payments – Page 69 – Product Management Confabulation

August 12, 2019

Venmo launches instant transfers to bank accounts

PayPal -owned payments app Venmo today announced support for instant transfers to U.S. bank accounts. The feature is an optional alternative to Venmo’s standard bank transfer service, which typically takes one to three business days to process transactions. With Instant Transfer, however, funds from your Venmo account can hit your bank account within minutes.

As of January 2018, Venmo has offered Instant Transfers to eligible Visa and Mastercard debit cards for a small fee. At launch, the fee was a flat $0.25, but Venmo bumped it up to 1% of the transferred amount last October. Now, the minimum fee is $0.25 and the maximum fee is $10. Of course, users can still choose the standard transfer option if they don’t want to pay for the convenience of instant payments.

While transferring to a debit card is useful for gaining quick access to cash stored in Vemno, not everyone carries a debit card nor do they always want their funds to go to that card. Bank transfers can also aid small business customers or gig economy workers by moving their Venmo cash to their main account for paying bills, rent, and other automatically debited transactions.

The news of an expanded Instant Transfer service comes at a time when Venmo is seeing increased competition from rivals including Square’s Cash App and the bank-operated Venmo challenger, Zelle. Thanks to its built-in customer base and integrations with U.S. banking apps, Zelle reported $44 billion sent on 171 million transactions in Q2 2019, making it the largest peer-to-peer payment app in the U.S. by a wide margin. Venmo’s payment volume in Q2, meanwhile, was $24 billion.

However, with more than 40 million active accounts, Venmo has more users than some of the U.S.’s bigger banks. And it’s still growing.

Offering an expanded fee-based Instant Transfer service to its customers could increase Venmo’s revenue and help push the service to profitability, along with its other plans — like launching its own credit card, for instance.

Venmo parent company PayPal has also offered instant transfers to bank accounts as of March after first announcing its plans back in 2017.

August 8, 2019

Japan’s mobile payments app PayPay reaches 10 million users

Paytm, India’s biggest mobile payments firm, now has 10 million customers in Japan, the company said as it pushes to expand its reach in international markets.
Paytm entered Japan last October after forming a joint venture with SoftBank and Yahoo Japan called PayPay.

In addition to 10 million users, PayPay is now supported by 1 million local stores in Japan, Vijay Shekhar Sharma, founder and CEO of Paytm said Thursday. The mobile payment services has clocked 100 million transactions to date, he claimed. In June, PayPay had 8 million users.

“Thank you India for your inspiration and giving us chance to build world class tech…,” he posted in a tweet.

More to follow…

August 6, 2019

Klarna raises $460 million, looks to expand its payments presence in the U.S.

Swedish payments provider Klarna has announced a new round of equity funding, adding $60 million at a post-money valuation of $5.5 billion, which makes it one of the most highly-valued private fintech companies in the world. The new funding will be used to help Klarna continue to grow its presence in the U.S. payments market, the company said in a press release.

Klarna’s European presence is strong, based on the back of its credit card-alternative payment method which allows customers to pay over time, with the purchase price broken up over four equal instalments, but directly from their bank accounts and without incurring any interest. The company also offers pay now options to provide both retailers and their customers so people can pay more traditionally, too.

In Europe, the mode has been a tremendous success because it’s more in line with how customers in many European markets prefer to pay anyway – avoiding credit and opting for cash and debit. Klarna is also riding the rise of pay later options that are increasingly popular in U.S. commerce, including offerings like purchase financing from Affirm.

Once reserved for big ticket items, interest-free, instalment based payment programs are increasingly common, and popular, for lower-cost purchase. Affirm, for instance saw total loan volume cross $2 billion in 2018. Klarna, meanwhile, is currently growing in the U.S. at a rate of around 6 million new customers annually, and it counts over 3,000 U.S. merchants as customers. Per order value is also growing among customers using Klarna’s 4-payment instalment option, the company says: Average order value is 68% higher when using this option, with a 44% higher conversion rate (ie. customers actually following through with the purchase) vs. traditional credit card payments.

