Digital Transactions Authoritative, insightful and timely information for payments professionals
Many news accounts of PayPal Holdings Inc.’s spinoff from parent company eBay Inc. noted that PayPal’s market capitalization was in the $50 billion range, but few provided context on where that placed the company among its publicly traded peers. Turns out, PayPal instantly became the fourth-largest payments player, trailing only Visa Inc., MasterCard Inc., and American Express Co., and well ahead of No. 5 Discover Financial Services.
As of the close of trading on Friday, PayPal’s market capitalization—its number of common shares multiplied by price per share—was $46.5 billion, according to an analysis by Digital Transactions magazine for an upcoming September profile on the newly independent PayPal. That’s nearly twice Discover’s market cap but just a quarter of Visa’s $181 billion.
Using Yahoo! Finance data, the magazine ranked the 20 largest payment networks, processors, merchant acquirers, wire-transfer providers, ATM and point-of-sale hardware manufacturers, services providers, and others.
Here are rankings for the Top 5 companies. All dollar figures for companies mentioned in this story are in billions, unless noted.
• Visa, $180.6
• MasterCard, $110.8
• American Express, $81
• PayPal, $46.5
• Discover, $24.4
The sixth through tenth-ranked payments firms are, in order, Fiserv Inc., $21; Fidelity National Information Services Inc. (FIS), $19.8; Alliance Data Systems Inc., $16.8, The Western Union Co., $10.4, and Total System Services Inc. (TSYS), $8.9.
In positions 11 through 15 are Global Payments Inc., $7.6; Vantiv Inc., $6.6; Jack Henry & Associates Inc., $5.8; NCR Corp., $4.7, and WEX Inc., $3.8. Finally, ranked 16 through 20, are VeriFone Systems Inc., $3.7; Euronet Worldwide Inc., $3.6; ACI Worldwide, $2.7; Shopify Inc., $2.6; and Blackhawk Network Holdings Inc., $2.3.
Market caps are determined by a variety of factors, including a company’s revenues, profits, growth rates, and other tangible financial factors, and intangible ones such as a firm’s perceived growth prospects and investor confidence in its management. Thus, market caps don’t necessarily match rankings by sales. No. 3 AmEx, for example, had more than twice the revenues of Visa, $8.28 billion versus $3.52 billion, in the quarter ended June 30. AmEx also had more than three times the revenue of MasterCard ($2.39 billion), and made more money—$1.47 billion in net income versus $920 million for MasterCard.
PayPal generated nearly as much in second-quarter revenue as MasterCard, $2.3 billion, but made only a third the profit, $305 million.
The top five payments players by market cap all provide network services that connect merchants with consumers via credit card, debit card, or online financial accounts. Discover’s credit card and other lending operations, however, generate the lion’s share of company revenues. AmEx also gets a considerable share of its revenues from lending.
At least half of the top 20 payments firms are processors, though the range of services can, as in the cases of Fiserv and FIS, go well beyond card processing, while others are specialists. The biggest pure-play merchant acquirer in the bunch is No. 11-ranked Global Payments Inc. The only e-commerce specialist is No. 19 Shopify.
One company that could soon rank high on the list is First Data Corp., the largest card payment processor of all. First Data is owned by investment firm Kohlberg Kravis Roberts & Co. and last month filed for a possible initial public offering of stock. Merchant processor Square Inc. also is mulling an IPO.
