The latest in Plaid’s payments push • TechCrunch
Welcome to The Interchange! If you received this in your inbox, thank you for signing up and your declaration of confidence. If you are reading this as a post on our site, please register here so that you can receive it directly in the future. Each week, I’ll take a look at the hottest fintech news from the previous week. This will include everything from funding rounds to trends to an analysis of a particular space to hot takes on a particular company or phenomenon. There’s a lot of fintech news out there, and it’s my job to stay on top of it—and make sense of it—so you can stay up to date. — Mary Ann
Hey, hey, Mary Ann here, feeling sorry for myself for having covid for the first time, when I should be thankful it took so long to get it, right? Fortunately, you can’t catch my germs through a computer or phone screen. I’ll fix it, but as a result… you’re stuck with another slightly shortened version of this newsletter! Big credit to, and thanks to, TechCrunch’s Kyle Wiggers, who once again saved the day by writing up all the blurbs (and there were a lot to cover) here. Kyle, you are the best.
Since Thanksgiving is less than a week away, I want to take this opportunity to say how truly grateful I am for having the trust and confidence to prepare this newsletter and for all of you to take the time to read and share it. I don’t take this lightly because without your support I wouldn’t be doing this. I know there are tons of fintech focused newsletters out there so it really means the world. Okay, now that I’m done with the scary part of this newsletter (to quote my kids), let’s get straight to the news.
Weekly news
Image credit: John Anderson, Head of Payments / Plaid
Plaid announced that it has hired John Anderson, a former Meta CEO, to serve as its first head of payments. The move comes as the fintech startup leans into payments, both in facilitating them itself and aiming to help others do it better and faster. Our first thought is that it would take another turn at Stripe, but interestingly, the two remain partners – for now. Plaid also announced that its Signal offering is out of beta with early adopters such as Robinhood, Webull and Uphold. It claims that by using Signal, companies can “unlock instant ACH.”
Unlike crypto, some segments of the lending market appear to be robust – at least for now. Now Holdings, the Warren Buffett-backed Brazilian banking firm that offers credit cards and personal loans, better known as Nubank, posted a nearly threefold jump in Q3 earnings on Monday. While publicly traded Nu has seen its US shares lose more than half their value this year, its customer base has grown to over 70 million after dramatically expanding its footprint in Mexico. Nu’s total revenue in Q3 reached $1.3 billion, up 171%, while profit rose to $427 million, up 90%.
Five years ago, Revolut, the British fintech company with a growing portfolio of banking services, hit the news when it reached over a million customers across Europe. It seems peculiar now; this week, Revolut hits 25 million customers globally as the firm prepares to expand into new markets including India, Mexico, Brazil and New Zealand. Revolut was last valued at $33 billion, but at least last year the company was not yet profitable; Revolut reported a net loss of £167 million (~$197.94 million) in 2021, its biggest ever.
Are valuations retreating and the IPO backlog growing in fintech, as chatter across the Twitterverse suggests? Silicon Valley Bank says yes on both counts in its State of the Markets report this week. According to the firm, the steepest declines in valuation have occurred for late-stage fintech companies; “enterprise value” to “next 12 months” revenue multiples for public fintechs have fallen 55% since the market peaked in early January. Meanwhile, since the end of 2021, the number of US fintech unicorns has grown by 38% to 159 – and stands at a staggering $656 billion in combined valuation, highlighting the huge backlog looking to close.
According to a study by the National Institute of Mental Health, 72% of startup founders are affected by mental health issues. Going a bit out of line, fintech giant Brex launched a program, Catharsis, which is designed to provide resources dedicated to mental health. Brex says it will facilitate access to therapists via a partnership with Spring Health, as well as offer a discount on its sleep-tracking Oura ring. Seems like a worthy cause, but part of us wonders if the effort is meant to distract from Brex’s ill-received pivot away from supporting small businesses.
