Nelo raises $3M to grow ‘buy now, pay later’ in Mexico

Buy now, pay later is a way of paying for purchases via installment loans that generally have no interest. The concept has grown in popularity in recent years, especially in markets such as the United States, Europe and Australia. Numerous players abound, all fighting for market share — from Affirm to Klarna to Afterpay, among others.

But notably, none of these bigger players have yet to penetrate another very large market — Latin America. Enter Nelo, a startup founded by former Uber international growth team leads, which is building buy now, pay later in Mexico. The company is already live with more than 45 merchants and over 150,000 users.

San Francisco-based fintech-focused VC firm Homebrew led its recent seed round of $3 million, which also included participation from Susa Ventures, Crossbeam, Rogue Capital, Unpopular Ventures and others. With the latest capital infusion, Nelo has raised a total of $5.6 million since its 2019 inception.

Nelo is not the only player in the Mexican market. A number of others, including Alchemy and Addi, have recently outlined plans for buy now, pay later offerings in the region. But where Nelo has an advantage, believes CEO Kyle Miller, is its established relationships with about 45 merchants.

“What I’m excited about is the relationship with the merchants,” Miller told TechCrunch. “If we find a large global one and increase conversion for them, that is our defensibility [against competitors]. What’s important here is signing on merchants, since they usually only have one offering in their checkout.”

He and co-founder Stephen Hebson used to work for Uber’s international growth team, growing financial services products in India, Mexico, China and Brazil.

“We got to see a cross market where countries were accelerating and where others weren’t,” Miller recalls. “For example, China was a leader in mobile payments and digital finance in India was completely transformed.”

Nelo co-founders Stephen Hebson and Kyle Miller; Image courtesy of Nelo

But in markets like Mexico, the percentage of cash payments for trips was very high. And to Miller and Hebson, this spelled opportunity.

Nelo launched its first product in Mexico in January 2020, similar to a debit card offering from a neobank. In the middle of the year, the company launched credit installment loans.

“It became immediately clear that it was going to be our most popular feature,” Miller said. “By the end of the year, it was the vast majority of our business and something that our users were telling their friends about. We were solving a real pain point.”

Indeed, cash remains the dominant method of payment in Mexico, with an estimated 86% of all payments being in the form of cash. According to eMarketer, the region was the fastest-growing e-commerce market in the world in 2020, with 37% year over year growth.

“Access to credit is something we take for granted in the U.S.,” Miller said. “By the end of the year, we realized this was the future of business, and we decided to focus just on credit.”

In March, Nelo launched its first product via an Android app and will be launching a web app soon.

Customers can use its offering like a credit card, connecting directly with merchants such as Netflix and Spotify. Many users are paying for things like utility bills and cell phone bills, turning them from prepaid to postpay.

With its current product, the company has lent about $2 million, and is seeing growth of about 20% month over month.

“We’re seeing massive demand for this new product in the way of organic signups,” Miller said, “for all the reasons Buy Now, Pay Later has been successful in markets like the U.S., Europe and Australia.”

Paying for installments is already common in Latin America, particularly in Brazil, so the concept is not foreign to residents in the region.

“We expected this is soon going to be a competitive market, so we’re hiring data scientists and engineers to continue improving our product, and grow,” Miller said.

Nelo has about 14 employees with an engineering team in New York.

Homebrew Partner Satya Patel says he’s excited about Nelo because he believes the startup “solves a serious problem related to the lack of credit for Mexican consumers.”

“Credit card penetration is less than 10% in Mexico and other forms of credit are effectively non-existent,” he wrote via email. “Nelo makes it possible for Mexicans to easily and inexpensively increase their purchasing power at the point of sale. And importantly, Nelo is delivering this solution online, supporting growing interest in e-commerce, and also offline, where consumers regularly shop today.”

Patel adds that what Nelo is building is valuable because he is not aware of any reliable, comprehensive consumer credit rating data set in Mexico.

“They are building underwriting models based on proprietary data and growing the merchant network at an incredible rate,” he said. “This buy now, pay later opportunity is untapped in Mexico but requires a very different approach than what has been successful in other markets.”

The Nelo team, according to Patel, understands the nuances of the market and “is executing at an exceptional pace.”

#bnpl, #finance, #financial-services, #fintech, #funding, #fundings-exits, #homebrew, #latin-america, #mexico, #mexico-city, #nelo, #payments, #recent-funding, #satya-patel, #startup, #startups, #venture-capital

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Altman brothers lead B2B payment startup Routable’s $30M Series B

We all know the COVID-19 pandemic has accelerated digital adoption in a number of areas, particularly in the financial services space. Within financial services, there are few spaces hotter than B2B payments.

With a $120 trillion market size, it’s no surprise that an increasing number of fintechs focused on digitizing payments have been attracting investor interest. The latest is Routable, which has nabbed $30 million in a Series B raise that included participation from a slew of high-profile angel investors.

Unlike most raises, Routable didn’t raise the capital from a bunch of VC firms. Sam Altman, CEO of OpenAI and former president of Y Combinator, and Jack Altman, CEO of Lattice, led the round. (The pair are brothers, in case you didn’t know.)

SoftBank-backed unicorn Flexport also participated, along with a number of angel investors, including Instacart co-founder Max Mullen, Airbnb co-founder Joe Gebbia, Box co-founder and CEO Aaron Levie, Salesforce founder and CEO Marc Benioff (who also started TIME Ventures),  DoorDash’s Gokul Rajaram, early Stripe employee turned angel Lachy Groom and Behance founder Scott Belsky.

The Series B comes just over eight months after Routable came out of stealth with a $12 million Series A.

CEO Omri Mor and CTO Tom Harel founded Routable in 2017 after previously working at marketplaces and recognizing the need for better internal tools for scaling business payments. They went through a Y Combinator batch and embarked on a process of interviewing hundreds of CFOs and finance leaders.

The pair found that the majority of the business payment tools that were out there were built for large companies with a low volume of business payments. 

After running enough customer development we identified a huge scramble to solve high-volume business payments, and that’s what we double down on,” Mor told TechCrunch. 

Routable’s mission is simple: to automate bill payment and invoicing processes (also known as accounts payables and accounts receivables), so that businesses can focus on scaling their core product offerings without worrying about payments.

“A business payment is more like moving a bill through Congress, where a consumer payment is more like a tweet,” Mor said. “We automate every step from purchase order to reconciliation and by extending an API, companies don’t have to build their own inner integration. We handle it, while helping them move their money faster.”

Since its August 2020 raise, Routable has seen its revenue grow by 380%, according to Mor. And last month alone, the company tripled its amount of new customers compared to the month prior. Customers include Snackpass, Ticketmaster and Re-Max, among others.

“We’ve been beating every quarter expectation for the past 18 months,” he told TechCrunch.

The company started out focused on the startup and SMB customer, but based on demand and feedback, is expanding into the enterprise space as well.

It has established integrations with QuickBooks, NetSuite and Xero and is looking to invest moving forward in integrating with Oracle, Microsoft Dynamics Workday and SAP. 

“A lot of our investment moving forward is to be able to bring that same level of automation and ease of use that we do for SMB and mid-market customers to the enterprise world,” Mor told TechCrunch.

Lead investor Sam Altman is in favor of that approach, noting that the recent booms in the gig and creator economies are leading to a big spike in the volume of both payments and payees.

“With the addition of enterprise capabilities, we think this can lead to an enormous business,” he said. 

The round brings Routable’s total raised to $46 million. The company has headquarters in San Francisco and Seattle with primarily a remote team. 

Sam Altman also told me that he was drawn to Routable after having experienced the pain of high-volume business payments himself and working with many startup founders who had experienced the same problem.

He was also impressed with the company’s engineering-forward approach.

“They can offer the best service by being embedded in a company’s flow of funds instead of the usual approach of just being an interface for moving money,” Altman said. 

With regard to the other investors, Mor said the decision to partner with founders of a number of prominent tech companies was intentional so that Routable could benefit from their “deep enterprise and high-growth experience.”

As mentioned above, the B2B payments space is white-hot. Earlier this year, Melio, which provides a platform for SMBs to pay other companies electronically using bank transfers, debit cards or credit — along with the option of cutting paper checks for recipients if that is what the recipients request — closed on $110 million in funding at a $1.3 billion valuation.

#aaron-levie, #airbnb, #altman, #b2b, #behance, #doordash, #finance, #financial-services, #flexport, #funding, #fundings-exits, #gokul-rajaram, #instacart, #jack-altman, #joe-gebbia, #lachy-groom, #lattice, #marc-benioff, #netsuite, #open-ai, #oracle, #payments, #president, #recent-funding, #routable, #salesforce, #sam-altman, #san-francisco, #scott-belsky, #seattle, #startups, #venture-capital, #y-combinator

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Nigerian fintech Appzone raises $10M for expansion and proprietary technology

Africa’s fintech space has gained proper attention over the past few years in investments but it is not news that startups still battle with offering high-quality products. However, they seem to be doing quite well compared with traditional banks that face challenges like legacy cost structures and a major lack of operational efficiency.

Appzone is a fintech software provider. It is one of the few companies that builds proprietary solutions for these financial institutions and their banking and payments services. Today, the company is announcing that it has closed $10 million in Series A investment.

