Payment Data Could Become Evidence of Abortion, Now Illegal in Some States

Financial companies collect a lot of payment data from customers. Prosecutors could subpoena those records for evidence of abortion, legal experts say.

#abortion, #banking-and-financial-institutions, #bernard-tara-siegel, #computers-and-the-internet, #corporations, #credit-cards, #debit-cards, #fourth-amendment-us-constitution, #law-and-legislation, #lieber-ron, #mobile-applications, #national-advocates-for-pregnant-women, #personal-finances, #pregnancy-and-childbirth, #privacy, #subpoenas, #women-and-girls

What the Fed’s Rate Hike Means for Credit Cards and Student Loans

Consumers can expect to pay more for some of life’s most common kinds of borrowing.

#automobile-financing, #credit-cards, #interest-rates, #prices-fares-fees-and-rates, #student-loans

When Financial Cheating Hurts Your Retirement Plan

Financial infidelity destroys trust. It can deliver a serious blow to your post-career planning, too.

#401k-403b-and-457-plans, #content-type-service, #credit-and-debt, #credit-cards, #divorce-separations-and-annulments, #marriages, #personal-bankruptcies, #personal-finances, #retirement

The Best Time to Use Your Airline Points and Miles

If you’re thinking of traveling and you’ve got points or miles sitting in airline and credit card accounts, the time to cash in may have arrived. Here’s what you need to know.

#airlines-and-airplanes, #credit-cards, #customer-loyalty-programs, #frequent-flier-programs, #travel-and-vacations

Talking Points With … Who Else? The Points Guy

Brian Kelly has been helping travelers and other consumers navigate the increasingly complicated loyalty universe for over a decade. Here’s what he has to say about playing the points game.

#brian-kelly, #budget-travel, #business-travel, #credit-cards, #customer-loyalty-programs, #frequent-flier-programs, #the-points-guy-llc, #travel-and-vacations

Amazon halts plan to ban Visa credit cards in UK

Amazon halts plan to ban Visa credit cards in UK

Enlarge (credit: Leon Neal | Getty Images)

Amazon has halted a plan to ban customers using UK-issued Visa credit cards from this week, as the companies work on a “potential solution” to a rancorous dispute that threatened to severely disrupt shoppers.

The world’s largest online retailer announced the proposed ban in November, citing the “high fees Visa charges for processing credit card transactions,” and advised customers to find new payment methods.

However, on Monday Amazon said that “the expected change regarding the use of Visa credit cards on Amazon.co.uk will no longer take place on January 19.” The group added that it was “working closely with Visa on a potential solution that will enable customers to continue using their Visa credit cards on Amazon.co.uk.”

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#amazon, #credit-cards, #fees, #policy, #visa

Robinhood Hits College Campuses, Where Credit Card Companies Fear to Tread

The company plans to hit up college coffee shops to spread the word about its services. When credit card companies did it a generation ago, Congress got involved.

#colleges-and-universities, #content-type-service, #credit-cards, #personal-finances, #robinhood-financial-llc

Robinhood Hits Campus, Where Credit Card Companies Fear to Tread

The company plans to hit up college coffee shops to spread the word about its services. When credit card companies did it a generation ago, Congress got involved.

#colleges-and-universities, #content-type-service, #credit-cards, #personal-finances, #robinhood-financial-llc

Bilt Rewards banks $60M growth on a $350M valuation to advance credit card benefits for renters

Bilt Rewards, a loyalty program for property renters to earn points on rent with no fees and build a path toward homeownership, announced Tuesday a round of $60 million in growth funding that values the company at $350 million.

The investment comes from Wells Fargo and Mastercard and a group of the nation’s largest real estate owners, including The Blackstone Group, AvalonBay Communities, Douglas Elliman, Equity Residential, GID-Windsor Communities, LENx, The Moinian Group, Morgan Properties, Starwood Capital Group and Related.

Bilt launched back in June out of Kairos, the startup studio led by Ankur Jain, focused on enabling over 109 million renters in the U.S. to earn points from paying their rent every month — typically someone’s largest monthly expense. Since then, the program was rolled out across over 2 million rental units, Jain told TechCrunch.

“We are the first and only alliance of the major property owners to create this kind of program and already have 15 of the top 20 owners involved,” he added. “We are also the only co-branded card to offer points on rent.”

Greg Bates, GID president and CEO, said his company has 130 assets spread across the top 20 markets and manages 40,000 apartment units. He learned about Bilt from a colleague who attended a proptech conference where Jain demoed the Bilt card.

For as long as Bates has been in the real estate industry, about 20 years or so, renters have wanted to pay rent with a credit card for convenience and to earn loyalty points. However, that was cost-prohibitive in terms of the surcharges needed to be added to the rental rate — until Bilt, he said. The card “is incredibly easy to use” and integrates into property owners’ online payment systems.

“Bilt has transformed the value proposition for residents that want to use a credit card and for landlords that want to accept them,” Bates added. “There will always be barriers to entry for products like this, but Bilt spent time with Mastercard and Wells Fargo to develop this unique product which will be a competition differentiator for a few years to come.”

In addition to the new funding, Bilt is also announcing new benefits for its loyalty members and upgraded offerings for the Bilt Mastercard, including the ability to earn up to 50,000 points on rent per year and unlimited points using the credit card.

For members, Bilt will pay interest in the form of points for a member’s account each month based on their average daily points balance over the 30-day period, and offer a concierge service for members choosing to redeem their Bilt points toward a home down payment. In addition, members can earn bonus points on top of points used by landlords on new leases and renewals.

Bilt worked with regulators, as well as Fannie Mae and the Department of Housing and Urban Development, to gain approval for using rewards points toward a mortgage. Members can also report their rent payments to the credit bureaus at no cost, which can help build credit history for millions of young renters.

Meanwhile, the company’s new “0-1-2-3” point earning structure for Bilt Mastercard holders provides no annual fee, 1x points on rent payments, 2x points on travel, 3x points on dining and 1x points on all other purchases.

This is the company’s first major external financing round and will be used to expand its real estate and loyalty partner network, grow its distribution channels and make its platform credit card more widely available to the public. Jain estimates Bilt is seeing 20% enrollment across residents.

As more renters move to homeownership over time, Bilt has plans to leverage this potential larger business to eventually become a mortgage provider for them.

“Renting is something people do for a while, and the core business has a massive scale opportunity, especially in the demographic under 35 years old, who tend to be up-and-coming professionals,” Jain added. “This is a unique target market, and Bilt will grow with them as they build their path to homeownership.”

 

#ankur-jain, #avalonbay-communities, #bilt, #credit-cards, #enterprise, #funding, #gid-windsor-communities, #greg-bates, #landlord, #loyalty-program, #mastercard, #money, #ownership, #payments, #property-technology, #real-estate, #recent-funding, #startups, #tc, #the-blackstone-group, #wells-fargo

MaxRewards banks $3M to reveal best payment methods that reap the most rewards

When Anik Khan graduated from college, his first job was working on credit cards and business expenses at Accenture. There, he found that someone could bring in a couple of thousand dollars just by having the right credit cards and following the rewards and promotions.

