#366
It’s Beginning To Look A Lot Like Contactless Payments

Published:

Dec 19, 2020


Author:

Published:

Dec 19, 2020


Author:


Share:

As consumers gear up for the holiday shopping season, many are looking for a contactless experience from retailers. Representing a scant 3% of US transactions in 2018 (versus 64% in the UK and 96% in South Korea), tap-to-pay is up 150% in the US since March.

Last spring, contactless payment limits (intended to reduce fraud), which initially started at $30, increased across the board, doubling in Germany and Netherlands, and jumping up to $250 in the US. Consumers are driving a lot of this change. According to Visa, 50% of consumers “would not shop” at stores that don’t have touchless checkout.

With over 383m users, Apple Pay has been a driving force for alternative payments (outside of China), and has recently drawn antitrust attention from several regulators. Since Apple is able to block rivals from using tap-and-go payments on an iphone/iwatch, regulators are concerned Apple is only giving consumers its technology as the option for contactless payments. Claiming that their approach is about security, Apple has attracted the European Commission’s attention, as the latter has launched a formal antitrust probe into Apple Pay.

Maybe some smooth talking with the regulators will help cement Apple’s position as the driving force in contactless payments for many Christmases to come!

Portfolio News


DeFi: A conversation with Sean Lippel on decentralized finance - Decentralized finance sits at the intersection of financial products and services with decentralized networks and open protocols. With over $15b of total value under protocol in DeFi from just $1b to start the year - and - and 1m active users globally - DeFi is experiencing breakneck growth in 2020. Interested in learning more? Come listen to the conversation in the FinTech Collective podcast booth on how finance is evolving at the speed of open source technology. Listen on Spotify here. Read more

Ocrolus adds firmographic and KYB capabilities with Middesk integration - Ocrolus customers will now have access to Middesk’s insights through the Ocrolus API. Because Middesk allows companies to establish the credibility of a business, customers can now get that degree of confidence and avoid doing business with fictitious companies and those involved in illegal or harmful activity. Read more

Our connectivity problem requires a powerful and efficient solution: shared, multi-purpose infrastructure - Bob Thompson, CEO of portfolio company Underline talks about why we cannot afford to be inefficient as we deliver affordable and reliable connections to communities. And that means embracing open access, shared fiber infrastructure. As a nation, we face $5-8t of cumulative deferred capital expenditure for all of our critical infrastructure. This is a unique challenge to be addressed by entrepreneurial asset managers - who can allocate the capital while also generating an attractive return for their investors. Read more

Vestwell is in and Ascensus is out in Oregon as mushrooming 'force-function' state retirement plans spark heated bids to recordkeep - State-sponsored retirement plans are expected to swell unstintingly to billions, maybe trillions, of dollars over time as state governments, and possibly the Feds, begin to put the squeeze on employers to facilitate employee saving through a form of IRA. Vestwell stepped in and grabbed Oregon's $69m IRA plan after Ascensus dropped out over cost issues. The pop echoed like a boom because of the winner-take-all nature of emerging state-sponsored retirement plans. Read more

It’s Beginning To Look A Lot Like...


Contactless is no passing fad. It’s the future of payments - Contactless payments (e.g., Apple Pay, Google Pay, tap-to-pay cards, etc.) are no longer a novelty. And adoption will only continue to accelerate: While the recent popularity of contactless payments was born out of necessity partly due to consumers’ safety concerns, the convenience and speed they offer has ensured that contactless will become a ubiquitous payment option across industries and payment experiences going forward. Read more

Apple Pay draws antitrust attention - Apple’s next antitrust battle is shaping up to be over Apple Pay, the company’s digital wallet, as the Covid-19 pandemic turbocharges use of contactless payments. Apple Pay is growing fast as consumers try not to touch buttons or handle cash because of the coronavirus. Read more

Hands-off holiday shopping blitz puts ‘contactless’ in spotlight - For most consumers in the U.S., using a credit card and interacting with a PIN pad to make payments was rarely an issue — until the Covid-19 outbreak. With hygiene suddenly becoming the top concern, consumers have been getting a fresh look at contactless payments. Read more

Industry News


$8b crypto startup Coinbase files draft S1 to SEC in preparation of IPO - While there were some doubts about the valuation previously, many expect the market to value the firm above $8b as Bitcoin pushes to new all-time highs, institutions embrace crypto, and money is easier to get for institutions than ever before. Read more

