The Fintech highFIVE!

FinTech High Five (2)

By Gary Dempsey Content Leader Money20/20 Europe

Welcome to the fintech highFIVE! 🖐 Every day, I’m amazed by the sheer amount of news and innovation happening in the fintech industry 🤯 Fintech truly has not stopped, even during these crazy times. I can’t help but notice common themes in this huge sea of news — so I’m trying something new to bring these headlines together. Bi-weekly, I’ll be hitting you with the biggest themes seen in the news — all counted down on just one hand. 👊 So gimme 5 🙏 as we celebrate 🙌 the best of fintech.

*We’re socially distant here. Virtual high-fives only 👏 for now! 😉

A commercial collective sigh of relief 🛍️

Amazon or Visa, or both, have backed down from their game of commercial chicken! Amazon announced back in November its plans to drop Visa payments by UK customers and on 19 January, and earlier this week, just two days before the guillotine date, they called it off. Both companies would have lost out if they did go ahead: Amazon would have reportedly lost nearly £1.4b from UK shoppers, and Visa wouldn’t have wanted those shoppers resorting to using the other cards in their wallets. While the details of the solution they have reached haven’t been made public, both companies have conveyed their intention to solve it, maybe next time they won’t make the fallout so public. Had Visa and Amazon not reached an agreement, Curve would have won big time with its clever hack that would have enabled shippers to still make payments with the banned cards. Better luck next time!

The battle for the checkout! ⚔️

Last week Checkout.com announced fresh funding to the amount of $1b, an incredible raise which will allow them to expand their product offering and services in the USA. They have also increased their valuation to $40b amid rumours of an IPO this year. Checkout.com is a full-stack payments company, acting as a gateway, an acquirer, a risk engine and a payment processor. They plan to use the funds to focus specifically on the US, aiming to serve enterprise merchants, especially fintech, software, food delivery, travel, e-commerce and crypto merchants. Their competitor Bolt, announced this week a raise of $355m, at an $11b valuation. Bolt offers one-click checkout and aims to offer five businesses the same technology as Amazon, while incorporating payments and fraud services. They are also in the company of competitor and payments behemoth Stripe. Investment and interest in this space are significant at the moment, and while each player maintains a minor USP over the other, it will be interesting to see how long this lasts and who will be on top by the end of the year, as well as who will have joined the battlefield?

It’s never been better to be SME 💅

The world of small business orchestration just got several industry votes of confidence. French neobank Qonto has raised €486m, it will use the funds to expand their small business and freelancer banking services in Europe. Their fellow French fintech PayFit, a payroll and HR software-as-a-service platform for small businesses raised $289m. Both are France’s newest minted unicorns. In the US, SME banking platform Novo has raised $90m to add lending capabilities, integrations, and products that allow small businesses to send and receive money more quickly. While, Brex, a provider of credit cards aimed at startups and SMEs, has raised $300m (and poached Meta’s Head of business products Karandeep Anand in the process), to evolve its business model with the aim of serving as a one-stop finance shop for these companies. All of these investments highlight the huge interest in this area at the moment. For 2022, I am hoping to see these orchestration players offer or partner to unite services to enable SMEs to operate as comprehensively as their bigger brother and sister companies.

Challenger banking not looking so challenging 😎

Financial superapp Revolut has launched as a bank in 10 Western European countries. The financial super-app, which has more than 18 million customers around the world, has taken advantage of its Lithuania-based European specialised banking licence to become a bank in Belgium, Denmark, Finland, Germany, Iceland, Lichtenstein, Luxembourg, Netherlands, Spain, and Sweden. Launching the bank in ten new European markets will provide an even greater level of security and confidence for their customers, and will enable them to launch a host of new products and services in the near future. Monzo also closed their recent funding round with a $100 million top-up from Chinese technology giant Tencent. The deal sees Monzo give Tencent a ‘small’ take in the company. Modest. Tencent has a growing fintech portfolio, with investments in Qonto and Lydia, and challenger banks such as Germany's N26, Brazil's Nubank and Tyme of South Africa. Revolut’s suite of products and services now rival that of a bank, while Monzo’s appeal to consumers in the UK is going from strength to strength after a tough year. Is the challenger bank storm brewing again?

The regulators are coming for BNPL ⚖️

The buy now pay later has had the opportunity to grow unfettered for a number of years now. But after this period of growth and significant investment globally, they face new regulatory scrutiny over their business models that could throw cold water over their future growth ambitions. The UK’s consumer group Which? has called for stronger safeguards after publishing research which indicates that shoppers view BNPL products as budgeting solutions rather than credit. The growth of the market is phenomenal, with the value of transactions more than tripling in 2020 - to £2.7 billion, with millions of people taking out new loans to cover Christmas shipping costs. With fintech powering the new age of digital commerce, what will this year hold for BNPL players like Klarna, Affirm and Zilch? Who are on the eve of being shackled by regulatory constraints, while vendors like Railsbank are preparing a whitelabel version of their simple solution for retailers to build their own offering.

If you have any thoughts or questions on this week’s fintech highFIVE, please share them in the comments section below. ✋

If you are sharing on Twitter, please use the hashtag #fintechhighfive and mention me, @gary20203, or @money2020.