It was back in 2017 when he and David Gao got the idea for his company MaxRewards, a digital wallet app that manages credit cards and automatically activates benefits like rewards, cashback offers and monthly credits. It also makes recommendations at the point of purchase on which card would yield the best reward for that purchase.

Going after the some 83% of Americans that have a credit card, the app version was officially launched in 2019, and now the Atlanta-based company is announcing a $3 million seed round co-led by Dundee Venture Capital and Calano Ventures. Also backing the company are Techstars, Fintech Ventures Fund, Service Provider Capital and Fleetcor president Nick Izquierdo.

Tracking his own credit cards manually prior to MaxRewards, Khan recalled in one year, getting $16,000 in rewards. However, utilizing those benefits was time-consuming and difficult, because the rewards and savings aren’t always made evident by the credit card companies.

“Other companies have tried to do something similar, but the issue is you don’t have the reward information or the offers,” Khan told TechCrunch. “If you were to aggregate this information, you still would have to activate all of these things and use them before they expired.”

Users connect their accounts and when they make a purchase, their location is cross-referenced with the merchant and an algorithm is applied to tell the user which card to use. The average app user has six credit cards.

MaxRewards is free to download and use, and the majority of the app’s functionalities are free. Users who want additional features, like the auto activation or rewards, can join MaxRewards Gold and are given the opportunity to choose their own monthly price — the average is over $25 per month — based on the value they expect to gain, Khan said.

MaxRewards offers and benefits. Image Credits: MaxRewards

Ron Watson, partner at Dundee, said his firm invests in seed-stage companies between the coasts and is interested in consumer and e-commerce companies. Watson said he was impressed with what MaxRewards has been able to do with a team of three. He also relates to the company’s mission, having grown up in a lower, middle-class family that did not frequently go on vacations.

When he got his first job and was suddenly flying everywhere, he recalls building up so many rewards to the point where he was able to go on a vacation to Hawaii and only spend maybe $100, he said.

“I used to put my points into a spreadsheet, but as I got older and had kids, I realized how hard it was for the average person to do that and how important it is to have automation,” Watson said. “I downloaded the app, and on the first day, saved $20.”

The company is often compared to NerdWallet or Mint, but in terms of functionality, Khan said he feels MaxRewards is unique due to its credit card system connectors. Rather than rely on third-party aggregators to discover the rewards, MaxRewards leverages its own proprietary connectors to card systems.

There are hundreds of thousands of offers to be discovered, and consumers are asking for even more features, so Khan decided it was time to go after seed funding. He had raised a small seed, about $200,000, from his time at Techstars, but the new funding will enable him to add to his team of three people. He expects to be at 20 by the end of the year. Khan also wants to accelerate its user acquisition, product improvement and compliance.

Next up, the company is going to automate rewards and savings across additional platforms like debit cards, payment apps and cashback apps, as well as create browser extensions and a web app. Khan also wants to do more on the education side with regard to using credit cards in a smart manner.

Arron Solano, managing partner at Calano, met Khan through Techstars and said he is an advocate for using credit cards in the right way. His firm was looking for a company like MaxRewards.

“During our first call, I remember telling my partner that Anik was a bulldog who knew what he was talking about, especially at that stage,” Solano added. “He had strong team members, his vision lined up well and that checked off a massive box for us. He energized us and showed he could find a market with insanely high ‘super users.’ ”

#anik-khan, #apps, #arron-solano, #calano-ventures, #credit-cards, #david-gao, #debit-card, #dundee-venture-capital, #ecommerce, #financial-services, #fintech-ventures-fund, #funding, #loyalty-program, #maxrewards, #mobile, #nick-izquierdo, #payments, #recent-funding, #ron-watson, #service-provider-capital, #startups, #tc, #techstars, #web-app

Indian fintech Slice launches $27 credit limit cards to tap 200 million users

Even as there are hundreds of millions of Indians who have bank accounts, only about 30 million of them have credit cards. The adoption rate of the plastic card has largely remained stagnant in the South Asian nation for the last few years.

The relatively young credit-rating system in India covers only a tiny fraction of the nation’s population. And banks neither have sophisticated underwriting systems nor the risk appetite to make any attempts to move the needle.

Slice, a Bangalore-based startup, believes it has found the solution. The startup, which has years of experience in issuing its cards to young professionals with no traditional jobs, said on Wednesday it’s launching a card with 2,000 Indian rupees ($27) as the default limit to tap the nation’s potential addressable market of 200 million individuals.

Rajan Bajaj, founder and chief executive of Slice, said the startup’s new credit limit card — considerably lower than industry’s lowest of about $270 — is aimed at those who don’t have a great credit score — or any score — and slowly help them build it.

The startup, which has been lately disbursing as many as 100,000 new super cards — its marquee offering — to users each month, is not charging any joining fee or annual fee with its new card and is offering the same benefits as its super card.

Bajaj said the startup is able to offer this card to users because it has spent years building its own credit underwriting system that supports this.

“In the last few years, we have actively invested in building a strong risk infrastructure by leveraging data science. Without robust risk management capabilities, it’s impossible to scale such a business and make such a truly inclusive product. But once the capability is built, no one can take the growth away from you. Currently, with a 50% m-o-m growth, our NPA is still less than 2%, a validation of our superior credit underwriting capabilities.”

Rajan said the startup arrived at the $27 figure because it believes this amount “still allows users to make meaningful transactions,” adding that by properly utilizing this limit and paying on time, users can instantly get approved for higher limits.

“We are confident this will encourage users to provide us with extra information that we need to increase their credit limit,” he told TechCrunch in an interview.

The startup, which raised $20 million in a financing round two months ago, is hoping to issue about 1 million of these new cards to users by the end of March next year.

It may raise more, soon. Investors are chasing the startup to finance a new round of about $100 million at a significantly higher valuation than that of its previous round. Rajan declined to comment on fundraise talks.

#asia, #credit-card, #credit-cards, #finance, #india, #payments, #slice

Airport Lounges Reopening: What Travelers Should Know

The majority of airport lounges serving international passengers remain closed, but domestic locations are reopening — offering varying experiences, that is. Here’s what air travelers need to know.

#airlines-and-airplanes, #airports, #alaska-airlines, #american-express-company, #american-airlines, #british-airways-plc, #capital-one-financial-corporation, #coronavirus-reopenings, #credit-cards, #delta-air-lines-inc, #quarantine-life-and-culture, #swissport-international-ltd, #travel-and-vacations

The next generation of global payments: Afterpay + Square

Sunday was a big day in fintech: Afterpay has agreed to merge with Square. This agreement sets two of the most admired financial technology companies in recent history on a path to becoming one.

