November 2023 Business of Payments newsletter

The Business of Payments

Last month’s poor results from Worldline and Adyen have not set a trend. Nexi’s Q3 numbers came ahead of market expectations. Management said there was no sign of the slowdown in Germany which has so rattled Worldline’s shareholders. Nexi’s stock price is recovering nicely while Worldine is still bumping along the bottom.

Adyen bounced back after its plain-speaking Dutch management presented analysts with a more realistic assessment of the company’s growth prospects and promised a slowdown in the breakneck pace of new hires. Adyen’s Q3 revenue was up 22% and with the processor now targeting 50% EBITDA margins by 2026, significant cash profits are on the horizon.

The dilemmas faced by European legacy acquirers are well described in Nightmare on Acquiring Street, a new paper from PSE Consulting. This lays out the speed at which the market is moving to “gateway acquirers” such as Stripe, Adyen and Checkout, which offer a tightly integrated bundle of services operating over a single platform.

Source: PSE Consulting

Processors operating with old technology and without modern checkout and boarding tools are struggling. Barclays and Credit Agricole are the only banks remaining in the list of top European acquirers and both now recognise the need for change. Credit Agricole has announced a JV with Worldline and Barclays is exploring options for Barclaycard which could involve a sale or joint-venture.

As well as the impact of technology trends, European acquirers also need to contend with a profound shift in channel buying behaviour by small businesses, the most profitable customer segment. A new report from Flagship Consulting demonstrates the extent of the risk.

Source: Flagship Consulting

Independent software vendors (ISVs) and other platforms are now taking between 40% and 65% of new merchants signed in the US. This trend is coming to Europe and threatens banks ability to sell direct to SMBs. ISVs are demanding increasingly high commissions from the acquirers. Bain estimates that 90% of payment revenue is at risk of changing hands.

The impact on the ISV’s themselves is less well documented but these businesses are now finding they can generate up to half their revenue from commissions on payment processing. This is incentivising bad behaviour and we’re seeing incidents of market abuse where ISVs impose penalties for merchants that use 3rd party payment products.

Shopify, the leading eCommerce retail platform, charges a 2% surcharge if merchants don’t process transactions through Shopify Payments. And Lightspeed, a restaurant POS software vendor with over 10,000 customers worldwide, insists that all new customers take its integrated payments product. Those who don’t will be hit with a 0.5% transaction surcharge. 

This hasn’t gone down well in Canada where one restaurateur reported being charged $300 for using a competitor payment terminal“It’s not illegal, but it’s unethical,” said the local business association. Lightspeed have now introduced a price pledge to match competitor pricing in any country. But it’s worrying that many ISVs are now treating their customers as hostages. This won’t end well.

Corporate activity

Advent, the US private equity giant has bought London-based MyPOS for $500m.MyPOS, which became a merchant acquirer last year, claims 170,000 mPOS merchants in 30 countries and generated €11m EBITDA in 2022 on revenues of €60m. Advent has bought MyPOS through a newly established “payment and technology platform” called Circle which will be chaired by Laurent Le Moal, ex CEO of PayU. Expect more deals to come.

Total Processing, a small but fast growing ISO based in Manchester, recruited Martin Gilbert of Revolut as a heavyweight chair just six months ago. He has wasted little time in arranging the sale of the business to Nomupay, the well-funded Dublin-HQ’d processor formed from the ashes of Wirecard. Nomupay is clearly one to watch. 

Tencent, the Chinese technology platform, has paid $100m for an 8% stake in Global Blue, the market leader in Tax Free Shopping, at a valuation of $1.25bn. The Tencent relationship will cement Global Blue’s position with high-spending outbound Chinese travellers.

Silverflow, the Amsterdam based payment orchestrator has raised €15m at a valuation “significantly higher” than its previous raise in 2021. The money will be used to support the company’s expansion into Latin American and the Far East.

Shift4 has finally closed the $525m acquisition of Credorax Finaro. The eighteen-month delay, caused by the presence of a sanctioned Russian oligarch on the Finaro share register, has given management plenty of time to plan the integration. The combined business has scale (c.$200bn volume), international reach and the capability in eCommerce which Shift4 has been lacking. 

