TrueLayer nabs $130M at a $1B+ valuation as open banking rises as a viable option to card networks

Open banking — a disruptive technology that seeks to bypass the dominance of card networks and other traditional financial rails by letting banks open their systems directly to developers (and new services) by way of APIs — continues to gain ground in the world of financial services. As a mark of that traction, a startup playing a central role in open banking applications is announcing a big round of funding with a milestone valuation.

TrueLayer, which provides technology for developers to enable a range of open-banking-based services has raised $130 million in a funding round that values the London-based startup at over $1 billion.

Tiger Global Management is leading the round, and notably, payments juggernaut Stripe is also participating.

Open Banking is a relatively new area in the world of fintech — the UK was an early adopter in 2018, Europe then signed on, and it looks like we are now seeing more movements that the U.S. may soon also join the party — and TrueLayer is considered a pioneer in the space.

The vast majority of transactions in the world today are still made using card rails or more antiquated banking infrastructure, but the opportunity with open banking is to build a completely new infrastructure that works more efficiently, and might come with less (or no) fees for those using it, with the perennial API promise: all by way of few lines of code.

“We had a vision that finance should be opened up, and we are actively woking to remove the frictions that exist between intermediaries,” said CEO Francesco Simoneschi, who co-founded the company with Luca Martinetti (who is now the CTO), in an interview. “We want a financial system that works for everyone, but that hasn’t been the case up to now. The opportunity emerged five years ago, when open banking came into law in the UK and then elsewhere, to go after the most impressive oligopoly: the card networks and everything that revolves around them. Now, we can easily say that open banking is becoming a viable alternative to that.”

It seems that the world of finance and commerce is slowly catching on, and so the funding is coming on the heels of some strong growth for the company.

Services that TrueLayer currently include payments, payouts, user account information and user verification; while end users range from neobanks, crypto startups, and wealth management apps through to e-commerce companies, marketplaces and gaming platforms.

And the startup says it now has “millions” of consumers making open banking transactions enabled by TrueLayer’s technology, and some 10,000 developers are building services based on open banking standards. TrueLayer so far this year has doubled its customer base, picking up some key customers like Cazoo to enable open-banking based payments for cars; and it has processed “billions” of dollars in payments, with payment volume growing 400%, and payment up 800%.

The plan is to use the funding to invest in building out that business further — specifically to extend its payments network to more regions (and more banks getting integrated into that network), as well as to bring on more customers using open banking services for more regular, recurring transactions.

“The shift to alternative payment methods is accelerating with the global growth of online commerce, and we believe TrueLayer will play a central role in making these payment methods more accessible,” said Alex Cook, partner, Tiger Global, in a statement. “We’re excited to partner with Francesco, Luca and the TrueLayer team as they help customers increase conversion and continue to grow the network.”

Notably, Stripe is not a strategic investor in TrueLayer at the moment, just a financial one. That is to say, it has yet to integrate open banking into its own payments infrastructure.

But you can imagine how it would be interested in it as part of the bigger mix of options for its customers, and potentially also to build its own standalone financial rails that well and truly compete with those provided by the card networks (which are such a close part of what Stripe does that its earliest web design was based on the physical card, and even its name is a reference to the stripe on the back of them.

There are other providers of open banking connectivity in the market today — Plaid out of the U.S. is one notable name — but Simoneschi believes that Stripe and TrueLayer on the same page as companies.

“We share a profound belief that progress comes through the eyes of developers so it’s about delivering the tools they need to use,” he he said. “We are in a very complementary space.”

#api, #bank, #banking, #ceo, #cto, #europe, #finance, #financial-services, #funding, #london, #mobile-payments, #money, #online-banking, #online-commerce, #online-payments, #open-banking, #partner, #payment, #payments-infrastructure, #payments-network, #stripe, #tiger-global-management, #truelayer, #united-kingdom, #united-states, #web-applications

All the reasons why you should launch a credit or debit card

Over the previous two or three years we’ve seen an explosion of new debit and credit card products come to market from consumer and B2B fintech startups, as well as companies that we might not traditionally think of as players in the financial services industry.

On the consumer side, that means companies like Venmo or PayPal offering debit cards as a new way for users to spend funds in their accounts. In the B2B space, the availability of corporate card issuing by startups like Brex and Ramp has ushered in new expense and spend management options. And then there is the growth of branded credit and debit cards among brands and sports teams.

But if your company somehow hasn’t yet found its way to launch a debit or credit card, we have good news: It’s easier than ever to do so and there’s actual money to be made. Just know that if you do, you’ve got plenty of competition and that actual customer usage will probably depend on how sticky your service is and how valuable the rewards are that you offer to your most active users.

To learn more about launching a card product, TechCrunch spoke with executives from Marqeta, Expensify, Synctera and Cardless about the pros and cons of launching a card product. So without further ado, here are all the reasons you should think about doing so, and one big reason why you might not want to.

Because it’s (relatively) easy

Probably the biggest reason we’ve seen so many new fintech and non-fintech companies rush to offer debit and credit cards to customers is simply that it’s easier than ever for them to do so. The launch and success of businesses like Marqeta has made card issuance by API developer friendly, which lowered the barrier to entry significantly over the last half-decade.

“The reason why this is happening is because the ‘fintech 1.0 infrastructure’ has succeeded,” Salman Syed, Marqeta’s SVP and GM of North America, said. “When you’ve got companies like [ours] out there, it’s just gotten a lot easier to be able to put a card product out.”

While noting that there have been good options for card issuance and payment processing for at least the last five or six years, Expensify Chief Operating Officer Anu Muralidharan said that a proliferation of technical resources for other pieces of fintech infrastructure has made the process of greenlighting a card offering much easier over the years.

#banking, #business-intelligence, #cardless, #credit-card, #debit-cards, #ec-column, #ec-fintech, #expensify, #finance, #financial-services, #financial-technology, #fintech-infrastructure, #fintech-startup, #marqeta, #mastercard, #mobile-payments, #online-payments, #payment-processing, #payment-processor, #payments, #startups, #synctera, #tc

Venmo to allow credit cardholders to automatically buy cryptocurrency with their cash back

PayPal-owned Venmo is expanding its support for cryptocurrency with today’s launch of a new feature that will allow users to automatically buy cryptocurrency using the cash back they earned from their Venmo credit card purchases. Unlike when buying cryptocurrency directly, these automated purchases will have no transaction fees associated with them — a feature Venmo says is not a promotion, but how the system will work long term. Instead, a cryptocurrency conversion spread is built into each monthly transaction.

Cardholders will be able to purchase Bitcoin, Ethereum, Litecoin and Bitcoin Cash through the new “Cash Back to Crypto” option, rolling out now to the Venmo app.

Venmo had first introduced the ability for customers to buy, hold and sell cryptocurrency in April of this year, as part of a larger investment in cryptocurrency led by parent company, PayPal. In partnership with Paxos Trust Company, a regulated provider of cryptocurrency products and services, Venmo’s over 70 million users are now able to access cryptocurrency from within the Venmo app. 

The cash back feature, meanwhile, could help drive sign-ups for the Venmo Credit Card, by interlinking it with the cryptocurrency functionality. Currently, Venmo cardholders can earn monthly cash back across eight different spending categories, with up to 3% back on their top eligible spending category, then 2% and 1% back on the second highest and all other purchases, respectively. The top two categories are adjusted monthly, based on where consumers are spending the most.

To enable Cash Back to Crypto, Venmo customers will navigate to the Venmo Credit Card home screen in the app, select the Rewards tab, then “Get Started.” From here, they’ll agree to the terms, select the crypto of their choice, and confirm their selection. Once enabled, when the cash back funds hit the customer’s Venmo balance, the money is immediately used to make a crypto purchase — no interaction on the user’s part is required.

The feature will not include any transaction fees, as a cryptocurrency conversion spread is built into each monthly transaction. This is similar to how PayPal is handling Checkout with Crypto, which allows online shoppers to make purchases using their cryptocurrency. The cryptocurrency is converted to fiat, but there are not transaction fees.

The feature can also be turned on or off at any time, Venmo notes.

The company views Cash Back to Crypto as a way for newcomers to cryptocurrency to enter the market, without having to worry about the process of making crypto purchases. It’s more of a set-it-and-forget-it type of feature. However, unless users make regular and frequent transactions with their Venmo Credit Card, these cash back-enabled crypto purchases will likely be fairly small.

The company has yet to offer details on how many Venmo credit cardholders are active in the market. So far, PayPal CEO Dan Schulman has only said, during Q1 earnings, that the card “is outpacing our expectations for both new accounts and transactions.” This past quarter, the exec noted that the company was also seeing “strong adoption and trading of crypto on Venmo.”

“The introduction of the Cash Back to Crypto feature for the Venmo Credit Card offers customers a new way to start exploring the world of crypto, using their cash back earned each month to automatically and seamlessly purchase one of four cryptocurrencies on Venmo,” noted Darrell Esch, SVP and GM at Venmo, in a statement. “We’re excited to bring this new level of feature interconnectivity on the Venmo platform, linking our Venmo Credit Card and crypto experiences to provide another way for our customers to spend and manage their money with Venmo,” he added.

The new option will begin rolling out starting today to Venmo Credit Cardholders.

#apps, #bitcoin, #credit-card, #crypto, #cryptocurrencies, #cryptocurrency, #digital-currency, #finance, #mobile-payments, #money, #paypal, #venmo

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

PayPal’s new ‘super app’ is ready to launch, will also include messaging

PayPal’s plan to morph itself into a “super app” have been given a go for launch. According to PayPal CEO Dan Schulman, speaking to investors during this week’s second-quarter earnings, the initial version of PayPal’s new consumer digital wallet app is now “code complete” and the company is preparing to slowly ramp up. Over the next several months, PayPal expects to be fully ramped in the U.S., with new payment services, financial services, commerce and shopping tools arriving every quarter.

The company has spoken for some time about its “super app” ambitions — a shift in product direction that would make PayPal a U.S.-based version of something like China’s WeChat or Alipay or India’s Paytm. Similar to these apps, PayPal aims to offer a host of consumer services under one roof, beyond just mobile payments.

In previous quarters, PayPal said these new features may include things like enhanced direct deposit, check cashing, budgeting tools, bill pay, crypto support, subscription management, and buy now/pay later functionality. It also said it would integrate commerce, thanks to the mobile shopping tools acquired by way of its $4 billion Honey acquisition from 2019.

