Fintech Update, 12/4 - 12/10

Hi! It’s Monday, December 11th, 2023. 

The Rundown

• Adyen will act as Klarna’s global acquiring bank for their consumer offerings, strengthening the companies’ long-running partnership. Adyen has offered Klarna’s suite of payment methods (including their interest-free Pay Now and pay later options) to their customers for over a decade. Now, it will take over for one of the BNPL provider’s existing acquiring banks, underpinning Klarna’s consumer offerings starting in Europe, North America, and Asia in 2024. Adyen’s role as a global acquiring bank can be compared to that of Wells Fargo, Chase, or other legacy institutions. Their push to become a global acquirer, undertaken over the past decade, has allowed Adyen to cut out traditional banks from their payment processing flow. Klarna clearly sees value in this full-stack offering, which will simplify (that is, streamline bank partners required to support) global payments for its ~150M customers worldwide, and, presumably, expand geographical support for own payment offerings on Adyen’s platform, which are only available in 22 countries today.

  

• The OCC issued a bulletin providing guidance to banks on managing the risk associated with offering BNPL loans. The bulletin specifically referred to the pay in four BNPL loans, which are payable in four or fewer bi-weekly installments and are 0% interest. Among other guidance, the bulletin states that “banks should maintain underwriting, repayment terms, pricing, and safeguards that minimize adverse customer outcomes and should ensure that marketing materials and disclosures are clear and conspicuous.” 
  

• Speaking of BNPL, India’s ZestMoney announced that it will shut down by the end of the year after failing to find a buyer or raise sufficient capital to continue operating. The startup, which leveraged “alternative data points” to help users build credit profiles and underwrite “small ticket loans to first-time internet customers” had raised $130 million over eight years at a $445 million valuation, with backing from global names like Goldman Sachs, Omidyar Network, and Ribbit Capital.
  

• Amazon will no longer allow users to add link their Venmo accounts as a form of payment, and will fully discontinue allowing payments via PayPal starting in mid-January. The announcement comes only 14 months after the ecommerce giant began offering the ‘pay with Venmo’ option. Amazon will continue to accept Venmo credit and debit cards.
  

• Checking in on a story we covered in September, X is continuing to progress on its money transmitter license land grab, adding licenses from South Dakota, Kansas, and Wyoming to bring the company’s total to 12. The new licenses continue to support the narrative that Elon Musk’s vision for the company is a financial “super-app” along the lines of China’s WeChat.
  

• Following its expansion into the UK announced last week, Robinhood made its crypto trading app available to eligible users in the EU. “The EU has developed one of the world’s most comprehensive policies for crypto asset regulation, which is why we chose the region to anchor Robinhood Crypto’s international expansion plans” according to Johann Kerbrat, General Manager of the company’s crypto division.
  

• Another wave of layoffs hits fintech. Last Tuesday, Bill.com announced plans to lay off 15% of its workforce and close its Sydney, Australia office in an effort to consolidate operations. The announcement comes on the heels of a disappointing financial performance for Bill.com –  the company was forced to cut its outlook for the year in its latest earnings report, citing macroeconomic headwinds. Meanwhile, Block subsidiary and music streaming platform Tidal announced that it’s laying off 10% of its workforce. The news follows Jack Dorsey’s November letter to shareholders, in which he outlined plans to cap Block’s total employee count at 12,000. To round it off, travel expense management startup Navan (fka TripActions) laid off 5% of its workforce.
  

• To end on a high note, fintech VC fund Canapi Ventures announced that it raised $750M for its second fund, bringing the firm’s total Assets Under Management to over $1.4B.

The Reading Nook

• Jamie Dimon unloaded on crypto during a Senate hearing this week: “The only true use case for it is criminals, drug traffickers … money laundering, tax avoidance. If I was the government, I’d close it down.” Tell us how you really feel, Jamie. 

Selected fundings

• European digital investment platform Scalable Capital raised $65 million in new funding at a $1.4 billion valuation. 

• Debt collection startup January raised $12 million in Series B funding. 

• Real-time transaction enrichment startup Spade announced $10 million in a Series A funding round led by Flourish Ventures.