As Mobile Payments Applications Grow, Startups Reap Rich Investment Haul

Mobile payments emerged on the scene a few years ago, but now it’s clear every market they touch—from the point of sale to peer-to-peer transfers to online lending—has become hot for investment. For proof, look no further than the latest list of so-called unicorns, privately held startups valued at $1 billion or more. There are now 102 of these companies, according to market researcher CB Insights, and no fewer than eight are in the payments business. As recently as last week, the firm had counted 99 unicorns.

A $1 billion valuation was once considered a rare achievement for a recently formed business, so rare it rated the “unicorn” tag. But now investors responding to the revival of near-field communication technology, streamlined methods of making mobile and online payments, and newfound consumer interest in P2P payments are lining up to pour cash into new entrants.

Here are the eight unicorns in the payments business, as determined by CB Insights in a report released Sunday:

1. Square Inc. ($6 billion). Investors include First Round Capital, Citi Ventures, GGV Capital. Square focuses on business services such as mobile point of sale payments and merchant funding, though its Square Cash product lets user send each other money.

2. Stripe Inc. ($3.5 billion). Investors include Khosla Ventures, Lowercase Capital, Redpoint Ventures. Stripe’s code streamlines online and mobile payments for e-commerce merchants.

3. Powa Technologies ($2.7 billion). Investors include Bright Station Ventures, Wellington Management. Powa has quickly become a major player in tablet-based POS.

4. Prosper Funding LLC ($1.9 billion). Investors include Accel Partners, DAG Ventures, Draper Fisher Jurvetson. Prosper’s marketplace lets individuals invest in online loans extended to other individuals and businesses.

5. Adyen ($1.5 billion). Investors include Felicis Ventures, Index Ventures, Temasek Holdings. Adyen’s gateway eases cross-border payments for merchants.

6. TransferWise Ltd. ($1 billion). Investors are IA Ventures, Index Ventures, SV Angel. TransferWise is the best-capitalized of digitally based startups aiming for a piece of the multi-currency money-transfer business.

7. Shopify Inc. ($1 billion). Investors are FirstMark Capital, Felicis Ventures, Insight Venture Partners. Shopify provides merchants an e-commerce platform that includes payment processing and mobile POS for face-to-face transactions.

8. Klarna Inc. ($1 billion). Investors include Institutional Venture Partners, Sequoia Capital, General Atlantic. Based in Europe, Klarna has brought its streamlined e-commerce payments platform to the United States.

If such valuations for recently formed private companies are a little less rare these days, it has much to do not just with the rapid growth of mobile payments, but with the increasing market in such payments being claimed by non-bank providers.

Mobile transactions worldwide are projected to reach 46.9 billion this year, up 61% from 29.2 billion in 2014, according to researcher Capgemini. At the same time, non-banks will account for 7 billion of the 2015 transactions, up from 3.8 billion last year. That gives non-banks a 15% share both years, up from 10% as recently as 2012.