January was a cruel month for the payments industry. Companies slashed jobs in the name of efficiency and profitability, proving that the payments world was not immune from a broader wave of tech industry cuts.
Spend management platform Brex cut 282 employees, roughly 20% of its workforce, on Jan. 24. Among those dismissed were software engineers, managers, and sales staff, according to a spreadsheet shared on LinkedIn by Brex’s former CTO. The layoffs, paired with some executive restructuring, were meant to help the San Francisco-based company become profitable this year.
Less than a week later, digital payments company PayPal said it planned to eliminate about 2,500 employees, or 9% of its staff. In a post on the company’s website, CEO Alex Chriss laid out his reasoning behind the cuts, but did not spell out details.
“We need to drive more focus and efficiency, deploy automation, and consolidate our technology to reduce complexity and duplication,” Chriss said in the release.
But moves to automate may introduce long-term risks, said Cliff Gray, principal with Gray Consulting Ventures. Companies like PayPal are “betting that systems are going to run without failure,” Gray said in a Thursday interview. “But when [systems] do fail, they fail spectacularly and [companies] don’t have the talent to minimize the damage and get these systems back up and running quickly.”
The same day as PayPal’s job cut news, digital payments company Block shed workers, too. The San Francisco-based company owns merchant business Square and peer-to-peer unit Cash App. Block had announced last November that it would cut 1,000 employees, about 8% of its workforce. The company did not specify how many cuts it made in January, according to a report by Bloomberg.
The workforce reductions aren’t likely to stop, according to Gray, who also works as a senior associate for The Strawhecker Group. “I guarantee you there's going to be more of this, even before summer I bet,” he said.
As for who’s next, he pointed to payment processing behemoths Fiserv and Fidelity National Information Services, known as FIS, as candidates for cuts. “I would be stunned if they didn’t have some layoffs,” Gray said.