The new funding for Klarna is led by Dragoneer Investment Group, and includes participation by Commonwealth Bank of Australia, HMI Capital LLC, Merian Chrysalis Investment Company Limited, and more.

August 6, 2019

The Federal Reserve announces plans for a real-time payments system that will be available to all banks

The Federal Reserve Bank announced today that it is developing a new service called FedNow that will allow all banks in the United States to offer 24/7 real-time payment services every day of the week. FedNow is expected to be available by 2023 or 2024 and will initially support transfers of up to $25,000.

FedNow will make managing budgets easier for many people and small businesses, but it also puts the Fed at loggerheads with big banks since a federal real-time payments system would compete with the one being developed by the Clearing House, which is owned by some of the world’s largest banks, including Capital One, Citibank, Wells Fargo, Bank of America, JP Morgan Chase and Deutsche Bank.

The Federal Reserve’s board of governors voted 4-1 to approve the proposal for FedNow on August 2, with its of vice chair for supervision, Randal Quarles, casting the dissenting vote.

While Venmo, Zelle and other apps already allow users to transfer money instantly to one another, the Federal Reserve Bank described services like those as a “closed loop” because both parties need to be on the same platform in order to transfer money and they can only be linked to accounts from certain banks. On the other hand, FedNow will be a universal infrastructure, enabling all banks, including smaller ones, to provide real-time payments.

Furthermore, the traditional retail payment methods used for transferring funds not only creates frustrating delays, but can “result in a build-up of financial obligations between banks which, as faster payment usage grows, could present risks to the financial system, especially in times of stress,” the Federal Reserve Board said.

In a FAQ, the Federal Reserve Board explained that “there is a broad consensus within the U.S. payment community and among other stakeholders” that real-time payment services can have a “significant and positive impact on individuals and businesses throughout the country and on the broader U.S. economy.”

For example, real-time payments mean people living on tight budgets will have to rely less on costly check-cashing services and high-interest loans and will incur less overdraft and late fees. Small businesses will also benefit because they can avoid short-term loans with high-interest rates.

The proposal has gained the support of Democratic lawmakers including U.S. Senators Elizabeth Warren and Chris Van Hollen and Representatives Ayanna Pressley and Jesús García.

In a statement, Warren, who is campaigning for the Democratic presidential nomination, said “I’m glad the Fed has finally taken action to ensure that people living paycheck-to-paycheck don’t have to wait up to five days for a check to clear so that they can pay their rent, cover child care, or pick up groceries. Today’s Fed action will also help small businesses by making payments from customers available more quickly. I look forward to working with the Fed to ensure a swift and smooth implementation of this system.”

Comments about FedNow will be accepted for 90 days after the proposal is published in the Federal Register.

July 31, 2019

Aspire raises $32.5M to help SMEs secure fast finance in Southeast Asia

Aspire, a Singapore-based startup that helps SMEs secure working capital, has raised $32.5 million in a new financing round to expand its presence in several Southeast Asian markets.

The Series A round for the one-and-a-half-year old startup was funded by MassMutual Ventures South Asia. Arc Labs and existing investors Y Combinator — Aspire graduated from YC last year — Hummingbird, and Picus Capital also participated in the round. Aspire has raised about $41.5 million to date.

Aspire operates a neo-banking-like platform to help small and medium-sized enterprises (SMEs) quickly and easily secure working capital of up to about $70,000.

AspireAccount, the startup’s flagship product, provides merchants and startups with instant credit limit for daily business expenses, as well as a business-to-business acceptance and other tools to help them manage their cash flow.

“I saw the problem while trying to rally small businesses trying to grow in the digital economy,” Andrea Baronchelli, founder and CEO of Aspire told TechCrunch last year. “The problem is really about providing working capital to small business owners,” said Baronchelli, who served as a CMO for Alibaba’s Lazada platform for four years.

