WWith the postponement of the annual report again, irecard triggered a quake in the payment services market. This could now have serious consequences for the Munich company. For the first time, the market is seriously bankrupting fintech: The bond, which runs until 2024, is traded at a discount of 50 cents per euro, and the yield jumps to 19 percent. What does this mean for Wirecard, the market and the competition?
On the one hand, you can be sure that more and more payments will continue to be made by card, be it online or in stores. Wirecard is too small to be a problem for the market if there is one payment service provider less. There are more than a dozen competitors on the German market alone. Some are more focused on brick-and-mortar retail, others more on online retail.
For Wirecard, the decline in trust is now a huge problem. Even the most unsuspecting customers are worried that there will be no attestation for bank balances on trust accounts amounting to almost 2 billion euros – even if the management board and his boss Markus Braun published a video on Friday night, in which Braun in turn spoke in a matter-of-fact voice Tried to explain the process and gave the impression that everything would be fine.
Wirecard is paid for the fact that it transfers money quickly and reliably from the customer to the dealer. If there is any doubt that Wirecard can do its business, it will be very difficult on the market. Although the company’s technology is pretty sophisticated, it is ultimately interchangeable. If a retailer currently has a contract with Wirecard, there is little that can be done about it. Industry observers do not believe that there is a special right of termination in the event of a late annual report.
It looks different if no money actually flows. But such a case is not yet known. In the event of bankruptcy, industry experts actually see black: Wirecard is not expected to have secured itself against such a case. The money would actually be gone and the infrastructure would be useless. It probably won’t get that far, the market is far too attractive for that. Currently, there is increasing speculation about a takeover.
A dealer who now wants to extend his existing contract or does not have one yet, is in a significantly better negotiating position. According to Wirecard CEO Markus Braun, the fees that the company collects for a payment transaction are currently on average 1.4 to 1.7 percent. However, Wirecard will no longer be able to maintain this easily, which will burden the business in the future. And the Munich-based company is now carrying another penalty: It could now be even more difficult to keep good people in the company or to inspire talent. Even if Wirecard is innocent of the current mistakes and criminal machinations are involved: If your own bank has been robbed, everyone will think twice about keeping their locker there.
Either way, the competitors can rub their hands. Above all, one should mention Adyen, who continue their record run and meanwhile climbed to just under EUR 1,300 per share on Thursday, bringing their stock market value to EUR 39.2 billion. At the beginning of the year they were still available for around 730 euros – an increase of almost 80 percent. Worldline was listed in the Cac 40, as were the papers from Ingenico, which is also a French payment processor, near their record highs from the first half of the year. Against Adyen, however, Worldline with a market value of 13 billion euros and Ingenico with just under 8.5 billion euros are still rather small. Wirecard is only valued at 6.4 billion euros. This also makes the group a candidate for takeover. Because it is really a bargain: At the beginning of 2019, the American financial service provider Fiserv spent $ 22 billion to take over the payment processor First Data.