Germany prepares to put some financial securities on the blockchain - Germany’s tech sector has hailed the government’s decision to allow some electronic-only securities—a move that paves the way for “crypto securities” to be entered into a blockchain-based register. However, with the shift initially ushering in only paperless bearer bonds—shares and mutual funds will come later—the sector says this move doesn’t go far enough. Read more

SEC charges Robinhood with misleading customers about how it makes money - Robinhood agreed to pay a $65m civil penalty, without admitting or denying the SEC’s findings. The millennial-favored trading app is best known for pioneering the “commission-free trading.” Robinhood, and the rest of the online brokerage industry, rely on what’s known as payment for order flow as their profit engine in lieu of commissions. However, the SEC order found that Robinhood provided inferior trade prices that cost customers $34.1m, even after considering the savings from not paying a commission. Read more

Affirm postpones its initial public offering - The point-of-sale lender, which had been set to begin marketing its shares to investors this coming week ahead of a December listing, now won’t go public until January at the earliest. While the reasons aren’t entirely clear, people familiar with the matter cited the extreme first-day pops this past week in the shares of DoorDash and Airbnb and delays at the SEC amid a flood of listing requests. Read more

Ruffer is the latest billion-dollar firm to bet on bitcoin - Asset manager Ruffer Investment Company is the latest “traditional finance” firm to hop on the Bitcoin bandwagon. The London-based company today said in an update to shareholders that it allocated 2.5% of its Multi-Strategies Fund to Bitcoin. According to Ruffer, Bitcoin is going to be the saving grace when the world’s major currencies struggle. Read more

CME Group announces Ethereum futures product - The product is coming to market February 8, 2021 subject to regulatory approval. It will be cash-settled and based on the firm's CME CF Ether-Dollar Reference Rate. According to CME's website, one contract will be equal to 50 ETH. Read more

Google Pay debuts cash back rewards, enabled by Fidel API - Google Pay is tapping Fidel, a UK based startup with an API that allows developers to build products and experiences on top of major card networks, to offer cash back rewards for its users as rewards are one component of the growing Google financial services ecosystem. Read more

Mastercard faces UK’s largest ever £14b class action lawsuit - The case is based on 2007 EU competition law, and marks the first mass claim made under the UK’s Consumer Rights Act – passed in 2015. The law reimburses consumers for illegal anti-competitive behavior. The claim argues that the card issuer reaped the rewards of interchange fees – charged to retailers – passed on to consumers at higher prices. Read more

How $600b could move Into Bitcoin: JP Morgan strategist - Fresh off its report that Bitcoin will continue to chip away at gold's market share, the investment bank is now predicting that Mass Mutual's recent $100m Bitcoin purchase (facilitated by FinTech Collective portfolio company NYDIG) is a precursor to $600b more of value to flow into the digital asset as pension funds and insurance companies continue to allocate. Read more

Apollo to purchase ATM company Cardtronics for $2.3b - Apollo Global Management and Hudson Executive Capital have agreed to acquire Cardtronics, a Houston-based operator of ATM machines, for $35 per share in cash in a deal that values the company at $2.3b, including debt. The purchase price marks a a 35% premium to Cardtronics' closing price Dec. 8, the final day before a joint offer was announced. The deal comes after Apollo and Hudson offered to buy the company for $31 per share. Read more

GoDaddy agrees to buy Poynt to boost digital payments technology - GoDaddy plans to pay $320m in cash at closing, along with $45m in deferred cash payments subject to various performance and employment standards in the next three years. The deal is expected to close in the first quarter of 2021. GoDaddy was interested in Poynt because of the digital shift in payments due to the pandemic, as well as in-person and online shopping converging more all the time. Read more

Co-op is using facial recognition tech to scan and track shoppers - Fascinating to see a consciously ethical not-for-profit UK retailer (Co-op) deploy tech that scans customer's faces in real-time, converts the images into numerical data and then compares them against a watchlist of known shoplifters and violent customers to see if there’s a match. Civil liberties advocates and regulators are, in-turn, watching the Co-Op. Read more

Finance chiefs face pressure to get to grips with sustainability - If presented with bird’s-eye views of oceans, forests or deserts, many chief financial officers might struggle to connect them to financial planning or cash flow management. But with pressure for companies to demonstrate their sustainability credentials, satellite imaging and other technologies are becoming increasingly relevant to the work of the CFO. Read more