Aspire currently operates in Thailand, Indonesia, Singapore, and Vietnam. The startup said it will use the fresh capital to scale its footprints in those markets. Additionally, Aspire is building a scalable marketplace banking infrastructure that will use third-party financial service providers to “create a unique digital banking experience for its SME customers.”

The startup is also working on a business credit card that will be linked to each business account by as early as this year, it said.

Baronchelli did not reveal how many business customers Aspire has, but said the startup has seen “30% month-on-month growth” since beginning operations in January 2018. Additionally, Aspire expects to amass more than 100,000 business accounts by next year.

Southeast Asia’s digital economy is slated to grow more than six-fold to reach more than $200 billion per year, according to a report co-authored by Google. But for many emerging startups and businesses, getting financial services from a bank and securing working capital have become major pain points.

A growing number of startups are beginning to address these SMEs’ needs. In India, for instance, NiYo Bank and Open have amassed millions of businesses through their neo-banking platforms. Both of these startups have raised tens of millions of dollars in recent months. Drip Capital, which helps businesses in developing markets secure working capital, raised $25 million last week.

July 30, 2019

Truecaller pushes software fix after covertly signing up Indians to its payments service

Truecaller, an app that helps users screen robocalls, has rolled out an update to its app in India, its largest market, after a previous software release covertly signed up an unspecified number of users to its payments service.

A number of users in India began to complain late Monday that Truecaller, which has amassed over 100 million daily users in the country, had registered them to its payments service without their consent. In a statement to TechCrunch, Truecaller said a bug in the previous software update caused the issue.

Thread. I fell victim to a @Truecaller UPI scam this morning. @npci_npci @upi_npci.

— Dheeraj Kumar (@codepodu) July 30, 2019

“We have discovered a bug in the latest update of Truecaller that affected the payments feature, which automatically triggered a registration post updating to the version. This was a bug and we have discontinued this version of the app so no other users will be affected,” a Truecaller spokesperson said in a statement.

“We’re sorry about this version not passing our quality standards. We’ve taken quick steps to fix the issue, and already rolled out a fix in a new version. For the users already affected, the new version with the fix will be available shortly, however, in the meanwhile they can choose to manually deregister through the overflow menu in the app.”

Truecaller added payments service to its app in India two years ago. The company, like several others such as Google and Samsung, relies on Indian government-backed UPI payments infrastructure for this feature. Under the current law, signing up a user to a payments service without their consent is frowned upon.

As of February this year, every tenth Truecaller user in India had signed up to Truecaller Pay.

July 30, 2019

Why this Nigerian fintech startup is volunteering audited financials

Nigerian fintech firm Carbon — an early stage financial services startup based in Lagos — has posted financials audited by KPMG on its website.

This comes four months after the company obtained a credit rating as a pre-IPO venture. Carbon — which recently rebranded its OneFi holding company and PayLater product titles into one name — plans to continue releasing its financial results on an annual basis, co-Founder and CEO Chijioke Dozie told TechCrunch.

This may not be totally unheard of in other global tech markets, but for startups in Africa’s big tech hubs — such as Nigeria — it’s a rarity.

One of the first glimpses into startup financials in Nigeria came when Jumia shareholder, Rocket Internet, went public in 2014, which required it to include limited Jumia data in its annual report. The accompanying prospectus to Jumia’s listing this year on the New York Stock Exchange offered the most expansive financial data to date on a tech venture operating in Africa.

Prior to this — and still for the most part — companies in the continent’s (mostly) pre-public (earlier stage) startup hubs — such as Nigeria — provide little to no financial performance info.

“Typically, in the local market, we have not seen a lot of voluntary transparency or the availability of data,” said Lexi Novitske — a Lagos based VC investor at Acuity Venture Partners.

