PayPal agrees $2.2 billion deal for iZettle

Another competitor bites the dust. How is real competition expected to thrive when the big fish keep swallowing the little ones? 

Good question but, as long as the small fish is VC-funded, its raison d'être is to get swallowed by the big fish. As I highlighted in a slightly different but still relevant context elsewhere on Finextra, consumers are naive if they expect the fintech movement to make any difference in traditional FI's behavior.

Right so Ketharaman! Here in the EU the polititicians and the central bank have strived to limit the US large card schemes companies dominance on payments and worked to open ip for more competition in the bank sector through the PSD2 and by embracing fintech startup companies and the concept of open banking. But as you say a VC company objective is to be sold to the highest bidder, often a global incumbent. So the end game will be more concentration to large multinational players controlled from outside of Europe.

That is a heck of lot of dollars to pay for a small fish that has a "small merchant base of half a million clients" which are all little fish themselves.

@FinextraMember: From time to time, we hear many pundits calling Europe a digital colony of USA. In the aftermath of Walmart's acquisition of Flipkart in India, they've been giving their unsolicited advice on how India can / should avoid becoming another US digital colony. Time will tell whether OB / PSD2 will be able to reverse the trend in Europe.

@James Piggot: 

Joseph Heller wrote decades ago in his bestseller Picture This, “‘Aristotle Contemplating The Bust of Homer’ is the most valuable painting because it’s the most costly painting; it’s the most costly painting because it’s the most valuable painting”. He was referring to the Rembrandt masterpiece that was the first painting in the world to sell for more than a million dollars.

Bottomline is, valuation is entirely between buyer and seller. As long as somebody is willing to buy shares of a startup at a certain valuation, it’s immaterial what third parties think about the valuation. That said, they say, valuation is always based on future expectations undergirded by past performance and not past performance itself. Also, 0.5M merchants is not small.