Afterpay and Square have the potential to build one of the world’s most important payments networks. Square has built a very significant merchant payment network, and, via Cash App, a thriving high-growth consumer payment service. However, these two lines of business have historically not been integrated. Together, Square and Afterpay will be able to weave all of these services together into a single integrated experience.

Afterpay and Cash App each have double-digit millions of consumers, and Square’s seller ecosystem and Afterpay’s merchant network both record double-digit billions of payment volume per year. From the offline register and the online checkout flow to sending money in just a few taps, Square and Afterpay will tell a complete story of next-generation economic empowerment.

As Afterpay’s only institutional venture investor, I wanted to share some perspective on how we got here and what this merger means for the future of consumer finance and the payments industry.

Afterpay and Square have the potential to build one of the world’s most important payments networks.

Critical innovations in fintech

Every five to 10 years, the global payments industry undergoes a critical innovation cycle that determines the winners and losers for the next several decades. The last major transition was the shift to NFC-based mobile payments, which I wrote about in 2015. The major mobile OS vendors (Apple and Google) cemented their position in the global payments stack by deftly bridging the needs of the networks (Visa, Mastercard, etc.) and consumers by way of the mobile devices in their pockets.

Afterpay sparked the latest critical innovation cycle. Conceived in a living room in Sydney by a millennial, Nick Molnar, for millennials, Afterpay had a key insight: Millennials don’t like credit.

Millennials came of age during the global mortgage crisis of 2008. As young adults, they watched their friends and family lose their homes by overextending on mortgage debt, bolstering their already lower trust for banks. They also have record levels of student debt. Therefore, it’s no surprise that millennials (and Gen Z right behind them) strongly prefer debit cards over credit cards.

But it’s one thing to recognize the paradigm shift and quite another to do something about it. Nick Molnar and Anthony Eisen did something, ultimately building one of the fastest-growing payments startups in history on their core product: Buy now, pay later … and never any interest.

Afterpay’s product is simple. If you have $100 in your cart and choose to pay with Afterpay, it will charge your bank card (typically a debit card) $25 every two weeks in four installments. No interest, no revolving debt and no fees with on-time payments. For the millennial consumer, this meant they could get the primary benefit of a credit card (the ability to pay later) with their debit card, without the need to worry about all the bad things that come with credit cards — high interest rates and revolving debt.

All upside, no downside. Who could resist? For the early merchants, virtually all of whom relied on millennials as their key growth segment, they got a fair trade: Pay a small fee above payment processing to Afterpay, get significantly higher average order values and conversions to purchase. It was a win-win proposition and, with lots of execution, a new payment network was born.

The rise of Afterpay

Image Credits: Matrix Partners

Imitation is the greatest form of flattery

Afterpay went somewhat unnoticed outside Australia in 2016 and 2017, but once it came to the U.S. in 2018 and built a business there that broke $100 million net revenues in only its second year, it got attention.

Klarna, which had struggled with product-market fit in the U.S., pivoted their business to emulate Afterpay. And Affirm, which had always been about traditional credit — generating a significant portion of their revenue from consumer interest — also noticed and introduced their own BNPL offering. Then came PayPal with “Pay in 4,” and just a few weeks ago, there has been news that Apple is expected to enter the space.

Afterpay created a global phenomenon that has now become a category embraced by mainstream players across the industry — a category that is on track to take a meaningful share of global retail payments over the next 10 years.

Afterpay stands apart. It has always been the BNPL leader by virtually every measure, and it has done it by staying true to their customers’ needs. The company is great at understanding the millennial and Gen Z consumer. It’s evident in the voice, tone and lifestyle brand you experience as an Afterpay user, and in the merchant network it continues to build strategically. It’s also evident in the simple fact that it doesn’t try to cross-sell users revolving debt products.

Most importantly, it’s evident in the usage metrics relative to competition. This is a product that people love, use and have come to rely on, all with better, fairer terms than were ever available to them than with traditional consumer credit.

Consumer loyalty and frequency drives powerful network effect, securing the lifetime value of a consumer

Image Credits: Afterpay H1 FY21 results presentation

Square + Afterpay: The perfect fit

I’ve been building payment companies for over 15 years now, initially in the early days of PayPal and more recently as a venture investor at Matrix Partners. I’ve never seen a combination that has such potential to deliver extraordinary value to consumers and merchants. Even more so than eBay + PayPal.

Beyond the clear product and network complementarity, what’s most exciting to me and my partners is the alignment of values and culture. Square and Afterpay share a vision of a future with more opportunity and fewer economic hurdles for all. As they build toward that future together, I’m confident that this combination is a winner. Square and Afterpay together will become the world’s next generation payment provider.

#afterpay, #column, #consumer-finance, #credit-cards, #cryptocurrencies, #debit-card, #finance, #financial-services, #financial-technology, #fintech, #klarna, #ma, #matrix-partners, #mobile-payments, #opinion, #payment-processing, #payments, #square, #startups, #tc

Ramp adds merchant ‘blocking’ to corporate credit card

Ask any employee and they’ll tell you one of their least favorite things to do is file expenses. And for companies, the process of managing corporate spend is one of their biggest challenges.

Corporate credit cards help ease that pain, so it’s no surprise that the competition between startups in the space is heating up by the day. 

One of the fastest growing players in the space is Ramp, a fintech company that earlier this year secured a $150 million debt facility with Goldman Sachs after having raised a $30 million Series B in late December 2020.

Today, the New York-based company is announcing a new feature that it says will give its corporate customers greater control and flexibility over the way their cards are used. Specifically, Ramp said it now offers its customers the option to approve or block merchants on the cards they offer to their employees.

In an exclusive interview with TechCrunch, Ramp co-founder and CEO Eric Glyman said the move was in response to customer demand.

“This was one of our most requested features, especially from companies with over 100 employees,” he told TechCrunch. “They said, ‘I can block a spam call. It’s crazy I can’t do this with my credit card.’ ”

Image Credits: Ramp

With the new feature, Ramp says companies “have complete control” over how their employees use their corporate cards, down to the vendor level. It allows companies to outline specifically who employees can spend with, which vendors can be charged on what card and how much they can charge. 

So, why is this a big deal? Glyman said this means that merchant-specific cards greatly reduce the risk from stolen or compromised cards. It also helps keep employees from inflating expenses or filing false reimbursement claims.

“This gives security and control back to finance teams in a way that was never before possible,” he said.

It also helps companies in their quest to save money by using corporate credit cards in the first place, Glyman added.

“For example, they can restrict spending to businesses or companies that they have discounts or preferential pricing with,” he said. “It’s another layer of enforcement for finance teams.”

The process was not an easy one since understanding and clustering unique identifiers to be able to identify merchants was “technically complex,” according to Glyman.