Typically, African financial institutions rely on using foreign technology solutions to solve their problems. But issues around pricing, flexibility to innovate, and a lack of local tech support always come up. This is where Appzone has found its sweet spot. The company based in Lagos, Nigeria, was founded by Emeka Emetarom, Obi Emetarom, and Wale Onawunmi in 2008.

Appzone clearly plays a different game from other African fintechs. One clear differentiator is that the company functions as an enabler (at payment rails and the core infrastructure) within banking and payments.

It commenced as a services firm to provide commercial banks with custom software development services. In 2011, the company launched its first core banking product targeting microfinance institutions. The following year, Appzone launched its first product (branchless banking) for commercial banks. It went live with its mobile and internet banking service in 2016 and launched an instant card issuance product in 2017. In 2020, the company launched services catered to end-to-end automation of lending operations for banks and blockchain switching.

“We started Appzone with the intention to build out innovative local solutions for banking and payments on the continent,” CEO Obi Emetarom told TechCrunch. “The focus was to leverage our ability as an enabler to create proprietary technology for both segments.”

Appzone

Image Credits: Appzone

Appzone platforms are used by 18 commercial banks and over 450 microfinance banks in Africa. Together, they amass a yearly transaction value and yearly loan disbursement of $2 billion and $300million.

Since its inception, the Google for Startups Accelerator alumnus claims to have led Africa’s fintech sector in some global firsts from the continent. First, the company says it created the world’s first decentralised payment processing network. Second, the first core banking and omnichannel software on the cloud. Third, the first multi-bank direct debit service based on single global mandates.

Emetarom likes to describe Appzone as a fintech product ecosystem with an emphasis on proprietary technology. So far, we’ve touched on two layers of this ecosystem—the digital core banking service providing software that runs financial institutions’ entire operations and interbank processing, which integrates these institutions into a decentralized network powered by blockchain.

Coinciding with this investment is the introduction and scaling of a third layer that focuses on end-user applications. Appzone, having built both banking and fintech layers, wants to connect individuals and businesses to their services. This is where most new-age fintech startups operate, and although Appzone is coming late to the party, it has a bit of an edge, the CEO believes.

“Most of these companies operating in end-user applications have to depend on services from core banking and interbank processing to be able to get their own offerings out there. For us, I think we have an advantage in terms of costs and flexibility because we are already operating in both layers,” Emeratom said in relation to what he thinks of competition.

The company is coming out to blitz scale its products and services after working in stealth mode for more than a decade. One way it wants to carry this out will be to take its pan-African expansion sternly even though a large part of its 450 clients are based in Nigeria. Other countries with a presence include the Democratic Republic of Congo, Ghana, Gambia, Guinea, Tanzania, and Senegal. Before now, Appzone lacked the resources to push into these markets aggressively even though they showed promise. But having closed its Series A, the plan is to drive growth in these countries and expand across more African countries.

Another means Appzone plans to achieve scale is by growing its engineering team — a department it takes pride in. These engineers make up half of Appzone’s 150 employees and there are plans to double down on this number. Like most Nigerian startups these days, Appzone is big on senior engineers. Still, while it might present a problem to other companies, Emetarom says the company has no issue training promising junior talent to grow in expertise.

“Our proprietary tech allows us to innovate at a fraction of a cost, and they are built by essentially the best local talent available. Because those systems are really complex and the level of innovation required is on another level, we literally seek out the to 1% of talent in Nigeria,” he remarked.We know that even though the expertise isn’t there, we can accelerate acquiring that expertise when we train the very best talents. The more we train our engineers, the faster they grow in terms of expertise, and they will be able to deliver at the same level of world-class quality we expect.

Appzone

Obi Emetarom (Co-founder and CEO, Appzone)

Back to the round, a noteworthy event is that most investors who took part are based in Nigeria despite its size. CardinalStone Capital Advisers, a Lagos-based investment firm, led the Series A investment. Other investors based in the country include V8 Capital, Constant Capital, and Itanna Capital Ventures. New York-based but Africa-focused firm Lateral Investment Partners also participated.

Before now, Appzone closed a $2 million from South African Business Connexion (BCX) in 2014. Four years later, it raised $2.5 million in convertible debt and bought back shares from BCX in the process. But overall, the company says it has raised $15 million in equity funding.

Speaking on the investment, Yomi Jemibewon, the co-founder and managing director of Cardinal Stone Capital Advisers, said the firm’s investment in Appzone is further proof of Africa’s potential as the future hub of world-class technology.

“Appzone is building a disruptive fintech ecosystem that will be the backbone of Africa’s finance industry with products across payments, infrastructure and software as a service. The impact of Appzone’s work is multifold — the company’s products deepen financial inclusion across the continent whilst providing best-fit and low-cost solutions to financial institutions. Its emphasis on premium talent also helps stem brain drain, rewarding Africa’s best brains with best in class employment opportunities,” he added.

Appzone’s funding continues the fast-paced investment activities witnessed by Africa’s fintech space after a slow January. In the last two months, more than eight fintech startups have secured million-dollar rounds. This includes very large rounds by South African digital bank TymeBank ($109 million) in February and African payments company, Flutterwave ($170 million) in March.

#africa, #appzone, #banking, #finance, #financial-inclusion, #financial-technology, #fintech, #fintech-software, #funding, #nigeria, #payments, #tc

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Signal tests payments in the UK using MobileCoin

Encrypted chat app Signal is adding payments to the services it provides, a long-expected move and one the company is taking its time on. A U.K.-only beta program will allow users to trade the cryptocurrency MobileCoin quickly, easily, and most importantly, privately.

If you’re in the U.K., or have some way to appear to be, you’ll notice a new Signal Payments feature in the app when you update. All you need to do to use it is link a MobileCoin wallet after you buy some on the cryptocurrency exchange FTX, the only one that lists it right now.

Once you link up, you’ll be able to instantly send MOB to anyone else with a linked wallet, pretty much as easily as you’d send a chat. (No word on when the beta will expand to other countries or currencies.)

Just as Signal doesn’t have any kind of access to the messages you send or calls you make, your payments are totally private. MobileCoin, which Signal has been working with for a couple years now, was built from the ground up for speed and privacy, using a zero-knowledge proof system and other innovations to make it as easy as Venmo but as secure as… well, Signal. You can read more about their approach in this paper (PDF).

MobileCoin just snagged a little over $11M in funding last month as rumors swirled that this integration was nearing readiness. Further whispers propelled the value of MOB into the stratosphere as well, nice for those holding it but not for people who want to use it to pay someone back for a meal. All of a sudden you’ve given your friend a Benjamin (or perhaps now, in the UK, a Turing) for no good reason, or that the sandwich has depreciated precipitously since lunchtime.

There’s no reason you have to hold the currency, of course, but swapping it for stable or fiat currencies every time seems a chore. Speaking to Wired, Signal co-founder Moxie Marlinspike envisioned an automatic trade-out system, though he is rarely so free with information like that if it is something under active development.

While there is some risk that getting involved with cryptocurrency, with the field’s mixed reputation, may dilute or pollute the goodwill Signal has developed as a secure and disinterested service provider, the team there seems to think it’s inevitable. After all, if popular payment services are being monitored the same way your email and social media are, perhaps we ought to nip this one in the bud and go end-to-end encrypted as quickly as possible.

#crypto, #cryptocurrency, #e2e, #mobile, #mobilecoin, #payments, #privacy, #signal, #signal-payments, #startups, #tc

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Clubhouse launches payments so creators can make money

Clubhouse, a one-year-old social audio app reportedly valued at $1 billion, will now allow users to send money to their favorite creators — or speakers — on the platform. In a blog post, the startup announced the new monetization feature, Clubhouse Payments, as the “the first of many features that allow creators to get paid directly on Clubhouse.”

Clubhouse’s press team did not immediately respond to comment. Paul Davison, the co-founder of Clubhouse, mentioned in the company’s latest town hall that the startup wants to focus on direct monetization on creators, instead of advertisements.

Here’s how it will work: A user can send a payment in Clubhouse by going to the profile of the creator to whom they want to give money. If the creator has the feature enabled, the user will be able to tap “Send Money” and enter an amount. It’s like a virtual tip jar, or a Clubhouse-branded version of Venmo (although the payments feature doesn’t currently let the user send a personalized message along with the money).

“100% of the payment will go to the creator. The person sending the money will also be charged a small card processing fee, which will go directly to our payment processing partner, Stripe,” the post reads. “Clubhouse will take nothing.”

Stripe CEO Patrick Collison tweeted shortly after the blog post went up that “It’s cool to see a new social platform focus first on participant income rather than internalized monetization / advertising.”

When the startup raised a Series B led by Andreessen Horowitz in January, part of the reported $100 million funding was said to go to a creator grant program. The program would be used to “support emerging Clubhouse creators,” according to a blog post. It’s unclear how they define emerging, but cultivating influencers (and rewarding them with money) is one way the startup is promoting high-quality content on its platform.

The synergies here are obvious. A Clubhouse creator can now get tips for a great show, or raise money for a great cause, while also being rewarded by the platform itself for being a recurring host.