So far, PayPal has continued to run Honey as a standalone application, website and browser extension, but the super app could incorporate more of its deal-finding functions, price tracking features, and other benefits.

On Wednesday’s earnings call, Schulman revealed the super app would include a few other features as well, including high-yield savings, early access to direct deposit funds, and messaging functionality outside of peer-to-peer payments — meaning you could chat with family and friends directly through the app’s user interface.

PayPal hadn’t yet announced its plans to include a messaging component until now, but the feature makes sense in terms of how people often combine chat and peer-to-peer payments today. For example, someone may want to make a personal request for the funds instead of just sending an automated request through an app. Or, after receiving payment, a user may want to respond with a “thank you,” or other acknowledgement. Currently, these conversations take place outside of the payment app itself on platforms like iMessage. Now, that could change.

“We think that’s going to drive a lot of engagement on the platform,” said Schulman. “You don’t have to leave the platform to message back and forth.”

With the increased user engagement, the company expects to see a related bump in average revenue per active account.

Schulman also hinted at “additional crypto capabilities,” which were not detailed. However, PayPal earlier this month increased the crypto purchase limit from $20,000 to $100,000 for eligible PayPal customers in the U.S., with no annual purchase limit. The company also this year made it possible for consumers to check out at millions of online businesses using their cryptocurrencies, by first converting the crypto to cash then settling with the merchant in U.S. dollars.

Though the app’s code is now complete, Schulman said the plan is to continue to iterate on the product experience, noting that the initial version will not be “the be-all and end-all.” Instead, the app will see steady releases and new functionality on a quarterly basis.

However, he did say that early on, the new features would include the high-yield savings, improved bill pay with a better user experience and more billers and aggregators, as well as early access to direct deposit, budgeting tools, and the new two-way messaging feature.

To integrate all the new features into the super app, PayPal will undergo a major overhaul of its user interface.

“Obviously, the [user experience] is being redesigned,” Schulman noted. “We’ve got rewards and shopping. We’ve got a whole giving hub around crowdsourcing, giving to charities. And then, obviously, Buy Now, Pay Later will be fully integrated into it…The last time I counted, it was like 25 new capabilities that we’re going to put into the super app,” he said.

The digital wallet app will also be personalized to the end user, so no two apps are the same. This will be done using both A.I. and machine learning capabilities to  “enhance each customer’s experiences and opportunities,” said Schulman.

PayPal delivered an earnings beat in the second quarter with $6.24 billion in revenue, versus the $6.27 billion Wall St. expected, and earnings per share of $1.15 versus the $1.12 expected. Total payment volume from merchant customers also jumped 40% to $311 billion, while analysts had projected $295.2 billion. But the company’s stock slipped due to a lowered outlook for Q3, impacted by eBay’s transition to its own managed payments service.

In addition, PayPal gained 11.4 million net new active accounts in the quarter, to reach 403 million total active accounts.

#apps, #cryptocurrencies, #cryptocurrency, #dan-schulman, #finance, #financial-services, #machine-learning, #mobile, #mobile-payments, #money, #online-payments, #paypal, #peer-to-peer, #united-states

Ivorian fintech Julaya raises $2M to digitize business payments in Francophone Africa

There are over 1 billion mobile money accounts globally. Africa leads the way in transaction value and volume thanks to M-Pesa, largely used in East Africa. Other regions across the continent are also growing fast.

In 2019, West Africa reported the most live mobile money services in any region, with 56 million active accounts. In Ivory Coast, one of Francophone Africa’s largest mobile money markets, 75% of the population own a mobile money account, compared to 20% who own bank accounts. The difference is staggering and clearly shows the region’s huge appetite for the service.

While telecom operators have largely dominated mobile money services across most of sub-Saharan Africa, a few startups are trying to change the mobile money experience for customers. Ivory Coast-based fintech startup Julaya is one such company, and today, it announced a $2 million pre-Series A funding to expand its products across West Africa.

Julaya was founded in 2018 by Mathias Léopoldie and Charles Talbot. Before launching Julaya, they worked at French payment fintech LemonWay on their service in Mali and Burkina Faso.

Léopoldie told TechCrunch that the experience introduced them to how mobile money worked across Francophone Africa. LemonWay acts as a payment solution for marketplaces. So, while working on expanding the fintech’s service in both countries, the pair noticed the massive potential businesses had to reach the unbanked via the large consumer penetration of telecom operators.

Julaya was launched to digitize trade payments but started in the Ivory Coast instead of Mali and Burkina Faso. The platform enables companies to streamline their accounting and improve their operational efficiency by digitizing payments to workers and suppliers instead of relying on cash.

The company helps African businesses and institutions disburse payments to mobile money and mobile banking wallets. It achieves this by working with telecom operators and other fintech startups in the region.

“Mobile money is coming to a mature stage where business and public institution use-cases provide new growth opportunities for the sector. The pandemic has opened up minds about the urge to digitize payments. Fintech competition in West Africa is making digital finance more affordable for consumers, and technical integrations with telecom operators are becoming more reliable,” Talbot said in a statement. 

Yet, these partnerships haven’t come without their own share of challenges. For one, payments technology in Francophone Africa remains quite fragmented, and APIs from telecoms are still burgeoning and somewhat unreliable.

Léopoldie added that challenges come from distribution channels, making it difficult for the company to sell en masse at a cheap cost, as well as from the untrustworthiness of businesses toward digitized payments.  

“In Ivory Coast, a wire transfer takes between one to three days, and you always have to check with your bank branch as a customer. … Businesses do not trust digital experiences as they often have shortcomings, and educating the market bears a high cost on acquisition. Then, talents that have a startup mindset are still difficult to find,” Léopoldie said of some of the challenges facing the three-year-old startup.

Despite this, the startup, which has an R&D and technical team in France, has bagged customers from SMBs and large corporates to government institutions. The company says it’s currently processing over $1.5 million monthly for 50 of these customers, including Jumia, SODECI, Ministry of Education, Ivory Coast and the World Bank.

Julaya closed a pre-seed investment of $250,000 in 2018 and a seed investment of $550,000 a year later, all from angel investors. But the company has introduced VC firms in its pre-Series A round. They include corporate venture capital firms Orange Ventures and MFS Africa Frontiers; VC firms Saviu Ventures, Launch Africa and 50 Partners Capital; and some angel investors in Africa and Europe. Julaya will use the investment to broaden its market share in Ivory Coast and launch digital payment products and expand across West Africa.  

More than 20 million people use Orange as a mobile money service across 15 African countries. The telecom operator also recently launched a mobile banking platform in Ivory Coast and has surpassed 500,000 users. Thus, what’s the rationale behind this strategic investment, which marks its third check in an African fintech startup after South Africa’s Yoco and Senegal’s SudPay?

“Fintech’s environment in Africa is distinguished by its competitiveness and strong dynamism. Orange Group, through its technology investment fund, intends to participate in this boom by supporting fintechs such as Julaya. The goal is to target local technology champions at the service of the transition to a more digital and responsible world,” said Habib Bamba, the director of Transformation, digital and media at Orange Ivory Coast.

Orange, other telecom operators, fintechs and banks remain big competitors to Julaya. So how does it plan to stay on top of people’s minds across the region? Léopoldie thinks that focusing on the best user experience might do the trick.

“This sounds like an overheard statement, but we understand that what the customer values most is reliable customer support and a predictable and smooth online experience, for instance, a reliable platform with very little downtime,” he said. “Even if you only have a 90% success rate on your transactions, as long as you give this information in a transparent communication to the customer, they will trust you.”

#africa, #east-africa, #finance, #financial-technology, #mobile-banking, #mobile-money, #mobile-payments, #orange-ventures, #south-africa, #tc, #west-africa

Nium crosses $1B valuation with $200M Riverwood Capital-led round

Business-to-business payments platform Nium announced Monday that it raised more than $200 million in Series D funding and saw its valuation rise above $1 billion.

The company, now Singapore-based but shifting to the Bay Area, touted the investment as making it “the first B2B payments unicorn from Southeast Asia.”

Riverwood Capital led the round, in which Temasek, Visa, Vertex Ventures, Atinum Capital, Beacon Venture Capital and Rocket Capital Investment participated, along with a group of angel investors like DoorDash’s Gokul Rajaram, FIS’ Vicky Bindra and Tribe Capital’s Arjun Sethi. Including the new funding, Nium has raised $300 million to date, Prajit Nanu, co-founder and CEO, told TechCrunch.

The B2B payments sector is already hot, yet underpenetrated, according to some experts. To give an idea just how hot, Nium was seeking $150 million for its Series D round, received commitments of $300 million from eager investors and settled on $200 million, Nanu said.

“This is our fourth or fifth fundraise, but we have never had this kind of interest before — we even had our term sheets in five days,” he added. “I believe this interest is because we’ve successfully managed to create a global platform that is heavily regulated, which gives us access to a lot of networks. This is an environment where payment is visible, and our core is powering frictionless commerce and enabling anyone to use our platform.”

Nium’s new round adds fuel to a fire shared by a number of companies all going after a global B2B payments market valued at $120 trillion annually: last week, Paystand raised $50 million in Series C funding to make B2B payments cashless, while Dwolla raised $21 million for its API that allows companies to build and facilitate fast payments. In March, Higo brought in $3.3 million to do the same in Latin America, while Balance, developing a B2B payments platform that allows merchants to offer a variety of payment methods. raised $5.5 million in February.

Nium’s approach is to provide access to a global payment infrastructure, including card issuance, accounts receivable and payable, and banking-as-a-service through a single API. The company’s network enables customers to then send funds to more than 100 countries, pay out in more than 60 currencies, accept funds in seven currencies and issue cards in more than 40 countries, Nanu said. The company also boasts money transfer, card issuances and banking licenses in 11 jurisdictions.

Francisco Alvarez-Demalde, co-founding partner and managing partner at Riverwood, said in an email that the combination of software — plus regulatory licenses — and operating a fintech infrastructure platform on behalf of neobanks and corporates is a global trend experiencing hyper-growth.

Riverwood followed Nium for many years, and its future vision was what got the firm interested in being a part of this round. Alvarez-Demalde said that “Nium has the incredible combination of a great market opportunity, a talented founder and team, and we believe the company is poised for global growth based on underlying secular technology trends like increasing real-time payment capabilities and the proliferation of cross border commerce.

“As a central payment infrastructure in one API, Nium is a catalyst that unlocks cross-border payments, local accounts and card issuance with a network of local market licenses, partners and banking relationships to facilitate moving money across the world,” he added. “Enterprises of all types are embedding financial services as part of their consumer experience, and Nium is a key global enabler of this trend.”