For its part, Ramp counts “thousands” of businesses as customers, with well into the tens of thousands individuals using its cards.

“We’re powering into 9 figures monthly and over $1 billion in spend,” Glyman said.

The company must be doing something right.

Since raising the credit line earlier this year, Ramp has seen continued growth, more than doubling volume over the past three months.

While Glyman declined to reveal specific revenue figures, he said Ramp grew by over 6,000% in 2020, compared to the year prior and has grown over 1,000 over the past 12 months. Customers are typically fast-growing startups as well as small businesses. Some of its more well-known startup customers include Ro, Sleep Eight, ClickUp, Marqeta, Candid, Better, Truebill and Nuggs.

While Ramp makes money mostly by interchange fees, Glyman said the two-year-old startup thinks of itself as a SaaS operator.

“Our long-term strategy to develop great software,” he said.

#articles, #business-models, #credit-cards, #economy, #entrepreneurship, #eric-glyman, #finance, #financial-technology, #fintech, #goldman-sachs, #marqeta, #money, #new-york, #payments, #ramp, #small-business, #smart-card, #startup, #startup-company, #tc

Fintech all-star Nubank raises a $750M mega round

In 2013, Colombian businessman David Velez decided to reinvent the Brazilian banking system. He didn’t speak Portuguese, nor was he an engineer or a banker, but he did have the conviction that the system was broken and that he could fix it. And as a former Sequoia VC, he also had access to capital.

His gut instinct and market analysis were right. Today, Nubank announced a $750 million extension to its Series G (which rang in at $400 million this past January), bringing the round to a total of $1.15 billion and their valuation to $30 billion — $5 billion more than when we covered them in January.

The extension funding was led by Berkshire Hathaway, which put in $500 million, and a number of other investors.

Velez and his team decided now was a good time to raise again, because, “We saw a great opportunity in terms of growth rate and we’re very tiny when compared to the incumbents,” he told TechCrunch.”

Nubank is the biggest digital bank in the world by number of customers: 40 million. The company started as a tech company in Brazil that offered only a fee-free credit card with a line of credit of R$50 (about USD$10). 

It now offers a variety of financial products, including a digital bank account, a debit card, insurance, P2P payment via Pix (the Brazilian equivalent of Zelle), loans, rewards, life insurance and an account and credit card for small business owners. 

Nubank serves unbanked or underserviced citizens in Brazil — about 30% of the population — and this approach can be extremely profitable because there are many more clients available.

The banking system in Brazil is one of the few bureaucracies in the country that is actually quite skillful, but the customer service remains unbearable, and banks charge exorbitant fees for any little transaction. 

Traditionally, the banking industry has been dominated by five major traditional banks: Itaú Unibanco, Banco do Brasil, Bradesco, Santander and Caixa Economica Federal. 

While Brazil remains Nubank’s primary market, the company also offers services in Colombia and Mexico (services launched in Mexico in 2018). The company still only offers the credit card in both countries.

“The momentum we’re seeing in Mexico is terrific. Our Mexican credit card net promoter score (NPS) is 93, which is the highest we’ve had in Nubank history. In Brazil the highest we’ve had was 88,” Velez said.

The company has been on a hiring spree in the last few months, and brought on two heavyweight executives. Matt Swann replaced Ed Wible (the original CTO and co-founder). Wible continues to be an important player in the company, but more in a software developer capacity. Swann previously served as CTO at Bookings.com and StubHub, and as CIO of the Global Consumer Bank at Citi, so he brings years of experience of scaling tech businesses, which is what Nubank is focused on now, though Velez wouldn’t confirm which countries are next.

The other major hire, Arturo Nunez, fills the new role of chief marketing officer. Nunez was head of marketing for Apple Latin America, amongst other roles with Nike and the NBA. 

It may sound a little odd for a tech company not to have had a head of marketing, but Nubank takes pride in having a $0 cost of acquisition (CAC). Instead of spending money on marketing, they spend it on customer service and then rely on word of mouth to get the word out.

Since we last spoke with Velez in January regarding the $400 million Series G, the company went from having 34 million customers to now having 40 million in a span of roughly 6 months. The funds will be used to grow the business, including hiring more people.

“We’ve seen the entire market go digital, especially people who never thought they would,” Velez said. “There is really now an avalanche of all backgrounds [of people] who are getting into digital banking.”

#banking, #berkshire-hathaway, #bradesco, #brazil, #colombia, #credit-cards, #cto, #david-velez, #digital-banking, #engineer, #finance, #financial-services, #funding, #itau-unibanco, #life-insurance, #mexico, #nubank, #p2p, #santander, #tc

Rising Debt, Falling Income: How to Dig Out

More Americans over age 55 are carrying debt loads, and their nonmortgage debt grew significantly during the pandemic.

#content-type-service, #credit-and-debt, #credit-cards, #elderly, #finances, #personal-bankruptcies, #personal-finances, #quarantine-life-and-culture, #retirement

A Smarter App Is Watching Your Wallet

As artificial intelligence evolves, personal finance programs are working to offer you, and your budget, tailored advice.

#artificial-intelligence, #banking-and-financial-institutions, #budgets-and-budgeting, #content-type-service, #credit-cards, #mobile-commerce-and-payments, #personal-finances, #savings

Stori raises $32.5M in a Lightspeed-led Series B to build Mexico’s credit card for the masses

While credit cards are commonplace in the United States, they are far less ubiquitous in many other countries, particularly those in Latin America. In Mexico in particular, cash remains the dominant method of payment with an estimated 86% of all payments being in the form of cash.

But card usage is growing as more people are shopping online than ever before. According to one recent study, Mexico topped the list of the world’s fastest growing e-commerce markets. Meanwhile, only 37% of Mexicans over 15 years old have a bank account, according to recent World Bank stats.

All these factors clearly make the country ripe for fintech innovation. 

And for the founders of Mexico City-based startup Stori, they spell opportunity.

From left to right, Stori founding team Juan Villaseñor, Marlene Garayzar, Bin Chen, Camila Burne

Stori launched its credit card product in Mexico in January 2020 and has so far had more than 1 million customers apply for a card. 

Several members of the founding team spent years at Capital One honing their skills in underwriting underserved populations while others worked at the likes of Mastercard, Morgan Stanley, GE Money, HSBC and Intel in Mexico and the U.S.

Now the company has raised a $32.5 million Series B round with the goal of “becoming Mexico’s leading credit card issuer for the rising middle class.”

Lightspeed Venture Partners led the company’s financing, which brings Stori’s total raised since its early 2018 inception to $50 million. According to Lightspeed Partner Mercedes Bent, the investment marked her firm’s first large investment in the Latin American region “with more to come.”

Existing backers Vision Plus Capital, BAI Capital and Source Code Capital also participated in the round.

Stori provides credit cards with “a 100% mobile app-based experience” to the rising middle income population in Mexico. The team spent its first two years building out the startup’s infrastructure and platform. 

