Fintech Update, 10/4 - 10/10
Hi! It’s Tuesday, October 12, 2021.
Leading Off
We hope you enjoyed Indigenous Peoples’ Day!
Monzo withdrew its banking application in the U.S. after the OCC suggested it was unlikely the neobank would be approved; and large banks are rumored to be pushing Visa to change how it processes certain Apple Pay transactions. // In other news, Target announced a partnership with both Affirm and Sezzle to bring BNPL to its customers just in time for holiday shopping; Robinhood will now be offering “24/7” phone support; Circle is under investigation by the SEC; and Public.com will allow crypto trading in its app. // All this + more below!
Heavy Hitters
Monzo withdraws US banking license application. The UK challenger bank withdrew its application for a U.S banking license after it was told by OCC that it was unlikely to be approved. The news is a blow to the fintech’s international expansion plans and a signal that US regulators are reluctant to offer bank approval to loss-making startups. Chime’s recent success shows that neobanks built on existing bank partnerships can grow quickly and achieve strong revenues without the immense investment required to apply for a bank charter. Still, Monzo’s rival Revolut has itself applied for a license with the FDIC, and prominent fintechs Square and Varo have achieved regulatory approval.
Banks and Visa are pushing for changes to Apple Pay fees. A number of large banks – including JPMorgan Chase, Capital One, and Bank of America – reportedly are pressuring Visa to change the way it structures fees for Apple Pay transactions, in order to “trim the fees that banks pay to Apple.” The proposed fee restructuring would change how Visa tokenizes card numbers for the Apple Pay mobile wallet, stopping the creation of new tokens for recurring payments, effectively eliminating fee revenue to Apple “after a first payment is made on a subscription” using Apple Pay.
Quick Takes
Target is partnering with Affirm and Sezzle to offer BNPL services to customers during and after the holiday season. Target will present Affirm as an option at checkout to customers making purchases over $100 and will allow customers to use their Sezzle Virtual Card for purchases under $100. Sezzle is a 2019 graduate of one of the Target Accelerator programs.
Robinhood will roll out 24/7 phone support to customers with a question or account issue.
Bloomberg goes deep on the mystery of Tether’s missing billions.
United will allow passengers to use PayPal QR codes to make touchfree in-flight purchases.
USDC stablecoin backer Circle is under SEC investigation related to its Lend product.
Public.com announced that it will allow users to buy, sell, and hold crypto assets within its app.
NerdWallet filed to go public via IPO later in the year.
Selected Fundings
Wealth Management
Social investing platform Commonstock raised $25 million in a Series A funding round led by Coatue.
Lending
Vehicle-secured, revolving credit solution Otto raised $4.5 million in seed funding.
Banking
Copper Banking, the digital bank for teens, raised $13.3 million in seed funding.
Payments
Payments software provider Modern Treasury raised $85 million in a Series C funding round led by Altimeter at a valuation of over $2 billion.
Crypto & Blockchain
Crypto payments startup MoonPay is raising $400 million in its first round of venture capital financing, co-led by Tiger and Coatue, at a $3.4B valuation (!).
Infrastructure
Insurance infrastructure provider Sure raised $100 million in Series C funding at a $550 million valuation.
BaaS platform Productfy raised $16 million in Series A funding to “build DeFi for traditional finance.”
Identity and fraud management service provider Frankie One raised $16 million in Series A funding.
Mono, the Nigerian startup that helps connect consumers’ bank accounts to financial applications, raised $15 million in a Series F funding round led by Tiger.
Insurtech
Egyptian online insurance broker Amenli raised $2.3 million in seed funding.
Digital life insurance company Ladder raised $100 million in Series D funding at a valuation of $900 million.