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Did Wirecard ever matter? Reflections on the structure of the German e-commerce payment service provider market
Journal of Payments Strategy & Systems,
15
(1),
67-78
(2021)
Abstract
The scandal-ridden collapse of Wirecard AG in June 2020 raises three important issues regarding the German e-commerce payment service provider (PSP) market. First, what do we know about the structure of the PSP market and, more specifically, its concentration when Wirecard was still ‘in the game’? Secondly, in the light of the evidence on market concentration, was the disruptive fallout following Wirecard’s demise based on realistic concerns? Finally, would linking company reporting to market data have allowed for a more precise gauging of Wirecard’s market relevance ex ante? To explore these questions, this paper draws on a data-driven market survey, expert interviews and confirmational reverse data engineering. The paper concludes that market power on the supply side of the market is not only limited but also sufficiently counterbalanced by market concentration on the buy side — among other factors. Simply put: Wirecard was not a systemically important PSP; indeed, it was not even a major one. The insights provided by this paper should invite further forensic analysis to better understand why many market observers got it wrong.
Keywords: payment service providers; PSP; digital payments; e-commerce payments; market structure; Wirecard AG
The full article is available to subscribers to the journal.
Author's Biography
Niklas Bartelt is an external lecturer at EBS University of Business & Law and senior adviser to DZ Bank AG. Prior to this, he was the founder and managing director of paydirekt. He has also served as the managing director responsible for transaction banking product management at DZ Bank AG. He started his career at Bain & Company, where he advised banks and private equity firms as a Senior Project Manager. Niklas has studied at WHU, EM Lyon, Cranfield University and the University of Michigan, Ann Arbor. He has a Diplom-Kaufmann (MBA equivalent) and a doctorate in business administration from WHU.
Ulrich Hommel is Full Professor of Finance at EBS University of Business & Law, where he also heads the Chair of Corporate Finance & Higher Education Finance. Ulrich holds a PhD in economics from the University of Michigan, Ann Arbor, and a Dr. habil in business administration from the WHU. His research interests include risk management, real option valuation, venture financing and corporate restructuring. Ulrich sits on a number of business school boards and is founding partner of XOLAS, a partnership consultancy advising business schools and universities.