The fact that Clubhouse’s first attempt at monetization includes no percentage cut of its own is certainly noteworthy. Monetization, or Clubhouse’s lack thereof, has been a topic of discussion about the buzzy startup since it took off in the early pandemic months. While it currently relies on venture capital to keep the wheels churning, it will need to make money eventually in order to be a self-sustaining business.

Creator monetization, with a cut for the platform, has led to the growth of large businesses. Cameo, a startup that sends personalized messages from creators and celebrities, takes about a 25% cut of each video sold on its platform. The startup reached unicorn status last week with a $100 million raise. OnlyFans, another platform that helps creators directly raise money from fans in exchange for paywalled contact, is projecting $1 billion in revenue for 2021.

Clubhouse’s payments feature will first be tested by a “small test group” starting today, but it is unclear who is in this group. Eventually, the payments feature will be rolled out to other users in waves.

#apps, #clubhouse, #paul-davison, #payments, #social, #startups, #stripe, #tc

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Uruguayan payments startup dLocal quadruples valuation to $5B with $150M raise

Cross-border payments startup dLocal has raised $150 million at a $5 billion valuation, less than seven months after securing $200 million at a $1.2 billion valuation.

This means that the five-year-old Uruguayan company has effectively quadrupled its valuation in a matter of months.

Alkeon Capital led the latest round, which also included participation from BOND, D1 Capital Partners, and Tiger Global. General Atlantic led its previous round, which closed last September and made dLocal Uruguay’s first unicorn and one of Latin American’s highest-valued startups.

DLocal connects global enterprise merchants with “billions” of emerging market consumers in 29 countries across Asia-Pacific, the Middle East, Latin America and Africa. More than 325 global merchants, including e-commerce retailers, SaaS companies, online travel providers and marketplaces use dLocal to accept over 600 local payment methods. They also use its platform to issue payments to their contractors, agents, and sellers. Some of dLocal’s customers include Amazon, Booking.com, Dropbox, GoDaddy, MailChimp, Microsoft, Spotify, TripAdvisor, Uber and Zara. 

In conjunction with this latest round, dLocal has named Sumita Pandit to the role of COO. Pandit is former global head of fintech and managing director for JP Morgan, who also had experience at Goldman Sachs.

“Sumita is a highly respected and accomplished fintech investment banker, and she’s played a pivotal role advising some of the world’s most successful fintech companies as they’ve scaled to become global leaders,”  said dLocal CEO Sebastián Kanovich in a written statement.

Meanwhile, former COO Jacobo Singer has been promoted to president of dLocal.

The company plans to use its new capital to enhance its technology and continue to expand geographically.

Alkeon General Partner Deepak Ravichandran believes that emerging markets represent some of the fastest growth opportunities in digital payments.

“However, as global merchants look to access these markets, they are often faced with a complex web of local payment methods, cross-border regulations, and other operational roadblocks,” he said in a written statement. “dLocal’s unique platform empowers merchants with a single integrated payment solution, to reach billions of customers, accept payments, send payouts, and settle funds globally.”

#alkeon-capital, #bond, #cross-border-payments, #d1-capital-partners, #dlocal, #finance, #fintech, #funding, #fundings-exits, #latin-america, #payments, #recent-funding, #startups, #tiger-global, #uruguay, #venture-capital

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Embedded procurement will make every company its own marketplace

In 2019, my colleague Matt Harris coined the term “embedded fintech” to describe how virtually all software-driven companies will soon embed financial services into their applications, from sending and receiving payments to enabling lending, insurance and banking services, an idea that quickly spread within the fintech community.

Vertical apps such as Toast for restaurants, Squire for barbershops and Shopmonkey for car repair shops will deliver financial services to businesses in the future rather than traditional, stodgy financial institutions.

Embedded procurement is the natural evolution of embedded fintech.

The embedded fintech movement has just begun, but there is already a sister concept percolating: embedded procurement. In this next wave, businesses will buy things they need through vertical B2B apps, rather than through sales reps, distributors or an individual merchant’s website.

If you own a coffee shop, wouldn’t it be convenient to schedule recurring orders for beans and milk from the same software portal where you process payments, manage accounting and handle payroll? The companies that figured out how to monetize financial services via embedded fintech are well positioned to monetize through procurement, too.

Embedded procurement is the natural evolution of embedded fintech. The salon software company Fresha is a typical embedded fintech story. Fresha’s platform is an online and mobile platform specially designed for spas and salons, encompassing appointment scheduling, reporting and analytics, marketing promotions, and point-of-sale capabilities. The software is free for salons; Fresha monetizes through payment processing.

In the future, Fresha will undoubtedly turn to embedded procurement, becoming a logical place for business owners to order and manage inventory like shampoo, scissors, brushes and other supplies. In turn, Fresha can aggregate demand from thousands of spas to place orders with its suppliers, leveraging its scale to negotiate more favorable pricing on behalf of its customers. Borrowing a concept from the healthcare world, vertical software companies will become group purchasing organizations in every sector.

#business-management, #column, #ec-column, #ec-ecommerce-and-d2c, #ec-fintech, #ec-market-map, #ecommerce, #finance, #financial-services, #financial-technology, #payments, #procurement

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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

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PPRO extends latest round to $270M, adding JPMorgan and Eldridge to grow its localized payments platform

In January, localized payments provider PPRO became the latest fintech-as-a-service startup to hit a billion-dollar valuation when it closed $180 million in funding. As a mark of how payments and e-commerce continue to be major areas of focus in the global economy, today PPRO is extending that round by another $90 million and adding in two new investors to its cap table.

The financing is coming by way of strategic backing from JPMorgan Chase, and Eldridge (which is the second time this week the PE firm has been in the news for making a major investment in an enterprise tech company: earlier this week Eldridge was one of the leads on a $475 million round for real-time intelligence provider Dataminr).

The enlarged $270 million round — the January tranche was from Eurazeo Growth, Sprints Capital and Wellington Management — includes both primary and secondary capital, and this latest tranche is part of the secondary element, PPRO CEO Simon Black confirmed to me. Prior to this, London-based PPRO (pronounced ‘P-pro’) raised $50 million in August 2020 from Sprints, Citi and HPE Growth; and in 2018 it raised $50 million led by strategic investor PayPal.

PPRO’s core product is a set of APIs that e-commerce companies can integrate into their check-outs to accept payments in whatever local methods and currencies consumers prefer, removing the need for PPRO customers to build those complex and messy integrations themselves. Its business has boomed in the last year as one of the bigger providers of that localized payment technology, with transaction volumes up 60% in 2020 to $11 billion in processed payments.

JPMorgan Chase, meanwhile, is one of the world’s financial giants, providing banking and credit cards among its many other services. The idea is that it wants to build more payment services around its existing relationships and to expand its payment business globally, working more closely with PPRO as part of that. There are two main areas where PPRO could figure: to help its credit card business gain more ubiquity as a payment method in more parts of the globe; and to be a service provider for its business banking customers to help them expand in more markets with more flexible, localized payments.

“We are extending into payments and we are looking to double down on addressing the needs of our clients and their clients, which can be consumers, suppliers or marketplace sellers,” said Sanjay Saraf, MD and Global Head of the Integrated Payments Group at JPMorgan Chase, in an interview. “That last mile becomes important from a customer service perspective.”

In particular, the US company is hoping to double down on its business and footprint in Latin America and Asia Pacific, two emerging markets still seeing a lot of growth in e-commerce, in particular compared to more developed, penetrated and mature markets like the U.S.

This latest round of financing underscores two trends of the moment in fintech.

First, it points to how active the e-commerce market has become — a trend fueled not in small part by the Covid-19 pandemic, and the resulting shift people have made to carrying out everyday tasks online. Second, it’s a sign of how global financial services companies are looking for ways to remain relevant in every market, tapping into more innovations from fintech startups to get there.

The problem, as it exists, is that payments remains a very fragmented business.

The standard methods that a person might use to pay for goods or services online in one country — for example a credit card in the U.S. — might differ drastically from the preferred methods when selling in another — for example, in Belguim one popular format is Bancontact (where you visit a new screen to authorize a transfer from directly from your bank checking account).

As with other payments and fintech-as-a-service startups, the attraction of using PPRO is that it has built a lot of those integrations at the backend and packaged them up as a service, taking away a lot of the complexity, in its case of identifying and integrating each of those payment methods manually, and making it something that can be done seamlessly and quickly.

JPMorgan is now one of several other partners. Those relationships work in both directions, providing partners a way to expand their consumer-facing products, and to help them work with more businesses in more markets. (Similar, I suspect to how JPMorgan will work with it, too.)

Others in PPRO’s network of 100 large global customers include PayPal, Citi, Mastercard Payment Gateway Services, Mollie and Worldpay, which use PPRO’s APIs for a variety of functions, including localised gateway, processing and merchant acquirer services.

It is also not the only one that has identified the opportunity to simplify this part of the payment process and of other complex financial transactions that rely on localized approaches. Others in the same area include RapydMambuThought MachineTemenosEdera, Adyen, Stripe and newer players like Unit, with many of these raising very large amounts of money in recent times to double down on what is currently a rapidly expanding market.

