What’s on the Other Side?

Much attention has been focused on the damage Covid-19 has wreaked on state and national economies, not to say on the lives of citizens. But we are entering a time when it may be possible to consider also what a post-pandemic world may look like. Certainly, some of the payments industry’s biggest players are already doing just that.

Last month, we reported on a so-called S-1 registration statement filed with the U.S. Securities and Exchange Commission by Shift4 Payments LLC, a major processor and payments-technology provider for the hospitality sector. The purpose of the filing is to describe the company’s business in preparation for an initial public offering. The timing of the IPO wasn’t known at this writing, but the possible strategy behind the move could be intriguing.

First, consider the losses Covid-19 is leaving in its wake. Among restaurants particularly, the pandemic has forced dining rooms to shutter and restaurateurs to resort to online ordering and takeout and delivery to recoup revenue (for more on how their moves are impacting payments, see our cover story in this issue). That’s hurting processors like Shift4 with big stakes in hospitality processing.

So some observers are wondering why the company is seeking an IPO now, of all times. We can’t be sure of the answer because Shift4 says it’s observing a quiet period. But one possibility is that it sees huge potential in being the provider of what will be much-needed POS gear and services on the other side of the pandemic, when restaurants will be looking to regroup and reopen.

First comes the devastation. In its filing, Shift4 indicates its gateway transactions for the week of March 22 plummeted to 7.5 million from 15.2 million the week before and 29.6 million the week of March 1. To be sure, this volume began improving in mid-April and reached 10.7 million by the week of May 3.

Still, the impact on the hospitality market is more likely reflected in later months, starting with April, when government orders in most states shut down dining rooms and hotels. Business failures resulting from these moves are likely to follow in the second half of the year.

Greg Cohen, principal at investment firm PayXAdvisory, told us Shift4 may be looking to a big payoff when the pandemic subsides and business owners begin to pick up the pieces of failed and damaged enterprises. “We will see a lot of [business] attrition, but what comes back in place will be using cloud-based systems provided by companies like Shift4,” he predicts. “This will bottom out and they will benefit.”

Does the market agree? Watch what happens with the IPO.

—John Stewart, Editor, john@digitaltransactions.net