2021 was a wild year for initial public offerings (IPOs). Several well-known fintechs made their public debuts in 2021, including Coinbase Global, Robinhood Markets, marqeta, and other.
According to the auditing firm Ernst & Young, last year was the strongest year in the history of the IPO with over 2,388 transactions this year with a total value of 453 billion US dollars.
While experts believe the IPO markets will cool off over the next year, several private unicorns have still not made their public debuts. Three giant fintechs that I will watch through 2022 are Stripe, Plaid, and Chime. Each is worth over $ 10 billion in private.
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Stripe is a fintech that is bringing payments into the digital age. The company helps process payments and credit card transactions for businesses on the Internet.
Stripe is used by millions of companies in 120 countries around the world. The companies that use its payment technology include Amazon, alphabet‘s Google, Shopify, and Spotifyto name a few. It calls itself the “Internet Payment Infrastructure” and uses an -plication programming interface ( -I) to do this.
With the introduction of payments in the digital age, companies can process funds quickly and securely. For example, Stripe can protect businesses from fraudulent transactions by checking customer account balances before completing a transaction. It’s just one of many reasons businesses turn to Stripe for their payment solution. Stripe makes money in a number of different ways, but most of its revenue comes from payment processing fees – which averages around 3%.
In March 2021, Stripe raised over $ 600 million in funding that the company invested to expand its European reach. The fundraising round also earned the company a valuation of $ 95 billion, making it the largest private fintech in the world.
Investors are eagerly awaiting Stripe’s public debut. Bloomberg reported in September that the payment company was in talks with investment banks about an IPO in early 2022. However, co-founder John Collison told CNBC in November that “we are very fortunate as a private company”. Either way, investors are eagerly awaiting the Stripe IPO – which will likely be one of the largest IPOs ever to complete.
Plaid is another fintech that brings payments into the modern age. While Stripe focuses on making transactions easier for businesses, Plaid makes it easy for customers to connect their bank account to various financial -ps. For example if you have your bank account with. associate PayPalTo send money quickly to Venmo, Chime Financial, or Robinhood, you are likely using Plaid’s technology.
Plaid makes it easy for users to make transfers simply by logging into their bank account through the -p they are using. In the past, customers would enter information like their bank account number and routing number and then wait days before sending funds.
Plaid is free to those who use it. So how does it make money? Plaid makes money from the companies it connects customers with. For example, if you’ve linked your bank account to Coinbase, Coinbase will pay a fee to Plaid as this has helped make this transfer easier.
Plaid’s final funding round closed in -ril 2021 with a total volume of $ 600 million. That round of funding gave Plaid a valuation of $ 10 billion to $ 15 billion.
Like Stripe, Plaid is in no hurry to go public. A failed acquisition in 2020 of Visa due to antitrust concerns indicates great interest in the company. A company spokesman told Barrons in -ril that “with $ 600 million, [Plaid] can be independent for a long time. ”However, it can’t be bad for the company to strike while the iron is hot, and that time could be 2022.
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3. Chime finances
Chime Financial is a company that aims to provide banking services to all types of clients, focusing on those underserved by traditional banks. Chime works with regional banks to develop financial products for customers, creating a competitive market with low-cost options for ordinary Americans.
The company focuses on underserved markets and promotes “free” banking for its customers. There are no overdraft fees, monthly service fees, or minimum account balance requirements. Believing that “daily banking and payment services should be helpful, simple, and free,” Chime offers 60,000 toll-free ATMs across the country in addition to its toll-free banking model.
Every time customers swipe a Visa or other card, businesses must pay these businesses a transaction fee of between 0.5% and 5%. These are the fees that Chime makes a living with. The company works with Visa and makes money off part of the transaction fees Visa charges merchants when customers use their Chime debit card.
In August 2021, Chime raised $ 750 million in funding, giving the fintech a $ 25 billion valuation. In this rating, Chime is the third most valuable private fintech worldwide, behind Stripe and the Swedish company Klarna.