Hi all, Ian here.
Hope everyone’s doing well and chilling out with the holidays coming off. Im planning to take it a bit easy next week before ramping up again Jan 2. Exciting things coming in 2021! (And no I’m not just referring to the Covid vaccine).
First thing up is a Buy Now, Pay Later report coming out later this year for FTT+ members: in it, we’ll dive into what consumer trends are pointing to for the future, ways these players could continue to expand, and what hurdles stand in their way. Stay tuned 👀
While things are slower over the next couple of weeks, here’s a playlist that I whipped up of stuff I’m listening to. Yes, it’s mainly Kid Cudi and Jack Harlow this week, because their album’s came out and they’re ****ing great.
Here’s this week’s playlist:
I highly recommend listening to it (in order, trust me) because some of these songs will be on the FTT 2020 Favorites Spotify Playlist we’re putting together (don’t worry I’m putting myself on a genre restriction.).
We’re also putting together an FTT Community Playlist as well—it’s collaborative so feel free to start adding stuff (I’m really excited to see what kinda stuff y’all listen to!) Start filling things in now!
How Apple’s MobeeWave Acquisition Can Transform SMB Banking
On to this week’s topic. When I saw Facebook attack Apple in newspaper ads saying it was bad for SMBs, among other things, I laughed for a multitude of reasons. One part was because of the full page newsletter ads themselves…what a weird ad product? Imagine a digital publication doing a full page takeover? Yuck.
Beyond the obvious reasons, Apple has tremendous potential to transform the SMB commerce market over the next five years, both with in-store and online payments. Most of this revolves around Apple’s recent acquisition of MobeeWavee, a POS terminal maker.
iPad’s as the new POS system: Back in July 2020 when the Apple acquisition was reported, Bloomberg’s Mark Gurman did a great job highlighting the potential. Mobeewave has the technology to turn Apple devices to into a simple way for a merchant to accept payments. (Payments industry expert Tom Noyes says something similar in a very detailed analysis.) With consumer behavior shifting dramatically, smartphone users in the US are becoming slightly more acclimated with contactless payments. This is a trend that the networks expect to continue, and clearly so does Apple.
The question is what’s next: If every Apple device with an NFC chip can become a terminal that accepts payments, what does that unlock? A pure software play, like Tom writes, makes a ton of sense. Apple tends to go for high margin businesses, which is hard to find in financial services or fintech. However, I think there is more opportunity for this in the SMB space through powering a direct financial product.
With Apple Pay, Apple established a new consumer behavior on their platform that they then monetized even further with the Apple Card. Now, you see Apple getting into areas like credit building with the Apple.
My two guesses for which financial products would make sense for Apple to develop for SMB’s are bank accounts and lending. Every company has a constant need for capital. And with Apple’s foray into the credit card market through a partnership with Goldman, expanding that to enable SMB lending makes a lot of sense. The immediate reaction is that lending is a highly regulated product that wouldn’t make sense for a tech giant and brand-conscious company like Apple. Except they’re already in consumer credit, which arguably is much riskier and has a more negative brand effect. And a partnership with a bank like Goldman Sachs gets rid of the regulatory problem for the most part.
Business bank accounts are much more straightforward. There’s still a dire need of them and Apple would sit in the flow of funds in this scenario, so in theory they could offer an instant payout to SMB’s on the platform. The low cost of implementation around business bank accounts and the potential of increasing the LTV of a cloud POS terminal product make this a worthwhile area for Apple to explore.
The News, By Parker Jay-Pachirat
FinTech lenders seem to have played an outsized and integral role in extending PPP loans to Black-and Hispanic-owned businesses, according to early research from an assistant professor at NYU Stern, Sabrina Howell. Howell’s research indicates that “fintechs, MDIs, and nonprofits tend to make a substantially larger share of their PPP loans to Black-owned businesses” while “small- and medium-sized banks are consistently least likely to lend to Black-owned businesses, with large banks close behind” (4).
Affirm delayed their IPO this Saturday, joining Roblox in postponing the big day after frothy gains from Airbnb and Doordash.The buy-now-pay-later fintech had initially planned to pitch shares to potential investors this past week and would have received a valuation as high as $10B, according to The Journal. Affirm is planning to IPO next year.
FIS’s payment company Worldpay collaborates with Visa, connecting their token services to strengthen digital commerce.FIS just launched their token management service, allowing online merchants and partners access to Visa Token Service and enhance the strength of their e-comm strategy. According to FIS’ press release, “The service provides clients with access to industry-leading tokenization capabilities from Visa, which can help reduce risk of data theft while helping to retain customers through uninterrupted commerce and enhancing card, not present authorization rates.”
Payment-processing company TSYS suffered a ransomware attack and had data exposed online, according to a report posted this past week. TSYS is the third-largest third party payment processor for financial institutions in the U.S, and was acquired by Global Payments Inc. in 2019. According to TSYS, the malware didn't jeopardize card data, and the attack only targeted the company's administrative wing.