Nanu said the new funding enables the company to move to the United States, which represents 3% of Nium’s revenue. He wants to increase that to 20% over the next 18 months, as well as expand in Latin America. The investment also gives the company a 12- to 18-month runway for further M&A activity.  In June, Nium acquired virtual card issuance company Ixaris, and in July acquired Wirecard Forex India to expose it to India’s market. He also plans to expand the company’s payments network infrastructure, invest in product development and add to Nium’s 700-person headcount.

Nium already counts hundreds of enterprise companies as clients and plans to onboard thousands more in the next year. The company processes $8 billion in payments annually and has issued more than 30 million virtual cards since 2015. Meanwhile, revenue grew by over 280% year over year.

All of this growth puts the company on a trajectory for an initial public offering, Nanu said. He has already spoken to people who will help the company formally kick off that journey in the first quarter of 2022.

“Unlike other companies that raise money for new products, we aim to expand in the existing sets of what we do,” Nanu said. “The U.S. is a new market, but we have a good brand and will use the new round to provide a better experience to the customer.”

 

#api, #arjun-sethi, #asia, #atinum-capital, #beacon-venture-capital, #dwolla, #enterprise, #funding, #gokul-rajaram, #mobile-payments, #nium, #online-payments, #payments, #paystand, #prajit-nanu, #recent-funding, #riverwood-capital, #singapore, #tc, #temasek, #venture-capital, #vertex-ventures, #visa

Paystand banks $50M to make B2B payments cashless and with no fees

It’s pretty easy for individuals to send money back and forth, and there are lots of cash apps from which to choose. On the commercial side, however, one business trying to send $100,000 the same way is not as easy.

Paystand wants to change that. The Scotts Valley, California-based company is using cloud technology and the Ethereum blockchain as the engine for its Paystand Bank Network that enables business-to-business payments with zero fees.

The company raised $50 million Series C funding led by NewView Capital, with participation from SoftBank’s SB Opportunity Fund and King River Capital. This brings the company’s total funding to $85 million, Paystand co-founder and CEO Jeremy Almond told TechCrunch.

During the 2008 economic downturn, Almond’s family lost their home. He decided to go back to graduate school and did his thesis on how commercial banking could be better and how digital transformation would be the answer. Gleaning his company vision from the enterprise side, Almond said what Venmo does for consumers, Paystand does for commercial transactions between mid-market and enterprise customers.

“Revenue is the lifeblood of a business, and money has become software, yet everything is in the cloud except for revenue,” he added.

He estimates that almost half of enterprise payments still involve a paper check, while fintech bets heavily on cards that come with 2% to 3% transaction fees, which Almond said is untenable when a business is routinely sending $100,000 invoices. Paystand is charging a flat monthly rate rather than a fee per transaction.

Paystand’s platform. Image Credits: Paystand

On the consumer side, companies like Square and Stripe were among the first wave of companies predominantly focused on accounts payable and then building business process software on top of an existing infrastructure.

Paystand’s view of the world is that the accounts receivables side is harder and why there aren’t many competitors. This is why Paystand is surfing the next wave of fintech, driven by blockchain and decentralized finance, to transform the $125 trillion B2B payment industry by offering an autonomous, cashless and feeless payment network that will be an alternative to cards, Almond said.

Customers using Paystand over a three-year period are able to yield average benefits like 50% savings on the cost of receivables and $850,000 savings on transaction fees. The company is seeing a 200% increase in monthly network payment value and customers grew two-fold in the past year.

The company said it will use the new funding to continue to grow the business by investing in open infrastructure. Specifically, Almond would like to reboot digital finance, starting with B2B payments, and reimagine the entire CFO stack.

“I’ve wanted something like this to exist for 20 years,” Almond said. “Sometimes it is the unsexy areas that can have the biggest impacts.”

As part of the investment, Jazmin Medina, principal at NewView Capital, will join Paystand’s board. She told TechCrunch that while the venture firm is a generalist, it is rooted in fintech and fintech infrastructure.

She also agrees with Almond that the B2B payments space is lagging in terms of innovation and has “strong conviction” in what Almond is doing to help mid-market companies proactively manage their cash needs.

“There is a wide blue ocean of the payment industry, and all of these companies have to be entirely digital to stay competitive,” Medina added. “There is a glaring hole if your revenue is holding you back because you are not digital. That is why the time is now.”

 

#blockchain, #enterprise, #finance, #fintech, #funding, #jazmin-medina, #jeremy-almond, #king-river-capital, #mobile-payments, #newview-capital, #payments, #paystand, #recent-funding, #saas, #softbank, #startups, #stripe, #tc, #venmo, #venture-capital

WhenThen’s no-code payments platform attracts $6M from European VCs Stride and Cavalry

The payments space – amazingly – remains up for grabs for startups. Yes dear reader, despite the success of Stripe, there seems to be a new payments startup virtually every other day. It’s a mess out there! The accelerated growth of e-commerce due to the pandemic means payments are now a booming space. And here comes another one, with a twist.

WhenThen has built a no-code payment operations platform that, they claim, streamlines the payment processes “of merchants of any kind”.  It says its platform can autonomously orchestrate, monitor, improve and manage all customer payments and payments ops.

The startup’s opportunity has arisen because service providers across different verticals increasingly want to get into open banking and provide their own payment solutions and financial services.

Founded 6 months ago, WhenThen has now raised $6 million, backed by European VCs Stride and Cavalry.

The founders, Kirk Donohoe, Eamon Doyle and Dave Brown  are three former Mastercard Payment veterans.

Based “out of Dublin, CEO Donohoe told me: “We see traditional businesses embracing e-comm, and e-comm merchants now operating multiple business models such as trade supply, marketplace, subscription, and more. There is no platform that makes it easy for such businesses to create and operate multiple payment flows to support multiple business models in one place – that’s where we step in.”

He added: “WhenThen is helping ecommerce digital platforms build advanced payment flows and payment automation, in minutes as opposed to months. When you start to integrate different payment methods, different payment gateways, how you want the payment to move from collection through to payout gets very, very complex. I’ve been doing this for over a decade now, as an entrepreneur building different businesses that had to accept collect and pay payments.”

He said his founding team “had to build very complex payment flows for large merchants, airlines, hotels, issuers, and we just found it was ridiculous that you have to continue to do the same thing over and over again. So we decided to come up with WhenThen as a better way to be able to help you build those flows in minutes.”

Claude Ritter, managing partner at Cavalry said: “Basic payment orchestration platforms have been around for some time, focusing mostly on maximizing payment acceptance by optimizing routing. WhenThen provides the first end-to-end payment flow platform to equip businesses with the opportunity to control every stage of the payment flow from payment intent to payout.”

WhenThen supports a wide range of popular payment providers such as Stripe, Braintree, Adyen, Authorize.net, Checkout.com, etc., and a variety of alternative and locally preferred payment methods such as Klarna Affirm, PayPal, BitPay.

“For brave merchants considering global reach and operating multiple business models concurrently, I believe choosing the right payment ops platform will become as important as choosing the right e-commerce platform. Building your entire ecomm experience tightly coupled to a single payment processor is a hard correction to make down the line – you need a payment flow platform like WhenThen,” added Fred Destin, founder of Stride.VC.

#adyen, #authorize-net, #bitpay, #ceo, #checkout-com, #dublin, #e-commerce, #entrepreneur, #europe, #finance, #financial-services, #fred-destin, #klarna, #managing-partner, #mastercard, #merchant-services, #mobile-payments, #money, #online-payments, #open-banking, #payment-gateway, #payment-processor, #payment-solutions, #paypal, #stripe, #tc

Venmo removes its global, public feed in a significant app redesign

PayPal-owned payments app Venmo will no longer offer a public, global feed of users’ transactions, as part of a significant redesign focused on expanding the app’s privacy controls and better highlighting some of Venmo’s newer features. The company says it will instead only show users their “friends feed” — meaning, the app’s social feed where you can see just your friends’ transactions.

Venmo has struggled over the years to balance its desire to add a social element to its peer-to-peer payments-based network, with the need to offer users their privacy.

A few years ago, the company was forced to settle a complaint with the FTC over its handling of privacy disclosures in the app along with other issues related to the security and privacy of user transactions. One of the concerns at the time was a setting that made all transactions public by default — a feature the FTC said wasn’t being properly explained to customers. As part of the settlement, Venmo had to inform both new and existing users how to limit the visibility of their transactions, among other changes.

However, privacy issues have continued to follow Venmo over the years. More recently, BuzzFeed News was able to track down President Biden’s secret Venmo account because of the lack of privacy around Venmo friend lists, for example. Afterwards, the company rolled out friend list privacy controls to address the issue.

Image Credits: Venmo

In the newly updated app, Venmo will still highlight this friend list privacy setting so users can choose whether or not they want to have their profile appear on other people’s friends’ lists. Users will also still be able to remove or add contacts from their friend list at any time, block people, and set their transaction privacy either as they post or retroactively to public, private, or friends-only. It’s unclear what advantage posting publicly has though, as the global, public feed is gone. Instead, public transactions would be visible to a users’ non-friends only when someone visited their profile directly.

In addition to the privacy changes, Venmo’s redesign aims to make it easier for people to discover the app’s new features, the company says.

Now, a new bottom navigation option will allow users to toggle between their social feed, Venmo’s products like the Venmo Card and crypto, and their personal profile. The newly elevated “Cards” section will allow Venmo Credit and Debit cardholders to manage their cards and access their rewards and offers, as before. Meanwhile, the “Crypto” tab will let users learn and explore the world of crypto, view real-time trends, and buy, sell or hold different types of cryptocurrencies.

Image Credits: Venmo

Venmo first added support for crypto earlier this year, following parent company PayPal’s move to do the same, and now offers access to Bitcoin, Ethereum, Litecoin and Bitcoin Cash. Before, the option appeared as a small button next to the “Pay or Request” button at the bottom of the screen, which contributed to Venmo’s cluttered feel.

The updated app will also include support for new payment types and expanded purchase protections, which Venmo announced last month, and said would arrive on July 20. Customers will now be able to indicate if their purchase is for “goods and services” when they transact with a seller, which will make the transactions eligible for Venmo’s purchase protection plan — even if the seller doesn’t have a proper “business” account.

Because this now charges sellers a 1.9% plus 10-cent fee, there had been some backlash from users who either misunderstood the changes or just didn’t like them. But the move could help to boost Venmo revenue.

