Posted by (S = Qr) Philip > 2019-03-12 06:29 | Report Abuse

Ghl is quite similar to stoneco when it first started, I used ghl to analyze my understanding of STNE. If you want to use growth triggers, you can see the next challenges facing ghl that stoneco has met and resolved to advance to the next stage.

In terms of business, ghl is stuck at the EDC terminal sales stage. They have a big market in Malaysia, with 200 sales staff selling EDC terminal. However.... They are only doing the front end, and selling back to back the credit "debt assets" to acquiring banks. Stoneco has managed to get the bank negara approval to become an acquiring bank itself. So it makes the big 18% a year that credit card companies make on debt on top of it's assets and going around acquiring merchants microtransactions. Basically it's a specialized bank that only does this business, handling small sme's.

In terms of growth, stone is adding customers at 100% growth per year. Ghl is already a big market in Malaysia with 200 million transactional revenue on 3.6 billion sales, but with very slow growth uptake in other countries.
Stone does this because it does the entire system ( POS, accounting, EDC) via cloud and into your smartphone and supported by a huge "mlm" team that goes around helping not so internet savvy people as well as selling those systems to new business owners. Ghl only sticks to selling EDC terminal only that can link to a POS system that you need to buy a computer/cash register for. And not very good support, according to online reviews comparing other rival suppliers.

In terms of market size, South East Asia is very difficult to do business in because of geography and culture. Brazil is one big landmass. Stoneco is targeting 8.8 million small business owners that can't even get EDC terminal approvals due to risk issues. It still has a long way to go. Ghl on the other hand cannot simply give out EDC terminal to every Tom dick and Harry out there, they need to get big bank approval first. Stoneco is it's own "bank".

If stoneco was to replicate it's business here in SEA, I think ghl and others will go out of business pretty fast.

Posted by (S = Qr) Philip > 2019-03-12 06:41 | Report Abuse

So you really need to understand in terms of ecosystem. Alipay does not handle debt, only cash. It simplifies payment method. you still need to link your alipay account to a credit card if you want to do... credit.Ghl is having problems integrating all of these because of its back end.

Stoneco also handles debt handling directly, internally (visa, MasterCard, amex) which is debt fueled, as it is a "bank". Which is a big game changer. I think it will stay highly relevant in the future. Ghl probably not.

If alipay can process debt directly with users like you and me, it will either go bankrupt really fast, or be there biggest China around. I doubt this will be possible, it's hard to track down non-paying lenders. Banks got a full credit compliance team, plus Dog the bounty Hunter to chase you down.

Posted by qqq3 > 2019-03-12 09:14 | Report Abuse

Thank you. Now I understand.

Posted by teoct > 2019-03-12 10:42 | Report Abuse

https://tefd.theedgemarkets.com/2019/TEP/20190312tgj9n2.pdf today TheEdge Financial Daily page 15 has an article on Alipay and Wechat pay. Apparently they do loan out money to consumer.