Covid nudges US bank customers into digital era - America’s top banks have decided not to let a good crisis go to waste. During the pandemic, they have capitalized on their customers’ increased willingness to use digital financial services. By May, more than 45 percent of Americans had changed the way they dealt with their bank, a survey of 1,000 people by consultancy FIS found. Read more

Adyen teams with Flywire to advance vertical payments worldwide - Flywire’s customers are predominantly in the healthcare and travel industries and will benefit from Adyen’s extensive international reach and support of numerous currencies. Customers can also tap RevenueProtect, Adyen’s risk management and fraud prevention product. The tie-up between Adyen and Flywire aims to innovate and improve the payments landscape for the international verticals both firms work with. Read more

Could Amazon start a bank? The FDIC has opened the door - The FANGs and other corporate giants may soon give Wall Street a run for its money as a key U.S. regulator is smoothing the path for nonbanks to get into lending. The Federal Deposit Insurance Corp. on Tuesday approved a final rule governing so-called industrial loan companies that will allow major businesses to seek banking charters while escaping capital and liquidity demands faced by dedicated financial firms. Read more

WhatsApp to rollout insurance and pension products on its platform in India - WhatsApp is set to roll out health insurance and micro-pension products on its messaging platform in India through tie-ups with licensed financial services players. Read more

Vestrata aims to shake up Europe’s private banks - The fintech start-up backed by former JPMorgan executives has raised $4m to launch their platform to attract wealth managers and private banks that are struggling to expand their businesses while also battling with rising costs and regulatory changes. Read more

Where tech workers are moving: new LinkedIn data vs. the narrative - There’s a narrative that the tech industry’s future lies in Texas and Florida with big-name tech executives moving en masse to Miami and Austin. That narrative crumbles when placed next to new LinkedIn data showing where tech workers are actually moving in 2020. The key beneficiaries of this year’s tech migration are less buzzy cities like Madison, Wisconsin; Richmond, Virginia; and Sacramento, California. Read more

Select Financings


Bestow - Dallas based digital life insurance platform raised $70m in Series C funding from investors including Breyer Capital, Valar Ventures, New Enterprise Associates, Core Innovation Ventures, Morpheus Ventures and Sammons Financial. Read more

BigID - New York based leader in data discovery and intelligence for privacy, protection and perspective raised $70m in Series D funding led by Salesforce Ventures and Tiger Global. Read more

Creditas - Brazil based lending platform raised $255m in Series E funding led by LGT Lightstone. Read more

GoCardless - London based recurring payments platform raised $95m in new funding led by Bain Capital Ventures. Read more

Lendeavor - San Francisco based company lending to healthcare practices now known as Provide raised $34m in Series A and B funding led by QED Investors. Read more

LendingHome - San Francisco based mortgage marketplace lender raised $75m in Series E funding led by Benefit Street Partners. Read more

LogicGate - Chicago based provider of cloud software solutions for automating governance, risk, and compliance raised $8.8m in growth funding from Greenspring Associates and Silicon Valley Bank. Read more

Lydia - Paris based developer of a fintech super-app raised $86m in Series B funding led by Accel. Read more

Openly - Boston based homeowners insurance platform raised $40m in Series B funding led by Advance Venture Partners. Read more

Oscar - New York based health insurer raised $140m in new funding led by Tiger Global. Read more

Paxos - New York based cryptocurrency infrastructure platform raised $142m in Series C funding led by Declaration Partners. Read more

Public - New York based social-focused stock trading service raised $65m in Series C funding led by Accel. Read more

Ramp - New York based provider of a corporate card and spending management platform raised $30m in Series A3 funding led by D1 Capital and Coatue Management. Read more

Salary Finance - UK based workplace lending company raised $27m in Series D funding led by Experian and Legal & General. Read more

Self Financial - Austin based startup that helps consumers establish and build credit history raised $40m in Series D funding led by Meritech Capital Partners. Read more

Taxdoo - Germany based tax compliance platform for cross-border e-commerce raised $21m in Series A funding led by Accel. Read more

Vise - New York based portfolio management platform intended to automate investment management for financial advisors using AI raised $45m in Series B funding led by Sequoia Capital. Read more

Zilch - London based buy now, pay later startup raised $30m in new funding led by Gauss Ventures. Read more


Share:

FinTech Collective Newsletter

Curated News with Context

Delivered every Saturday, the weekly newsletter, produced by our team, provides a tightly edited rundown of global fintech news, along with a bit of our original analysis.