Did Wirecard ever matter? Reflections on the structure of the German e-commerce payment service provider market

Niklas Bartelt and Ulrich Hommel
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Niklas Bartelt: Lecturer, EBS University of Business & Law, Germany
Ulrich Hommel: Chair of Corporate Finance & Higher Education Finance, EBS University of Business & Law, Germany

Journal of Payments Strategy & Systems, 2021, vol. 15, issue 1, 67-78

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 (search for similar items in EconPapers)
JEL-codes: E5 G2 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:aza:jpss00:y:2021:v:15:i:1:p:67-78

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