Fintech Update, 1/16 - 1/21

Jan 22, 2024

Hi! It’s Monday, January 22nd, 2024

Last week, we saw a number of late-stage fintechs expanding their product offerings…

Both Varo and Current announced partnerships with Column Tax to offer a tax prep and filing tool to their users. Via these partnerships, customers of each neobank will be able to access their refunds 5 days early. Our take? This makes a ton of sense. Neobanks have struggled to win over the status of primary account and while they may boast millions of users, their deposit numbers are quite low as their users aren’t treating them as primary bank and therefore, the neobanks have a difficult time monetizing their user bases. Tax refunds are one of the biggest checks many Americans receive every year - the average tax refund in 2023 was $2,903. Partnering up with Column Tax to offer a product that helps them get access to these funds from their users seems like a no brainer.

Affirm started offering early paycheck access to their users. Users who set up direct deposit into their Affirm savings account, will get access to their paycheck up to 2 days early. Our take? Similar to the partnerships above, this move from the BNPL giant is geared towards getting users to turn Affirm into their primary account and increase the funds stored on the platform. And, rather than partnering, Affirm appears to be offering the functionality in house - given the similarity between paycheck advances and short-term loans, the BNPL should be well positioned to offer the product. The move is also further evidence of Affirm trying to deepen their relationship with their users and expand their product offering - the BNPL also launched a debit card last year that gives users the option to pay via debit or convert purchases into installment loans in an attempt to increase its frequency of use with its user base and get into daily transactions. As of last September, there were over 400,000 Affirm debit cards active.

To settle an antitrust case brought by the European Commission in 2022, Apple has agreed to open up its near field communication (NFC) technology to third parties. Apple had previously been the only mobile payments provider that could access NFC technology, which the European Commission claims restricted competing third party iOS app developers from offering similar capabilities. The 10-year agreement requires Apple to make its NFC technology available via API at no cost to any third party wallet provider in the European Economic Area.

Not strictly fintech, buuut… The Consumer Financial Protection Bureau (CFPB) issued a new proposed rule that would cap overdraft fees at banks with over $10 billion in assets, “[closing] a loophole that . . . exempted overdraft loans from the consumer protections required by the 1968 Truth in Lending Act.” If enacted, the new rule would formalize a limitation that many banks have already adopted on their own due to pressure from fintech competitors that popularized fee-free overdraft protections.

Tether had a no good, very bad week. A report (full text) published by the United Nations Office on Drugs and Crime noted that the world’s largest stablecoin “has become a preferred choice for [East and Southeast Asian] cyber fraud operations and money launderers alike due to its stability and the ease, anonymity, and low fees.” Chainanalysis’s annual report on crypto crime did not specifically name Tether, but measured $40B in illicit stablecoin transactions across 2022 and 2023 and found that stablecoins are disproportionately used in illicit crypto transactions.

Zillow added a credit building feature that allows renters using the platform to report on-time rent payments to Experian at no cost to them or their landlord. Zillow’s VP of Rentals noted that on-time rent payments are a testament to a renter’s reliability, and have traditionally been overlooked by credit reports.

Visa completed its acquisition of processing and core banking platform Pismo, expanding the global payment giant’s footprint in API-based core and card-issuer capabilities to “broaden these offerings and better serve the ecosystem.”

Securities finance infrastructure platform Equilend announced plans to sell a majority stake to PE Firm Welsh, Carson, Anderson & Stowe (WCAS). As a part of deal, set to close in Q2 of this year, WCAS will invest an additional $200M towards “organic growth initiatives and acquisitions.”

Donald Trump has promised to block any form of central bank digital currency if he wins the 2024 presidential election, claiming that “such a currency would give…our federal government, absolute control over your money.”

Earned wage access company DailyPay raised $75 million in new funding from PE shop Carrick Capital Partners at a $1.75 billion valuation.
Customer engagement startup Digital Onboarding raised $58 million in growth funding.
Argentinian payments infrastructure company Pomelo raised $40 million in Series B funding.
Payroll credit platform Kashable raised $25.6 million in Series B funding.
Briq, which leverages AI to automate construction finance workflows, raised $8 million in a Series B extension round at a $150 million valuation.
Tandem, which offers a product to make it easy for couples to share expenses, raised $3.7 million in new funding.