PayPal said in February that Venmo grew users 32% over 2020 to reach 70 million active accounts and expects the app to generate nearly $900 million in revenue this year — likely in part thanks to this and other new initiatives, like its crypto transaction fees.

Image Credits: Venmo

Beyond the more functional changes and the privacy updates, Venmo’s redesign also modernizes the look-and-feel of the app itself, which had become a little dated and overly busy. As Venmo had expanded its array of services, the hamburger (three line) menu in the top right of the old version of the app had turned into a long list of options and settings. Now that’s gone. The app uses new iconography, an updated font, and lots of white space to make it feel fresh and clean.

The app’s changes also somewhat de-emphasize the importance of the social feed itself. Although it may still default to that tab, other options now have equal footing with tabs of their own, instead of being hidden away in a menu or in a smaller button.

Venmo says the redesigned Venmo app will begin to roll out today to select customers and will be available to all users across the U.S. over the next few weeks.

#apps, #biden, #buzzfeed, #cryptocurrencies, #federal-trade-commission, #finance, #mobile-payments, #online-payments, #paypal, #peer-to-peer, #president, #united-states, #venmo

Google update will allow digital Covid-19 vaccination cards and test results to be stored on Android devices

Google is making it possible to store digital versions of either Covid-19 test results or vaccination cards on users’ Android devices. The company on Wednesday announced it’s updating its Passes API, which will give developers at healthcare organizations, government agencies, and other organizations authorized by public health authorities the ability to create digital versions of tests and vaccination cards which can then be saved directly to the user’s device. The Passes API is typically used to store things like boarding passes, loyalty cards, gift cards, tickets and more to users’ Google Pay wallet. However, the Google Pay app in this case will not be required, Google says.

Instead, users without the Google Pay app will have the option to store the digital version of the Covid Card directly their device, where it’s accessible from a homescreen shortcut. Because Google is not retaining a copy of the card, anyone who needs to store the Covid Card on multiple devices will need to download it individually on each one from the healthcare provider or other organization’s app.

The cards themselves show the healthcare provider or organization’s logo and branding at the top, followed by the person’s name, date of birth, and other relevant information, like the vaccine manufacturer or date of shot or test. According to a support document, healthcare providers or organizations could alert users to the ability to download their card via email, text, or through a mobile website or app.

In an example photo, Google showed the Covid-19 Vaccination Card from Healthvana, a company that serves L.A. County, However, it didn’t provide any other information about which healthcare providers are interested in or planning to adopt the new technology.

The Passes API update doesn’t mean Android users can immediately create digital versions of their Covid vaccination cards — something people have been taking pictures of as a means of backup or, unfortunately in some cases, laminating it. (That’s not advised, however, as the card is meant to be used again for recording booster shots.)

Rather, the update is about giving developers the ability to begin building tools to export the data they have in their own systems about people’s Covid tests and vaccinations to a local digital card on Android devices. To what extent these digital cards will become broadly available to end users will depend on developer adoption.

For the feature to work, the Android device needs to run Android 5 or later and it will need to be Play Protect certified, which is a licensing program that ensures the device is running real Google apps. Users will also need to set a lock screen on their device for additional security.

Google says the update will initially roll out in the U.S., followed by other countries.

The U.S. is behind other markets in making digital version of vaccination cards possible. Today, the EU’s Covid certificate, which shows an individual’s vaccination status, test results or recovery status from Covid-19, went live. The certificate (EUDCC) will be recognized by all EU members, and will aid with cross-border travel. Israel released a vaccine passport earlier this year that allows vaccinated people to show their “green pass” at places that require vaccinations. Japan aims to have vaccination passports ready by the end of July for international travel.

In the U.S., only a few states have active vaccine certification apps. Many others have either outright banned vaccine passports — which has become a politically loaded term — or are considering doing so.

Given this context, Google’s digital vaccination card is just that — a digital copy of a paper card. It’s not tied to any other government initiatives nor is it a “vaccine passport.”

#android, #api, #google, #google-pay, #health, #healthcare, #mobile, #mobile-payments, #technology, #united-states, #vaccination

Shopify expands its one-click checkout, Shop Pay, to any merchant on Facebook or Google

E-commerce platform Shopify announced this morning its one-click checkout service known as Shop Pay will become available to any U.S. merchant that sells on Facebook or Google — even if they don’t use Shopify’s software to power their online stores. That makes Shop Pay the first Shopify product offered to non-Shopify merchants, the company notes.

First introduced at its developer conference in 2017, Shop Pay is similar to other instant checkout solutions that offer an easier way to pay online by reducing the number of fields a customer has to fill out during the checkout process. The service remembers and encrypts the customer’s information, so consumers can check out with just a tap when shopping online and, as of recently, even pay for purchase in installments, thanks to a partnership with Affirm.

Shopify in February had expanded Shop Pay to Facebook and Instagram, in partnership with Facebook, but it only worked for existing Shopify merchants selling on those social platforms at the time. In May, Google announced at its I/O developer conference it was partnering with Shopify on an online shopping expansion that would give Shopify’s more than 1.7 million merchants the ability to reach customers through Google Search and other “shopping journeys” that began through other Google properties like Search, Maps, Images, Lens, and YouTube.

The company declined to share how many of its 1.7 million merchants are already available on Facebook or Google today, but said they are two of the most popular channels.

Following today’s announcement, other merchants will also have the option to adopt Shop Pay for their own Facebook or Google stores. While how many will actually do so is yet unknown, Shopify notes that every day 1.8 billion people log onto Facebook and a billion shopping sessions take place across Google.

The company also touted Shop Pay’s advantages, including its 70% faster checkout than a typical checkout offers, with a 1.72x higher conversion rate — meaning fewer abandoned charts.

For consumers, the advantage of using Shop Pay over a traditional checkout, beyond the speed, is its integration with Shopify’s mobile app, Shop, which organizes and tracks your online orders across merchants, including Amazon,  so you can see when orders are arriving or quickly ask questions and manage returns.

To date, the Shop app has tracked over 430 million orders, the company says.

Over time, the Shop app can also customize a feed including users’ favorite stores to point to other recommendations, including those from local merchants. Shopify confirmed that the Shop app will be able to track the Shop Pay-enabled orders from the non-Shopify merchants.

“Since launching, Shop Pay has set the standard for checkout experiences, facilitating more than $24 billion in orders,” noted Shopify VP, Carl Rivera, who heads Product for Shop. “According to studies, cart abandonment averages 70%, with nearly 20% occurring because of a complicated checkout process. Shop Pay makes that process fast and simple, and the expansion to all merchants selling on Facebook and Google is a mission-critical step in bringing a best-in-class checkout to every consumer, every merchant, every platform, and every device,” he added.

The expansion could be a notable challenge to other payment mechanisms, including PayPal, Venmo, Apple Pay, and those offered by the platforms themselves, thanks to Shopify’s growing traction with merchants — one analysis gives its platform a 23% market share in the U.S — combined with the popularity of the Shop app, now the No. 3 Shopping app on the App Store.

The news follows yesterday’s confirmation that Shopify has taken a significant stake in payments giant Stripe, the backbone of the Shop Pay service, as well as Shopify’s partner on merchant services, including bank accounts and debit cards.

Shopify says the Shop Pay service will be enabled for all U.S. merchants selling on Facebook in the “coming months,” and will roll out to all merchants on Google by late 2021.

 

#e-commerce, #ecommerce, #economy, #facebook, #google, #merchant-services, #mobile-payments, #online-shopping, #online-stores, #partner, #shop, #shopify, #shopping, #stripe, #tc, #united-states

Messenger adds Venmo-like QR codes for person-to-person payments in the U.S.

This spring, Facebook confirmed it was testing Venmo-like QR codes for person-to-person payments inside its app in the U.S. Today, the company announced those codes are now launching publicly to all U.S. users, allowing anyone to send or request money through Facebook Pay — even if they’re not Facebook friends.

The QR codes work similarly to those found in other payment apps, like Venmo.

The feature can be found under the “Facebook Pay” section in Messenger’s settings, accessed by tapping on your profile icon at the top left of the screen. Here, you’ll be presented with your personalized QR code which looks much like a regular QR code except that it features your profile icon in the middle.

Underneath, you’ll be shown your personal Facebook Pay UR which is in the format of “https://m.me/pay/UserName.” This can also be copied and sent to other users when you’re requesting a payment.

Facebook notes that the codes will work between any U.S. Messenger users, and won’t require a separate payment app or any sort of contact entry or upload process to get started.

Users who want to be able to send and receive money in Messenger have to be at least 18 years old, and will have to have a Visa or Mastercard debit card, a PayPal account or one of the supported prepaid cards or government-issued cards, in order to use the payments feature. They’ll also need to set their preferred currency to U.S. dollars in the app.

After setup is complete, you can choose which payment method you want as your default and optionally protect payments behind a PIN code of your choosing.

The QR code is also available from the Facebook Pay section of the main Facebook app, in a carousel at the top of the screen.

Facebook Pay first launched in November 2019, as a way to establish a payment system that extends across the company’s apps for not just person-to-person payments, but also other features, like donations, Stars, and e-commerce, among other things. Though the QR codes take cues from Venmo and others, the service as it stands today is not necessarily a rival to payment apps because Facebook partners with PayPal as one of the supported payment methods.

However, although the payments experience is separate from Facebook’s cryptocurrency walletNovi, that’s something that could perhaps change in the future.

Image Credits: Facebook

The feature was introduced alongside a few other Messenger updates, including a new Quick Reply bar that makes it easier to respond to a photo or video without having to return to the main chat thread. Facebook also added new chat themes including one for Olivia Rodrigo fans, another for World Oceans Day, and one that promotes the new F9 movie.

 

#apps, #cryptocurrencies, #e-commerce, #facebook, #facebook-messenger, #finance, #messenger, #mobile, #mobile-payments, #online-payments, #paypal, #qr-code, #social-media, #software, #technology, #united-states, #venmo

Wealthsimple raises $610M at a $4B valuation

Canadian fintech giant Wealthsimple has raised a new round of $750 million CAD (~$610 million) at a post-money valuation of $5 billion CAD (~$4 billion). The round was led by Meritech and Greylock, and includes funding from Inovia, Sagard, Redpoint, TSV, as well as individual investors including Drake, Ryan Reynolds and Michael J. Fox (basically, all the most famous Canadians).