The past year has been “an acceleration of a trend, where behaviors are being reinforced,” said Black in an interview. “At the consumer level, we are buying so many more products and services online, and we value convenience more than ever, which translates to a real strengthening of more demand for local payments.”

And while emerging technologies like cryptocurrency continue to see a lot of buzz, this is not at all where mass-market activity is for now. “The big trend is mobile wallets, not bitcoin,” Black said.

#europe, #finance, #fintech, #funding, #jpmorgan-chase, #payments, #ppro, #saas

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Feedzai raises $200M at a $1B+ valuation for AI tools to fight financial fraud

On the heels of Jumio announcing a $150 million injection this week to continue building out its AI-based ID verification and anti-money laundering platform, another startup in the space is levelling up. Feedzai, which provides banks, others in the financial sector, and any company managing payments online with AI tools to spot and fight fraud — its cornerstone service involves super quick (3 millisecond) checks happening in the background while transactions are being made — has announced a Series D of $200 million. It said that the new financing is being made at a valuation of over $1 billion.

The round is being led by KKR, with Sapphire Ventures and strategic backer Citi Ventures — both past investors — also participating. Feedzai said it will be using the funds for further R&D and product development, to expand into more markets outside the U.S. — it was originally founded in Portugal but now is based out of San Mateo — and towards business development, specifically via partnerships to integrate and sell its tools.

One of those partners looks to be Citi itself:

“Citi is committed to advancing global payments anchored on transparency, efficiency, and control, and our partnership with Feedzai is allowing us to provide customers with technology that seamlessly balances agility and security,” said Manish Kohli, Global Head of Payments and Receivables, with Citi’s Treasury and Trade Solutions, in a statement.

The funding is coming at a time when the need for fraud protection for those managing transactions online has reached a high watermark, leading to a rush of customers for companies in the field.

Feezai says that its customers include 4 of the 5 largest banks in North America, 80% of the world’s Fortune 500 companies, 154 million individual and business taxpayers in the U.S., and has processed $9 billion in online transactions for 2 of the world’s most valuable athletic brands. In total its reach covers some 800 million customers of businesses that use its services.

In addition to Citibank, its customers include Fiserv, Santander, SoFi, and Standard Chartered’s Mox.

The round comes nearly four years after Feedzai raised its Series C, a $50 million round led by an unnamed investor and with an undisclosed valuation. Sapphire also participated in that round.

While money laundering, fraud and other kinds of illicit financial activity were already problems then, in the interim, the problem has only compounded, not least because of how much activity has shifted online, accelerating especially in the last year of pandemic-driven lockdowns. That’s been exacerbated also by a general rise in cybercrime — of which financial fraud remains the biggest component and motivator.

Within that bigger trend, solutions based on artificial intelligence have really emerged as critical to the task of identifying and fighting those illicit activities. Not only is that because AI solutions are able to make calculations and take actions and simply process more than non-AI based tools, or humans for that matter, but they are then able to go head to head with much of the fraud taking place, which itself is being built out on AI-based platforms and requires more sophistication to identify and combat.

For banking customers, Feedzai’s approach has been disruptive in part because of how it has conceived of the problem: it has built solutions that can be used across different scenarios, making them more powerful since the AI system is subsequently “learning” from more data. This is in contrast to how many financial service providers had conceived and tackled the issue in the past.

“Until now banks have used solutions based on verticals,” Nuno Sebastiao, co-founder and CEO of Feedzai, said in the past to TechCrunc. “The fraud solution you have for an ATM wouldn’t be the same fraud solution you would use for online banking which wouldn’t be the same fraud solution would have for a voice call center.” As these companies have refreshed their systems, many have taken a more agnostic approach like the kind the Feedzai has built.

The scale of the issue is clear, and unfortunately also something many of us have experienced first-hand. Feedzai says its data indicates that the last quarter of 2020 that show consumers saw a 650% increase in account takeover scams, a 600% in impersonation scams, and a 250% increase in online banking fraud attacks versus the first quarter of 2020.  (Those periods are, essentially, before pandemic and during pandemic comparisons.)

“The past 12 months have accelerated the world’s dependency on electronic financial services – from online banking to mobile payments, and in turn have increased fraud and money laundering activity. Our services are in more demand than ever,” said Sebastiao in a statement today.

Indeed, yesterday, when I covered Jumio’s $150 million round, I said I wouldn’t consider its funding to be an outlier (even though Jumio made clear it was the largest funding to date in its space): the fast follow from Feedzai, with an even higher amount of financing, really does underscore the trend at the moment.

In addition to these two, one of Feedzai’s biggest competitors, Kount, was acquired by credit ratings giant Equifax earlier this year for $640 million to move deeper into the space. (And related to that field, in the area of identity management, which goes hand-in-hand with tools for laundering and fraud, Okta acquired Auth0 for $6.5 billion.)

Other big rounds for startups in the wider space have included included ForgeRock ($96 million round), Onfido ($100 million), Payfone ($100 million), ComplyAdvantage ($50 million), Ripjar ($36.8 million) Truework ($30 million), Zeotap ($18 million) and Persona ($17.5 million).

KKR’s involvement in this round is notable as another example of a private equity firm getting in earlier with venture rounds with fast-scaling startups, similar to Great Hill’s investment in Jumio yesterday and a number of other examples. The firm says it’s making this investment out of its Next Generation Technology Growth Fund II, which is focused on making growth equity investment opportunities in the technology space.

“Feedzai offers a powerful solution to one of the biggest challenges we are facing today: financial crime in the digital age. Global commerce depends on future-proof technologies capable of dealing with a rapidly evolving threat landscape. At the same time, consumers rightfully demand a great customer experience, in addition to strong security layers when using banking or payments services,” said Stephen Shanley, Managing Director at KKR, in a statement

“We believe Feedzai’s platform uniquely meets these expectations and more, and we are looking forward to working with Nuno and the rest of the team to expand their offering even further,” added Spencer Chavez, Principal at KKR.

#artificial-intelligence, #enterprise, #europe, #feedzai, #finance, #fraud, #funding, #money-laundering, #payments, #security, #tc

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Nigerian fintech of the unbanked Bankly raises $2M led by Vault and Flutterwave

Nigeria remains a largely cash-dominated country. There are over 100 million adult Nigerians, of which more than half have little or no access to financial services

Today, Bankly, a Nigerian fintech startup digitizing cash for the unbanked, announced that it has closed a $2 million seed round. Founded by Tomilola Adejana and Fredrick Adams in 2018, Bankly is digitizing the informal thrift collections system known with different names such as esusu or ajo in Nigeria.

In the absence of a banking system nearby or a disregard for one, the unbanked resort to these traditional systems because they work completely offline. The system allows them to collate and save cash with a thrift collector responsible for disbursing funds when due.

However, there are issues around this system. First is the security issues that arise when the thrift collector goes missing with the money or is feared dead, leaving no clue where the savings are kept. There’s also limited access where members cannot consistently save if absent from a particular location. The third is the lack of customer data since most don’t have an online banking presence.

What Bankly has done is to digitize their whole process of collating money and allow these unbanked people to save their money using online and offline methods.

Over the past 18 months, the company has been building out its distribution and agent network. Here, customers can deposit and withdraw cash with a Bankly agent anytime. This solves the issue of access as there are thousands of agents in these cash-dependent communities.

When the information of this new set of customers is collected and saved on its platform, Bankly starts to build engaging communities where these people can collectively save their income with the agents. Slowly, an online banking presence is built for them.

With most of their money in a bank and little or no cash to buy airtime or make payments, they would frequently opt to access these services via their mobile phones.

Image Credits: Bankly

Onboarding these new set of customers means they get to save and transact more over time. This opens up access to credit and with more value created, there’s a new set of banked people, which leads to financial inclusion in the long run. With its insights into customer behaviour and transactions, Bankly also provides “data-as-a-service” to other service providers to offer tailored products and services to Nigeria’s informal sector

“The first phase is building agent networks which is good but that’s not the goal,” CEO Adejana said to TechCrunch. Just in the same way mobile inclusion happened, you need to then focus on acquiring customers who, after transferring cash to their mobile accounts, use it to buy airtime or make payments. We call that the three-phase process. The distribution first, then focusing on the consumer, after that full digitization. This is how we reach financial inclusion.”

Bankly operates like a traditional bank but with fewer assets, revenue, customers and operational costs. But because it doesn’t spend a lot in acquiring customers and building physical presences, it can pass on those cost savings to customers as interests and still make decent margins.

Agents on the platform also take commissions for any transaction a customer makes through them. This time last year, they were a little over 2,000 of them across the country. Now, Bankly has grown this number to 15,000 agents in just over a year.

The company still plans to add more agents with the new investment received. To increase its 35,000 customer base in cash-dependent communities, Bankly will also provide direct-to-consumer products in the coming months.

L-R: Fredrick Adams (CPO) and Tomilola Adejana (CEO)

In Bankly’s three years of operation, Adejana cites finding the right partners, talent, and most importantly, the right investors as challenges that the company has faced. Due to the nature of Bankly’s business, Adejana didn’t accept some of the investment offered to the company and only let in investors who aligned with the company’s plans for the unbanked.