AIB and Bank of Ireland have abandoned efforts to create a domestic money transfer app to compete with the runaway success of Revolut. The banks had spent a total of €17m on the project which was to be called Yippay (yes, really) but ran into regulatory obstacles. Nexi had been contracted to build the product.

The Irish banks may be better served joining the European Payment Initiative (EPI) which has completed its acquisitions of iDEAL and Payconiq. This gives the EPI a solid basis of technology and transaction flow on which to build a common digital wallet for all European markets.

New Shopping

We’re keeping a close eye on grocery. Shifts in supermarket payments can move the whole market. But not yet. The FT concludes that, twenty years after the debut of online groceries, shoppers still prefer buying food in real life. Despite the pandemic boost only 12% of UK groceries are bought online.

But in-store shopping is changing rapidly with the introduction of self-checkout, Smartcarts and autonomous stores.

Italy’s first autonomous store has opened in Verona. In contrast to many pilot implementations, this one is a large format Tuday supermarket. The technology, supplied by Sensei, a Portuguese start-up, can even detect variable weight items through an integration with the scales. Payments are from Nexi. Shoppers don’t need to use the app. They can pay at a standard POS if they choose.

Tesco is trialling a similar process at one UK store. Again, shoppers don’t need to use the retailer’s app. They just walk up to the checkout which will “magically present them with a list of the products they have picked up”. Shoppers can pay with a card in the normal way. The technology is from Trigo, an Israeli start-up already working with REWE, Aldi and Auchan and in which Tesco has a small stake.

A2Z, the Israeli start-up which is leading development of smart carts, announced the delivery of an initial order of 250 to Monoprix, the French supermarket. These carts contain sensors that automatically record your purchases. A2Z believes it will sell a total of 30,000 smart carts in France alone over the next three years through IR2S, its distribution partner.

There is a live debate about self-checkouts. It’s clear they can work well for small basket sizes but not for the weekly shop. Whether it’s using a handheld scanner or fixed self-checkout terminal, the process puts too much work on the shopper. 

Booths, an upmarket UK supermarket, has removed self-checkouts completely. The customers seem very happy.

In biometric news, PayEye, a Polish start-up which allows people to pay with an iris scan has launched a new range of hardware. Called eyePOS, the terminals include a special camera but also take standard payment cards. PayEye offers them for an introductory price of €11.25 per month.

Despite overwhelming consumer demand to pay at POS by tapping their mobile phone on the terminal, there are still some circumstances when a physical card is needed. One is the M6 toll road in the English midlands. The operator has annoyed tens of thousands of motorists by removing the ability to use Apple or Google Pay. The rationale? A Government dictat that it was illegal have a mobile phone in your hand while in control of your vehicle.

After a predictable outcry, the Government has conceded an exemption for making a contactless payment and the toll road systems will be upgraded for Apple Pay.

In-car payments

The toll road problem would be avoided if all motoring-related payments – parking, charging and fuelling – were brought together in a single app accessed from the car dashboard. 

Mercedes Benz has built its own payment service but Volkswagen is following a different approach of co-ordinating a set of partners. VW has launched “Pay to Fuel” for its Skoda brand working with Mastercard, Parkopedia and ryd, a German fintech that offers a pay-to-fuel app.

Meanwhile, VW has sold PaybyPhone to Fleetcor, a large US B2B payment company for $300m. PayByPhone, generates c.$40m annual revenues from its app which gives access to 4m parking spaces in 1,000 cities across Europe and North America. Payment volume was $900m in 2022, giving a very healthy take rate of 4.4%.

Fleetcor plans to expand the PayByPhone service to include EV charging and automatically buying fuel at service stations.


Alcohol and cigarette vending machines are common in Germany, but age verification can be tricky. It’s  good to see Girocard, the domestic debit scheme, working with Feig, a leading vending machine supplier, to restrict sales to those old enough to buy the products.

Also in Germany, Bluefin has gained Giro certification for the TECS platform it acquired earlier this year and launched a white-label POS service for ISVs. Newland is providing the Android terminals. In other hardware news, ITCARD, a Polish acquirer with 90,000 POS, has started deploying Ingenico’s Axium terminals. This is positive news for Ingenico which has been very slow to market with a workable Android product.

One reason why Stripe is so popular, despite its high prices, is that it makes life easy for its customers. For example, you can now manage Klarna disputes from within the Stripe dashboard. Previously, Stripe merchants needed to deal with Klarna customer services via email.

