Square : A new way of processing digital payment

As shows the 40%  advance of the Nasdaq over the past 12 months  and the impressive 50% rally of the Global X Fintech Thematic ETF, we are currently in a bullish trend on the technological sector. Yet, in the case of the Fintech, as are pointing out more and more reports it seems that it could very well may be only the beginning of a decade long growth trend towards a more decentralized banking sector.
Indeed, as reported by the World Bank roughly 1.7 billion people mainly in developing countries are still unbanked and transitioning rapidly towards the smartphone technology and mobile app economy, skipping altogether PCs and traditional banking as in China ten years ago when the expansion of smartphone usage led to an unprecedented rise of mobile payments. As such, the recent expectation published by Allied Market Research expecting a 30% annual growth of the global mobile payments market between 2020 and 2027 seems rather on par and a good reason to consider investing in one of the leader of the space such as Square which grew its user base by more than 25% over the past year and set to be among the biggest winner of this current trend towards mobile payments in the decade to come.

What is Square ?

Square is a digital payment processing company working toward the economic empowerment and the simplification of small business operations by providing easy to use service. More specifically, it provides a full-fledged business solution for both online storefronts and e-commerce business comprehending :

• Small terminals
• Contactless payments  
• Online payments
• Digital system to run operations such as curbside pickup

Furthermore, it also provide a person-to-person Cash App and with Square Capital a financial services product for small business all within the same system that powers many of their application in order to ensure a smooth and simple process.

Current competitors

Currently the strongest competitors are Paypal and Shopify. Indeed, between its $191 billion in total payment volume during the first quarter of 2020, its strong userbase of more than 325 million active users and the strong partnership with ebay, Paypal is currently the undisputed leader of the global mobile payment market. Yet, it does not propose a comprehensive suite of small business service as advanced as the one developed by Square.  At the other hand of the spectrum Shopify is currently one of the best one-stop online business-maker solution available taking care of everything for a monthly fee. However,  the Shopify solution doesn’t work for storefronts, and doesn’t offer the same full suite of payment solution offered by Square.
So, as we can point out, compared to other competitors, Square is not only a payment orchestrator but more of a full-service small business developer in between the Paypal and Shopify which gives it an edge compared to its other two main competitors. Plus, the recent building of its Cash App supported new technological assets such as Bitcoin, allows the company to branch into new and lucrative territory while gaining exposure given that its Cash App has been the top financial tool in the US App Store for the past two years.

To conclude, even though, Square stock soar more than 300% over the past 5 years there still appears to be a lot more room for future growth knowing that Paypal is still growing its userbase by double digits and that for now the company is serving less than 3% of the $100 billion addressable sellers market and less than 2% of the addressable $60 billion cash app market.