Fintech Update, 12/13 - 12/19
Hi! It’s Monday, December 20, 2021
Dear readers,
We’ll be off for the next two weeks in celebration of Christmas and New Year’s. As we enter our second holiday season of the Covid era, we’re looking forward to enjoying some traditional activities – such as disinfecting the tree, tuning in to Dr. Fauci’s annual holiday guidance, and writing to Santa to ask for proof of vaccination before he enters the chimney.
It’s been a tumultuous end to yet another year, and we hope that you and your loved ones stay safe as you enjoy a happy and restful holiday. We’ll be reflecting on all the incredible blessings in our lives and looking forward to returning to your inboxes in 2022 to share all the amazing things in store for fintech in the New Year!
All our best – Joe, JC & Kieran (Team TFU)
The Rundown
The U.S. Consumer Financial Protection Bureau (CFPB) is scrutinizing BNPL lenders PayPal, Affirm, Klarna, Afterpay, and Zip based on concerns that the firms may encourage consumers to take on too much debt by using their products, misuse consumer personal data, and engage in regulatory arbitrage. The CFPB issued a series of orders to the firms describing the regulator’s concerns and noting that its forthcoming examinations will be done in concert with international supervisory agencies, the Federal Reserve, and state regulators.
Blockchain-based online lender Figure amended its application for a national bank charter to include FDIC insurance, choosing to pursue a more traditional application rather than face potentially years of legal challenges. The firm originally had applied for an OCC charter in November 2020 while noting that it did not intend to seek FDIC insurance, a specification that drew immediate lawsuits from the Conference of State Bank Supervisors (CSBS) arguing that the OCC “lacks the authority to charter a full-service national bank without obtaining deposit insurance.” Figure’s general counsel commented that the company believes “the law would have come out on our side if it were to go through litigation [but] we just don't want to continue to wait for that to happen." Our take: it’s the reasonable, expedient decision, but we can’t help but feel disappointed about not having an answer to the question Figure’s application raised.
Robinhood is partnering with Chainanalysis to leverage the blockchain analytics firm’s “Know Your Transaction” compliance monitoring solution for its upcoming crypto wallet, which it plans to roll out in early 2022. According to the Robinhood, over 1.6 million people are on the waitlist for the wallet, which will support trading and transferring major tokens.
Typically we wouldn’t include a funding in the rundown (see selected fundings below), but we’ll make an exception for… NYDIG, who announced a $1 billion(!) raise that valued the bitcoin platform at $7 billion. The company has been making a significant marketing push in recent months, getting a rebrand and nabbing a primary sponsor role at the Money20/20 conference in Las Vegas in October. The round, led by venture firm WestCap and existing investor Bessemer Venture Partners, suggests that the recent “surge in the value of digital currencies and . . . sky-high valuations in recent months” may continue, “even as regulatory scrutiny intensifies.”
Equifax announced that it is planning to record BNPL loans on people’s credit reports early next year. Since many of the major BNPL players, including Afterpay and Klarna, don’t furnish repayment data to the credit bureaus, many don’t show up on credit reports and have effectively created a blind spot for lenders. TransUnion and Experian are also working to enable reporting of BNPL loans on credit reports and adding more information next year.
Just in time for the holidays, Block’s CashApp now allows users to send each other gifts of stock and bitcoin using their USD balance or debit card. So… HO-HO-HODL?
(Just to note, we were feeling quite clever when we came up with that ho-ho-hodl joke. Then we googled it and of course it already exists. And of course it’s already been made into an ugly Christmas sweater. And of course that sweater is currently sold out on Etsy. Stay weird, finternet.)
Amazon and Barclays are working together to allow Amazon customers in the U.K. to pay in installments for purchases of at least GPB 100. The move is notable because of what it signals about the continued push into BNPL payment options among major retailers and financial institutions, but also in light of Amazon’s recent announcement that it will no longer accept Visa as a form of payment in its U.K. store due to the card network’s high interchange rates.
Digital finance platform MoneyLion is acquiring B2B financial services platform Even Financial for somewhere between $360 million to $440 million, depending on whether Even meets post-acquisition revenue targets.
The Economist looked at the crypto industry’s controversial all stars, who are vying for dominance over an industry that has grown 12-fold in total market value (to $2.3T) since the start of 2020.
A former McKinsey partner has pleaded guilty to securities fraud for betting on Goldman’s $2.2B acquisition of fintech lender GreenSky before it was announced.
More fundings:
Indian payments platform Razorpay raised $375 million in a Series F funding round at a $7.5 billion valuation, more than doubling its valuation of $3 billion in April.
Pakistani financial service provider for SMEs Creditbook raised $11 million in a pre-Series A funding round led by Tiger.
Bill payment mobile app Papaya raised $50 million in a Series B funding round led by Bessemer Venture Partners.
Staircase, the company building API infrastructure for the mortgage industry, raised $18 million in a Series A funding round led by Bessemer Ventures.
Corporate expense management platform Mesh Payments raised $50 million in a Series B funding round led by Tiger.
Crypto-as-a-service platform Ramp raised $52.7 million in Series A funding.
Indian pay-later card provider Uni raised $70 million in a new financing round.
Fraud management provider for fintechs Sperta raised $3 million in a seed funding round.
Brazilian consumer credit provider Open Co raised $115 million in a funding round led by SoftBank.