With over 3.5b cards issued and $1.1t in transaction volume in Q1 this year alone - Visa, the payment behemoth, has had a busy week vis a vis the regulators.
Earlier this week, the company voiced its commitment to “maintaining stability in our payments system and will not make any future rate changes in the U.S. for another year.” Mastercard matched the gesture, as retailers had been mounting pressure on both networks to delay interchange fee hikes. Legislators themselves were active in raising the heat; particularly Senator Dick Durbin, who’d previously helped limit fees on debit-card transactions, and reappeared in an appeal to the patriotic sentiment of both companies.
Then, on Friday, the WSJ reported that, according to insider sources, the DoJ is investigating whether Visa - and potentially Mastercard - is engaging in anti-competitive practices in the debit card market. The probe allegedly highlights the role of network fees, particularly in their impact to merchants, who in turn raise prices on customers. It is no secret to fintech aficionados that this investigation comes shortly after the blocked acquisition of Plaid, whose innovative tech represented a threat to Visa, according to the SEC. The deal was dropped by both parties in January.
The DoJ apparently also asked about debit-card routing practices in newer forms of payment. This includes using debit cards with mobile wallets like Apple Pay, or when in-store customers pay by tapping debit cards on terminals, rather than inserting. It seems that, while protecting consumers during a prolonged health crisis makes intuitive sense, intervening in the adoption of more innovative tech at scale raises more questions.
The pandemic itself has pushed consumers into unprecedentedly digital settings, greatly impacting the payments landscape. Consider the situation from Plaid’s perspective: it is now worth basically three times what Visa was willing to pay for it…
Morgan Stanley becomes the first big U.S. bank to offer its wealthy clients access to bitcoin funds - The investment bank told its financial advisors in an internal memo that the bank is launching access to three funds that enable ownership of bitcoin. Two of the funds on offer are from Galaxy Digital, the crypto firm founded by Mike Novogratz, while the third is a joint effort from asset manager FS Investments and bitcoin company NYDIG. The move, a significant step for the acceptance of bitcoin as an asset class, was made by Morgan Stanley after clients demanded exposure to the cryptocurrency. Read more
Bottlepay brings real-time bitcoin payments to Twitter - UK based payments platform Bottlepay, which allows users to send bitcoin via Twitter, has announced its full launch after leaving beta mode. Users can tweet, for example, "@bottlepay send 1,000 sats to @twitteruser," instantly sending this amount of the cryptocurrency from one wallet to another. Besides Twitter, Bottlepay plans on extending its service to Reddit, Discord, Twitch, Telegram and Mastodon in the coming months. Read more
Mexican challenger bank Fondeadora adds $14m to its Series A - Congratulations to portfolio company Fondeadora, which raised an additional $14m in new Series A funding, bringing the round total to $28m. Portag3 led, and was joined by insider Gradient Ventures. Y Combinator, Scott Belsky, Sound Ventures, Fintech Collective and Ignia also participated in the first tranche of the Series A. Read more
Flutterwave and PayPal collaborate to allow African merchants to accept and make payments - Congratulations to portfolio company Flutterwave, which announced a collaboration with PayPal to allow PayPal customers globally to pay African merchants through its ‘Pay with PayPal’ feature. Via this partnership, African businesses can connect with the more than 377m PayPal accounts globally and overcome the challenges presented by the highly fragmented and complex payment and banking infrastructure on the continent. Read more
Anyfin: Swedish fintech company launching in Germany - After Klarna, Anyfin is the next Swedish fintech company to expand to Germany. Co-founder and CEO Mikael Hussain speaks to over 100,000 app users in Sweden and Finland. “We see great potential in the German market, as the willingness of consumers to improve their financial situation is at least as great as in Scandinavia,” he says. Read more
FinTech Collective: the Mexico cohort - Carlos Alonso Torras dives into FTC's Emerging Cities thesis, taking a closer look at Mexico in particular - which we think is unique in its stage of development and scale of opportunity. So far, we've made eight investments in Latin America (five of which are in Mexico) and are looking forward to remaining active in the region and contributing to the emergence of a spending middle class. Read more
Transforming mortgage: Ocrolus virtual roundtable - Matt Levinson will moderate this 60-minute roundtable, which will explore the current state of the mortgage industry in the U.S. They will dive into the fintech tools and partnerships that mortgage lenders are counting on to address increased demand and new circumstances like self-employment income, and talk about the future of mortgage – and how we can get there. Listen here. Read more
How Much Does It Cost To Pay?
