Wirecards Feeling Wired

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What's going on?

Move over, Deutsche Bank theres a new kid in town. Say hallo to German payment-processor-cum-fintech-wizard, Wirecard, whose stock rose by 9% on Thursday, stoked by a better-than-expected second-quarter report. Supergeil!

What does this mean?

Wirecard keeps the online economy moving, processing digital payments (from your credit card, for example) between customers and companies. It takes a small fee each time normally 1-2% of the transaction. This soon adds up: the company facilitates over $100 billion of transactions globally. Now, its set its sights on growing in Asia through acquisitions (it recently snagged Citigroups services in Asia) and partnerships with AliPay and WeChat.



In the last quarter, Wirecard grew its revenue by 40% and profit by the same amount. Because of these ber-strong results, the management bumped its revenue expectations to $3.4 billion by 2020 an increase of $230 million on the old target.

Why should I care?

For markets: The list of digital economy winners continues to grow.


Wirecard already has $1.7 billion of annual revenue. Its a mere 5% of Deutsche Banks, but Wirecards a more valuable company (tweet this), perhaps since its growing so quickly and the skys the limit. Why? It has a European banking license so could become a fully-fledged bank if it fancies it. The consequences of a new online economy are far reaching: its not just traditional retailers that get hurt by the likes of Amazon, but also media (e.g. digital-only news outlets), hoteliers (e.g. Airbnb) and, increasingly, traditional finance.



The bigger picture: Disruption in payments is even hurting the new guys.


Square had a big boost to its stock price on Tuesday as downloads of its Cash App overtook PayPals Venmo. Squares Cash App is similar to Wirecard in that it enables digital payments, but specializes in person-to-person transactions. While PayPal isnt exactly an old dog (babys only 20), its certainly being taught new tricks by challenger businesses it recently lost its long-standing customer, eBay, to one.

Originally posted as part of the Finimize daily email.

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