PayPal’s success is inviting regulators to launch more antitrust probes into payment processing giants to give fintech startups a fighting chance, according to market stakeholders and analysts.
The fintech behemoth, founded by the fabled so-called “PayPal Mafia” that included the tech tycoon Elon Musk and investor Peter Thiel in 1999, is riding high on a mounting wave of digital payments after Covid-19 caused online shopping and contactless payments to surge. The company has just had its best first quarter ever, with its revenue jumping by 31% to $6.03bn on the back of processing $285bn in transactions over the period, up 50% from 2020.
While PayPal and other payment processing companies like Visa, Mastercard, Square and Stripe have come out as some of the big winners from the pandemic, the question is what their growth will mean for the fintech sector at large. Will there be a space for smaller startups as the payment goliaths carve out bigger market shares for themselves? And what will competition regulators do if they are unsatisfied with the answer?
“Over the years PayPal have created an unfair advantage in the entire fintech and banking industry due to their global presence and their ability to generate a very profitable business that generates a lot of cash that was reinvested in order to grow,” Oded Zehavi, co-founder and CEO of Mesh Paymentstells Verdict.
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