Payment and Marketplace Stocks

About Payment and Marketplace Stocks

The card networks are one of the great business models in existence. They take a cut of a payment, lend nothing, carry no credit risk, and the volume grows with nominal spending, which means inflation is a tailwind rather than a cost. Two of them dominate globally and both have compounded for decades.

The rest of the group is not that. Processors do the unglamorous work of connecting merchants to the networks and compete with everyone else doing the same job, so pricing goes one direction. Marketplaces take a share of each order and increasingly make their real money selling advertising to their own sellers. Delivery and ride-hailing split their cut with a driver, which is a structurally harder version of the same idea.

Regulation is the ceiling everyone here lives under. Caps on interchange, rules on surcharging, and rulings on whether drivers are employees all set a limit on the cut rather than on the demand for it. The networks in particular carry permanent antitrust and interchange risk, and that is the main reason the multiple is not higher than it already is.

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