Fintech Comes to America at Last
26th March 2021
The good news is that the picture in America is changing for the better. Thanks to the pandemic, there has been a surge in payments online and experimentation by consumers with new services provided by digital-payments firms. In the past quarter the volume of transactions on PayPal was 36% higher than a year earlier. The number of people using Square’s digital Cash App rose by 50% to 36m during 2020. Investors are now betting that these two firms, together with Stripe and Adyen (which is Dutch), form a quartet that can take on America’s stodgy financial establishment. (The chairman of The Economist’s parent group is a director of Square.) PayPal is worth $275bn, nearing Bank of America, the country’s second-biggest lender.
Yet there is a catch. Despite the rise of innovative firms, fees for American consumers have yet to fall by much. Square charges 2.6% on the average transaction; Stripe’s fee nears 3%. By contrast, China’s big fintech firms charge below 0.5%. Fees have been kept low by a fierce price war.
Pretty sad when Communist China has more competition than the U.S.