Fresh blow as another fintech firm plummets

The shock rippling through Europe’s fintech sector turned up a notch yesterday after shares in French payment giant Worldline plummeted by more than half.

Listed on the Paris stock exchange, it is best known for providing terminals to process payments, serving more than 1m merchants across the world, including McDonald’s and supermarket giant Carrefour.

Another blow for Europe’s fintech industry as investors lose patience with a sector that surged during the pandemic as lockdowns pushed more people online

Worldline entered the CAC 40 in 2020 after a series of acquisitions, with a market value of over £10bn.

But just a day after London-listed CAB Payments stock crashed 72pc, Worldline shares were temporarily suspended before finishing down 60pc, after it warned revenues would take a hit this year amid a deteriorating economic outlook.

Its market cap is now £2.6bn. ‘We face more challenges than we anticipated even until very recently. The first one is obviously the economic slowdown in Europe most particularly in Germany,’ said Worldline chief executive Gilles Grapinet.

The update is another hammer blow for Europe’s fintech industry and investors have lost patience with a sector that surged during the pandemic as lockdowns pushed more people online.

But worries over a broader slowdown in consumer spending amid a cost-of-living crisis have brought the companies crashing back to earth, while rising interest rates called time on the period of cheap money for its investors.

‘Today’s slump is a sign of investors’ total surrender,’ said David Vignon, an analyst at Stifel. The alarm spread with shares also falling among its European peers. Nexi fell 13pc in Milan, and Adyen by 6pc in Amsterdam.

On Tuesday, shares in London listed CAB Payments plunged more than 70pc after it lowered its full-year revenue forecasts. It fell another 17.8pc yesterday.

Particularly worrying was the warning from Worldline about rising signs of fraud. It said it had noticed ‘fraudulent patterns of cyber-crime behaviour’ among some merchants. It comes after German watchdog Bafin last month prohibited a Worldline joint venture from accepting payments from certain clients due to money-laundering risks. Worldline has stopped working with some merchants in Germany and with clients that raise red flags.

Fintech is still reeling from the fallout of Wirecard, the German payments processor which crashed into insolvency in 2020.

Bob Lyddon, a banking consultant said: ‘There’s no doubt that an element of trust has gone for investors.’

It is also a setback for Prime Minister Rishi Sunak.

When Chancellor, he called for a ‘digital big bang’, and the current Chancellor, Jeremy Hunt, has championed the UK’s ‘world-beating fintech sector’.

But the fear now is that optimism has been misplaced.

This post first appeared on Dailymail.co.uk