You may have seen the recent news week that the Australian online payments provider Fast has had to shut down. The company, which was most recently valued at over $500 million, was backed by some of the world’s most important companies and venture capitalists. For example, Stripe, which is the world’s most valuable private startup (worth almost $100 billion), led a funding round for Fast in 2021 to raise $102 million for the company.
But here’s the problem: Despite all that funding, Fast’s revenues were small. Around $50K per month, according to the latest reports. And the company was spending around $10 million per month. The story has become a scandal in Silicon Valley, and the lavish lifestyle of its CEO, Domm Holland, has been getting a lot of headlines. Reportedly, the company paid the pop band The Chainsmokers $1 million to play at a retail event. This kind of activity is remarkable given its monthly revenues were similar to that of a mid-sized restaurant.
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Fast should have rode waves of eCommerce boom
And yet, the news about Fast’s collapse has posed questions about the online payments industry in general. For some context, there has been a rush to provide one-click checkout solutions to websites since 2017. The reason for this is that Amazon’s patent on one-click checkout technology expired five years ago. As such, many companies like Fast and Bolt (you can see what kind of branding they are going for) emerged to get a slice of the market.
Of course, it should be noted that we are experiencing an eCommerce boom. From takeaway restaurants to large online stores to individuals selling art, everyone is in a rush to get some sort of seamless checkout experience on their websites and apps. But the industry is very competitive, and that means there are going to be winners and losers.
Countless ways to pay online
Often when we pay for things online, we don’t think about how the transaction is facilitated – we just want it to be quick. But the range of options now is incredible. If you wake something like Playerz, a popular online casino site in India, the platform offers around two dozen ways to deposit and withdraw. These range from traditional methods (cards like VISA and Diners Club) to the big eWallets (Skrill and Neteller) to more niche methods (like pay by phone bill with Boku). While that’s great for players to have a method of payment they like using, it’s difficult for those providers to stand out.
The point, as such, is that while there is a growing need for the facilitation of online payments and companies are coming up with smarter and faster solutions, the sheer number of options is posing a problem for those startups wishing to get a significant portion of the market share. Going back to Fast, it represents a cautionary tale of how something can seem like a good idea, but the challenges it can face in practice.
And it should also be noted that the challenges are likely to grow in the near future. While some people are very sceptical of cryptocurrency, there is a growing demand for online payment systems that use the likes of Bitcoin, Ethereum and Tether. This is becoming more and more mainstream. For instance, Apple announced last week that it was offering integration for MetaMask (a cryptocurrency wallet) for some of its Apple Pay Wallet features. While many companies won’t implode as spectacularly as Fast, you can be sure that many will face pressures in a hugely competitive market.