Fintech Update, 8/30 - 9/12
Hi! It’s Monday, September 13, 2021.
Leading Off
PayPal acquired Japanese BNPL provider Paidy for $2.7B. // In other news, the SEC told Coinbase that it plans to sue the cryptocurrency exchange over its plans to offer a product that will allow users to earn interest by lending digital assets, Amazon is working on a new point-of-sale system, and PayPal is exploring a stock-trading platform for U.S. customers. // Plus, Affirm crushed its FY Q4 earnings, Prosus acquired BillDesk for $4.7B, and Varo raised $510M in a Series C funding round that values the challenger bank at $2.5B. // All this + more below!
Heavy Hitters
Paidy gets paid. PayPal announced that it is acquiring Japanese BNPL provider Paidy for $2.7 billion (in cash) to enhance its business in Japan. The planned acquisition will help PayPal expand further into Japan, the third largest e-commerce market in the world (online shopping volume has more than tripled over the last 10 years to some $200B), trailing only the U.S. and China, and get access to Paidy’s 6+ million registered users. However, over 50% of e-commerce in Japan is non-card based and is funded via cash on delivery, in person payment, and bank transfer. The transaction is expected to be approved from a regulatory perspective and completed in the fourth calendar quarter of 2021. M&A activity in the BNPL space is heating up - Square announced its plans to acquire Afterpay in early August and Affirm acquired Canadian BNPL provider Paybright in January!
Quick Takes
SEC and Coinbase get into it. The Securities and Exchange Commission has said it will sue the crypto exchange if it moves forward with a plan to let users earn interest by lending digital assets. Coinbase rejects the SEC’s characterization of its “Lend” product as a security, and public comments from CEO Brian Armstrong show the growing tension between the crypto industry and its regulators.
Amazon looking to launch POS system. Amazon is working on a new point-of-sale system that can be sold to third-party sellers. The new system will be able to handle both online and offline transactions and will help Amazon compete directly with Shopify, Square, and PayPal.
PayPal to launch stock trading platform. According to a CNBC article, PayPal is exploring ways to let users trade individual stocks amidst the retail trading boom. PayPal “hired brokerage industry veteran Rich Hagen as part of the move”to lead Paypal Invest - according to sources familiar with the matter, part of his job description outlines PayPal’s efforts to “explore opportunities” in the consumer investment business.
Robinhood planning early-deposit feature. The new feature will let users receive paychecks via direct deposit up to two days early, mirroring services offered by competitors like PayPal and Wealthfront. Such functionality falls in line with Robinhood’s pitch that its app is much more than a place to trade.
Mastercard acquires CipherTrace. The payments network acquired the crypto-tracing firm on Thursday for an undisclosed amount. CipherTrace will improve Mastercard’s crypto monitoring and compliance activities by scanning blockchains for illicit transactions. The firm currently monitors over 900 cryptocurrencies.
Affirm sees strong Q4 earnings. Leading BNPL provider Affirm published Q4 earnings, topping revenue and volume expectations and providing an upbeat volume forecast for the full year (71% revenue growth), even without factoring in potential contributions from its new partnerships with Amazon or the forthcoming rollout of Affirm Debit+. The stock was up over 20% following the report.
Indian banks rolling out account aggregator system. The objective of the program is to allow consumers to consolidate all their financial data in one place and better control its use. Users who give consent will be able to share their information between Account Aggregator participants using a central API-based repository. Importantly, users determine how long their data can be accessed.
Prosus acquires BillDesk for $4.7B. Dutch tech and payments giant announced that it is planning to acquire Indian payments provider BillDesk for $4.7 billion (all-cash). Prosus plans to combine BillDesk with its global fintech and payments business, PayU, which would make it one of the bigger online payment providers globally with “$147 billion in annual payment volume.”
Funding Circle launches BNPL for SMEs. The alternative lending platform announced that it is launching FlexiPay, a BNPL solution for small businesses, whereby “customers will be able to apply for and split credit facilities of between £2,000 and £30,000 into three monthly chunks almost instantly.”
Nubank acquires Spin Pay. The Brazilian neobank is acquiring the fintech to offer Pix, a popular instant payments platform developed by the Brazilian Central Bank. Spin, which supports 200+ retailers accepting Pix payments, will remain a separate entity after the acquisition. The move comes as Nubank targets a +55B IPO.
UK neobanks are getting into the BNPL space. Revolut and Monzo are announcing plans to enter the buy-now-pay-later market. Both are developing their own versions of BNPL, but only Monzo is regulated in the UK (Revolut has a European banking license in Lithuania). The moves come as the British government introduces regulation for the sector.
Varo raises $510M. The first U.S. neobank to receive a national bank charter raised $510 million in a Series E funding round at a $2.5 billion valuation. Since obtaining its bank charter 13 months ago, the company has “doubled its number of opened accounts to four million and tripled its revenue.
Better.com acquires Property Partner. Online mortgage tech company Better.com announced it has acquired a U.K.-based property crowdfunding investment platform, Property Partner, for an undisclosed amount.
Pop Flies
Card issuing platform Marqeta announced a continued partnership with Australian BNPL provider Zip, enabling Zip to “to bring new payments products to market faster, offering customers a line of credit attached to their account rather than an installment plan."
Ikea’s owner invested $22.5 million in Israeli BNPL provider Jifiti.
Google has partnered with Equitas Small Finance Bank, an Indian microfinance lender, “to offer time deposits to users of its payments wallet.”
JPMorgan announced that it has acquired food and dining review website The Infatuation and bought a minority stake in Volkswagen’s payments unit.
More Fundings!
Wealth Management
Sphere, the company focused on getting fossil fuels out of 401(k)s, raised $2 million in seed funding.
Origin, the company working to elevate financial literacy in the workplace, raised $56 million in Series B funding.
Jetty, the company giving tenants rental payment flexibility, raised $23 million in a Series A funding round co-led by Citi.
Lending
LatAm BNPL provider Addi raised a $75 million Series B extension, bringing the total round up to $140 million.
Italian BNPL provider Scalapay raised $155 million in a Series A funding round led by Tiger Global at a $700 million valuation.
Wisestack, the startup that brings BNPL to in-person services, raised $45 million in a Series B funding round led by Insight Partners.
Banking
Challenger bank and debit rewards provider Point raised $46.5 million in Series B funding.
Nigerian small business banking and software service provider Prospa raised $3.8 million in pre-seed funding.
Canadian SMB financial super app Nuula raised $120 million in funding ($20 million in equity and $100 million credit facility).
Payments
Egyptian microfinance lending and payment company MNT-Halan raised $120 million in new funding.
African mobile money provider Wave raised $200 million in a Series A round with participation from Sequoia Heritage, Stripe, Founders Fund, and Ribbit Capital at a $1.7 billion valuation.
Corporate
All-in-one expense management platform Jeeves raised $57 million in Series B funding at a $500 million valuation. The startup was valued at $100 million when it closed its Series A in May!
Lean, the company providing gig workers with a platform that offers access to financial products “custom built for their needs” raised $4.5 million in seed funding.
Insurtech
Insurify, the insurtech provider that has built a machine learning-based virtual insurance agent to help people get better rates on home, auto, and life insurance, raised $100 million in Series B funding.
Vouched, the company that provides business insurance to startups and high-growth companies, raised $60 million in Series C funding at a $550 million valuation, along with a previously unannounced $30 million in Series B funding.