“Most startups are concerned such disclosure could expose losses, give market intel to competitors, or attract unwanted attention from regulators. It could also lead to negative negotiation leverage if partners saw that they were making good returns.”

So why’d Carbon go to the trouble of putting its pre-public accounting out in the open for anyone to see?

Clients and recruiting were two reasons. “From a customer perspective, we are trying to get people to trust us with their financial services…so they can see this is the institution I’m dealing with and this is their financial position,” explained Carbon’s Dozie.

Carbon has evolved from its original focus as an online lender, to offer a broader array of mobile-based financial services — including payments, investment products, credit reports, and business banking services. In March, the company acquired Nigerian payment solutions company Amplify for an undisclosed amount.

By stats offered by Briter Bridges and a 2018 WeeTracker survey, fintech now receives the bulk of VC capital and deal-flow to African startups, many of which are attempting to reach the continent’s large unbanked and underbanked populations.

Nigerian fintech startup OneFi acquires payment company Amplify

Carbon fits into that category and its CEO believes being up front about the startup’s financial position will attract top talent. “From a recruitment perspective, we want recruits to know we have good prospects — that this is a company that’s doing well and wants to keep doing well,” said Dozie.

That impression is buoyed by Carbon’s initial results, which were fairly positive for a Series A stage startup. The company had revenues in 2018 of $10 million, according to its online annual report, and turned a profit of around $500,000.

It’s helped with recruiting interest, according to Dozie, who said he’d marked an increase in candidates inquiring about open positions since the results were posted.

Carbon Financial Results 2018 Nigeria Fintech II

The other reasons to volunteer financial data is to reassure investors (current and potential), shake off stereotypes for Nigeria, and better position Carbon globally.

“When you look at some of these challenger banks in the West, and you look at their numbers and our numbers, we could easily fit in with Monzo, N26, or Atom,” said Dozie.

“But we don’t get considered because investors don’t really think that you can get the results or this performance in the markets that we’re in,” he added — noting that Carbon has operations in Nigeria, Ghana and South Africa and is considering expansion in Senegal, Côte d’Ivoire, DRC, and Egypt.

Investor Lexi Novitske thinks Carbon offering financial performance data is a good thing for Africa’s tech ecosystem. “The move builds trust from clients, partners, or investors in a market where there is not a lot of openness,” she said. “I am encouraged to see how other companies will react. My hope is that more will openly report their own metrics…”

Carbon CEO Chijioke Dozie says the company will continue to post audited financials on an annual basis, even if they show losses. If the startup continues to expand, attract capital, talent, and grow revenues, other Nigerian fintech firms may follow suit.

July 29, 2019

Flutterwave and Alipay partner on payments between Africa and China

San Francisco and Lagos based fintech startup Flutterwave has partnered with Chinese e-commerce company Alibaba to offer digital payments between Alipay and African merchants.

Flutterwave is a Nigerian founded B2B payments service (primarily) for companies in Africa to pay other companies on the continent and abroad.

Alipay is Alibaba’s digital wallet and payments platform. In 2013, Alipay surpassed PayPal in payments volume and currently claims a global network of over 1 billion active users, per Alibaba’s latest earnings report.

A large portion of Alipay’s network is in China, which makes the Flutterwave integration significant to capturing payments activity around the estimated $200 billion in China-Africa trade.

“This means that all our merchants can accept or install Alipay as a payment type to accept payments from its billion users,” Flutterwave CEO Olugbenga Agboola — aka GB — told TechCrunch.

“There’s a lot of trade between Africa and China and this integration makes it easier for African merchants to accept Chinese customer payments.”

A Flutterwave company release added, “We’ve managed to connect African countries…to each other so it was about time we connected Africa to the world. We started with the U.S…but you can’t connect Africa to the world without China.”

An Alipay spokesperson confirmed the Flutterwave collaboration with TechCrunch. Flutterwave will earn revenue from the partnership by charging its standard 2.8 percent on international transactions. The company currently has over 60,000 merchants on its platform, according to Agboola.

