⚠ Nobody Buys a Terminal for Its SoftwareModerate threat
StoneCo (STNE) — threat to the moat
StoneCo's own filing says the merchant is won on service differentiation; the integrated stack earns its keep in banking and credit, not at the counter.
StoneCo built its own gateway, its own processing, its own settlement and its own banking core, and integrating those properly is the reason a Stone merchant can see a sale, a deposit and a loan in one place rather than three.
The awkward question is how much of the merchant's decision that engineering actually wins. A shopkeeper choosing between terminals is comparing the rate, the settlement speed, and whether anyone answers the phone. The architecture behind all three is invisible to them. StoneCo's own description of its distribution is unusually honest about this: proximity channels with proprietary and franchised hubs, sold on service differentiation as the main driver1.
That is a defensible position and it is a different position from the one a technology multiple implies. Service differentiation is delivered by people, scales roughly linearly with cost, and can be matched by any competitor willing to spend the same money — which is precisely what a bank-owned acquirer with a national branch network is equipped to do.
Where the platform genuinely earns its keep is further up the stack. The reason StoneCo can underwrite a merchant's loan from that merchant's payment flow, or open a deposit account inside the same relationship, is that the systems are one system. Those advantages are real; they just belong to the banking and credit pages rather than to the terminal.
The falsifier is whether merchants who take the banking and credit products churn at a materially lower rate than merchants who take payments alone. If the difference is small, the integration is a cost saving rather than a moat.
- ReportedStoneCo describes its proximity channel as selling through proprietary and franchised hubs 'with service differentiation as the main driver'.StoneCo Ltd. Form 20-F for FY2025 (CIK 1745431) — active payment clients of 4,803.5 thousand at 31 December 2025, against 4,172.7 thousand in 2024 and 3,522.1 thousand in 2023; TPV of R$560.9 billion, against R$516.2 billion and R$438.3 billion; revenue of R$14,153.8 million and adjusted net income from continuing operations of R$2,477.2 million; more than 3.6 million banking active clients, the majority of whom are also payment clients; retail deposits of R$11,091.0 million against R$8,704.8 million and R$6,119.5 million; a credit portfolio of R$2,836 million with expected credit losses of R$389.7 million, against R$1,207.6 million and R$144.5 million a year earlier; clients divided into MSMBs (micro-merchants and SMBs) and Key Accounts, 'comprised of platform services and sub-acquirers'; StoneCo became in 2017 the first non-banking entity authorised by the Central Bank to operate as an Acquirer through a payments-institution licence, and is among the six largest players by total card volume per ABECS; distribution through proprietary and franchised hubs sold on 'service differentiation as the main driver', digital channels, and more than 500 Strategic Partners at December 2025; per the Central Bank, Pix's share of the total number of transactions rose from 1% in Q4 2020 to 52% in H1 2025 and its share of monetary volume from 1% to more than 26%; the filing warns that 'the concentration of our clients by geography and economic sector may increase our risk' and that the company experiences churn from business closures and account transfers; interest rates directly affect both revenue generation and cost of funds, most third-party funding being linked to the Brazilian interbank rate; StoneCo's own analysis notes that US MSMB take rates have been stable over five years despite penetration around 120% of consumption, and finds no indication of saturation-driven price reductions in Brazilian cities with low cash usage — FY2025 · publ. 2026 · source ↗