Posted In:

Banking, Payments

Overdraft Shutdown


Jun 08, 2019


Posted In:

Banking, Payments


Jun 08, 2019



Overdraft fees are a massive revenue source for banks. In 2017, UK banks pulled in £2.4b ($3b USD) from overdrafts. In the U.S., banks with over $1b in assets collected $11.5b in overdraft and non-sufficient funds (“NSF”) fees. All 10 of the nation’s largest banks charge overdraft fees in excess of $30.

However, regulators in both countries are looking to reform this practice. In the U.S., senators Cory Booker and Sherrod Brown introduced legislation to crack down on overdrafts. The “Stop Overdraft Profiteering Act” would ban overdraft fees on debit card and ATM transactions, while also limiting fees stemming from checks and recurring payments.

The UK’s Financial Conduct Authority is going even further with a massive overhaul taking affect in April 2020. Banks will no longer be allowed to charge fixed daily or monthly overdraft fees at all – and must instead charge a simple annual interest rate. Bank materials and overdraft advertisements will need to clearly state the interest rate, with no hidden costs.

According to the FCA, the average cost of borrowing £100 through an overdraft would drop from £5 a day, to less than 20p.

Though these regulations still need to play out, one thing is clear – government officials want to give unfair overdrafts a proper sendoff…

Portfolio News

Nigerian payments startup Flutterwave enters South Africa - Portfolio company Flutterwave is expanding into South Africa, its fifth market on the continent. Launched in 2016, Flutterwave builds modern payments technology and infrastructure for Africa, enabling banks and merchants to replace multiple payment integrations with one simple API. Read more

Asset manager rated 'A' by Sigma Ratings with positive outlook for its governance and control effectiveness - Portfolio company Sigma has expanded into asset management, providing Gateway Partners with an 'A' rating and a positive outlook. Completing a "Sigma Ratings" can demonstrate a FI's strong commitment to transparency, good governance, and robust financial crime risk management. Read more

MoneyLion featured by Yahoo Finance - Portfolio company MoneyLion was featured as "one of three of our favorites" in an article featuring attractive low-cost banking options for this summer. Read more

Fintech female Fridays: Gabrielle Haddad – Portfolio company Sigma Ratings’ Co-Founder & COO recounts her early professional story, letting go of what her career was "supposed to be", and her learnings and challenges to-date leading an AI tech company focused on building the world's first non-credit rating agency. Read more

Cybersecurity company Glasswall Solutions appoints Danny Lopez as Chief Executive Officer - FinTech Collective special advisor Danny Lopez has been appointed CEO of cybersecurity company Glasswall Solutions. Based in London, Danny will continue to support FinTech Collective. We wish him all the success in the world. Read more

Overdraft Shutdown

Bank overdraft fees targeted in major shake-up - In 2017, UK banks made more than £2.4bn from overdrafts - with 30% alone coming from "unarranged" overdrafts. The UK financial regulator is now forcing a major shake-up - the biggest overhaul in a generation. Read more

Industry News

A $100m ICO being sued by the SEC wants more of your money - Last week, the “foundation” behind Kik, the company that raised $100m in an ICO in 2017 for the “Kin” token, set up a new website:, to help raise money to take on the SEC. The FT's Alphaville have found some wags who have set up an alternative site called Read more

JPMorgan scraps new app service for young people - Chase, the USA's largest commercial bank, began shutting down Finn, the no-fee banking brand designed to meet the financial needs of younger consumers. Read more

SoFi loses three top executives - Three top executives from SoFi are leaving the firm in the coming weeks, adding to the challenges that the company faces as it moves through a tougher environment for online lenders. Read more

Square sends millions of digital receipts, sometimes to the wrong person - As reported by the WSJ, Square has been sending receipts to the wrong people, revealing surprise gifts to pending divorces. Read more

Digital Asset Holdings pivots to focus on "smart contracts" - The FT reports that Blyth Masters’ grand plan to apply blockchain technology to the world of securities and trade settlement appears to be stalling, with DAH pivoting to focus on “smart contracts”. Read more

Expectation building on FinTech IPOs - The ten most valuable FinTech companies in the world are mostly 6-10 years old, with hundreds of millions raised, and multibillion-dollar valuations. Yet, not one of them seems particularly close to an offering. Read more

Square strengthens POS system to integrate Postmates, DoorDash, and other food delivery services - Looking to eliminate “tablet farm” scenarios in restaurants, Square has announced a host of new integrations to help centralize their ordering, delivery, and payment processing into a single interface. Read more

Select Financing

Biz2Credit - New York based online lending platform has raised $52m of Series B funding, led by WestBridge Capital. Read more

CellPoint Mobile - London-based provider of digital payment solutions for airlines has raised £11m of additional funding from Toscafund Asset Management (managed by Penta Capital). Read more

Crowdz - San Jose based trade finance startup has raised $5.5m in Series A funding, co-led by Barclays and Bold Capital Partners. Read more

Halo Investing - Chicago based platform that provides structured note investments has raised $12m in Series B funding, led by Allianz Life Ventures. Read more

Grasshopper - New York based startup-focused bank has raised $100m+ from a group of investors, including T. Rowe Price, Patriot Financial and Endeavour Capital. Read more

Getsafe - Heidelberg based insuretech startup targeting millennials has raised $17m (€15m) in Series A funding, led by Earlybird. Read more

Possible Finance - Seattle based subprime consumer lending startup has raised $10.5 million in venture funding, led by Canvas Ventures. Read more

Step – San Francisco based teenager-focused mobile banking startup has raised $22.5m of Series A funding, led by Stripe. Read more

Synapse - San Francisco based developer of APIs for financial services has raised $33m in Series B funding, led by Andreessen Horowitz. Read more

Tink - Stockholm based open banking platform has raised $11.2m from PayPal. Read more

TrueLayer - London based open-banking platform has raised $35m of funding, led by Tencent and Singaporean sovereign wealth fund Temasek. Read more

WorldRemit - London based money transfer startup has raised $175m of Series D funding at $900m+ valuation, led by TCV, Accel and Leapfrog Investments. Read more


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