Wealthsimple’s big new raise more than doubles its valuation from its last round, a $114 million CAD (roughly $93 million) funding announced last October, which carried a post-money valuation of $1.5 billion CAD ($~1.22 billion USD). The Toronto-based company has been a leader in the realm of democratizing financial products for consumers, including stock trading, crypto asset sales, and peer-to-peer money transfers.

The company says that it experienced significant growth during the pandemic, which is likely one big reason why its valuation rose so much between its most recent raise and this one. Its commission-free retail investment platform has grown “rapidly” over the course of the past 14 months, the company says, and the crypto trading platform which it launched last August has also seen strong uptake given the recent surge in consumer interest in cryptocurrency assets.

Late last year, Wealthsimple soft-launched its P2P money transfer app, Wealthsimple Cash, and in March it made it available to all Canadians. The app is very similar in terms of features to Venmo or Square’s Cash app, but neither of those offerings have been available to Canadians thus far. Wealthsimple’s app, which is free to use and distinct from its stock trading and crypto platforms, has thus tapped significant pent-up demand in the market and seen rapid uptake rthus far.

With this funding, Wealthsimple plans to “expand its market position, build out its product suite, and grow its team.” The company also offers automated savings and investing products (the robo-advisor tools it was originally founded around), as well as tax filing tools, and it has demonstrated a clear appetite and ability to expand its offerings to encompass even more of its customers financials lives when committed with fresh resources to do so.

The company says it has over 1.5 million users, with over $10 billion in assets under management as of the last publicly available numbers.

#cryptocurrencies, #finance, #financial-technology, #fintech, #funding, #michael-j-fox, #mobile-payments, #money, #peer-to-peer, #robo-advisor, #ryan-reynolds, #tc, #toronto, #venmo, #wealthsimple

Google Pay update adds grocery offers, transit expansions, and spending insights

Following November’s overhaul of Google Pay, which saw the service expanding into personal finance, the company today is rolling out a new set of features aimed at making Google Pay more a part of its users’ everyday lives. With an update, Google Pay will now include new options for grocery savings, paying for public transit, and categorizing their spending.

Through partnerships with Safeway and Target, Google Pay users will now be able to browse their store’s weekly circulars that showcase the latest deals. Safeway is bringing over 500 stores to the Google Pay platform, and Target stores nationwide will offer a similar feature. Google Pay users will be able to favorite the recommended deals for later access. And soon, Google Pay will notify you of the weekly deals when you’re near a participating store, if location is enabled.

Image Credits: Google

Another update expands Google Pay’s transit features, which already today support buying and using transit tickets across over 80 cities in the U.S. New additions arriving soon now include major markets, Chicago and the San Francisco Bay Area. This follows Apple Pay’s recently added and much welcomed support for the Bay Area’s Clipper card. The company is also integrating with Token Transit to expand transit support to smaller towns across the U.S.

Soon, the Google Pay app will also allow Android users to access transit tickets from the app’s homescreen through a “Ride Transit” shortcut. They can then purchase, add, or top up the balance on transit cards. Once purchased, you’ll be able to hold up your transit card to a reader — or show a visual ticket in the case there’s no reader.

The final feature is designed for those using Google Pay for managing their finances. With last year’s revamp, Google partnered with 11 banks to launch a new kind of bank account it called Plex. A competitor to the growing number of mobile-only digital banks, Google’s app serves as the front-end to the accounts which are actually hosted by the partner banks, like Citi and Stanford Federal Credit Union.

As a part of that experience, Google Pay users will now gain better access into their spending behavior, balances, bills, and more via an “Insights” tab. Here, you’ll be able to see what your balance is, what bills are coming due, get alerts about larger transactions, and tracking spending by either category or business. As Google is now automatically categorizing transactions, that means you’ll be able to search for general terms (like “food”) as well as by specific business names (like “Burger King”), Google explains.

Image Credits: Google

These features are a part of Google’s plan to use the payments app to gain access more data on users, who can then be targeted with offers from Google Pay partners.

When the redesigned app launched, users were asked to opt in to personalization features which could help the app show users better, more relevant deals. While Google says it’s not providing your data directly to these third-party brands and retailers, the app provides a conduit for those businesses to reach potential customers at a time when the tracking industry is in upheaval over Apple’s privacy changes. Google ability to help brands reach consumers through Google Pay could prove to be a valuable service, if the is able to grow its user base, and encourage more to opt in to the personalization features.

To make that happen, you can expect Google Pay to roll out more useful or “must have” features in the weeks to come.

#android, #apple-pay, #bank, #chicago, #finance, #google, #google-pay, #mobile-payments, #online-payments, #personal-finance, #safeway, #target, #united-states

Mobile bank Current raises $220 million Series D, triples valuation to $2.2B

U.S.-based challenger bank Current, which has now grown to nearly 3 million users, announced this morning it has raised a $220 million round of Series D funding, led by new investor Andreessen Horowitz (a16z). The funding swiftly follows Current’s $131 million Series C at the end of last year, at which point the company had doubled its user base over just six months to over 2 million users.

As a result of the new roud, the fintech company has roughly tripled its valuation in five months’ time to $2.2 billion.

Other participants in the round include returning investors Tiger Global Management, TQ Ventures (the fund managed by media executive Scooter Braun), Avenir, Sapphire Ventures, Foundation Capital, Wellington Management and EXPA. David George, who led the round with a16z, will become a Current board member.

Current began its life as a teen debit card controlled by parents, but later expanded to offer personal checking accounts powered by the same underlying banking technology. Like a range of modern-day “neobanks,” or digital banks, the Current app offers a baseline of standard features like free overdrafts, no minimum balance requirements, faster direct deposits, instant spending notifications, banking insights, free ATMs, check deposits using your phone’s camera and more. It also last year launched a points rewards program in an effort to better differentiate its service from the growing number of competitors and became one of the first banks to transfer the early round of stimulus payments during the pandemic.

These days, Current is partnering with creators, like the recently announced MrBeast (aka Jimmy Donaldson), who said last week on his YouTube channel that he will personally send $1 to every 100,000 people who sign up using his Creator code. MrBeast is also an investor.

Like other fintechs in its same space, Current has benefitted from the younger generation’s adoption of mobile banking apps instead of larger, traditional banks, who they feel don’t serve their interests. Its average customer age is 27, for example. Digital banks can keep costs down by not having to pay for the overhead of brick-and-mortar locations, allowing them to roll out benefits like reduced or zero account fees and other consumer-friendly protections.

Current today continues to offer teen banking, in a challenger to mobile banking app Step, which has also leveraged social media influencers to get the word out with a younger demographic. But Step today is appealing to the 13 to 18-year old crowd directly, offering banking services and a secured card. Current, meanwhile, targets its service to the parents.

Its teen account costs $36 per year, while personal checking is available both as a free and premium ($4.99/mo) service. The company in the past has said its primary focus is the over 130 million Americans who live paycheck to paycheck.

Current says the new funds will be used to grow the company and its member base as it expands it range of banking products. One key area of new investment will be cryptocurrency, it says.

“This new generation of customers doesn’t want to bank in physical branches,” said a16z’s David George, in a statement. “We believe there will be a shift in the next 10 years to mobile and consumer-focused banking services powered by innovation in technology, and with Current’s exceptional growth over the past year, they’ve clearly demonstrated they’re at the forefront of this trend. Their product is among the best in the market, and they have proven an ability to reach customers who previously were unserved or underserved by traditional banks,” he said.

#andreessen-horowitz, #bank, #banking, #challenger-bank, #current, #finance, #funding, #mobile, #mobile-banking, #mobile-payments, #money, #tc

PicPay, the Brazilian mobile payments platform, files for an IPO on Nasdaq

Brazilian mobile payments app PicPay filed an F-1 with the Securities and Exchange Commission (SEC) for an IPO valued at up to $100 million on Wednesday. The company plans to list on the Nasdaq under the ticker symbol PICS.

PicPay operates largely as a financial services platform that includes a credit card; a digital wallet similar to that of Apple Pay; a Venmo-style P2P payments element; e-commerce, and social networking features.

“We want to transform the way people and companies interact, make transactions, and communicate in an intelligent, connected, and simple experience,” said José Antonio Batista, CEO of PicPay, in a statement.

While the company is based in Sao Paulo now and operates across Brazil, PicPay originally launched in Vitoria in 2012, a coastal city north of Rio. In 2015 the company was acquired by the group J&F Investimentos SA, a holding company owned by Brazilian billionaire brothers Wesley and Jose Antonio Batista, which also own the gigantic meatpacker JBS SA.

2020 was an explosive year for PicPay as the company saw its active userbase grow from 28.4 million to 36 million as of March 2021. According to the company’s 2020 financial report, which PicPay shared with TechCrunch, the company’s revenues also grew drastically from $15.5 million in 2019, to $71 million in 2020. The company is not yet profitable, however, and PicPay shelled out $146 million in 2020 to fuel its growth.

“We believe that the growth of our base and user engagement in our ecosystem demonstrates the scalability of our business model and reveals a great opportunity to generate more value for these customers,” Batista added.

Fintech is one of the most popular sectors in Brazil today, because there’s a lot of room for improvement in the region. The country has traditionally been controlled by four major banks, which have been slow to adapt to technology and also charge very high fees.

PicPay’s IPO is being led by Banco Bradesco BBI, Banco BTG Pactual, Santander Investment Securities Inc., and Barclays Capital Inc. 

*The Brazilian Real was valued at 5.50 to $1 USD on the date of publication.

#brazil, #e-commerce, #fintech, #initial-public-offering, #mobile-payments, #securities-and-exchange-commission, #social-networking, #tc

Forget the piggy bank, Till Financial’s kids’ spend management app gets Gates’ backing

Today’s children and teens want more power and control over their spending.

And while there are a number of financial services and apps out there aimed at helping this demographic save and invest money (Greenlight being among the most popular and well-known), one startup is coming at the space from another angle: helping younger people also better manage their spend.

Till Financial describes itself as a collaborative family financial tool that aims to empower kids to become smarter spenders. The New York-based company’s banking platform is designed to encourage “open and honest” discussions between parents and their kids. And it has just raised $5 million to help it advance on that goal.

A slew of investors put money in the round, including Elysian Park Ventures, Melinda Gates’ venture fund Pivotal Ventures with Magnify Ventures, Afore Capital, Luge Capital, Alpine Meridian Ventures, The Gramercy Fund, SM Ventures (the family office of the founders/CEOs of Stadium Goods) and Lightspeed Venture Partners’ Scout Fund. Also participating were angel investors such as the founders of fintech Petal, the founders of alcohol marketplace Drizly, the president of Transactis, and the president of 1800Flowers.