The Flutterwave-Alipay alliance developed out of Agboola’s acceptance in Alibaba’s Africa eFounders Fellowship.

“Because of that I was in China to do meetings with Jack Ma and the only ask I had from that trip is ‘I want to be the Africa payment infrastructure that plugs directly into Alipay,'” Agboola said.

The Alipay partnership follows those between Flutterwave and Visa earlier this year to launch a consumer payment product for Africa called GetBarter.

Founded in 2016, Flutterwave allows clients to tap its APIs and work with Flutterwave developers to customize payments applications. Existing customers include Uber, Facebook, Booking.com and e-commerce unicorn Jumia.com. Flutterwave has processed 100 million transactions worth $2.6 billion since inception, according to company data.

In a recent Extra Crunch feature, TechCrunch tracked Flutterwave as one of several Africa focused fintech companies that have established headquarters in San Francisco and operations in Africa to tap the best of both worlds in VC, developers, clients, and digital finance.

These startups are locating in SF and Africa to win in global fintech

Flutterwave’s Alipay collaboration also tracks a trend of increased presence of Chinese companies in African tech.

China’s engagement with African startups has been light compared to the country’s deal-making on infrastructure and commodities. That looks to be shifting.

Alibaba founder Jack Ma has made several trips to the continent and this March announced the $1 million Africa Netrpreneur Prize for African startups and founders. Chinese company Transsion—a top-seller of smartphones in Africa under its Tecno brand—operates an assembly facility in Ethiopia and announced its IPO this year.

And this month Chinese owned Opera announced $55 million in venture spending to support its growing West African digital commercial network, that includes browser, payments and ride-hail services.

Opera founded startup OPay raises $50M for mobile finance in Nigeria

July 24, 2019

Drip Capital raises $25M to help exporters access working capital

Drip Capital, a startup that helps small and medium-sized exporters secure working capital, has raised $25 million to expand its reach globally.

The Series B financing round for the two-and-a-half-year-old startup was led by Accel and Boosts Total Venture. In an interview with TechCrunch, Neil Kothari, co-founder and co-CEO of the startup, said Drip Capital has also raised $55 million in debt funding over the last two years, making the startup’s total raise $100 million.

Exporters worldwide have to wait for about 60 days (if not more) before they get paid. This creates an immense challenge for millions of small and medium-sized exporters who don’t have any savings to process additional orders until they get paid from their previous clients.

“Despite the fact that they’re reputable, credit-worthy businesses, over half of them still get turned down by banks for the capital they need. We invested in Drip to change this,” said Arun Mathew, a partner at Accel.

After signing up to the platform, an exporter can submit their invoices and open a credit line to finance their next orders.

Drip Capital works with investors and lenders in developed markets to help exporters secure financing. The startup, which has over 800 exporters and importers on its platform, said it has already issued loans worth more than $500 million to date.

Unlike many other online lenders that take no risk liabilities of the flowing capital, Kothari said Drip invests much of its own money in lending, too. “We have skin in the game. This adds tremendous credibility.”

The startup, whose platform is being used to do trading in 60 countries, will use the capital to expand its global footprint. It plans to launch in the UAE, Mexico, and the United States in the coming months.

“With new funding in place, we can replicate the model we’ve created in India with other geographies by scaling the product, engineering, sales and marketing teams,” the startup said.

Drip Capital also intends to expand its offerings to importers, adding a new option that will allow businesses to make more purchases from international markets and increase their sales.

Many established companies such as Honeywell, Sam’s Club, TJ Maxx, Whole Foods, and Zara have purchased goods from exporters that have received financing through Drip, the startup said.

Drip Capital, of course, isn’t the only platform that helps exporters get paid faster. But larger companies tend to do it all and optimize the supply chain for the biggest companies in the world. Drip Capital is focusing on a niche market.