Payment cards are big business. According to Research and Markets, the segment could be worth over $2 billion by 2026, growing from $1.96 billion this year. That is probably the reason for the start of banking-as-a-service Unit is investing in it — the company on Tuesday launched a service that allows customers to build custom payment cards for their own end users. The device handles almost all aspects of the back end, including card printing, compliance and transaction tracking. In this way, it is a different approach from corporate card issuers Brex and Ramp, claims Unit Manager Itai Damti, which is strictly business-to-business – Unit sees its offering as more “business-to-business-to-consumer.”
If you are wondering about reading material about the expected financial problems in the technology sector, Ukraine-based fintech investor can Vadym Synegin wrote an excellent piece for TC+ on what entrepreneurs can do to help their businesses thrive in times of crisis. Among other steps, he suggests entrepreneurs double down on developing and proving the quality of their products, managing risk and looking for ways to bolster the company’s ranks with high-performing talent.
For a little over a year ago, Wise – the company formerly known as TransferWise – was listed on the London market. Now, looking for new growth avenues, Wise is embarking on an expanded partnership with up-and-coming telecommuting startups Part to enable businesses to pay employees faster (apparently). Wise and Deel’s new feature allows customers to send funds via Deel using just an email address, and opens up new currencies within Deel’s existing payment infrastructure. To take advantage, Deel customers simply need to open an account with Wise and link it to the Deel platform.
In another post for TC+, fintech consultant Greg Easterbrook lays out four moves he believes fintech firms must take to set themselves up for success in the coming months. Urging start-ups to ensure their technology stacks support fintech’s cutting edge, he warns against competition from traditional financial firms that offer more of a “super app” experience with strong membership benefits and perks. Fintechs that outperform the market will either specialize in specific services or embrace a strategy of building compelling new products and benefits, says Easterbrook.
Despite being the world’s largest prepaid debit card company by market capitalization, Green dot usually flies under the radar. But the firm has faced challenges in recent months, revealing it is in a dispute with Uber – one of its contract customers – and that “several” of its bank customers refused to renew their contracts this summer. In a shake-up aimed at righting the ship, Green Dot appointed a new CFO, COO and chief revenue officer this week and said it is focusing on technology modernization, including a move to a cloud-based core banking platform and card management system.
Fintech startup Dunk and MasterCard is collaborating on a new card aimed at musicians and content creators (think TikTok influencers). How do you build a map for creators, you might ask? Well, in Bump’s case, they remove monthly fees and credit checks, and take into account things like a customer’s web3 assets (eg cryptocurrencies, NFTs) when setting credit limits. There are plenty of other cards out there that don’t require a credit check, and at least one startup, Spectral, is trying to create a web3 “credit score” system. But Bump’s offer is still exciting.
StellarFi, a credit-building service that makes bill payments on your behalf and reports them to the major credit bureaus, is on the rise. The company announced this week that it has passed $1 million in annual recurring revenue just five months after launch, and that its customer base has grown by 83% in the past month. The current economic climate likely has something to do with StellarFi’s success – US inflation remains above 7% and short-term lending rates are at their highest level since January 2008.
Financing and M&A
Image credit: Co-founders Carolina Nucamendi and Brenna Curran / Waivr
See TechCrunch and beyond
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Fiat Ventures, with $25M for first fund, brings ‘insider’ approach to investing in early stage fintechs
Valar Ventures leads $20 million in online brokerage platform baraka
UK fintech Banked raises $15M for US expansion
Waivr’s founders had failed in their first company. Here’s how they ended up landing $1.4 million for their company
WeGift closes £26M Series B funding as demand for its digital payout platform grows
Indian fintech Lentra raises $60 million to expand loans-as-a-service for banks
Payzen Raises $20M for Healthcare Buy Now, Pay Later
Revere Partners commits $10 million in investment to revolutionize dental fintech
That was it for now. I’m off next week and hope many of you are too! This newsletter will return on December 4. Wishing you all the best, and a safe and healthy holiday week. xoxo, Mary Ann
