PayPal May Have a New Threat in Lydia

February 20, 2018         By: Steven Anderson

I’m still at least a little amazed that mobile payments firms are continuing to enter the market. I would have thought saturation was a thing by now, with so many firms already in play. That’s just not the case, though, as recent startup Lydia has already taken the French mobile payments market by storm and is eyeing a worldwide expansion as we speak.

To that end, Lydia recently raised a reported 13 million euros—about $16.17 million US as of this writing—in a funding round that featured several existing investors returning to the well. Investors ranging from leader CNP Assurances to New Alpha AM and Groupe Duval were all in play.

The new investment isn’t particularly surprising; Lydia is currently the mobile payment leader in France, at last report, which means the new investment is backing a market leader. Lydia got its start in a familiar and often-overlooked sector of  mobile payments: peer-to-peer. Allowing new users access to free and instant transactions between friends, that was enough to get the ball rolling. It subsequently expanded to stores and other payments.

With Lydia processing approximately a million transactions a month with a combined average value of 25 million euros—about $31.12 million US—and adding about 2,000 new users every day, it’s clear that Lydia’s got the chops to take on the biggest. Lydia recently spread to Ireland, Portugal, Spain, and the UK, and plans to step into Austria and Germany. That new funding will go to new hires and further expansion from there.

There’s no doubt that Lydia’s got a serious user base behind it, and its expansion into Europe is a natural, and smart, idea. The notion that it could compete with the already widely-available PayPal (not to mention its immediate peer-to-peer equivalent Venmo) is a little less easy to follow. PayPal is already in over 200 markets and has been there for some time, in many cases, so for Lydia to break the inertia PayPal already has would take a whole lot of doing.

It’s not immediately clear how Lydia has the competitive edge to get people out of the PayPal camp who are already there. However, Lydia’s come a long way in a short time and may well pose a competitive threat with a new edge.