“We’ve had to be patient to make sure that we were talking to people who deeply understand the problem and are passionate about solving it and are not about getting returns as soon as possible,” she said.

The co-lead investors include Vault, the holding company of VANSO, a fintech that was sold to Interswitch in 2016, and African payments company Flutterwave. While both companies have pioneered the technology the banked enjoy by building payment rails, they’ve done little to move the needle for the unbanked. With Bankly, there’s a chance to do so.

“Given our over twenty years experience in Nigeria’s fintech industry and previous exits, we strongly believe that Bankly understands the nuanced needs of this market — not to mention the team, strategy, and technology — to succeed in bringing affordable financial services to the unbanked. We are delighted to participate in this financing round as Bankly moves into its next growth stage,” Idris Alubankudi Saliu, partner at Vault said.

For Flutterwave, this marks its first disclosed investment into another company. When it raised a $170 million Series C last month, CEO Olugbenga Agboola mentioned to TechCrunch that Flutterwave might explore some partnerships with smaller companies and potential acquisitions in the coming years. So while the investment comes as a surprise, it’s not rare to see startups invest in other startups, particularly in the ones they hope to acquire in the future—case in point, Stripe and Paystack.

Other investors who took part in the round include Plug and Play Ventures, Rising Tide Africa and Chrysalis Capital.

Bankly aims to grow its customer base to 2 million unbanked Nigerians over the next three years. The goal is to support the Central Bank of Nigeria’s National Financial Inclusion Strategy of increasing the number of banked Nigerians from 60% to 80% by 2020. A year on, that strategy is yet to be actualized. But Adejana says Bankly is working with these regulators towards a more realistic target of 2025.

“We’re thrilled to have closed this milestone fundraise and to have such seasoned fintech investors who understand the market join us on this journey to bank Nigeria’s unbanked. Now we have built the agent network and are poised to serve customers directly via offline and online channels. Partnerships, collaboration, and a deep understanding of the needs of the unbanked will be vital to our success,” said Adejana.

Before Bankly, the CEO worked as an investment banker but it was during her masters’ program in Sydney she got into the world of fintech. After returning to Nigeria, Adejana worked on a product that offered loans to small businesses, then later joined Accion Venture Lab, a program focused on products that foster financial inclusivity. It was there Bankly started.

The product has caught on well. And while there are lots of fintech products in the Nigerian market claiming to reach the unbanked, Bankly remains one of the very few that can boldly stake a claim to that.

To truly attain financial inclusion in Nigeria, Adejana believes the onus lies with the fintechs to have long-term views just as the telcos and fast-moving customer goods did in the past. This increases the pie of customers fintechs can serve instead of taking a slice of an existing one. “For financial services to reach the last mile, it has to be distributed the same way fast-moving consumer goods are distributed,” she added

#finance, #financial-inclusion, #financial-services, #flutterwave, #funding, #payments, #startups, #tc, #unbanked, #vault

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Roll still doesn’t know how its hot wallet was hacked

Move fast, break things, get hacked.

That’s what happened at Roll, the social currency platform that allows creators to mint and distribute their own Ethereum-based cryptocurrency known as social tokens. Last week, Roll disclosed a hacker had stolen $5.7 million from its hot wallet, a little over a year after the company launched.

Roll set up a $500,000 fund to help creators recoup their losses, and the company promised to hire a third-party to audit its security infrastructure.

But the company has so far been unable to contract with security investigators to probe the breach, leaving the startup to look for clues itself. A week has passed since the breach, and the social currency startup says it still doesn’t know how the hacker broke in or stole its private keys.

In a call with TechCrunch this week, Roll executives confirmed its infrastructure never underwent a security audit, a process designed to help find and fix vulnerabilities, prior to its launch.

“We weren’t ready from a security standpoint,” said Roll CEO Bradley Miles.

“This incident was a big setback for us, we will revamp a lot of infrastructure around this that we have in place to prevent something like this from happening again,” said Roll’s chief technology officer Sid Kalla, who oversees cybersecurity because the company does not have dedicated staff.

The executives said while its smart contracts — the technology that underpins the blockchain — were audited by a third-party firm, the rest of the company’s infrastructure was never stress-tested.

“That was a shortcoming on our end, and we should have done this earlier,” said Kalla.

The emptying of Roll’s hot wallet comes as social currency climbs to new levels of popularity. Roll has netted high-profile creators like actor Terry Crews, along with hundreds of other social currency on the platform, many plummeting in value after the hot wallet was hacked.

Some of the larger social currencies, like $WHALE, bounced back fairly quickly after the breach of Roll’s hot wallet. A month earlier, $WHALE “serendipitously withdrew” a large amount of its supply to its cold wallets, which aren’t connected to the internet, in anticipation of community distributions. The social currencies that had measures in place proved some resiliency against the hack.

After the company realized its hot wallet was emptied, the company spent the first two days following the money trail. Miles said the company engaged with forensic blockchain company Chainalysis for help. The company said it was looking at his logs, but says they have not seen any anomalous logins. Roll uses Amazon’s cloud for its infrastructure, and only a handful of employees have access to the private keys, and their accounts are secured with app-based authentication codes, said Kalla.

“We’re a young company, we’re growing extraordinarily quickly,” said Miles, who admitted that the company’s response “could have been better.”

“There’s no scenario in which you can lose that kind of money and not bring in incident response,” said Jake Williams, founder of cybersecurity firm Rendition Infosec. “The idea that you would try to do a DIY incident response, especially if it’s not your core capability, is just ridiculous.”

“To rebuild trust, the company has to come clean on where the failures were at,” said Williams, a former NSA hacker turned incident responder.

Roll is rebuilding its infrastructure, but did not give a timeline for when the work would be completed. The company said it won’t allow users to make withdrawals until it’s confident that its infrastructure is secure. The company says it will engage a security company to audit the changes to its infrastructure. Roll also said it will reduce how many tokens it holds in its hot wallet.

Miles said the company’s relief fund for creators was raised to $750,000, which he said will go directly to affected communities. The company also plans to hire a dedicated chief information security officer when its next financing round closes.

#blockchains, #chainalysis, #computer-security, #computing, #crypto-economy, #cryptocurrencies, #cryptocurrency, #cryptography, #decentralization, #ethereum, #hack, #payments, #roll, #security, #social-currency, #technology

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Afriex raises $1.2M seed to scale its payments and remittances platform across Africa

Sending money from the U.S. to Nigeria can be a painstaking process. For remittance platforms like Western Union, it will cost a transfer fee and take between one to five business days for money sent from a U.S. debit card to enter a Nigerian bank account

Crypto remittance platforms are rising to the challenge of fixing these cross-border payment issues by reducing time and fees. Just yesterday, we talked about Flux, a Nigerian fintech solving this problem in the present YC W2021 batch. Today, another YC-backed startup, Afriex — but from the Summer 2020 batch — is raising a $1.2 million seed round. 

The company founded by Tope Alabi and John Obirije in 2019 provides instant, zero-fee transfers to Africans at home and in the diaspora. It allows users to deposit cash on the app, send money to a bank account or another user, and withdraw money to a connected bank or debit card

Like other crypto remittance platforms, Afriex has built its business on stablecoins — cryptocurrency backed by the dollar. In essence, the company buys cryptocurrency in one country and sells it in another to offer better exchange rates. This is in contrast to better-known platforms like Western Union and Wise that use traditional banking systems.

Last year while the startup graduated from YC, it claimed to be processing about $500,000 per month in transaction fees and is used in over 30 countries. At the time, Afriex was only present in Nigeria and the U.S. But having started operations in Ghana, Kenya, and Uganda, Afriex claims to be processing millions of dollars each month. On its website, though, Afriex states that customers can only send money to and from Nigeria, Ghana, Kenya, Canada, and the U.S.

With the new investment, the Lagos and San Francisco-based startup is looking to scale up by growing the team and expanding to other markets.

Pan-African VC firm Launch Africa led the seed round. Other investors include Y Combinator, SoftBank Opportunity Fund, Future Africa, Brightstone VC, Processus Capital, Uncommon Ventures, A$AP Capital, Precursor Ventures, and Ivernet Holdings. Angel investors like Russell Smith, Mandela Schumacher-Hodge Dixon, Furqan Rydhan, and Andrea Vaccari also took part.

The SoftBank Opportunity Fund, a subsidiary of the SoftBank Group, targets founders of color in the U.S. running early-stage startups. Since launching in June 2020, it has invested in 22 startups and Afriex seems to be the only one catering to a set of users in the US and another continent.

This is due to Alabi’s upbringing as an immigrant child who has had a mix of both worlds. It was difficult to send money to Nigeria and his experience as a blockchain developer at Consensys made him realize he could solve a problem.

“We would go back home every two years and even then, I would always take note of what was missing and what could be improved. I would find myself having to pay for foreign expenses with money that was sitting in a US bank account,” said Alabi. “Traditional remittance companies were so slow and expensive that I knew I could do it better with crypto. Remittance is the best and most important use case for crypto. Our goal is to build the world’s largest remittance company, starting with emerging markets.”