Part of Till’s goal is to help kids “learn by doing” and gain confidence in spending decisions. It arms them with a bank account, digital and physical debit card and goal-based savings. For example, say a teen wants to buy an iPad, they can set up an account that they can save toward that iPad and give family members (such as grandparents, for example) the opportunity to pitch in the same amount, or more. They can also set up recurring payments for things like Netflix or Spotify subscriptions so they can get a taste of what it’s like to pay regular bills.

“Parents and the current banking options miss the point when they just focus on savings. We need to first prepare kids to be Smarter Spenders, supported by savings and investing,” said Taylor Burton, who founded the company with Tom Pincince. “On Till, kids learn to spend with intention and purpose, while parents gain confidence and trust based on transparency and accountability.”

To Pincince, the market is clearly underserved.

“The legacy banks really don’t care about this young person and the early digital players are really missing the mark,” he said. 

And despite the plethora of apps targeting the demographic, Pincince believes there’s plenty of room for the right players.

“The reality is you’re talking about a swath of kids under the age of 18 and over the age of eight that is the single largest unbanked population,” he said. “We’re not fighting to be the top of your son’s wallet. We’re fighting to be the first product into that wallet.”

Indeed, it’s a big market — the average middle-class family in the U.S. spends $284,570 per child by the time they turn 18.

The platform is free to all families and, early on, attracted the attention of Peggy Mangot, operating partner/COO of PayPal Ventures. She invested personally in Till in its pre-seed rounds. Prior to PayPal, Mangot ran development of Greenhouse, Well Fargo’s fee-free mobile banking app that aimed to help younger users build responsible spending habits.

Mangot has three kids and recalls that when they were shopping online, she’d give them her credit card. Or, if they were going to the corner store or meeting with friends, she’d give them cash.

“But that way, the money is meaningless to them. They didn’t really know how to understand what things cost and there was no sense of ownership,” she said. “It was just me handing over cash or a card.”

What attracted her the most about Till, Mangot said, was the team’s approach to treat younger people “with respect and agency.”

She also believes that by helping children and teens understand important financial lessons at a younger age, the world will ultimately be full of more responsible adults.

“By putting these tools in the hands of these young people early, they’ll have years and years of experience before they’re more independent and have to manage their paycheck and bills,” Mangot told TechCrunch. “Once you have mass adoption, it’s going to create a much more financially literate, confident and in control set of young adults than we’ve ever had.”

Besides making money on interchange fees, Till aims to earn revenue by partnering with merchants to offer rewards to users. It also plans to earn referral fees by referring the teens to other financial institutions when they get older and have different needs.

“It’s not our intention to be your son or daughter’s forever bank. It’s our intention to be the first bank,” Pincince said. “So, they hit the age of maturity, we’re actually giving them a high-five off of our platform and introducing them to maybe their first college loan or their first credit card.”

#afore-capital, #bank, #banking, #debit-card, #drizly, #ebay, #finance, #financial-services, #fintech, #funding, #fundings-exits, #ipad, #lightspeed-venture-partners, #luge-capital, #melinda-gates, #mobile-banking, #mobile-payments, #netflix, #new-york, #online-payments, #paypal, #pivotal-ventures, #recent-funding, #spotify, #stadium-goods, #startup, #startups, #tc, #till-financial, #tom-pincince, #united-states, #up, #venture-capital

Fueled by pandemic, contactless mobile payments to surpass half of all smartphone users in U.S. by 2025

Among other technology trends accelerated by the Covid-19 pandemic, the use of contactless mobile payments boomed in 2020. According to a recent report by analyst firm eMarketer, in-store mobile payments usage grew 29% last year in the U.S., as the pandemic pushed consumers to swap out cash and credit cards for the presumably safer mobile payments option at point-of-sale.

Last year, 92.3 million U.S. consumers age 14 or older used proximity-based mobile payments at least one time during a 6-month period in 2020 — a figure the firm expects to grow to reach 101.2 million this year. And that usage is now on track to surpass half of all smartphone users by 2025, eMarketer forecasts.

Image Credits: eMarketer

Adoption last year was largest among younger consumers, including Gen Z and millennials. The former is expected to account for more than 4 million of the total 6.5 million new mobile wallet users per year from 2021 to 2025. Millennials, meanwhile, will continue to account for around 4 in 10 mobile wallet users.

Several industry reports had already noted the pandemic impacts on the mobile wallet industry in general, with one from earlier this month by finance and investment company Finaria estimating that the industry would grow 24% from last year to reach $2.4 trillion in 2021. It had said that while Asian markets and particularly China had been leading the way in mobile payments adoption, the U.S. had earlier struggled due to the slow rollout of mobile payment technologies by retail stores. But now, the U.S. has grown to become the second-largest market with $465.1 billion worth of mobile payment transactions, which will grow to $698 billion in 2023.

The pandemic had pushed lagging retailers to finally get on board with mobile payments. A mid-year survey published in 2020 by the National Retail Federation and Forrester, found that no-touch payments had increased for 69% of retailers, and that 67% now accept some form of contactless payment, including both mobile payments and contactless cards.

Image Credits: eMarketer

As a result of the industry changes, eMarketer reports that not only has mobile wallet usage increased, the average annual spend per user is increasing, as well. The firm predicts that figure will grow 23.6% from ~$1,973.70 in 2020 to $2,439.68 in 2021, and will surpass $3,000 by 2023.

In the U.S., Apple Pay remains the top mobile payment player with 43.9 million users in 2021, growing by 14.4 million between 2020 and 2025 — more than its competitors. Starbucks will remain the No. 2 player with 31.2 million users, followed by Google Pay, which will add 10.2 million users during that time frame. Samsung Pay, meanwhile, is seeing stagnant growth, adding just 2 million more users between 2020 and 2025.

Image Credits: eMarketer

#apple, #apple-pay, #china, #digital-wallet, #finance, #google, #mobile-payments, #retail-stores, #samsung, #smartphone, #starbucks, #tc, #technology-trends

Accel-backed mobile money platform NALA to start offering remittance services to East Africa

According to a McKinsey report, the total number of mobile money services worldwide was 282 in 2017, with more than half of those operating in sub-Saharan Africa. 

In 2020, these numbers increased significantly, but the ratio remained similar.  In 96 countries, there are 310 live mobile money services, according to a GSMA report. Out of that number, 171 are from Africa, while 157 are in sub-Saharan Africa.

In Tanzania, mobile money services can be relatively difficult to use due to unstable internet and high service fees. Benjamin Fernandes noticed this as a national television host while building a mobile money service to enable people to pay for TV subscriptions in East Africa back in 2011

Six years later, he would start his own mobile money and wallet aggregator, NALA, to solve these issues. Its first mobile application allowed users to make mobile money payments and utilize mobile banking without an internet connection. The business grew to 250,000 users in over a year after its official launch.

Last year, the WorldBank predicted a sharp decline of international remittances to Africa. But even though Africa is still the most expensive region to send money to with averages of 10.6% in transaction fees, the opposite happened. There was an increase in remittance activity on the continent.

Kenya, for instance, had its highest-ever inbound remittance at $3 billion, while WorldRemit acquired Sendwave in August 2020 for $500 million and Mama Money claimed to have grown 500% within the year.

NALA also noticed an uptick in remittance requests where 1 in 7 users wanted to receive money internationally. This happened despite not being in that business at the time. It’s not hard to see why: Presently, over 70% of money sent to Sub-Saharan Africa is transacted through physical stores. When many over-the-counter services were suspended or limited due to coronavirus restrictions, people were left with expensive, unreliable or hard-to-access alternatives.

Combined with the increasing trend for digital-first financial services and listening to some users’ requests, NALA began testing international money transfers in August 2020 to facilitate payments from the U.K. to Kenya, Uganda and Tanzania. By building a multi-currency ledger where people can send money from the U.K. to Tanzania and back to the U.K., Fernandes says NALA can build a Wise for Africa.

I believe international payments are only 1% built today. Until you can send money both ways seamlessly, our work isn’t done,” Fernandes told TechCrunch. We believe African markets should be ‘sender’ markets, too; there is a lot of trade happening with other countries, and most of the money is sent via costly bank wires or at physical stores. It doesn’t need to be this way; it’s time for something better.” 

Various platforms are trying to achieve this, but none specifically targets the East African region. That is NALA’s play, according to the CEO. “This is where we see a big advantage for us. We are local, we understand mobile money, we built bill payments on our previous product, and this is an extension of that,” he added.

Benjamin Fernandes (CEO, Nala)

Since graduating as the first East African company from Y Combinator in 2019, NALA has brought other interesting investors on board to support its mission. The most notable is Accel, which has been kept under wraps for some time. The VC firm rarely makes deals on the continent and has only invested in NALA and Egypt’s Instabug. Other backers include NYCA Partners and angel investors like Shamir Karkal (co-founder of Simple), Peeyush Ranjan (former Flipkart CTO and current head of Google Payments), and Thomas Stafford (DST Global)

NALA also enlisted the services of Nicolas Esteves, who was the VP of engineering at Osper and had a stint at Monzo to become the company’s CTO which, according to Fernandes, will considerably improve the company’s chances of achieving its goal. “When we brought someone of his calibre on our team, it just opened up the doors of what we could accomplish because he has built multi-currency ledgers across different large companies.”   

For now, though, the company will be rolling out a beta product next month for U.K.-based customers sending money to Kenya and Uganda (Tanzania will come later). The company claims that the service will support instant payments to all major mobile money accounts and says it is closing some banking partnerships that will allow it to facilitate money transfers from East Africa to the U.K.

#accel, #africa, #east-africa, #finance, #kenya, #mobile-payments, #monzo, #nala, #payments, #remittance, #tanzania, #tc, #uganda, #y-combinator

Fraud prevention platform Seon raises a $12M Series A round led by Creandum

Seon, which lets online businesses fight online fraud like fake accounts has raised a $12 million Series A round led by Creandum, with participation from PortfoLion, part of OTP Bank. The funding appears to be one of Hungary’s larger series A rounds to date.
 
Seon is a fraud-detection startup that establishes a customers’ ‘digital footprint’ in order to weed out false accounts and thus prevent fraudulent transactions. Clients include Patreon, AirFrance, Rivalry and Ladbrokes Launched in 2017, the company claims to bave been profitable since the end of 2019, after experiencing growth through working with neobanks, esports, gaming, Forex, and crypto trading throughout the rapid digitization brought on by the pandemic.

