The digital payments wave continues to rise globally
The pandemic has led to a boom in online shopping and with that, a mass adoption of digital payments. The virus has led people to think of cash as another point of contact to be avoided. This has led to an unprecedented surge in first time users and has compelled merchants to adopt digital modes of payment. The transition from cash to cashless has been drastically sped up and has changed the perception of digital payments from being a convenience to a necessity. According to a report by marketsandmarkets, the global digital payment market size is expected to increase from $79.3B in 2020 to $154.1B by 2025, a CAGR of 14.2%. This is a welcome news to fintech companies engaged in digital payments all over the world.
US based Square reported that share of cash transactions among its seller network has fallen to one-third in August, down from nearly 41% compared to the same time last year. They estimate this recent shift away from cash usage would have taken more than three years without the pandemic. Square and Stripe have seen a dramatic increase in website traffic with YTD growth of 66% and 35% respectively. They have also ramped up their headcount by 18% and 15% YTD respectively. We can see the effect of the tailwind on the stock price of Square which has increased 4x, trading at $188.60 as of Oct 16 compared to $40 on March 16.
This trend towards digital payment can be seen in other developed economies like that of the UK, with Checkout.com, and Netherlands, with Adyen, as well. Checkout.com and Adyen have seen an increase of 64% and 32% in website traffic and of 70% and 29% in employee count YTD. Checkout.com announced a $150M Series B funding round at a valuation of $5.5B, which is triple the value of its funding round in May 2019. Adyen has seen its stock price more than double from €700 in March to €1650 as on Oct 16.
Thailand-based Omise and India’s Razorpay have benefitted as Asia also started moving away from cash. They have seen an increase in website traffic of 62% and 60% respectively YTD. Razorpay has recorded 300% growth in its business during the last six months of the pandemic and has increased its employee count by 22% to cope with the increased volume of business. It joined the unicorn club after raising a $100M Series D round in Oct ’20 . Uruguayan company dLocal became the country’s first and only unicorn to date by raising $200M at a valuation of $1.2B. The company has seen a rise in website traffic of 68% YoY and has increased its employee strength by 53% this year alone.
Africa has also seen its digital payments market grow tremendously over the past year. Nigeria’s Paystack, and South Africa’s Peach Payments and Ozow are companies which have done remarkably well in the sector. Paystack, Peach Payments and Ozow have seen an increase in website traffic of 20%, 139% and 39% in the past six months and a rise in employee count of 5%, 57% and 13% YTD. Paystack recently became the biggest startup acquisition to come out of Nigeria after being acquired by Stripe for over $200M.
There is no doubt that a move away from cash is inevitable and the pandemic has only served to make the transition quicker than expected. This has made these companies from ones to look out for in the future to ones you must watch out for now.
