Mar 15, 2021

Stripe reaches all-time high while Tencent takes a plunge

Tencent
Stripe
Fintech
AntGroup
William Girling
3 min
Stripe reaches all-time high while Tencent takes a plunge
In the last 24 hours, two fintech giants’ fortunes have drastically diverged: Stripe has attained a record $95bn valuation as Tencent lost $62bn...

In what appears to be a continuation of the regulatory pressures that felled Ant Group’s IPO in 2020, Chinese tech industry leader Tencent has lost $62bn in the fallout.

By most assessments of the situation, the company’s fintech output is now worth practically nothing; its stock’s value has been “obliterated” after falling 8.4% since Friday 12 March. Inside sources consider that Tencent will, in all likelihood, form a holding company for its banking, insurance and payment services.

Estimated to have been previously worth between $105bn and $120bn, with payments services alone valued at $70bn to $80bn, and with wealth management, credit, and insurance capabilities contributing a further $35bn or $40bn, Tencent’s current position is precipitous.

"All else equal, we think it could be argued that Tencent's fintech business is now valued at almost zero," stated analysis from Bernstein. "This is significant, as it implies any further declines from here would essentially imply a de-rating of the Tencent multiple."

Stripe: The US’ most valuable startup

In contrast to Tencent, Stripe’s remarkable run of growth is continuing unimpeded: its value has tripled in under 12 months, and a $600m funding round has just elevated the company’s value to an all-time high of $95bn.

Named among the round’s primary investors were Allianz X, Axa, Ireland’s National Treasury Management Agency, and others.

Currently the most valuable startup in the US - CB Insights reports that it has even overtaken Elon Musk’s SpaceX - Stripe is reportedly planning to invest in European operations, particularly its Dublin HQ. 

“We’re investing a ton more in Europe this year,” stated John Collison, President and Co-Founder of Stripe. “Whether in fintech, mobility, retail or SaaS, the growth opportunity for the European digital economy is immense.“

What could the future hold?

Although Tencent has experienced a devastating blow to its business, Bernstein still remains optimistic about its chance of a recovery; it compares the company’s present woes to be “in a very different light to the situation facing Alibaba,” for instance. 

As such, it could be shortsighted to read these latest events as the ultimate downfall of a Chinese tech giant.

Stripe’s trajectory, however, seems less ambiguously positive. Not content with simply achieving success in the short-term, the company has made it clear that progressive, forward-thinking expansion remains its core goal. Dhivya Suryadevara, CFO, commented:

“The pandemic taught us many things about society, including how much can be achieved—and paid for—online, but the internet still isn’t the engine for global economic progress that it could be. We’re laser focused on helping ambitious businesses grow faster. 

“While Stripe already processes hundreds of billions of dollars per year for millions of businesses worldwide, the opportunity ahead is much larger for Stripe than it was when the company was started 10 years ago.”

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Jul 29, 2021

BIS and MAS publish blueprint for cross-border payment idea

Fintech
BIS
MAS
transfers
2 min
The Bank for International Settlements and the Monetary Authority of Singapore have published a blueprint for real-time payment systems across borders

The Bank for International Settlements and the Monetary Authority of Singapore (MAS) has published a proposed blueprint for the multilateral linking of domestic real-time payment systems across borders.

The blueprint, titled Project Nexus, outlines how countries can fully integrate their retail payment systems onto a single cross-border network, allowing customers to make cross-border transfers instantly and securely via their mobile phones or internet devices. 

The Nexus blueprint was developed through consultation with multiple central banks and financial institutions across the globe. It builds on the bilateral linkage between Singapore's PayNow and Thailand's PromptPay, launched in April 2021, and benefits from the experience of the National Payments Corporation of India's (NPCI) development and operation of the Unified Payments Interface (UPI) system.

The Nexus blueprint comprises two main elements: 

  • Nexus Gateways, to be developed and implemented by the operators of participating countries' national payment systems, will serve to coordinate compliance, foreign exchange conversion, message translation and the sequencing of payments among all participants. These gateways will be predicated on a common set of technical standards, functionalities and operational guidelines set out within the proposal. 
  • An overarching Nexus Scheme that sets out the governance framework and rulebook for participating retail payment systems, banks and payment service providers to coordinate and effect cross-border payments through the network. 

“To achieve significant cost-reduction in cross-border payment transfers, enhancements must be made on two fronts: direct connectivity between domestic faster payment systems, and frictionless foreign exchange on shared common wholesale settlement infrastructures. The BIS Innovation Hub Singapore Centre is working on both. The Nexus project maps out a much-needed set of standards to achieve seamless cross-border payment systems connectivity.” said Sopnendu Mohanty, Chief FinTech Officer, MAS.

 

How do cross-border payments work?

 

Cross-border payments are currency transactions between people or businesses that are in different countries. The sender will choose a front-end provider, such as a bank or a money transfer operator (e.g. Transferwise), to initiate the payment. The receiver then receives the payment via the medium specified by the sender. Traditionally, cross-border payments flow via the correspondent banking network (CBN) which most front-end providers use to settle the payment. But, in recent years, new back-end networks emerged to optimise cross-border payments and enable interoperability between payment methods and provide senders with more possibilities to reach the receiver.

The increased international mobility of goods, services, capital, and people have contributed to the growing economic importance of cross-border payments. The value of cross-border payments is estimated to increase from almost $150 trillion in 2017 to over $250 trillion by 2027, equating to a rise of over $100 trillion in just 10 years.

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