SEON’s CEO and Founder, Tamas Kadar, said in a statement: “We’re extremely pleased to have completed our latest funding round, led by Creandum, joining its exciting tech portfolio. We feel we have found a like-minded investor to work closely with to pursue the significant global opportunity for our business as we continue to democratize fraud fighting.”
 
Simon Schmincke, general partner at Creandum, said: “At Creandum, we believe cybercrime will be one of the most serious threats of the 21st century. With SEON, we’ve found an anti-fraud solution that’s effective, affordable, flexible, intuitive, and clearly proves its ROI.”
 
Gábor Pozsonyi, partner at PortfoLion Capital Partners, added: “Seon is a fundamentally useful brand: it offers a solution to one of the greatest challenges of digitalization, not only saving hundreds of millions of euros for its partners but making the internet a safer place.”

SEON are seen as competing with Emailage, Iovation, Threatmetrix. However, SEON’s thesis is that social media is a great proxy of a legitimate user vs bot/fake fraudster, so it looks heavily at social accounts to weed out fraudsters.

As part of the funding round, Seon has brought on board the following investors as shareholders: N26 founders, Maximilian Tayenthal and Valentin Stalf; SumUp founders Stefan Jeschonnek and Jan Deepen; Tide CEO Laurence Krieger; Revolut ex-CFO Peter O’Higgins; iZettle ex-chief Product Officer Leo Nilsson; Onfido cofounder Eamon Jubawy, and ComplyAdvantage founder Charlie Delingpole.

#ceo, #cfo, #charlie-delingpole, #cofounder, #europe, #financial-services, #financial-technology, #general-partner, #hungary, #izettle, #laurence-krieger, #mobile-payments, #n26, #onfido, #online-fraud, #online-payments, #partner, #patreon, #portfolion, #revolut, #social-media, #tc, #threatmetrix, #tide

Flutterwave and PayPal collaborate to allow African merchants to accept and make payments

It is nearly impossible for businesses in some African countries to receive money from PayPal. While the payments giant has not given reasons why this is so, speculation hints at factors like insufficient regulation and poor banking security in said countries. 

That might be a thing of the past for some businesses as African payments company Flutterwave today is announcing a collaboration with PayPal to allow PayPal customers globally to pay African merchants through its platform.

Via this partnership, businesses can connect with the more than 377 million PayPal accounts globally and overcome the challenges presented by the highly fragmented and complex payment and banking infrastructure on the continent.

According to CEO Olugbenga ‘GB’ Agboola, this will happen via a Flutterwave integration with PayPal so merchants can add PayPal as a payment option when receiving money outside the continent. The service, which is already available for merchants with registered business accounts on Flutterwave, will be operational across 50 African countries and worldwide, the company claims. Flutterwave hopes to roll out this service to individual merchants on the platform as well.  

“In a nutshell, we’re bringing more than 300 million PayPal users to African businesses so they can accept payments across the continent,” he said to TechCrunch. “Our mission at the company has always been to simplify payments for endless possibilities, and from when we started, it has always been about global payments. So despite having the largest payment infrastructure in Africa, we want to have arguably all the important payments systems in the world on our platform.”

A PayPal spokesperson confirmed the Flutterwave collaboration with TechCrunch.

Since the company’s expansion to Africa, it has maintained a one-sided relationship with most countries on the continent, allowing them only to send money. And according to its website, only 12 African countries can send and receive money on the platform, but to varying degrees. They include Algeria, Botswana, Egypt, Kenya, Lesotho, Malawi, Mauritius, Morocco, Mozambique, Senegal, Seychelles and South Africa.

Users in countries who are not afforded the luxury to do so have to rely on using the PayPal account of a friend or family, based in countries where payments can be received. Next, they request the funds via bank transfer, leading to more incurred costs or use other cross-border money platforms like WorldRemit.

This is a pain point for these businesses, particularly in Nigeria. PayPal finally arrived Africa’s most populous country in 2014 and a year later, it became the company’s second-biggest market on the continent.

But despite its fast adoption rate and large fintech appetite, merchants cannot still receive payments from other countries on the platform with various sources alluding PayPal’s decision to the country’s history with internet fraud.

Fraud or not, Nigeria’s e-commerce and that of the continent at large continues to grow at a breathtaking pace. In 2017, Africa generated $16.5 billion in revenue, and by 2022, it is expected to reach $29 billion. With numbers like this, it isn’t hard to see why PayPal wants to get in on the action, albeit not completely. Hence, the partnership with Flutterwave.

The company, via its APIs, offer payment services to individuals and businesses across the continent. Since launching in 2019, the African payments company has partnered with Visa to launch Barter; Alipay to offer digital payments between Africa and China; and Worldpay FIS for payments in Africa.

But this one with PayPal is arguably its biggest partnership yet. Now, African businesses have more access to sell to global customers using PayPal to receive and send payments online. 

In a way, Flutterwave absorbs most of the risk PayPal thinks it will incur if it makes its platform more open to merchants in these countries. But at the same time, it solidifies Flutterwave’s position in the eyes of multinationals looking to enter the African market.

Like when its partnership with Worldpay FIS coincided with its Series B funding, this announcement is also coming on the back of a raise. Last week, the payments company closed a $170 million Series C led by Avenir Growth Capital and Tiger Global, becoming a billion-dollar company in the process.

In hindsight, the mammoth raise suggests that there are a couple of projects in the company’s pipeline. Going by this partnership, we can expect the majority of them to be global plays.

Yet, these questions remain top of mind — What happens when PayPal automatically allows businesses from these neglected African countries to start receiving payments? Will both services continue to coexist if that happens? We’ve reached out to PayPal for comment.

However that plays out, this is a step forward in the right direction for Flutterwave, which has shown time and time again the length it is willing to go for its 290,000 merchants and the ongoing quest to become a global payments company.

“By working with PayPal, we can further strengthen our commitment to our customers and service users as we will be enabling them to transact and expand their business operations to reach new markets. PayPal’s global reach is unrivalled, and collaborating with them allows our customers to explore new markets where PayPal is embedded,” the CEO said.

#africa, #alipay, #cross-border-e-commerce, #ecommerce, #finance, #flutterwave, #kenya, #mobile-payments, #money, #nigeria, #payments, #paypal, #startups, #tc, #worldpay

Venmo to gain crypto, budgeting, savings, and Honey integrations this year

The Venmo mobile payments app is going to look very different in 2021 as it inches closer to neobank territory with expansions into budgeting, saving, and cryptocurrency, said Venmo parent company PayPal, during its fourth-quarter earnings on Wednesday. The company also plans to put its $4 billion Honey acquisition to work by integrating its suite of shopping tools into the Venmo app, including merchant offers, deals, price tracking and wish lists.

PayPal already signaled its intentions to bring cryptocurrencies to Venmo. The company entered the crypto market last November by adding support for buying, holding, and selling cryptocurrencies in the U.S. through a partnership with the regulated crypto services provider, Paxos Trust Company. At the time, PayPal noted it would bring a similar feature set to its Venmo app during 2021.

That time frame is still on track, PayPal confirmed during its earnings call with investors.

The company said, in the next few months, Venmo users will gain the ability to buy, hold and sell crypto inside the Venmo mobile app, along with other “investment alternatives.” (This statement refers to PayPal’s work with central banks who are developing their own digital currencies on the blockchain.)

Other changes to Venmo make the app sound as if it’s becoming more of a neobank competitor.

For example, PayPal said it will work with its financial industry partners this year to introduce features like budgeting and saving tools as well as bill pay options inside PayPal — additions that are common to modern-day mobile banking apps.

On Venmo, the forthcoming savings feature will look similar to PayPal’s existing PayPal Cash Plus account, where it partners with financial institutions to provide FDIC pass-through insurance. Today, funds held in the Cash Plus account are eligible for this insurance only if customers also have a PayPal Cash Card debit card, have enrolled in Direct Deposit, or have established Goals in their Cash Plus account. Venmo now has the pieces in place to offer the same.

Another change includes the Honey integration, which PayPal has been promising for some time. Now, the company is offering more details around what those integrations will look like. It said the plan is to integrate Honey’s features into both its PayPal and Venmo platforms in the first half of 2021 — including Honey’s wish list, price monitoring tools, deals, coupons and rewards.

This integration will allow merchants to target specific demographics of PayPal and Venmo customers with personalized offers and discounts, thanks to PayPal’s two-sided marketplace. In other words, the company will attempt to capture the consumer in the earlier stages of the shopping process, when they’re browsing for deals, looking up prices, or searching for specific products. Honey’s shopping tools could point them to a matching deal, and then the customer could complete the checkout process using the Venmo app. 

These new tools will arrive at a time when the pandemic has forced more commerce to shift online, as retail stores and other in-person retail opportunities declined due to store closures and government lockdowns. Plus, some people today now just prefer to shop online because they no longer feel safe in physical retail stores where basic safety measures like mask-wearing and social distancing aren’t enforced.

This broader acceleration of e-commerce and “contactless” payments also helped PayPal to add 1.4 million new merchants in the quarter. It now has 29 million merchants across its platform, who interact with now nearly 350 million consumers.

Meanwhile, Venmo’s total payment volume grew 60% year-over-year to $47 billion, and its customer base grew 32%, ending just shy of 70 million accounts. The company expects its revenues will approach $900 million in 2021.

Venmo credit card

Image Credits: Venmo

Venmo has been rapidly expanding beyond being just a payments app. In recent months, it has launched its first credit card, which will be 100% rolled out by month-end, as well as QR codes for in-store shopping, business profiles, and cash-checking features that arrived just in time to handle customers’ stimulus checks.

But Venmo doesn’t aim to be a full neobank — at least not yet. Instead, it imagines itself as more of a “digital wallet” of sorts.

“Today’s digital reality is rapidly accelerating the need for a digital wallet that encompasses payments, financial services and shopping,” explained PayPal CEO Dan Schulman, speaking to investors. “This year, our digital wallet will change more than it has ever changed before, significantly increasing its functionality within a single, integrated and beautifully designed app that should meaningfully increase consumer engagement,” he said.

As Venmo’s new features roll out, PayPal expects the app’s usage and payment volume to grow.

“I think we are going to see….a real bend in the historic rate of engagement. And it’s going to be all around that super app functionality in that digital wallet, moving well beyond just payments,” Schulman said.

