The problem with Paytech

Fintech is a portmanteau of financial technology that refers to the application of technology to the financial services industry. Fintech covers a wide range of activities, including mobile payments, money transfers, loans, and asset management.

The fintech industry has seen rapid growth in recent years, with venture capitalists pumping billions of dollars into the sector. This has led to the development of a number of innovative new products and services.

Fintech companies are often able to undercut traditional financial institutions by offering lower rates and fees. They also tend to be more user-friendly, with slick mobile apps and easy-to-use websites.

Paytech

Fintech is an industry with many sectors under it. One of the most important sectors is the Paytech sector. Paytech is the area of fintech that focuses on payments. It includes companies that develop mobile payments, online payments, and peer-to-peer payments.

Payments are a critical part of the financial services industry. They allow consumers to transfer money and make purchases. In recent years, there has been a surge in the use of mobile payments. This is due to the rise of smartphones and the spread of 4G networks.

Payments are also becoming more complex. In addition to traditional payments methods, such as credit cards and bank transfers, there is now a range of new payment options, such as digital currencies and mobile wallets.

There is however a problem with the paytech sector, particularly in the developed world. That problem becomes more prominent when we look at the list of the 15 biggest fintech firms in the world.

1. Visa
2. Mastercard
3. Ant group
4. Tencent
5. Intuit
6. Paypal
7. Stripe
8. Adyen
9. Fiserv
10. Square
11. Klarna
12. Nubank
13. Checkout.com
14. Grab
15. Coinbase

12 out of these 15 biggest fintech firms are in the paytech sector and provide some sort of payment processing. Moreover, most of these 12 companies are based out of Silicon Valley.

The problem, therefore is that the paytech sector, particularly in USA and Europe has turned into a red sea. It has become highly saturated, with many companies providing similar services.

This has led to a lot of companies failing, as investors are not willing to put more money into a sector that is becoming too saturated. If there is room for paytech sector, then it is in the developing nations, where regulations or lack of local ecosystems have not yet allowed the growth of fintech firms.

The takeaway from this for investors and entrepreneurs is that if you want to create a fintech startup that not only survives its initial years but also has a chance to grow well, then look into other sectors. If you are bent on entering the paytech sector, then try to differentiate your product and service from the competition. Otherwise companies like Visa, Paypal and Square will be unforgiving.