#africa, #blockchain, #cryptocurrencies, #cryptocurrency, #funding, #payments, #remittance, #softbank-opportunity-fund, #stablecoin, #tc

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These undergraduates left university to build Flux, a payments startup now in YC

Traditional remittance companies, while necessary, currently have two flaws in speed and exorbitant fees. It can take a long while (days to weeks) for money sent from an immigrant in the U.S. to reach a relative in Nigeria. The fees charged depend on the amount sent — and let’s not forget the extra charges for withdrawals and deposits.

Ben Eluan and Osezele Orukpe, two software engineers based in Nigeria, faced this problem in 2019. They had executed a project for a client in the U.K. and when the time came for them to get paid, they settled with Skrill. However, it took a week for the friends to get their money, and they lost a considerable chunk of it to charges.

“The experience made us think of the payments and, more importantly, cross border payments,” Eluan said to TechCrunch.The gig economy and the service economy for small businesses economy is very massive, and we care about it enough to dedicate all our time into building payments for Africa.”

Over the last three years, crypto remittance companies have emerged to fill in this need, as well. Via an application and from a wallet, people can convert fiat into crypto and send it to the wallets of people in other countries who convert back to fiat if they choose.

Image Credits: Flux

That’s the same proposition Eluan (CEO), Orukpe (CTO) and the team have with their product, Flux. The crypto remittance company was built to enable merchants to send and receive money from anywhere in the world, Eluan tells me.

He adds that what differentiates Flux from other crypto remittance startups lies in the ease and speed of the platform’s transactions. He claims that facilitating payments on Flux is 100x faster than fiat, and is cheaper too. The platform charges $0.50 for every transaction, regardless of the amount.

In May 2020, Flux got accepted into Pioneer, an accelerator launched by ex-YC partner Daniel Gross. Pioneer gives founders access to funding streams and talent hardly found outside Silicon Valley. It has already backed more than 100 founders who give up 1% equity to join the accelerator. Depending on their progress, Pioneer can decide to give either $20,000 for 5%, $100,000 for 5%, or $1 million for 10%.

After the program, Flux subsequently raised $77,000 pre-seed investment from different investors — Hustle Fund and Mozilla, among others.

Eluan says the six-month-old company has 5,000 customers who have transacted over $750,000 in payments volume. According to the CEO, the startup is growing 40% month-on-month and has made $25,000 in revenue.

The company witnessed this growth despite the Central Bank of Nigeria’s clampdown on crypto exchange activities. The country’s apex bank ordered local banks to stop aiding crypto transactions. This meant that crypto users on Flux and other crypto platforms could no longer convert fiat to crypto using their bank accounts or cards.

“We had to be compliant because of the CBN policy and our customers can’t really convert their crypto to fiat but can still transact their crypto. This is why we want to make Flux available in the US and UK, where people can use Flux and send money to Nigeria. It’s currently not available but that’s what we’re building and is the next phase of our application,” he said.

The team is also working on a peer-to-peer feature that will see users seamlessly transact crypto and fiat with one another. The company has launched Flux Merchants, a product that allows merchants to accept payments by creating payment links for their products and services.

Eluan, Orukpe, Israel Akintunde (VP, Engineering) and Ayomide Lasaki (head of Marketing) — met in their freshman year at Obafemi Awolowo University (OAU) in Ile-Ife, Osun. Studying various engineering disciplines, the four friends formed a “programming club” with other software developers on campus where they would basically meet to write code and make applications. Eluan even tells me they regularly skipped class for these sessions.

Before Flux, the friends built an e-commerce platform called Joppa that helped people find merchants around them within the city. Although they had 20,000 users, Eluan says the team didn’t understand the dynamics of what it entailed to run a startup, so the business had to shut down

A factor that eventually led to founding Flux was the university’s budding tech talent ecosystem, which is teeming with stories of prominent startups launched by alumni. Some include Jobberman, Africa’s largest recruitment site; Kudi and Cowrywise, two YC-backed companies; and Techstars company Farmcrowdy among others

“These founders came from our school and it was a huge motivation for us. We always knew that we wanted to build something but we weren’t sure what this would be. We eventually landed on Joppa, then Flux,” Eluan added.

In fact, according to Techpoint Africa, OAU alumni have founded startups that have cumulatively raised $1 million more than other alumni from other universities in West Africa. Think of OAU as the region’s Stanford University.

Image Credits: Flux

However, unlike others, the founders dropped out of the university to start Flux. 

“We dropped out to focus on our startup and scaling it into a $1 billion company. We believe the opportunity here is huge. So for us, the right thing to do is to get the job done well. Startups need time so dropping out was inevitable,” he said.

Not only are they the first set of African founders that are all dropouts to get into Y Combinator, but they’re arguably the youngest. It is a feat Flux is thrilled about, and Eluan believes it will open the doors for more young founders on the continent.

“Well, we are excited about that, and it simply means brilliant young people in Nigeria and Africa can definitely go ahead to build stuff and get funded too just like founders from the U.S.,” he said.

But while their acceptance into Y Combinator is a much-needed validation for their work and sacrifice, there’s still a lot of work to be done. The startup, now based in Lagos, is playing in a competitive payments space. Different companies like Chipper Cash, Flutterwave, MFS Africa and other crypto startups are trying to fix cross-border payments, and there’s a race against time to capture market share. Hopefully, YC, Pioneer, other backers, and the team’s understanding of the market will propel Flux to dominance

#africa, #crypto-economy, #cryptocurrency, #flux, #payments, #startups, #tc, #y-combinator

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Social+ payments: Why fintechs need social features

Social+ companies are upping the stakes for everyone by giving consumers multiple benefits at once: products that serve a purpose but also meet our need for belonging to a community.

But what exactly is a social+ company? One for which social engagement is an inextricable component of the product. That is to say: If you removed the social element, the product would cease to make sense. You can find plenty of examples in gaming (Fortnite), fitness (Strava, Peloton), commerce (Pinduoduo), audio (Clubhouse) and more. As noted in Andreessen Horowitz’s recent series Social Strikes Back, “The best version of every consumer product is the one that’s intrinsically social.”

Social+ products are seeing mass adoption because they marry community with functionality.

The benefits of a social+ company

Social+ products are seeing mass adoption because they marry community with functionality. Users form meaningful connections — and engage in value-adding conversations — within the context of the goal they’re trying to achieve. Whether it’s shopping for a deal or growing their assets, social+ products help users gain new knowledge, find motivation, garner status, form friendships and generally feel like they’re part of something.

Companies that base their business model on social+ products enjoy a variety of benefits:

Growth

When the social aspect of a product is integral to its function, users will often drive growth on their own steam, inviting their friends and family to join the community.

Members of highly engaged communities are inspired and fired up by their interactions with other members, and when they’re fired up about something, they talk about it. Participating in these communities makes users feel like they’re part of something, which can have a powerful effect on your growth.

Retention

Relationships matter. The relationship your users have with your brand is ultimately what will determine whether they stick with you or leave you for a competitor offering the same service — particularly at a more attractive price. If you provide your customers with access to a community they relate to and resources that make their lives easier, they’re more likely to be loyal.

The beauty of social+ is that embedding social interaction within your product or app allows you to own that conversation and build a community around your brand. In the absence of built-in communities, these users are forced to turn to places like Reddit or WhatsApp to discuss, among other things, the relative advantages of competitors’ apps.

Harnessing the creativity of your users

User-generated content (UGC) is the lifeblood of any social+ product, driving user engagement and fostering connections among users. UGC means the company can harness the creativity and popularity of its users and doesn’t have to expend as many resources creating content users find valuable. Plus there’s the added bonus that authentic UGC — whether it’s a screenshot or a meme — lends the product far greater credibility than any marketing initiatives you could launch.

#api, #column, #ec-column, #ec-consumer-applications, #ec-fintech, #finance, #payments, #social, #tc, #user-generated-content

0

Homebrew backs Higo’s effort to become the “Venmo for B2B payments” in LatAm

The B2B payments space has been on fire for a while, and the COVID-19 pandemic has only fueled mass adoption of digitizing finances.

In regions like Latin America, the need for innovation in the sector is even more paramount than in the United States with so many people still relying on outdated processes.

One Mexico City-based startup, Higo.io, is out to transform B2B payments for SMBs (small and medium-sized businesses) in Latin America, starting with its home country.

Rodolfo Corcuera, Juan José Fernández and Daniel Tamayo founded the company in January 2020, recognizing that the process of paying vendors for business owners is largely “manual and cumbersome.”

“In Mexico, small businesses mostly handle payables with nothing more than spreadsheets and email and legacy bank accounts,” CEO Corcuera said.

The trio formed Higo to automate processes and provide visibility into cash flow, particularly for small businesses. “Informal” businesses make up about 23% of Mexico’s GDP, according to data from INEGI, the government’s National Institute of Statistics and Geography. Higo launched its SaaS platform last November.

And now the startup has raised $3.3 million from a group of U.S.-based investors including Homebrew (which led the round), Susa Ventures, Haystack and J Ventures. The financing is the latest in a string of fintech-related fundings in Mexico that TechCrunch has covered as of late.

Higo wants shake up the payments scene in the region by creating an alternative to traditional banking for businesses to pay each other. 