Correction, 2/4/21, 1 pm et —  Schulman’s note about bill pay was referencing a launch inside PayPal’s app in 2021. It was mentioned alongside other forthcoming Venmo features, which led to some confusion. We’ve now corrected this. 

#digital-currency, #e-commerce, #finance, #financial-services, #mobile-banking, #mobile-payments, #online-payments, #online-shopping, #paypal, #venmo

Barclays adds itemised digital receipts to its banking app in partnership with fintech Flux

Flux, the London fintech that has built a technology platform for banks and merchants to power itemised digital receipts and more, has seen its lengthy pilot with Barclays bear fruit.

Announced formally today — but actually quietly rolled out a few months ago — Flux-powered digital receipts are now available as an opt-in for all U.K. Barclays debit card holders within the bank’s main mobile banking app. Previously, the functionality was only available within the Barclays Launchpad app, which is available for customers that want to try out experimental or upcoming features.

Early last year, Barclays announced that it has invested in Flux, taking a minority stake, so the strengthening of its partnership isn’t too much of a surprise. Flux also went through the Techstars-powered Barclays accelerator in its very early days. However, not all corporate accelerators lead to great outcomes as corporates are notoriously risk-adverse. This one certainly wasn’t rushed but it’s meaningful regardless, giving Flux a major shot in the arm in reaching mainstream banking customers beyond the existing challenger bank partnerships it has forged.

“Customers who pay using their Barclays debit card for future in store purchases at H&M, shoe retailer schuh and food outlets, which include Just Eat and Papa Johns, will see their receipts sent automatically to their app after making a purchase. They can then easily and securely view their receipts whenever they need by tapping on the transaction,” says Barclays. Crucially, although opt-in, Barclays customers will receive a prompt to set up digital receipts when they purchase items from retailers currently on-boarded to Flux.

Founded in 2016 by former early employees at Revolut, Flux bridges the gap between the itemised receipt data captured by a merchant’s point-of-sale (POS) system and what little information typically shows up on your bank statement or mobile banking app. Off the back of this, it can also power loyalty schemes and card-linked offers, as well as give merchants much deeper POS analytics via aggregated and anonymised data on consumer behaviour, such as which products are selling best in unique baskets.

On the banking side, along with Barclays, Flux has partnered with challenger banks Starling and Monzo. Once banking customers link their account to the service, Flux delivers digital receipts (and where available rewards and loyalty) for transactions at Flux retailer partners.

Longer-term, Flux wants to become a standard for the interchange of item level digital receipt data — and the proprietary platform that powers that standard — but has always faced a chicken and egg problem: It needs bank integrations to sign up merchants and it needs merchant integrations to sign up banks. Barclays going live properly is another significant turn in the upstart’s flywheel.

#bank, #banking, #barclays, #europe, #finance, #financial-services, #flux, #fundings-exits, #london, #mobile-banking, #mobile-payments, #startups, #tc, #techstars

China’s draft payments rules put Ant, Tencent on notice

A string of recent events in China’s payments industry suggests the duopoly comprising Ant Group and Tencent may be getting a shakeup.

Following the abrupt call-off of Ant’s public sale and a government directive to reform the firm’s business, the Chinese authorities sent another message this week signaling its plan to curb concentration in the flourishing digital payments industry.

The set of draft rules, designed to regulate non-bank payments and released by the People’s Bank of China (PBOC) this week, said any non-bank payments processor with over one-third of the non-bank payments market or two companies with a combined half of the market could be subject to regulatory warnings from the anti-monopoly authority under the State Council.

Meanwhile, a single non-bank payments provider with over one half of the digital payments market or two companies with a combined two-thirds of the market could be investigated for whether they constitute a monopoly.

The difference between the two rules is nuanced here, with the second stipulation focusing on digital payments as opposed to non-bank payments in the first.

Furthermore, the rules did not specify how authorities measure an organization’s market share, say, whether the judgment is based on an entity’s total transaction value, its transaction volume, or other metrics.

Alipay processed over half of China’s third-party payments transactions in the first quarter of 2020, according to market researcher iResearch, while Tencent handled nearly 40% of the payments in the same period.

 

As China heightens scrutiny over its payments giants, it’s also opening up the financial market to international players. In December, Goldman Sachs moved to take full ownership of its Chinese joint venture. This month, PayPal became the first foreign company with 100% control of a payments business in China after it bought out the remaining stake in its local payments partner Guofubao.

Industry experts told TechCrunch that PayPal won’t likely go after the domestic payments giants but may instead explore opportunities in cross-border payments, a market with established players like XTransfer, which was founded by a team of Ant veterans.

Ant and Tencent also face competition from other Chinese internet firms. Companies ranging from food delivery platform Meituan, e-commerce platforms Pinduoduo and JD.com, to TikTok’s parent firm ByteDance have introduced their own e-wallets, though none of them have posed an imminent threat to Alipay or WeChat Pay.

The comprehensive proposal from PBOC also defines how payments processors handle customer data. Non-bank payments services are to store certain user information and transaction history and cooperate with relevant authorities on data checks. Companies are also required to obtain user consent and make clear to customers how their data are collected and used, a rule that reflects China’s broader effort to clamp down on unscrupulous data collection.

#alibaba-group, #alipay, #ant-group, #asia, #bytedance, #china, #finance, #mobile-payments, #online-payments, #payments, #paypal, #state-council, #tc, #tencent, #wechat, #wechat-pay

5 reforms necessary to create a truly cashless society

The coronavirus pandemic challenged the status quo and completely changed normal life as we knew it. However, with these challenges have come new opportunities to adapt and participate differently in the world. One of the first trends was that cash is no longer accepted.

The transition to cashless transactions, which at first seemed minor, made my customer experience seamless. Going wallet-free made me wonder why I ever carried cash at all!

Cashless life has been widely adopted in Asian countries for quite some time, but it wasn’t universally adopted across the United States until the coronavirus pandemic. The convenience of cashless transactions just makes sense, but my hope is that this convenience doesn’t come at the cost of other aspects of commerce.

The transition to cashless transactions made my customer experience seamless.

Inaccessibility, fees and thoughtless spending are some of the potential problems that come to mind with cashless spending. For a truly cashless society, here are five key points for consideration:

1. Payment processors currently have the upper hand, forcing fees onto customers

For the sake of a cashless transaction, we have given up our last direct authentic connection with our favorite baristas, small businesses and independent brands. When I take out my credit card or phone to pay, I am not thinking about the fees that both myself and the merchant are paying to facilitate what was once a fee-less transaction. Losing this direct connection with my merchant has given payment processors the upper hand, allowing them to demand an unjustifiable fee of up to 3%.

With virtual payments, my cash is essentially in my phone and the barista is directly in front of me, but the transaction does not work like cash. The merchant will need to pay the fee on my transaction. If the cash revenue for that coffee shop used to be 20% of their revenue pre-COVID, they will now need to pay the fees on 20% of their revenue. Sadly, the merchant response over time is to raise prices. Historically, the adoption of a cashless exchange results in fees being passed through to the customer.

Through price increases across the board, the customer is always bailing the merchant out for the cost of the electronic, seamless, safer-than-ever money exchange. Furthermore, the customers are even “forced” to tip digitally from predefined settings, removing all meaning of tips as an emotional social contract. This new normal means that customers will end up paying $4 in a digital transaction for a coffee that used to cost $3 in cash.

2. Platforms must adapt new models to forgo transaction fees

Given that software and intelligent platforms have always lowered the cost of services when they are used at scale, why has this reduction of cost not yet applied to digital financial transactions? Customers need to demand that cashless transactions operate in the same way as cash transactions.

Even if we continue with a fee model, why would regular, loyal and verified customers always pay (directly or indirectly) the hefty cost of the exchange on top of the cost of credit? There should be a differentiation between these different types of transactions, regular or new, and appropriate fees that make sense.

3. Product experiences must promote conscious spending

Paying with digital or credit cards almost feels like paying with someone else’s money, which can be a dangerous feeling when considering that the user does not see this money spent instantly. Say your regular coffee costs $3. Paying for that coffee with cash is a very different experience than paying with a card or a digital wallet.

When you have a finite amount of cash in your pocket, the physical act (and sometimes mental pain) of spending makes the money feel different and more valuable than the invisible money that you spend via your credit or debit card. In many ways, the silent pain we endure while paying in cash has been subconsciously raising our awareness about our spending.

4. Accessibility and use must extend to all

The idea of a cashless society has thus far not been very inclusive to the unbanked and underbanked population. To support a new model, this underserviced sector needs to be able to utilize this software. A user needs to be able to walk into a grocery store and give the cashier $100 for them to upload the money to their virtual wallet.

Alternatively, a friend needs to be able to send $100 to their virtual wallet. For a cashless society to work, virtual payments need to work with ease and certainty that they will be accepted at any and all locations, just like cash.

5. The path to an open wallet

Have you ever ordered a $15 meal on a food delivery app, only for the total to end up over $25? Beyond the delivery fee, tips and taxes, delivery apps are pricing in extra fees to offset the fees charged by credit card and payment companies. In an effort to avoid these extra fees, apps like Lyft and Uber have begun deploying their own digital wallets supported by ACH transfers.

Sadly, consumers are unlikely to see the benefit until these wallets reach wide adoption, which is clearly not happening because no one wants yet another app-specific wallet.

The way forward

To truly empower the consumer, both Google and Apple should keep developing their digital wallets with an open API payment system to allow all apps to securely interact with it for free. This will transform the Google and Apple wallet and will better service the unbanked and underbanked populations instead of just being a gateway for credit cards.

This would further support the unbanked or underbanked population as they too would be able to utilize an open wallet that can be refilled with cash in person. I should be able to use the cash I have in my virtual wallet with any app, website or physical merchant without paying a fee. I should also be able refill the wallet from my bank account or directly deposit some of my paycheck into my phone wallet. Merchants would also benefit from wallet-to-pay by paying no fees to Google and Apple.

Instead, the mobile wallet creator could introduce a new business model focused on discovery and connecting users and merchants, charging merchants for the connections that they facilitate.

In a not-so-distant future, when I get my new Apple or Google phone, it will have a wallet that can be used without fees for payment across all apps, in physical retail locations, and for peer-to-peer money transfers. The credit cards, or rather lines of credit, on my digital wallet will use an Affirm-like loan service that allows me to buy anything from a pack of gum to a luxury watch or even a car, just using my phone’s wallet.

Goldman Sachs and Mastercard should not be the only players in the credit space. Innovation is necessary in the digital wallet space to pioneer the movement to change the outdated fee models for the simple act of money exchange.

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