So GrabPay uses Wirecard?
According to news reports, yes.
....Now,this looks like Wirecard has almost 5 times the employee size of Adyen with less than 1/3 the transaction volume. This makes Wirecard sound pretty bloated to me and cost cutting seems like a guaranteed, easy and lowest hanging fruit to bring this company to profitability.
In "ordinary" times, perhaps. These aren't ordinary times for Wirecard.
(pls note transaction volume is not revenue. In simplest terms, transaction volume is the amount of authorised payment that flows through its payment processing host. Revenue can then be loosely calculated by the transaction volume * the difference between Merchant Discount Rate and Interchange fee). Very simplified example: If transaction volume is 100bn and interchange fee is 1% and merchant discount rate is 2.5%, then revenue is $100bn * (1.025 - 1.01) = $1.5BN.
Wirecard has allegedly been very aggressive in acquiring merchants, so it's likely their per transaction cut is lower than what their competitors are getting. There are also some fixed operating costs, i.e. scale economies matter.
Questionable: Recent acquisitions by Wirecard on smaller players.
That's been a problem for other players, yes.
But the moment Wirecard loses its partnership with Visa/master, it's like cutting the main artery from the heart to the rest of the body; Wirecard dies.
This could happen. It happened to CardSystems several years ago, and it was basically a death sentence, requiring CardSystems to sell itself to the highest bidder, a bidder who didn't have to bid very much. Interestingly, one of Wirecard's regional operating brands in the Middle East is "CardSystems."
But no doubt all partners of Wirecard are being updated on the latest events happening at Wirecard.
If they are the briefings don't have much shelf life. Their CEO resigned only this past Friday (June 19, 2020) and was arrested soon after. Their COO is gone, too. It's a very fast moving story.
In the event Wirecard is not bankrupt but the major international payment schemes like Visa/master decide to cut links with Wirecard, it will become an attractive buyover target at this price because of my next point (valuable intangibles). Nonetheless, any bank or scheme connected to Wirecard is likely to make contingency plans if not yet.
Yes, major merchants and partners must be scrambling right now. "Mom and pop" merchants could be disrupted.
Another dealbreaker is any potential worms we are not aware of. I am in the dark about this.
The Financial Times has been opening this can of worms for nearly 5 years. It seems to be a very big, very wormy can.
Valuable intangibles: Its merchants, especially merchants on physical terminal. Wirecard is pretty aggressive in merchant acquiring in Asia region, especially taking over the Citi merchant acquiring business in 2017. If any competitor can take over Wirecard's merchant acquiring business, it's definitely worth far more than the current market cap of approx 2BN USD.
It's probably worth something, but it's also difficult to value amidst this turmoil. Accounting problems can be really deadly.
Potentially valuable intangibles: its datacentres. Every payment processing company will have datacentres based on their expected transaction volume and redundancy. This can be 1 of the assets from Wirecard.
Even if Wirecard has such assets (not a given), they're not worth what they used to be. These days data centers tend to be "co-location facilities," meaning they're like Regus or WeWork facilities for computers. You don't own the building. Moreover, the now used equipment in those data centers isn't usually worth very much, even if it's premium gear (and it probably isn't). And if they're principally running in public clouds, they don't even have this much.
Wirecard also has its own suite of terminals (which is how it got into acquiring physical merchants) however, it is possible other payment processing companies can use terminals from other terminal manufacturers such as Ingenico and Verifone though it's not entirely plug and play).
Right, but these could turn into e-waste. And who's going to pay to retrieve them, even if Wirecard owns them? (Wirecard might not.)
All these being said and done, the play money for Wirecard is not meant for investing purposes, it's only for trading after massive decrease in share price.
There is actually an interesting branch of investing involving distressed assets. The great Warren Buffett famously loaned billions to Goldman Sachs in the depths of the Global Financial Crisis. He demanded preferred shares yielding 10% dividends plus a stock purchase option. He got it, and he did quite well. Goldman Sachs did, too: they survived and prospered.
发哨子2020;127956086 said:
So the consumers are spared but the merchants may be in $trouble$ .
Some consumers could face difficulties, notably the consumers with Wirecard-managed prepaid cards that have balances held by Wirecard.