In January 2021, the fintech’s monthly new customer growth was 14 times than what it saw in January 2020 and 6 times the company’s monthly average for 2020, according to co-founder Bin Chen. He declined to reveal its current total of customers.

Because the Mexican market is so huge (the country has a population of nearly 130 million), Stori is currently only focused on serving the country.

Just as in other parts of the world, Stori saw tailwinds in the COVID-19 pandemic in that it fueled customer demand for a way to pay digitally. 

“Consumers in Mexico are increasingly using e-commerce and app-based services like ride hailing and delivery and credit cards are the preferred payment methods in those channels,” Chen said. “They’re experiencing more cash flow fluctuation and irregular expenses and need access to flexible credit that can meet short term needs.”

And of course, during pandemic-related lockdowns, more people are turning to digital financial offerings to avoid visiting bank branches in person.

One commonality among all of Stori’s co-founders, according to Chen, is that each “comes from a modest background.”

“We all experienced the feeling of being excluded from the traditional financial service world. As an international student pursuing my master’s degree in Illinois more than twenty years ago, I was relying solely on teaching assistantship to cover my study and living expenses,” Chen recalled. “I often ran out of money, and had a hard time to make ends meet – I received many rejections before I got my first credit card.”

Similar to TomoCredit’s mission in the U.S., Stori’s founders are working to give middle and low-income customers that are “new to the formal financial system” an opportunity to access credit.

The company plans to use its new capital to grow its customer base, boost headcount and invest in product design, technology infrastructure and underwriting, said Chen, who previously worked at Capital One and Mastercard in both U.S. and emerging markets. Today, Stori has 80 employees spread across offices in Mexico, U.S. and China, up from 40 a year ago.

“Our goal is to become a leading digital bank for the underserved population in the region,” he said.

For its part, Lightspeed first met the company’s founders over a year ago.

“We were struck by the depth of their experience. They navigated the pitfalls of Covid masterfully — without the benefit of a US style stimulus — and showed that their underwriting models were strong and improving,” Bent said. “That is a reflection of the quality of the team.”

Yiran Liu, a partner at China-based Vision Plus Capital, says the firm led Stori’s Series A round and “continues to be super pro rata in this round.”

“We have a structural thesis on digital fintech models and are investing in these models globally, particularly in emerging markets,” Liu said in a written statement. “We are impressed by the team’s execution and excited by the local market opportunity as evidenced by the rapid growth.”

 

 

#credit-cards, #finance, #funding, #latin-america, #lightspeed-venture-partners, #mercedes-bent, #mexico, #mexico-city, #payments, #recent-funding, #startups, #stori, #venture-capital

How to Pay Off Credit Card Debt

While American balances are down over all, interest can still add up. If your stimulus check isn’t going to cover basics, consider reducing your debt.

#credit-and-debt, #credit-cards, #personal-finances

The Man Who Turned Credit-Card Points Into an Empire

Brian Kelly, The Points Guy, has created an empire dedicated to maximizing credit-card rewards and airline miles. What are they worth in a global pandemic — and why are they worth anything at all?

#airlines-and-airplanes, #budget-travel, #coronavirus-2019-ncov, #credit-cards, #customer-loyalty-programs, #dubrovnik-croatia, #frequent-flier-programs, #travel-and-vacations

Bonus: Kara and Nick Kristof Debrief on Ajay Banga

They also discuss the slippery slope from guns to sugary cereals.

#banga-ajay, #credit-cards, #kristof-nicholas-d, #mastercard-inc, #new-york-times, #pornhub

Your Card Payment Has Been Declined

Mastercard’s chief executive oversees $6.5 trillion in transactions. That gives him unique insights into our economic recovery, and power over companies like PornHub.

#banga-ajay, #child-pornography, #credit-cards, #mastercard-inc, #pornhub, #silicon-valley-calif

Visa and Mastercard Block Use on Pornhub

The credit card companies had launched separate investigations earlier this week into their financial ties with MindGeek, the parent company of Pornhub.

#credit-cards, #mastercard-inc, #mindgeek-sarl, #pornhub, #sex-crimes, #visa-inc

Visa and Mastercard to Investigate Financial Ties to Pornhub

The payment companies said they would investigate financial links after The New York Times reported that videos on Pornhub depict child abuse.

#child-abuse-and-neglect, #credit-cards, #kristof-nicholas-d, #mastercard-inc, #paypal, #pornhub, #sex-crimes, #video-recordings-downloads-and-streaming, #visa-inc

Mastercard’s Ajay Banga Took the Long View and Preserved Jobs

In 10 years running Mastercard, Ajay Banga has favored a forward-looking approach.

#banga-ajay, #company-reports, #content-type-personal-profile, #coronavirus-2019-ncov, #credit-cards, #executives-and-management-theory, #labor-and-jobs, #layoffs-and-job-reductions, #mastercard-inc, #stimulus-economic, #wages-and-salaries

DOJ files antitrust lawsuit challenging Visa’s $5.3 billion acquisition of Plaid

The Department of Justice has filed an antitrust lawsuit challenging Visa’s proposed $5.3 billion acquisition of Plaid .

News of the DOJ’s investigation first broke last month.

“By acquiring Plaid, Visa would eliminate a nascent competitive threat that would likely result in substantial savings and more innovative online debit services for merchants and consumers,” the DOJ wrote in its lawsuit.

The deal would violate Section 2 of the Sherman Act “and must be stopped,” the DOJ wrote in its filing, published by Bloomberg Law.

In a statement, Visa said it “strongly disagrees” with the DOJ’s “legally flawed” arguments.

“This action reflects a lack of understanding of Plaid’s business and the highly competitive payments landscape in which Visa operates,” the statement read. “The combination of Visa and Plaid will deliver substantial benefits for consumers seeking access to a broader range of financial-related services, and Visa intends to defend the transaction vigorously.”

“As we explained to the DOJ, Plaid is not a payments company. Visa’s business faces intense competition from a variety of players – but Plaid is not one of them. Plaid is a data network that enables individuals to connect their financial accounts to the apps and services they use to manage their financial lives, and its capabilities complement Visa’s. Together, Visa and Plaid will deliver better digital experiences and more choice for consumers in managing their money and financial data. Visa is confident that this transaction is good for consumers and good for competition,” the statement added.

Plaid co-founders William Hockey and Zach Perret. Image Credit: Plaid

As the Justice Department argues, Visa’s monopoly power in online debit is protected by barriers to entry and expansion. New challengers to Visa need connections with millions of consumers to attract merchants and need connections to thousands of merchants to attract new consumers, the DOJ said.

DOJ lawyers pointed to Mastercard’s inability to seize more than a quarter of the online debit market as a sign of Visa’s continued dominance. “Mastercard has neither gained significant share from Visa nor restrained Visa’s monopoly,” the lawyers wrote.

