Mobile payments company Square under pressure
One of the big players in mobile payments stateside is Square. The CEO is Jack Dorsey who is also Chairman of Twitter having founded both companies.
Gross Payment Volume (GPV) for the first quarter was $10.3 billion, up 45% year over year. Adjusted Revenue was $146 million, up 64% year over year, and Adjusted EBITDA was a loss of $9 million, a solid improvement from a loss of $20 million in the first quarter of 2015. Total net revenue was $379 million, up 51% year over year. You can read the full letter to shareholders here.
One thing that has sat in Square’s favour is that they early on struck a deal to be the mobile payments provider for Starbucks giving them strong visibility across the US. But that agreement is due to expire in the third quarter of this year and won’t be renewed.
There were great hopes for Square when it first launched and it has been well backed and seen some success but it does demonstrate how tricky it is to build out these new payment technologies from scratch without the backstop of a big bank or organisation.
not untypical of the sector – have a look at others in the digital payments process – such as Tungsten and Monitise – different bits of the process perhaps but some things in common:
digital threatens to do at some point to transaction costs what Purplebricks claims to do to estate agents fees
problem is that there’s no bar to market entry and plenty of other people wanting to do similar or related things – so even if one gets the volume of transactions – holding margins is a problem
one solution is diversification – uk experiences is seriously not good – these new co’s have a very limited expertise – should perhaps stick to it then sell out
the market looks like the ‘perfect market’ described by adam smith centuries ago – good for the consumer – hell for the provider
note that despite paypal’s (arguably high) costs no-one has shown any sign of competing with it
will the low cost provider come from the east?
alipay for instance?