Fintech Update, 11/22 - 12/5
Hi! It’s Monday, December 6, 2021.
Hey, everyone! We’re happy to be back in your inbox after a week off. Buckle up for a two week mega-update! 🚀
The Rundown
Another bank said ‘game over’ to overdraft fees, with Capital One announcing that it will eliminate the practice for all its consumer banking customers, effective January. Capital One’s move comes on the heels of similar announcements from Ally Bank, which also eliminated overdraft fees in June, and PNC Bank and Bank of America, which rolled out new protective features designed to reduce the possibility for a consumer to overdraft their account. Capital One is the largest U.S. bank to end overdraft fee charges, which generated about $150 million per year for the bank, and affirms the thesis we shared in June that that such fees would soon be eliminated across the industry due to “increasing pressure and growth from up and coming challenger banks who also don’t charge overdraft fees.”
Square CEO Jack Dorsey stepped down from his dual role as CEO of Twitter and concurrently announced that Square’s holding company is rebranding to Block, reflecting the firm’s expansion into cryptocurrency and other verticals beyond the Seller business (which the Square brand will continue to represent).
Mastercard acquired bill pay service Arcus, a purchase that promises to help Mastercard expand its Mastercard Bill Pay service throughout Latin America given Arcus’ office in Mexico City and “access to the largest retailers and direct connection with many of the largest billers in Mexico.”
The CEOs of six cryptocurrency firms, including Bitfury CEO and former Comptroller of the Currency Brian Brooks, will appear before the U.S. House Financial Services Committee on December 8 to testify in a hearing entitled: “Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States.”
Tether’s latest financial disclosure again failed to clarify the composition of its reserves, which have come under scrutiny for misleading observers on the total assets supporting the stablecoin. Tether’s latest disclosure noted that $30.6 billion of its $69 billion in assets still are held in unidentified commercial paper.
Revolut acquired Nobly POS, an app providing point-of-sale, inventory management, and CRM tools to the hospitality industry. Revolut CEO Nik Storonsky noted that the purchase will improve the firm’s business services as it works to offer “a one-stop shop solution to enable merchants of every kind to manage their finances and run their businesses from a single platform.”
Klarna is launching a U.S. “pay now” feature that will allow customers to pay immediately in full at the point of sale, as well as a new card offering that allow users to make purchases on a short-term BNPL basis. These features together appear to compete with similar offerings like Affirm’s Debit+ product (although neither of these features from Klarna offer a single instrument for both pay now and split functionality like Debit+ does) and suggests Klarna may be interested in expanding from retail sales into broader payments functionality. In addition, the company published its Q3 business update.
Afterpay announced BNPL for subscriptions, which will give U.S. consumers the ability to pay for their recurring purchases in installments. The announcement comes within weeks of Klarna announcing their flexible payment solution for subscriptions.
Goldman Sachs launched a new cloud computing service, the pithily named “GS Financial Cloud for Data with Amazon Web Services,” after collaborating with Amazon for over two years. The bank’s new offering will provide “[clients] access to our decades of experience and data aggregation . . . to enhance their business decisions,” said CEO David Solomon. Clients will hope the service is more efficient than its name implies.
And in other Goldman naming convention news, the bank will rebrand its consumer banking division from “Marcus by Goldman Sachs” to Goldman Sachs Marcus in order to “be closer” to customers. Sachsy.
Stripe teamed up with TikTok to allow users to directly tip US-based creators on the platform.
Facebook is testing a “Split Payments” feature in its Messenger app that will allow users to share the cost of bills and expenses within a group chat.
Immad Akhund, CEO of SMB-focused banking platform Mercury, said he expects the four largest banks in the U.S. to “all be worth less than $100 billion” in the next five years due to growing challenges from tech-enabled competitors.
Selected fundings:
Payhawk, the financial management solution for European businesses, raised $112 million in Series B funding at a $570 million valuation.
Cloud-based B2B banking services provider Thought Machine raised $200 million in a Series C funding round led by NYCA.
Small business lender Fundbox raised $100M in Series D funding at a $1.1B valuation.
Irish tax automation software provider Fonor raised $20.5 million in Series A funding.
EarlyBird, the platform for parents investing in their children’s futures, raised $4 million in seed funding.
International BNPL! Brazil’s TruePay raised $32 million in Series A funding; India’s Simpl raised $40M in Series B funding; and Mexico’s Kueski raised $102M in equity and $100M in debt.