It’s no surprise that Stripe can get its merchants to write great testimonials. Here’s the CIO of La Redoute, the giant French catalogue retailer, explaining why he chose Stripe as its global PSP/processor. “It has been an incredible and enjoyable journey working with Stripe’s team,” he says.      

Stripes’ platform strategy is sparking interesting innovation. Lopay is a UK mPOS provider built on top of Stripe’s APIs.  Lopay (the clue is in the name) undercuts SumUp and iZettle by charging just 0.99% for debit/credit transactions. It says it has signed 20,000 merchants in 18 months. Lopay charges 0.8% extra for instant settlement and says this is a very popular option. 

DeluPay is targeting a similar market in France with a solution based on QR codes linked to open banking transfers. 1,000 merchants have signed up to benefit from transactions free under €2 and 0.5% thereafter. If you understand French, watch the CEO get quite a grilling on this early morning business TV show. The presenters struggle with the consumer proposition and keep asking why they wouldn’t keep using Apple Pay or Paypal.

The Polish Post Office is looking to capitalise on the 10m users of its mobile app by adding InPost Pay as a checkout button for local web shops. Customers can then pay within the app using Blick, cards or cash on delivery.

Finally, take a look at This is a very impressive AI powered search engine that allows you to construct a basket across over 1m Shopify merchants. Payment through Shopify Payments of course.


SoftPOS is a downloadable payment application that allows any Android device equipped with an NFC chip to take money on cards. This represents a clear threat to the terminal manufacturers who, together, ship over 100m units each year. Sunmi is the first to respond. It’s latest Android hardware range includes a low-cost terminal designed for SoftPOS and shipped without a PCI certificate.

I think SoftPOS will make a quicker impact in the enterprise market than for micro-merchants. For example, Alaska Airlines is working with Stripe to allow 7,000 crew members to accept contactless payments for food and drink using their airline issued iPhones. This should speed up in-flight service. 

Symphopay, a Romanian POS payment gateway has sold its SoftPOS application to Raiffeisen Bank. The solution is already deployed at 880 easybox lockers of Sameday courier company.

Dotykacka, the Czech retail and restaurant software provider with over 20,000 merchants, has launched SoftPOS  in the Czech Republic and Slovakia. The solution is from, a Danish start-up with Nexi providing the processing.

MyPOS has launched SoftPOS in the UK with merchants paying 1.6% + 7p per transaction and no monthly fee. I think it’s a mistake for vendors to forgo a standing charge as there’s a high risk of attracting large numbers of merchants that never make any transactions.

The steady rollout of Apple’s Tap to Pay as an alternative to Android has reached France. Group BPCE, Adyen, myPOS, Revolut, SumUp, Viva Wallet and Wordline are offering the product at launch. 

Open banking

The latest Open Banking Impact Report shows UK open banking payments doubled compared to 2022 and now running at £4.5bn a month, still small modest compared to c.£65bn on cards and c.£110bn on direct debits.

There are now 45 open banking payment providers in the UK. This is probably rather more than the market needs and many vendors must be wondering they can stay in business long enough to reach break-even.

Who is going to consolidate the overcrowded open banking market? The CEO of Go Cardless, a very well-funded UK direct debit specialist, said it would likely be making acquisitions. Go Cardless already bought Noridgen, a Latvian open banking provider earlier this year.

If open banking payments are going to become mass market, vendors need to provide a superior customer experience to cards. One good example is William Hill, provider of online gambling and sports betting, which will be offering open banking for both pay-ins and pay-outs. This is a sector where bank transfers offer clear advantages over cards, notably the ability to pay winnings instantly. Truelayer is providing the technology.

If the industry doesn’t move quickly, the tech giants will drive the market forward. 

Apple has started using open banking to offer iPhone users the chance to view their bank balance and transaction history before confirming an Apple Pay transaction. Although it would be a small additional step for Apple to start directing Apple Pay transactions over open banking rails, it may be reluctant to lose the 0.15% commission it charges card issuers today.


We’ve covered the rip-off fees from many ATMs in tourist locations before. Honest Guide (1.3m subscribers) explains the scandal better than we can. Euronet doesn’t come out well.