Visa also set up technical barriers by entering into restrictive agreements with merchants and banks to prevent competitors from growing their share of the online debit market.

“These entry barriers, coupled with Visa’s long-term restrictive contracts with banks, are nearly insurmountable, meaning Visa rarely faces any significant threats to its online debit monopoly. Plaid is such a threat,” according to the DOJ.

Companies like Venmo, Acorns, and Betterment are just some of the big startups that use Plaid to build their services.

“While Plaid’s existing technology does not compete directly with Visa today, Plaid is planning to leverage that technology, combined with its existing relationships with banks and consumers, to facilitate transactions between consumers and merchants in competition with Visa,” according to the DOJ.

And Visa was well aware of Plaid’s potential to disrupt its business. As early as March 2019, nearly nine months before the acquisition was announced, the vice president of corporate development and head of strategic opportunities expressed concerns about Plaid’s business.

“I don’t want to be IBM to their Microsoft,” the executive said, according to the lawsuit filed by DOJ. Visa’s chief executive also clearly acknowledged that Plaid was a threat.

The company estimated that Plaid could cost Visa’s debit business between $300 million and $500 million by 2024 if it were to continue operating as an independent company. It was, in the words of Visa’s executives an “[e]xistential risk” to its U.S. debit business and it could have forced Visa to accept lower margins — something that would be a boon to businesses and consumers.

#credit-cards, #debit-cards, #department-of-justice, #finance, #merchant-services, #payment-cards, #plaid, #tc, #united-states, #visa, #zach-perret

The DOJ investigating Visa’s $5.3 billion bid for Plaid on antitrust grounds

It’s not just big tech that’s getting the antitrust treatment from the Department of Justice.

Late Monday afternoon, the Department of Justice tipped its hand that it was investigating Visa’s proposed $5.3 billion acquisition of the venture-backed Plaid, which allows applications to connect with a users’ bank account.

It’s a tool that powers a good chunk of the new fintech offerings from a whole slew of products and the Justice Department has apparently spent the past year looking into how the deal would effect the broader market for new financial services offerings coming from a number of tech startups.

The revelation that the DOJ was taking a closer look at the Plaid acquisition came from a petition filed in the U.S. Court for the District of Massachusetts to compel Bain & Co., the consulting firm that worked on Visa’s bid for Plaid, to comply with the agency’s civil investigative demand.

The DOJ is alleging that Bain has withheld documents demanded under the CID by asserting that it had some privilege over the documents — effectively stalling the DOJ’s investigation.

“American consumers rely on the Antitrust Division to investigate mergers promptly and thoroughly,”  said Assistant Attorney for the Antitrust Division Makan Delrahim, in a statement.  “Collecting relevant third-party documents and data is essential to the division’s ability to analyze these transactions.  Too often, third parties seek to flout these requirements, hoping the division will lose interest and focus its enforcement efforts elsewhere.”

DOJ first asked Bain for documents related to Visa’s pricing strategy and competition against other debit card networks in June. The feds intended to use that information to analyze the effects of Visa’s attempted acquisition on the broader financial services market. Bain refused to produce the documents by claiming that the information was privileged.

Visa’s bid for Plaid isn’t the only big fintech acquisition that’s in the DOJ’s sights, according to a report in The Wall Street Journal. Federal regulators are also looking at MasterCard’s $1 billion bid for the fintech startup Finicity, and Intuit’s $7 billion pitch to acquire the credit advisory and lending marketplace, Credit Karma Inc.

“The division’s petition against Bain is aimed at securing relevant documents and making clear that the division will hold third parties to the deadlines and specifications in the CIDs we issue,” Delrahim said. “Third parties, like Bain, must comply fully and expeditiously with our civil investigative demands and provide the documents and data we need to discharge our duties and serve the American people.”

#att, #bain-co, #companies, #credit-cards, #department-of-justice, #finance, #intuit, #massachusetts, #mastercard, #merchant-services, #payment-cards, #plaid, #tc, #the-wall-street-journal, #visa

Recession’s Silver Lining: American Households Are Doing Better Than Expected

With few avenues for spending and big purchases on hold, many Americans are saving more and paying off debts, helped by loan deferrals and relief aid.

#coronavirus-aid-relief-and-economic-security-act-2020, #credit-and-debt, #credit-cards, #credit-scores, #fair-isaac-corporation, #layoffs-and-job-reductions, #personal-finances, #recession-and-depression, #savings, #stimulus-economic, #united-states-economy

Help! My Travel Agency Shut Down and I’m Out $2,000

Our columnist investigates whether there is any recourse for a canceled flight booked through STA Travel, which filed for bankruptcy in August.

#airlines-and-airplanes, #bankruptcies, #british-airways-plc, #consumer-financial-protection-bureau, #consumer-protection, #credit-cards, #quarantine-life-and-culture, #travel-agencies-and-agents, #travel-and-vacations

Airline Miles Programs Sure Are Profitable. Are You the Loser?

United and Delta have been boasting to lenders about fat margins in frequent-flier mile programs. Time for customers to pay a bit more attention.

#airlines-and-airplanes, #american-express-company, #content-type-service, #credit-cards, #customer-loyalty-programs, #delta-air-lines-inc, #frequent-flier-programs, #travel-and-vacations, #united-airlines

Valar triples down on Petal, leading $55M Series C round into the credit card disruptor

Sometimes raising venture capital can be as simple as talking to your existing investor and having them wire over another check.

When we last caught up with Petal in January 2019, the startup was hot off its $30 million Series B round and was accelerating its mission to take on the world of credit cards. Petal’s core differentiation is that it looks at the cash flow of potential borrowers rather than traditional credit scores to assess creditworthiness, helping to identify underbanked users who have the ability to be trusted with a credit card, but lack the formal statistics to prove it.

Well, a lot has happened since then. COVID-19 hit, and along the way, the traditional credit score has been rent asunder as millions lost their jobs, had their hours cut back, and changed life circumstances. At the same time, federal stimulus relief in the form of direct payments to taxpayers actually led some credit scores to increase during the pandemic. All of this is to say that underwriting based on prospective cash flow has been a bit more attuned to reality rather than credit scores based on retrospective history.

Now, the New York City-headquartered startup is expanding, and netted a $55 million dollar Series C round led by Valar again, who not only led the company’s Series B, but also its $13 million Series A round back in 2018. This Series C round closed in April just after the COVID-19 pandemic got fully underway and is officially being announced today.

Valar, one of the many vehicles in the Peter Thiel capital universe, has staked its claim in the fintech world, backing companies like Even, Stash, N26, BlockFi, Point Card, and Taxfix. I asked Petal CEO Jason Gross his thoughts on why he took capital from his existing investors two more times, and his line was “if you’ve heard the expression, ‘if it ain’t broke don’t fix it.’” He continued, “Our view has been that if we already have a really great working relationship, and a lot of support and a dynamic that’s been successful in the boardroom, there’s no reason to necessarily change that.”

