Fintech Update, 3/18 - 3/24

Mar 25, 2024

Hi! It’s Monday, March 25th, 2024

The Department of Justice’s blockbuster antitrust case against Apple cites the tech giant’s alleged resistance to third-party digital wallets as an anti-competitive practice that helps Apple illegally maintain a monopoly in the smartphone market. Apple does not allow third party apps to offer its tap-to-pay functionality, and the suit alleges that prohibition means “Apple maintains complete control over how users make tap-to-pay payments with their iPhone . . . [and] deprives users of the benefits and innovations third-party wallets would provide.” The suit, where over a dozen state attorneys general have joined the DoJ, also claims that “Apple . . . uses its smartphone monopoly to extract payments from banks, which need to access customers that use digital wallets on iPhones.” Apple charges banks 0.15% for each credit card transaction mediated by Apple Pay, while payment apps from Samsung and Google are free to issuing banks. Our take? A broad case like this will likely drag on for years–and Apple may well win (the governments’ recent anti-big tech cases have fallen flat) – but it could expose tech giant’s walled-garden approach to digital wallets to heightened scrutiny and provide fodder to competitors.

It’s official – Robinhood is now live in the UK! After announcing plans for UK expansion nearly 5 years ago, the retail trading firm is finally offering early access to users who have joined the waitlist. Next up is the launch of its crypto trading app in the EU, announced last December

FINRA is slapping robo-advisory and brokerage platform M1 Finance with a fine of $850,000 for hiring influencers to post social media content that the regulator claims was “exaggerated, unwarranted, promissory, or misleading.” The lawsuit is the first formal enforcement action for FINRA involving social media influencers, setting a precedent for similar lawsuits in the future.

British embedded finance firm Railsr reportedly approached B2B payments company Equals Group about a potential merger. Railsr once represented the vanguard of banking-as-a-service platforms in Europe, but recent years have seen it fall victim to “aggressive over-expansion . . . [and] serious regulatory issues.”

London-based challenger bank Revolut is rolling out a point-of-sale iPad application for the hospitality industry, enabling the fintech to compete with the likes of Square, Stripe, SumUp, and Toast. The new offering will allow merchants to streamline order management across multiple locations, track inventory, and improve sales visibility. Revolut is only charging 0.8% +2p, the cheapest transaction fee among its competitors. Our take? Expect the race to the bottom on pricing to continue as the competition heats up.

In what we can only describe as the most predictable outcome imaginable, Britain’s High Court ruled that Australian Craig Wright is not the man behind Bitcoin’s pseudonymous creator Satoshi Nakamoto. According to the judge’s ruling, “the evidence is overwhelming . . . that Dr. Wright is not the author of the Bitcoin white paper . . . not the person who adopted or operated under the pseudonym Satoshi Nakamoto . . . not the person who created the Bitcoin system . . . [and] not the author of the initial versions of the Bitcoin software.” Adding to the schadenfreude, Wright himself may face fraud charges for allegedly “putting forward his dishonest claim to be Satoshi and backing it up with a huge number of forged documents.”

In a blog post titled “Deepening our commitment to banks,” embedded finance platform Unit described its vision for the future of embedded financial services, how it currently operates, and how it’s evolving to better serve both banks and tech companies in the future. It’s an accessible piece in a space that’s currently marked by noise and misinformation – it’s a good primer on the current state of embedded finance (or BaaS if you prefer), even if you’re not convinced by its direction. [Bias alert! Two of us are Unit employees and one is a Unit investor. We’re not trying to be self-serving, we really think it’s a worthwhile read. 🙂]

Coast, which offers expense management software for companies with “real-world” field personnel (e.g., fleets, HVACs, last-mile delivery companies), raised $25 million in new equity funding and $67 million in debt financing from Silicon Valley Bank and Triple Point Capital.
Personal finance management app Copilot raised $6 million in Series A funding.
Swiss fintech nsave, which enables “people in countries with unstable banking sectors or facing high-inflation” to open offshore accounts, raised $4 million in a seed funding round co-led by Sequoia.