With the debate raging about whether merchants should be obliged to accept cash, it’s good to see merchants playing an active role for or against. This sign was spotted by Chris Higham in Newcastle.

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And which button would you press in this Las Vegas taxi?  Photo from Booshan Rengachari.

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In other news

French railways has introduced ticketless transit based on contactless payments for regional trains. This is a wonderful idea which should be adopted by all transit authorities everywhere.

Farewell Dotpay. The pioneering Polish eCommerce gateway was acquired by Nets Nexi in 2018 and its brand is now folded into Przelewy24.

Klarna management has averted a strike by conceding a collective bargaining agreement with its workers. Its CEO didn’t handle a subsequent all-hands call very well, likening union reps to the corrupt pigs in Animal Farm.

CAB Payments has been one of the least successful IPO’s of 2023 with shares down 80%. The FT explains why.

French authorities have levied €414m fines on four Meal Voucher providers for anti-competitive practices in this €6bn market. This is very profitable business – the providers charge 2.5% to the employers and 2-5% for the restaurants.

BCG reports that eCommerce growth, which slowed sharply as real life returned after the pandemic, has now returned to its longterm trend.

If you watch one video this month, check out this US start-up’s application of AI to wearable technology.

One of the rare European banks making a success of payments is Santander whose Getnet unit is now number two merchant acquirer in Latin America.

What??? Nearly 1% of the entire US GDP goes through Delta Airline’s American Express card, generating $5.5bn annual revenues for the airline.

Two slices of archive magic from the BBC. The Future of Credit Cards (1986) and the Future of Banking (1968).  

And finally

Accounting for inflation, this is spending a penny in an Irish toilet. JustTip is providing the attendant service. Spotted by Rónán Gallagher.

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Where to find me?

I’ll be at the PSE Merchant Acquiring Conference in London on 5 December and then at MPE 2024 in Berlin on 12-14 March.

Get in touch

Geoffrey Barraclough

TrueLayer claims open banking leadership in four markets but generated just £4m sales in 2022

TrueLayer, the generously funded open banking unicorn, indicated just how costly its expansion plans have been. According to documents posted at UK Companies House, Truelayer Group reported group operating losses widening to £61m in 2022 on revenues of just £4m. 

Founded by Franceso Simoneschi in 2016, TrueLayer is backed by a stellar rosta of investors including Stripe, Tiger Global and Anthemis. It has received funding of $272m in total (Crunchbase) with its $130m round in 2021 valuing the business at $1bn.

The London-based fintech is investing at pace to establish a large claim in the crowded market for open banking payments. Along with its competitors – Tink, Token, Volt, Yapily etc – the company aggregates connections to thousands of banks into a single API. This allows merchants to offer consumers the option to pay from almost any bank through a single connection with TrueLayer.  Clients include Cazoo, Coinbase and Revolut

Although TrueLayer is live 21 countries, it claims market leadership in four – UK, Ireland, Spain and France – and “significant share” in Germany and Netherlands. It has an EMI license in the UK and PI licence in in Dublin. 

Management highlight two major product launches. 

  • Variable Recurring Payments (VRP) – TrueLayer was first to market in the UK with recurring payment through its single open banking API as an alternative to direct debit and card on file. Merchants benefit from faster settlement. 
  • Identity data – Signup+ widens TrueLayer’s proposition beyond payment initiation by making bank-sourced identity data available through its API. This simplifies customer onboarding by removing the need for additional verification checks. I used it to sign-up for Plum and can report the customer experience was indeed seamless.

TrueLayer is growing – revenues were up 56% in 2022 and payment volume was 2.8x higher than the previous year – but total sales of £4.14m are modest for a business boasting “annualised total payment volume” of $35bn. As context, a specialist eCommerce merchant acquirer with similar processing volume would be making net revenue of $75m-$150m depending on its risk appetite.

This modest growth has come at considerable financial cost. Administrative expenses were up 88% to £63.4m driven by higher spend on employees – up 99% to £46.4m. Staff numbers ballooned to 434 at an average cost per staff member is £106K. Management trimmed its employee base by 10% at the end of 2022 with the CEO saying “we are now operating in a very different context and more challenging market conditions.”

TrueLayer’s operating loss rose from £31m in 2021 to £61m in 2022. Fortunately, the business is well financed and had £96m net cash at year end.