“We want to build the Venmo for B2B payments in Latin America,” Corcuera told TechCrunch. 

Ultimately, the goal is to help SMB owners deal less with tedious tasks and more on generating revenues and profits for their businesses. Customers so far include hundreds of small business owners and the company aims to have “thousands” of customers by year’s end.

“E-invoicing is ubiquitous in the States and in the U.S., receiving a PDF invoice is enough,” Corcuera told TechCrunch. “But in Mexico, it has to be electronic to be [tax] deductible by law. With our platform, invoices are automatically populated so businesses can have visibility into what has to be paid, what vendors they owe and when they owe.”

Corcuera is no stranger to running companies, having launched a housecleaning marketplace at the age of 23 in 2013. He also founded Tandem, an office management platform, in 2018, to help office managers streamline their procurement needs. As is often the case for founders, it was during the process of growing that company that Corcuera realized how painful and time consuming it was for businesses to manage their payables and receivables. That led him to come up with the concept behind Higo.io. 

Gallardo was previously COO at Swap, a Mexican challenger bank, and also was one of the founding members of Uber’s Mexican operations.

Looking ahead, Higo plans to use its new capital in part to boost its six-person staff, particularly beefing up its engineering team so that it can “scale as fast as possible,” according to Corcuera.

For now, the company’s efforts are focused exclusively on the Mexican market, which in of itself is huge.

“Later we will expand in Latin America. We see a very clear opportunity in similar markets across the region,” Corcuera said.

Homebrew Partner Satya Patel said his San Francisco-based VC firm believes there’s a massive opportunity in Latin America given the move to digital payments. The investment in Higo marks Homebrew’s third in the region in the past 18 months.

“This is an exceptional team focused on a problem that is visceral for businesses in Mexico in particular,” Patel told TechCrunch. “They are able to provide businesses with a real-time view of their cash flow and working capital. Without it, they are at risk. So the opportunity is to tackle this acute pain point being felt by a lot of businesses.”

The region’s payments ecosystem, he said, is still very nascent.

“Being the intermediary for B2B tax information gives Higo an opportunity to provide a real alternative to the traditional way Mexicans are used to doing banking and business,” Patel added.

#accounts-payable, #banking, #business, #ceo, #entrepreneurship, #finance, #funding, #fundings-exits, #haystack, #homebrew, #invoice, #latin-america, #mexico, #payments, #recent-funding, #saas, #satya-patel, #startups, #susa-ventures, #swap, #tc, #uber, #united-states, #venmo, #venture-capital

0

A crypto company’s journey to Data 3.0

Data is a gold mine for a company.

If managed well, it provides the clarity and insights that lead to better decision-making at scale, in addition to an important tool to hold everyone accountable.

However, most companies are stuck in Data 1.0, which means they are leveraging data as a manual and reactive service. Some have started moving to Data 2.0, which employs simple automation to improve team productivity. The complexity of crypto data has opened up new opportunities in data, namely to move to the new frontier of Data 3.0, where you can scale value creation through systematic intelligence and automation. This is our journey to Data 3.0.

Coinbase is neither a finance company nor a tech company — it’s a crypto company. This distinction has big implications for how we work with data. As a crypto company, we work with three major types of data (instead of the usual one or two types of data), each of which is complex and varied:

  1. blockchain: decentralized and publicly available
  2. product: large and real-time
  3. financial: high-precision and subject to many financial/legal/compliance regulations.

Our focus has been on how we can scale value creation by making this varied data work together, eliminating data silos, solving issues before they start and creating opportunities for Coinbase that wouldn’t exist otherwise.

Having worked at tech companies like LinkedIn and eBay, and also those in the finance sector, including Capital One, I’ve observed firsthand the evolution from Data 1.0 to Data 3.0. In Data 1.0, data is seen as a reactive function providing ad-hoc manual services or firefighting in urgent situations.

#artificial-intelligence, #coinbase, #column, #data-analysis, #data-management, #developer, #ec-cloud-and-enterprise-infrastructure, #ec-column, #enterprise, #machine-learning, #payments, #tc

0

Google Play drops commissions to 15% from 30%, following Apple’s move last year

Google will lower its Play commissions globally for developers that sell in-app digital goods and services on its marquee store, the company said, following a similar move by rival Apple late last year.

The Android-maker said on Tuesday that starting July 1, it is reducing the service fee for Google Play to 15% — down from 30% — for the first $1 million of revenue developers earn using Play billing system each year. The company will levy a 30% cut on every dollar developers generate through Google Play beyond the first $1 million in a year, it said.

Citing its own estimates, Google said 99% of developers that sell goods and services with Play will see a 50% reduction in fees, and that 97% of apps globally do not sell digital goods or pay any service fee.

Google’s new approach is slightly different from Apple, which last year said it would collect 15% rather than 30% of App Store sales from companies that generate no more than $1 million in revenue through the company’s platform. That drop doesn’t apply to iOS apps if a developer’s revenue on Apple platform exceeds $1 million.

“We’ve heard from our partners making $2 million, $5 million and even $10 million a year that their services are still on a path to self-sustaining orbit,” wrote Sameer Samat, VP of Android and Google Play, in a blog post.

“This is why we are making this reduced fee on the first $1 million of total revenue earned each year available to every Play developer that uses the Play billing system, regardless of size. We believe this is a fair approach that aligns with Google’s broader mission to help all developers succeed.”

The move comes months after changes in Google billing system charges rattled many startups in India. More than 150 startups banded together last year after Google said it will collect as high as 30% cut on in-app purchases in a range of categories made by Android apps.

Following the backlash, Google delayed mandating the planned Play Store payments rule in India to April 2022 and had reached out to several firms in recent months in the country to better understand their concerns, people familiar with the matter told TechCrunch.

Vijay Shekhar Sharma, founder and chief executive of mobile payments provider Paytm, India’s most valuable startup, dismissed Google’s move today as a “PR stunt.”

In an interview with TechCrunch, Sharma said established firms like his will still have to pay an exorbitant amount of fee to Google. Today’s announcement by Google, he said, further raises the question whether Google plans to address concerns raised by serious internet firms at all.

The biggest concern firms face today is the inability to use a third-party payments service for billing, he said. “They are basically saying that as soon as you build a business larger than $1 million — which is a very low bar — you are going to pay a 30% fee, which after taxes, becomes 44%,” he said.

A 30% sales cut and the inability to use third-party billing system have been points of contention between many developers and app store operators — Apple and Google — and led to a lawsuit by Fortnite-maker Epic Games against the iPhone-maker last year. Epic CEO Tim Sweeney had alleged that Apple’s move to lower the App Store fee for smaller developers was orchestrated to sow division among app creators.

Sharma said he was hopeful that Google will address other concerns, especially because in a country like India “we don’t have any other operating system, or distribution platform. They effectively control the destiny of every app developer in the country.”

Android commands 99% of the smartphone market in India, according to research firm Counterpoint. “Earlier India was powered by Android, then we became dependent on Android, and now it is controlled by Android,” said Sharma, whose payments app competes with Google Pay in the world’s second largest internet market.

Google’s Samat said,”We look forward to seeing more businesses scale to new heights on Android, and to further discussions with the Indian developer community to find new ways to support them technically and economically as they build their businesses.”

“Once developers confirm some basic information to help us understand any associated accounts they have and ensure we apply the 15% properly, this discount will automatically renew each year,” he wrote.

#apple, #apps, #asia, #ecommerce, #epic-games, #fortnite, #google, #google-play, #google-play-store, #india, #payments, #paytm

0

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

0

Daily Crunch: Stripe valued at $95B

Stripe gets a mind-boggling valuation, Facebook promotes COVID vaccines and Elon Musk has an interesting new title. This is your Daily Crunch for March 15, 2021.

The big story: Stripe valued at $95B

That’s right: The popular payments company has raised $600 million in new funding at a $95 billion valuation. It says it will use the money to expand in Europe while also growing its global payments and treasury network.

“Whether in fintech, mobility, retail or SaaS, the growth opportunity for the European digital economy is immense,” said president and co-founder John Collison in a statement.

Meanwhile, over in Extra Crunch, Alex Wilhelm takes a closer look at the company’s new growth numbers, like the fact that it’s now working with more than 50 companies that are each processing more than $1 billion annually.

The tech giants

Facebook to label all COVID-19 vaccine posts with pointer to official info — The company says it has also implemented some “temporary” measures aimed at limiting the spread of vaccine misinformation/combating vaccine hesitancy.

His Majesty Elon the First, Technoking of Tesla — In Musk-speak, his new title still translates into the chief executive officer of the electric car company.

Netflix gets 35 Oscar nominations, including 10 for ‘Mank’ — Of course, this is a streaming-centric year for movies overall.

Startups, funding and venture capital

Airtable is now valued at $5.77B with a fresh $270 million in Series E funding — Airtable is a relational database that many describe as a souped-up version of Excel or Google Sheets (and there’s at least one TechCrunch editor who swears by it).

WeWork unbundles its products in an attempt to make itself over, but will the strategy work? — The pandemic presented WeWork with challenges, but also, some might say, opportunity.