Gross said that the company’s model has allowed it to handle the storm of changes that have been underway this year. “It’s allowing us to make credit accessible at a period of time when legacy institutions — traditional banks and so on — are being forced to to pull back,” he said. “We’ve been able to continue to accurately understand what’s going on with the financial circumstances of our customers and applicants” allowing the company to “lean in” this year.

He noted the company has brought on “tens of thousands of customers” since the last time TechCrunch chatted with the company.

Petal has slightly tweaked the cosmetic design of the card. Photo via Petal.

Outside of fundraising and customer growth, the company has been busy. It launched a second office in Richmond, Virginia last year. It “has a really strong, kind of vibrant and emerging technology scene. It is the largest concentration of colleges in Virginia, and it also is a financial-services-heavy location,” Gross explained. Conveniently, it also shares the same time zone as NYC.

Back last September, the company raised $300 million from Jeffries as a debt facility to finance its credit card, and in February, it recruited Kaustav Das as its new chief risk officer. Das came from small business loan platform Kabbage, which was sold to American Express earlier this year following the heavy economic blow from the pandemic to small businesses across the country.

Petal is now about 100 employees, and the company has been operating entirely remotely since March. Gross says his goal for the next two years is to onboard “hundred of thousands of new customers.”

In addition to Valar, a huge miscellany of funds participated in the round, including “Rosecliff Ventures, Afore Capital, RiverPark Ventures, Great Oaks Venture Capital, GR Capital, Nelstone Ventures, Abstract Ventures, Ride Ventures, Gramercy Fund, Adventure Collective, Starta Ventures, and NFL star Kelvin Beachum, Jr.” The company has now raised about $100 million of equity capital all together.

#credit-cards, #finance, #fintech, #funding, #fundings-exits, #new-york-city, #petal, #startups, #valar-ventures

Who Gets Hurt When the World Stops Using Cash

Some people don’t have credit or debit cards, so a growing number of state and local governments are requiring businesses to accept cash.

#consumer-protection, #content-type-service, #coronavirus-2019-ncov, #coronavirus-risks-and-safety-concerns, #credit-cards, #debit-cards, #hygiene-and-cleanliness, #mobile-commerce-and-payments, #personal-finances, #shopping-and-retail, #us-dollar-currency

Our Cash-Free Future Is Getting Closer

The pandemic is propelling a shift toward a cashless society in ways that no other single event has. Experts say that’s not necessarily a good thing.

#banking-and-financial-institutions, #coronavirus-2019-ncov, #credit-cards, #currency, #e-commerce, #europe, #paris-france, #prices-fares-fees-and-rates, #quarantines, #shopping-and-retail

Behind Wirecard’s Collapse: Allegations of Lies, Spies and Missing Billions

Markus Braun built Wirecard to “conquer the world,” but those aspirations attracted skeptics. Its accounting scandal has sent shock waves through Germany.

#accounting-and-accountants, #banking-and-financial-institutions, #braun-markus-1969, #credit-cards, #cyberattacks-and-hackers, #ernstyoung, #financial-times, #frauds-and-swindling, #germany, #mobile-commerce-and-payments, #phishing-computer-fraud, #wirecard-ag

Square, Jack Dorsey’s Pay Service, Is Withholding Money Merchants Say They Need

Small businesses say the Twitter chief’s other company is holding on to 30 percent of their customers’ payments during the pandemic.

#computers-and-the-internet, #consumer-protection, #coronavirus-2019-ncov, #credit-cards, #dorsey-jack, #layoffs-and-job-reductions, #mobile-commerce-and-payments, #small-business, #square-inc

Stripe adds card issuing, localized card networks and expanded approvals tool

At a time when more transactions than ever are happening online, payments behemoth Stripe is announcing three new features to continue expanding its reach.

The company today announced that it will now offer card issuing services directly to businesses to let them in turn make credit cards for customers tailored to specific purposes. Alongside that, it’s going to expand the number of accepted local, large card networks to cut down some of the steps it takes to make transactions in international markets. And finally, it’s launching a “revenue optimization” feature that essentially will use Stripe’s AI algorithms to reassess and approve more flagged transactions that might have otherwise been rejected in the past.

Together the three features underscore how Stripe is continuing to scale up with more services around its core payment processing APIs, a significant step in the wake of last week announcing its biggest fundraise to date: $600 million at a $36 billion valuation.

The rollouts of the new products are specifically coming at a time when Stripe has seen a big boost in usage among some (but not all) of its customers, said John Collison, Stripe’s co-founder and president, in an interview. Instacart, which is providing grocery delivery at a time when many are living under stay-at-home orders, has seen transactions up by 300% in recent weeks. Another newer customer, Zoom, is also seeing business boom. Amazon, Stripe’s behemoth customer that Collison would not discuss in any specific terms except to confirm it’s a close partner, is also seeing extremely heavy usage.

But other Stripe users — for example, many of its sea of small business users — are seeing huge pressures, while still others, faced with no physical business, are just starting to approach e-commerce in earnest for the first time. Stripe’s idea is that the launches today can help it address all of these scenarios.

“What we’re seeing in the COVID-19 world is that the impact is not minor,” said Collison. “Online has always been steadily taking a share from offline, but now many [projected] years of that migration are happening in the space of a few weeks.”

Stripe is among those companies that have been very mum about when they might go public — a state of affairs that only become more set in recent times, given how the IPO market has all but dried up in the midst of a health pandemic and economic slump. That has meant very little transparency about how Stripe is run, whether it’s profitable and how much revenues it makes.

But Stripe did note last week that it had some $2 billion in cash and cash reserves, which at least speaks to a level of financial stability. And another hint of efficiency might be gleaned from today’s product news.

While these three new services don’t necessarily sound like they are connected to each other, what they have underpinning them is that they are all building on top of tech and services that Stripe has previously rolled out. This speaks to how, even as the company now handles some 250 million API requests daily, it’s keeping some lean practices in place in terms of how it invests and maximises engineering and business development resources.

The card issuing service, for example, is built on a card service that Stripe launched last year. Originally aimed at businesses to provide their employees with credit cards — for example to better manage their own work-related expenses, or to make transactions on behalf of the business — now businesses can use the card issuing platform to build out aspects of its customer-facing services.

For example, Stripe noted that the first customer, Zipcar, will now be placing credit cards in each of its vehicles, which drivers can use to fuel up the vehicles (that is, the cards can only be used to buy gas). Another example Collison gave for how these could be implemented would be in a food delivery service, for example for a Postmates delivery person to use the card to pay for the meal that a customer has already paid Postmates to pick up and deliver to them.

Collison noted that while other startups like Marqeta have built big businesses around innovative card issuing services, “this is the first time it’s being issued on a self-serving basis,” meaning companies that want to use these cards can now set this up more quickly as a “programmatic card” experience, akin to self-serve, programmatic ads online.