If shoppers do shift quickly from cards to open banking, the prize for API providers such as Truelayer could be significant. But the market is growing more slowly than many hoped and competition between the specialist players is reported to be ferocious. Consolidation is inevitable and likely to favour businesses, like TrueLayer, with wealthy and committed backers. 

Yapily results show slow pace of Open Banking growth

Financial results from Yapily show that the open banking market is taking off more slowly than many had hoped. Although Yapily is one of the leading API providers and reported 60% revenue growth in 2022, total sales were less than £3m, generating a modest return on the nearly $70m raised from VCs including Sapphire, Lakestar, HV and LocalGlobe.

European retail banks are obliged to offer APIs that authorised providers can use to access account information or generate account-to-account (A2A) payments. Yapily, founded in 2017 by Stefano Vaccino, a former Goldman Sachs exec, is one of a number of businesses formed to aggregate the APIs offered by thousands of individual banks into a single connection. Although this sounds like a winning proposition, competition is fierce and a number of other start-ups offer similar services. These include Truelayer, Token, Tink,, Nuapay, Volt and many more.

Yapily’s API connects with 2000 banks in 19 countries and, management claims, is accessed by over 3.500 software applications provided by its 500 customers. Yapily has a strong position in providing access to open banking payments for Fintechs, which often use its APIs to offer simple A2A transfers for their customers to top-up accounts. Yapily’s customer list includes PayhawkGuavapayPleo and Quickbooks. The links take you to mini case studies on the Yapily website.

Turnover in 2022 was £2.78m. 80% of sales were the UK, where Yapily is based, but European revenues more than doubled to £0.48m. Management says the positive result was driven “by increased demand as the business expanded into new regions” and stepped up its sales and marketing efforts. Yapily bought a German rival, FinAPI in May 2022 for an undisclosed sum. 

The modest increase in topline growth has been costly. Administrative expenses ballooned to £23.7m in 2022 from £9.5m the previous year as management spent heavily on “continued investment in product development, sales and marketing… and support functions as the company scales.” Notably, employee costs more than doubled to £14.6m. Yapily now has 158 staff, mainly in London, costing an average of £92K each. 

The team has been busy. Management highlighted a growing range of products, a more extensive network of connections to banks and other financial institutions, a 70% increase in customer numbers and a 4.5 times increase in payment volume. The actual payment volume was not disclosed.

The operating loss grew to £21.5m from £8.4m the previous year, reflecting the company’s “deliberate growth strategy” aimed at “seizing substantial market opportunities” in the emerging open banking market. Accumulated losses now stand at £33m.

Yapily had £18m cash at year end after taking an additional £10m investment. JP Morgan reportedly looked at taking a stake in the business but decided against

The open banking market is going to be big. The only question is when. And the open question for Yapily and its small army of competitors is whether they can afford to wait. 

GoCardless – strong revenue growth but losses widen

GoCardless, the London-based account-to-account payment specialist, has deposited its financial results for the year to June 2022, showing impressive revenue growth of 44% to £70.4m, but also widening operating losses of £61m. 

The company’s vision is to become “the world’s bank payment network,” and it aims to achieve this by offering account-to-account payments that can help merchants improve cash flow and reduce the headaches of chasing payments and managing conflicts between merchants and customers. These, it claims, are endemic in the card world.

GoCardless, which mainly offers direct debits and subscription payments, has expanded its core acceptance services to include additional products, such as “Success +,” which uses payment intelligence to increase the chances of a successful transaction, for example by retrying at specific times when the payee is more likely to have funds. It is also moving into open banking following the acquisition of Nordigen, a Latvian bank API aggregator.

For a payment type often thought of as cheap, GoCardless charges a premium price. The company’s standard pricing is 1% + £/€0.2 to a maximum of £/€4 or 2% + £/€0.2 for international transactions. Moreover, 37% of GoCardless’ revenue now comes from “committed” merchants who pay a monthly fee on top of transaction costs for additional features such as having their brand name appear on their customer’s bank statements.

Total payment volume rose 44% to £22.7bn, and revenue also grew 44% to £70.4m. GoCardless’ take rate is a very creditable 31bps, and its investors will be hoping that it can sustain the premium pricing as it enters new markets.