Altimeter to lead Plaid deal after scrapped Visa merger - Plaid, the financial technology startup whose planned sale to Visa fell apart in January, is raising about $600m in a funding round that could value it at between $10b to $15b. The deal would represent a steep rise in expectations for the eight-year-old company. Read more
Visa and Mastercard will delay merchant fee hikes another year amid ongoing pandemic - Visa and Mastercard are postponing plans to boost the fees U.S. merchants pay when consumers use credit cards online, pushing back the changes another year to April 2022 because of the pandemic. Read more
Visa faces antitrust investigation over debit-card practices - Justice Department probe focuses on whether Visa's actions allow it to maintain a dominant market share unlawfully. Read more
How Stripe became Silicon Valley’s most prized asset - One of Stripe’s key competitive advantages is doing more with less. It has about 3,000 staff, 1/3 less than Facebook had in 2012 when it IPO'd at a similar valuation. The company has remained capital-efficient, even as it expanded to more than 40 countries raising $2.4b to date, compared with Uber’s $14b before its IPO in 2019. Read more
Goldman’s junior bankers complain of crushing workload amid SPAC-fueled boom in Wall Street deals - Junior investment bankers at Goldman Sachs are suffering burnout from 100-hour work weeks and demanding bosses during a SPAC-fueled boom in deals, according to an internal survey done by a group of first-year analysts. The surge in activity has taken a serious toll on analysts’ mental and physical health since at least the start of the year. Read more
Federal Reserve calls time on looser capital requirements for US banks - Investors had focused intently on the fate of these regulatory concessions in recent weeks, especially as volatility in the $21t market for US government bonds picked up and Treasury yields shot higher. Without more lenient rules for large US banks, Wall Street strategists cautioned that the choppy trading conditions that have at times this year engulfed the world’s largest government bond market could be amplified, even as the deficit swells. Read more
Real estate tech startup Offerpad to go public via SPAC merger in $3b deal - The Phoenix based company announced its plans to go public by merging with Supernova Partners Acquisition Company in a deal valued at $3b. Founded in 2015, Offerpad started out as primarily an iBuyer (meaning it bought homes from sellers who signed up online) and has since evolved its platform in an effort to be a one-stop shop for people looking to buy or sell a home. Read more
Sotheby’s enters NFT digital art market, considers broader cryptocurrency options - Sotheby’s Chief Executive Officer Charles Stewart said that the house was looking into ways to allow collectors to pay—and potentially get paid—with cryptocurrency for digital works as well as physical masterpieces, which would be a first for a blue-chip auction house. Mr. Stewart said the house isn’t ready to pull the trigger on any concrete plans, but that it is determined to pave the way for a recent influx of “engaged and affluent” cryptocurrency investors to spend on traditional trophies in a way that wouldn’t have been possible previously. Read more
IBM expands cloud presence to help Latin American businesses accelerate path to hybrid cloud - IBM triples the locations of the IBM Cloud data center in Brazil and expands the global presence of cloud computing. Clients like Arezzo & Co, Banco Sabadell or Neural Creations are leveraging IBM Cloud capabilities to lead in their industries. Read more
Teen ‘mastermind’ behind the great Twitter hack sentenced to three years in prison - The hack took place on July 15th, 2020, and it quickly became one of the most fraught cybersecurity incidents in Twitter’s history, as accounts belonging to high-profile users like Elon Musk, Bill Gates, Barack Obama, and Joe Biden were compromised in quick succession to promote a bitcoin scam Clark used to accept more than $100,000 in the cryptocurrency. Read more
Robinhood rival eToro to go public via $10.4b SPAC merger - Social investment network eToro plans to go public through a merger with a blank check company FinTech Acquisition Corp. V backed by Betsy Cohen, founder and the former CEO of The Bancorp. The deal, set to close in the third quarter, was led by investors including ION Investment Group, Softbank Vision Fund 2, and Fidelity Management & Research. Read more
Fidelity takes minority stake in alternatives platform Moonfare - Moonfare offers access to a range of private equity funds with a minimum investment of €100,000, and collaborates with some of the biggest private equity firms including KKR, Carlyle, EQT and Warburg Pincus. As a result of the partnership with Fidelity — the first institutional investor to acquire a stake in Moonfare — clients will be able to access private market funds on the platform with a minimum €50,000 investment. Read more
Tencent loses $62b, wiping out value of fintech business - The stock fell more than 4% in Hong Kong on Monday, following a 4.4.% drop on Friday. China’s top financial regulators see Tencent as the next target for increased supervision after the clamp down on Jack Ma’s Ant Group, people with knowledge of their thinking have said. Like Ant, Tencent will probably be required to establish a financial holding company to include its banking, insurance and payments services. Read more
First Digital goes live as Israel's first new bank since 1978 - First Digital Bank, the first new bank in Israel since 1978, started operations on Sunday on a trial basis, and said it planned to open to the public later in 2021. Read more
Bank-fintech interoperability hits the agenda for Peru - Peru’s Electronic Clearing House (CCE) has its sights set on interoperability between banks, savings banks and fintechs – but multiple challenges stand in the way of making it happen. Read more
Axis Bank introduces 'wear 'N' pay' - India's Axis bank has rolled out a range of wearable devices for contacless payment transactions. Dubbed 'Wear 'N' Pay', the program enables customers to leave their wallets at home and use payment bands, key fobs, or loops to make payments on the go. Read more
House-flipping lenders are throwing cash at a red-hot U.S. market - There are few easier ways to make a quick buck in America today than flipping houses. Profits on flips are at a record high - some $66,000 on average per home - and there are more than 60 banks financing flippers today. That’s an increase of almost 50% in a little more than two months. Read more
Meet venture capital’s baby cousin, venture debt - A Bloomberg "Quick Take" on one slice of the private credit asset class that is on pace for especially rapid growth as startups seek to stay private for longer and VC firms see record levels of activity: venture debt, also known as venture lending. Read more
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