ElevateBio raises $525M to advance its cell and gene therapy technologies — The company’s business model focuses on both developing and commercializing its own therapies, while also working through long-term partnerships with academic research institutions.

Advice and analysis from Extra Crunch

Julia Collins and Sarah Kunst outline how to build a fundraising process — Collins is the first Black woman to co-found a venture-backed unicorn, so it should come as no surprise that investors lined up to bet on her latest venture.

Olo raises IPO range as DigitalOcean sees possible $5B debut valuation — It’s a busy day in IPO-land.

(Extra Crunch is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Everything else

US e-commerce on track for its first $1 trillion year by 2022, due to lasting pandemic impacts — The COVID-19 pandemic boosted U.S. online shopping by $183 billion, according to a new report by Adobe’s e-commerce division.

BMW debuts the next generation of its iDrive operating system — With its new system, BMW is expanding the center dashboard display all the way through the cockpit.

4 signs your product is not as accessible as you think — Bringing decades-long legacy code and design into the future isn’t easy.

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.

#daily-crunch, #funding, #fundings-exits, #payments, #stripe

0

India’s CRED in talks to raise $200 million at $2 billion valuation

Bangalore’s fintech startup ecosystem is inching closer to delivering a new unicorn: CRED.

Two-year-old CRED is in advanced stages of talks to raise about $200 million at about $2 billion valuation, three sources familiar with the matter told TechCrunch. The new funding round, like this January’s Series C, will be largely financed by existing investors, the sources said, requesting anonymity as talks are private. The round is expected to close within a month, one of them said.

CRED, founded by Kunal Shah, has become one of the most talked-about startups in India, in part because of the pace at which its valuation has soared.

Backed by high-profile investors including DST Global, Sequoia Capital India, Tiger Global, Ribbit Capital, and General Catalyst, CRED was valued at $806 million when it closed its Series C round in January this year and $450 million in August 2019. (TechCrunch also scooped the Series C round of CRED.)

If the new deal goes through, CRED will be the fastest startup in the world’s second largest internet market to attain a $2 billion valuation. Prior to the upcoming Series D round, CRED had raised about $228 million.

Reached by TechCrunch early last week, CRED declined to comment. Sequoia Capital India didn’t immediately respond to a request for comment.

The Indian startup operates an eponymous app that rewards customers for paying their credit card bills on time and offers deals from online brands such as Starbucks, Nykaa, and Vahdam Teas. It had over 5.9 million customers as of January — or about 20% of the credit card holder population in the country.

The startup, unlike most others in India, doesn’t focus on the usual TAM of India — hundreds of millions of users of the world’s second most populated nation — and instead caters to some of the most premium audiences.

“India has 57 million credit cards (vs 830 million debit cards) [that] largely serves the high-end market. The credit card industry is largely concentrated with the top 4 banks (HDFC, SBI, ICICI and Axis) controlling about 70% of the total market. This space is extremely profitable for these banks – as evident from the SBI Cards IPO,” analysts at Bank of America wrote in a recent report to clients.

“Very few starts-ups like CRED are focusing on this high-end base and [have] taken a platform-based approach (acquire customers now and look for monetization later). Credit card in India remains an aspirational product. The under penetration would likely ensure continued strong growth in coming years. Overtime, the form-factor may evolve (i.e. move from plastic card to virtual card), but the inherent demand for credit is expected to grow,” they added.

Consumer segmentation and addressable market for fintech firms in India (BofA Research)

CRED says it is trying to help customers improve their financial behavior. An individual needs a credit score of at least 750 to join CRED. In a recent newsletter to customers, CRED said the median credit score of its customers was 830 and at “any given point in time” more than 375,000 individuals are on the app’s waiting list, many of whom have demonstrably improved their score to join CRED.

“It’s easy to be responsible when you’re empowered. 80% CRED Protect members got visibility on extra interest charges and avoided late payment fees by tracking their dues on CRED. Ignorance is not always bliss. CRED members detected additional charges worth over ₹145 Crores [$20.1 million] on their statements. CRED members avoided over ₹43.5 Crores [$6 million] worth of late payment fees,” it wrote in the newsletter.

“With the help of regular bill payment reminders, and a seamless credit card management experience; 160,000 CRED members improved their credit scores last month. CRED members know it pays to be good as they earned cash-back worth ₹12 Crores [$1.65 million] by paying their bills on time. There’s always something to look forward to on CRED. Our members got access to over 750 new rewards and products.”

The startup makes money by cross-selling financing products — for which it has a revenue-sharing arrangement with banks and other financial institutions — and levies a similar cut from merchants who are on the platform, Shah, who is also one of the most prolific angel investors in India, told TechCrunch in an interview in January this year.

#asia, #cred, #dst-global, #funding, #general-catalyst, #india, #kunal-shah, #payments, #ribbit-capital, #sequoia-capital-india, #tiger-global

0

Zeller, a fintech founded by Square alumni, raises $25M AUD Series A led by Lee Fixel’s Addition

A photo of Dominic Yap, chief operating officer and co-founder, and Ben Pfisterer, chief executive officer and co-founder of Zeller

Dominic Yap, chief operating officer and co-founder, and Ben Pfisterer, chief executive officer and co-founder of Zeller

Zeller, a payment and financial services startup founded by former Square executives, quietly raised a $25 million AUD (about $19.4 million USD) Series A last year, it announced today. The funding was led by Addition, the investment firm founded by former Tiger Global partner Lee Fixel, and included participation from returning investors Square Peg and Apex Capital. The Melbourne-based company said this is one of Australia’s largest pre-launch Series A rounds ever.

The startup previously raised a $6.3 million AUD (USD $4.9 million) seed round in June 2020. Zeller was was founded last year by Ben Pfisterer, Square’s former Asia Pacific and Australia head, and Dominic Yap, its strategy and growth lead. It has made 38 new hires over the past six months, growing its team to 50 people.

The funding will be used to grow Zeller’s product development and engineering capabilities, marketing and sales, and customer support teams as it prepares for its launch. A date hasn’t been set yet, but chief executive officer Pfisterer told TechCrunch it is “imminent.”

Zeller will offer a fully-integrated payments and financial services solution designed for small- to medium-sized businesses that currently rely on multiple providers for their payment terminals, point of sale systems, e-commerce payments, transaction accounts and credit cards. Zeller’s software is combined with a payment terminal, transaction account and business Mastercard, and intended to make it easier for businesses to accept and send payments, access funds and manage their finances. Zeller will have no lock-in contracts and one low fee for card payments.

“We don’t underestimate the challenges that come with scaling a new brand in an area dominated by entrenched banking incumbents, yet the opportunity is incredibly exciting,” said Pfisterer. “The industry experience our team has built up over the years means that we are well aware of the pain points business owners face when getting set up with a new banking or financial services provider.”

He added that despite the growth of e-commerce, about two-thirds of transactions are still processed in person. Zeller’s “sweet spot” is currently businesses that process up to $10 million AUD annually, mostly in face-to-face transactions.

“They may be sole traders or employ a team, may operate across one or multiple locations and come from a variety of verticals including retail, hospitality, fixed or mobile services, events, trades and many more,” said Pfisterer. He estimated that Zeller’s market opportunity in Australia includes just under 1.5 million merchants, and it is also designed to be scalable into other markets.

Other payment and financial services companies in Australia include Square, eWAY, PayPal, Ayden and Stripe.

Pfisterer said eWAY, Stripe and Adyen tend to focus on e-commerce payment processing, “yet this is just one element of what business owners need to manage their cash flow.” Most still need to accept in-person payments, which means going to a traditional bank for a merchant terminal and account. On the other hand, PayPal and Square focus mainly on micro-merchants. “The growing pains kick in when a business starts to expand and demands a wider variety of services.”

Zeller already has plans to introduce new payment and financial services products, and integrations with tools like point-of-sale and accounting software, to scale up with businesses as they grow, he added.

#australia, #financial-services, #fintech, #payments, #smes, #tc

0

Cheese raises $3.6M for its digital bank aimed at the Asian-American community

Many things have accelerated in the world of fintech over the past year, not the least of which is the trend of digital banks aimed at specific communities in the U.S.

In the past few months alone, a number of neobanks targeting the Black and Latinx communities have emerged. Most recently, we covered the $5 million raise of one such bank — First Boulevard.

Today, Cheese announced the launch of its digital banking platform that is aimed at primarily serving the Asian-American community. Co-founder and CEO Ken Lian came to the United States from China in 2008 to attend college. In the years after his move, Lian said he paid thousands of dollars in bank fees and got rejected “multiple times” for basic bank accounts, despite having a FICO score over 800.

Those experiences led him to come up with the concept behind Cheese, which he said will offer its banking services via a multi-language platform. The one-year-old startup also has a social component, giving customers a way to support Asian-American businesses and organizations. Lian is no stranger to the world of entrepreneurship, having also founded Moolah Science, a startup that helped consumers find out if online stores owed them a refund that got acquired by a Fortune 500 company in 2019.

Lian founded Cheese along with Zhen Wang and Qingyi Li under the premise that Asian-Americans are often subject to discrimination and “an unequal playing field” in America despite being among the most educated in the country.

“We understand Asian users much better than anybody else because we are