The company has opened an office in New York to supplement those already established in London, Paris, Munich, Melbourne, and San Francisco. Although global expansion is top of the priority list, the UK and Ireland still account for 80% of GoCardless’ revenue.

The total number of merchants grew 10% to 76,000, with both revenue and volume per merchant increasing 25% to £925 and £298.000, respectively. GoCardless has a wide range of clients from SMEs to large enterprises, including blue-chip names such as Tripadvisor, DocuSign, and the British Government.

The company charged £114m of administrative expenses for 2022, notably £74m for employees. The total staff count rose by 239 to 825 at an average cost of £106k per person. The main headcount increase was in operations, which includes “the increasingly complex compliance needs of a global business.” One example is the additional payment licence obtained in France to serve the EU.

Fraud and bad debt are not eliminated by account-to-account payments, and GoCardless holds £2.7m as merchant deposits where clients “operate in a sector with a very high failure or chargeback rates.” It also has provisions for £1.9m for failed payments and £3.8m for fraud losses, equivalent to 8% of turnover. Sensibly, GoCardless is trying to get its merchants to fund their share and has launched Protect+, its first anti-fraud product.

Total operating losses for the year were at £60.9m, and accumulated losses now stand at £171m. Despite the red ink, GoCardless is well-funded, having raised $306m in February 2022 in a round led by Pereira and Blackrock. To justify the $2.1bn valuation, GoCardless will need to deliver broad-based international expansion while maintaining high margins and negotiating the move to open banking.

Truelayer shows costs of open banking land grab

Truelayer, the generously funded open banking start-up, indicated just how costly its expansion plans have been. It reported operating losses of £30.1m in 2021, according to documents deposited at UK Companies House. 

The London-based fintech is investing at pace to establish a dominant position in the emerging market for open banking payments. Along with its competitors – Tink, Token, Yapily etc – the company aggregates connections to thousands of banks into a one API. Merchants can use this single connection to offer consumers the option to pay with bank transfers from most well known banks.  Clients include Cazoo and Revolut

If shoppers do shift quickly from cards to open banking, the prize for aggregators such as Truelayer could be significant. But costs may be higher and revenues lower than some commentators have suggested. 

There are a great many banks. Each has a slightly different API and aggregators require a very large and expensive product team to keep on top of all the changes and updates. And many markets have not yet agreed standards for basic features, such as refunds. This adds to the complexity. Importantly, as long as the API aggregators remain outside the money flow or not taking merchant risk, they will normally be restricted to charging per click rather than ad valorem. This means that achieving margins comparable to the merchant acquirers is going to be challenging. 

Whatever the future holds, Truelayer has made a fine start and claims to have 50% share of the emerging open banking payments market in UK, Ireland and Spain. The company claims 22% higher payment conversion than its competitors, saying that merchants report “on average one in three people choose to pay straight from their bank account through TrueLayer when presented with a choice.

The product strategy is to widen geographical reach and deepen functionality to include the features merchants have come used to expect with other payment methods. In 2022, Truelayer has established connectivity to banks in Austria, Belgium, Denmark, Finland and Portugal alongside a European HQ (with a payment institution licence) in Dublin. The company has launched variable recurring payments (open banking’s equivalent of direct debits) and also developed an out of box integration with WooCommerce.

Revenue increased 86% to £2.6m in 2021 on the back of a 7-fold increase in total payment volume.

Cost of sales increased to £1.3m, roughly in line with revenue. Gross margins ticked up 3ppt to 52%. 

Administration expenses ballooned to £33.7m “in line with the company’s commitment to growth… largely due to increased headcount.” During the course of 2021, staff numbers grew from 125 to 231 and are believed to have reached c.400 by August 2022. At this point,  CEO Francesco Simoneschi announced a 10% cut in the workforce saying that his firm now operates “in a very different context and more challenging market conditions.” To his credit, the co-founder put the employee communication on the company blog. 

Operating loss was £30.1m before £3.5m of tax credits. After a fair value adjustment to convertible loan notes issued in 2020, accumulated losses now stand at £103m. 

Fortunately, Truelayer is very well funded. $70m series D investment was secured in April 2021 and a further $130m in September 2021 from Tiger Global Management and Stripe. Acquisition by Stripe would seem a plausible exit.