The payments business used to be simple. Its narrative was simple: that as more people convert from cash and check to card, its market would grow; and its business model was simple: that for every tap or swipe of a card, a small profit would accrue to industry participants. For years, these principles sustained a growth industry that attracted a huge amount of investment capital. 

But then things got complicated. New payment methods were launched, many of them by central banks; different wallets emerged; national payment schemes competed alongside global alternatives. No longer able simply to ride the key macro trend of cash-to-card conversion, participants had to navigate the industry’s growing complexities all while new capital was being pumped in. 

John Collison, co-founder and President of Stripe, one of the newest entrants in payments, acknowledges the challenge. “Stripe is, say, 12 years post launch,” he told interviewer Patrick O’Shaughnessy recently. “But just measure it against the goals we set out to solve when we started, there’s still not only a lot to do, but in certain ways, we’re even further from solving them than we were at the outset… And while Stripe is now way more powerful than it ever was in the past, it’s interesting that just the complexities of the world are also advancing considerably.” 

We’ve talked a lot about payments here before: the origins of the networks and the present-day strategy of Visa, new payment methods in Brazil and new wallets in India, the operations of processors Worldpay and Stripe. In the past couple of months, though, the challenges of complexity have really come to light. In August, payments platform Adyen shocked markets by resetting growth expectations lower, and this week, Worldline, a leading European payments processor, did the same. The stock prices of each halved. These companies pursue quite different strategies, but they compete in the same European home market, the most complex payments landscape on the planet. 

To understand what happened and how sentiment around payments, once the darling of the financial services industry, can turn so quickly, read on...