Plaid introduced an “improved integration” with Capital One. According to my research, it seems an improvement was in high demand. As part of the data access agreement, Plaid is building a direct integration with Capital One’s API. According to an email announcing the feature, “The new integration will feature an OAuth flow, which redirects users to Capital One’s site to complete the sign-in process”.
Visa and BlockFi partnered to release the world’s first-ever Bitcoin rewards card.It’s called the “Bitcoin Rewards Visa Credit Card”. Despite the name, which I find somewhat prosaic, the waitlist is pretty sexy. It’s also only available to clients with funded BlockFi accounts in the BlockFi app. If the sexy website and exclusivity don’t do it for you, then please know that yes, the card is metal. Here’s how it works: After applying and being approved, you’ll receive a credit limit that you can spend each month. If you pay your statement balance on time, you won’t be charged any interest on the balance. On every transaction made, you accrue 1.5% cashback. That cashback will automatically be converted to bitcoin and placed into your BlockFi account on a regular monthly cycle. The reward card launched shortly before bitcoin reached an all-time high this week, breaking through $20K.
Lil Yachty announced a collab with digital and blockchain-based collectibles marketplace Nifty Gateway to sell a piece of (digital) art. Social tokens are becoming more mainstream as they allow artists and influencers to accept coins as currency, redeemable for goods and services. The popularity of social tokens with creators validates the emergence of crypto marketplaces like Zora, for buying, selling, and trading limited-edition goods and art.
Yatchy’s artwork is titled “YachtyCoin” and was auctioned off on the Nifty Gateway platform this Wednesday. Lil Yachty made his foray into the crypto world last week when his Ethereum-based social token $YACHTY garnered upwards of $375K in total sales on Swiss-based platform Fyooz.
Robinhood can’t seem to get themselves out of hot water: Massachusetts regulators filed a complaint against them on Wednesday.The 24-page complaint alleges the company aggressively marketed itself to inexperienced investors and failing to implement controls to protect them. Exposing investors to “unnecessary trading risks” would fall short of the fiduciary standard Massachusetts adopted earlier this year, requiring broker-dealers to act in their clients’ best interests.
On the heels of the Massachusetts regulatory complaint, the SEC fined Robinhood $65M yesterday for misleading customers about payment for order flow practices which cost traders over $34M in losses. According to the SEC’s order, between 2015 and late 2018, Robinhood made misleading statements in customer communications about its largest revenue source - payments from trading firms in exchange for Robinhood sending its customer orders to those firms for execution. The SEC order found that one of Robinhood’s largest selling points to customers was “commission-free” trading, but customers’ orders were executed at prices inferior to other brokers’ prices. Despite this, Robinhood falsely claimed on their website FAQ between October 2018 and June 2019 that its execution quality matched or beat that of its competitors. “Robinhood provided misleading information to customers about the true costs of choosing to trade with the firm,” says Stephanie Avakian, director of the SEC’s Enforcement Division. “Brokerage firms cannot mislead customers about order execution quality.”
Fundraising News, by Parker Jay-Pachirat
Public raised a $65M Series C on Tuesday. The startup launched fifteen months ago to reinvent how people experience and invest in the stock market by pioneering real time-fractional investing and creating a social network built upon stock brokerage. The round was led by Sameer at Accel for the third time in a row, who was joined by Alison of Greycoft and Oliver of Lakestar. Public’s major investors also participated in the round, including Lakestar, Greycroft, Brianne Kimmel’s Worklife, and Shari Redstone’s Advancit Capital. Notable new investors included Dick Parsons, The Chainsmokers’ Mantis VC, and skateboarding legend Tony Hawk.
Ramp raised $30 million in a Series A3 round, led by D1 Capital and Coatue. The business credit card and expense management startup has seen a ton of growth recently—it passed the $100 million transaction volume mark a few months ago. The company also announced a new feature, Ramp Reimbursement, which Ian’s extremely excited about. “When I was a reporter I had to pay a ton out of pocket for coffees and lunches and I always either forgot to file expenses (I was 23 year old in NYC, expenses were not a high priority). This helps employees manage that super annoying task.”
GoCardless raised another $95M in Series F funding this week. This round was led by Bain Capital Ventures and follows GoCardless's 46% YoY growth, which has benefitted from the increase in e-comm and online payments during COVID19. GoCardless says it will use the funding to accelerate its open banking strategy, combining open banking enabled bank-to-bank payments with the global bank debit payment network it has already built out.
GoDaddy announced it will acquire Poynt for $320 million in cash at closing and $45 million in deferred cash payments- subject to certain performance and employment conditions- over the next three years. The acquisition merges online and in-person commerce, addressing consumers’ need for connected commerce experience across a business’ channels. "Commerce is critical to our customers and we continue to invest in building seamlessly intuitive experiences that enable small businesses to sell everywhere," said GoDaddy CEO Aman Bhutani. "Poynt accelerates our strategy to provide a complete suite of commerce and payment services to address this critical customer need and focus on a large addressable market opportunity.