It seems also to be good news for investors. “Stripe Issuing is a big step forward,” said Alex Rampell, general partner at Andreessen Horowitz, in a statement. “Not just for the millions of businesses running on Stripe, but for credit cards as a fundamental technology. Businesses can now use an API to create and issue cards exactly when and where they need them, and they can do it in a few clicks, not a few months. As investors, we’re excited by all the potential new companies and business models that will emerge as a result.”

Meanwhile, the revenue “optimization” engine that Stripe is rolling out is built on the same machine learning algorithms that it originally built for Radar, its fraud prevention tool that originally launched in 2016 and was extended to larger enterprises in 2018. This makes a lot of sense, since oftentimes the reason transactions get rejected is because of the suspicion of fraud. Why it’s taken four years to extend that to improve how transactions are approved or rejected is not entirely clear, but Stripe estimates that it could enable a further $2.5 billion in transactions annually.

One reason why the revenue optimization may have taken some time to roll out was because while Stripe offers a very seamless, simple API for users, it’s doing a lot of complex work behind the scenes knitting together a lot of very fragmented payment flows between card issuers, banks, businesses, customers and more in order to make transactions possible.

The third product announcement speaks to how Stripe is simplifying a bit more of that. Now, it’s able to provide direct links into six big card networks — Visa, Mastercard, American Express, Discover, JCB and China Union Pay, which effectively covers the major card networks in North and Latin America, Southeast Asia and Europe. Previously, Stripe would have had to work with third parties to integrate acceptance of all of these networks in different regions, which would have cut into Stripe’s own margins and also given it less flexibility in terms of how it could handle the transaction data.

Launching the revenue optimization by being able to apply machine learning to the transaction data is one example of where and how it might be able to apply more innovative processes from now on.

While Stripe is mainly focused today on how to serve its wider customer base and to just help business continue to keep running, Collison noted that the COVID-19 pandemic has had a measurable impact on Stripe beyond just boosts in business for some of its customers.

The whole company has been working remotely for weeks, including its development team, making for challenging times in building and rolling out services.

And Stripe, along with others, is also in the early stages of piloting how it will play a role in issuing small business loans as part of the CARES Act, he said.

In addition to that, he noted that there has been an emergence of more medical and telehealth services using Stripe for payments.

Before now, many of those use cases had been blocked by the banks, he said, for reasons of the industries themselves being strictly regulated in terms of what kind of data could get passed across networks and the sensitive nature of the businesses themselves. He said that a lot of that has started to get unblocked in the current climate, and “the growth of telemedicine has been off the charts.”

#cards, #credit-cards, #ecommerce, #enterprise, #finance, #payments, #stripe, #tc

Making the Most of Hotel Loyalty Programs When You’re Not Traveling

Some loyalty programs are extending customers’ elite status, lengthening expiration dates on rewards and more. Here’s how to navigate them.

#coronavirus-2019-ncov, #credit-cards, #customer-loyalty-programs, #customer-relations, #hilton-worldwide-holdings-inc, #hotels-and-travel-lodgings, #hyatt-hotels-corp, #marriott-international-inc, #travel-and-vacations

Visa partners with Paga on payments and fintech for Africa and abroad

Visa has entered a partnership with Nigeria based startup Paga on payments and technology.

Founded in Lagos, Paga scaled its fintech business in West Africa, before targeting expansion in Ethiopia and Mexico.

The startup has created a multi-channel network for over 14 million customers in Nigeria to transfer money, pay-bills and buy things digitally through its mobile-app or 24,840 agents.

The new arrangement allows Paga account holders to transact on Visa’s global network. It will also see both companies work together on tech.

The collaboration reflects a strategy of the American financial services giant to expand in Africa working with the continent’s top startups.

Visa’s partnership with Paga doesn’t include investment in the startup, but it is expected to drive larger payment volumes for both companies — and Visa’s priorities in Africa.

“We want to digitize cash, that’s a strategic priority for us. We want to expand merchant access to payment acceptance and we want to drive financial inclusion,” said Otto Williams, Visa’s Head of Strategic Partnerships, Fintech and Ventures for Africa.

The Paga-Visa arrangement will bring new merchant options to Paga’s network.

“Based on the partnership we’re going to launch QR codes and NFC [payments] into the market in Nigeria — alternative ways of receiving payments than bringing out a physical card,” said Oviosu.

Tayo Oviosu

Visa and Paga’s engineering teams have already started working together, according to Oviosu, and Paga expects to roll-out these new options in Nigeria sometime in second-quarter 2020.

The startup is pivoting toward becoming less of a Nigeria-centered company and more an emerging markets fintech platform. In January, Paga acquired Ethiopian software development company Apposit, on plans to launch in the East African country.  After Nigeria, Ethiopia has Africa’s second-largest population of 114 million.

Paga has also opened an office in Mexico and will launch its payments products there this year.

“There are several very large countries around the world in Africa, Latin America, Asia where these [financial inclusion] problems still exist. So our strategy is not an African strategy…We want to go where these problems exist in a large way and build a global payments business,” Oviosu told Techcrunch in January.

The Visa-Paga partnership comes as fintech has become Africa’s best funded startup sector — according to latest VC reporting — with thousands of ventures vying to scale digital-finance products to the continent’s unbanked and underbanked consumers and SMEs.

As a company, Visa maintains multiple partnerships with Africa’s largest banks, but collaborating with the continent’s VC backed fintech ventures has taken center-stage. This was confirmed in Visa’s recent 2020 Investor Day presentation, which dedicated several slides to its strategy of “partnering with leading African players” in the startup ecosystem.

The global financial services company has entered into collaborations with several African fintech ventures, such as B2B payments company Flutterwave and South African startup Yoco, which is focused on enterprise payments services and hardware for SMEs.

Visa has also jumped into the venture funding realm in African fintech. In 2019 Nigerian financial services company Interswitch reached a $1 billion valuation and unicorn status after Visa acquired a minority equity stake.

Visa’s Otto Williams, who has taken a lead on the company’s Africa strategy, noted non-equity collaborations will remain the primary focus — though those could lead to VC down the road.

“If we have a commercial partnership in place that creates the right…investment thesis…you know those strategic partnerships inform venture investments,” Williams said.

Of course, Visa’s isn’t the only American financial services firm backing African tech companies. In 2019, its rival Mastercard invested $50 million in Pan-African e-commerce venture Jumia. The two are working together on developing fintech services across Jumia’s customer network.

#africa, #african-tech, #asia, #credit-cards, #ethiopia, #finance, #financial-services, #flutterwave, #interswitch, #jumia, #lagos, #latin-america, #mexico, #money, #nigeria, #paga, #payment-cards, #south-africa, #tc, #tech-in-africa, #techcrunch, #visa, #west-africa, #yoco