PayPal has waded into the culture wars, apparently triggering “thousands” of its users to close their accounts in outrage. Its loss could be one UK stock’s gain.
First, let’s examine the story.
Only the Young
On the 15 September, US fintech PayPal banished two right-leaning groups from its platform. These were UK organisations The Daily Sceptic, a news site, and The Free Speech Union, a campaign group.
Both were founded by a well-connected individual called Toby Young, the associate editor of The Spectator magazine. After being deplatformed, he kicked up such a furore that the issue was raised in Parliament, and 42 peers and MPs signed a letter urging the Business Secretary Jacob Rees-Mogg to act.
PayPal backpedalled on Tuesday, unblocking Young’s accounts. However, the experience has left the right-wing firebrand embittered.
In a column for The Spectator, Young vowed not to use PayPal again despite his accounts having been reinstated. He added that he had received “thousands of emails and messages” from supporters who had shut their own PayPal accounts “in solidarity”.
Upside surprise for Wise?
There is plenty of choice in the fintech world for those who don’t want to use PayPal. One option is Wise (LSE:WISE), which allows users to transact in over 50 different global currencies.
Indeed, when it comes to making international transfers, Wise offers a much better exchange rate than PayPal. While PayPal charges the mid-market exchange rate plus a 3.5%-4% markup, Wise offers the interbank exchange rate pure and simple.
Plausibly, some of the ‘thousands’ who quit PayPal in support of Young could turn into Wise users.
The company grew quarterly revenue by 51% year on year to £185.9m, according to its Q2 filing this year.
Wise projects its revenue growth will be between 30% and 35% in the next financial year. Perhaps growing discontent over PayPal’s treatment of right-leaning groups could help Wise hit or even surpass that target.
Sardines in a can
Although I use Wise’s services, and I have considered buying shares, I have never pulled the trigger. That is because the number of options in the fintech space has become bewildering.
In addition to PayPal and Wise, they include Amazon Pay, Apple Pay, Atlantic Money, DonorBox, Google Pay Send, Mercado Pago, Payoneer, Revolut, Skrill, Stripe, Square, and Western Union.
And that is not even an exhaustive list!
If I could buy shares in a well-balanced ETF with exposure to all of the many fintech providers, I would. After all, the sector is forecast to quintuple in size by 2030.
However, many of the emergent competitors – like Atlantic Money, DonorBox, Stripe, and Revolut – are not publicly traded.
A quick look at Young’s news site, The Daily Sceptic, shows me he is now accepting donations using DonorBox instead of PayPal. Meanwhile, on his Free Speech Union page, visitors are encouraged to become members via a payment through Stripe.
The barriers to entry in the fintech space are too low to make any particular company a good investment for me.