A glimpse into Apple’s plan to dominate the POS payments 📲; Coinbase's ad backfires terribly. But it’s genius! 👏; Warren Buffett's $1 billion bet on Nubank🇧🇷💸
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Good morning Everyone,
And happy Saturday! This week was probably the hottest week of the year when it comes to all things FinTech. Therefore, without further ado, let’s dive into the three stories that were supermassive this week. You can uncover other stories, keep the FinTech pulse daily and get at least x5 more by becoming a subscriber. Join the community here:
And here’s a mix of 3 hot & fresh FinTech stories from this week:
A glimpse into Apple’s plan to dominate the POS payments 📲
The news 📰 Payment giant Stripe will be the first provider to offer Tap to Pay on iPhone, Apple’s software point-of-sale (softPOS) solution that will allow merchants to accept contactless payments like Apple Pay with their iPhones, without the additional hardware needed. This was officially confirmed in Apple’s press release.
More to that 👉 The feature will hence be available for third-party payment providers and their software developers to integrate into their iOS apps later this year. Stripe will also add it to the Shopify Point of Sale app this spring.
A strong move 👀 This move from Apple was somewhat expected further to their Mobeewave acquisition back in 2020. I have also covered rumors that Apple was creating a softPOS offering late last month.
Back then, it was already obvious that this move could steal volume from incumbent mPOS players (i.e. PayPal’s iZettle, Square, SumUp, among others) and bring a new customer base to Apple. Yet, it was unclear whether Apple would keep the integration within its ecosystem or enable it for third-party use.
Right now, it looks like Apple has made the right move integrating with third-party payment providers. It’s potentially huge and matters for several reasons:
✈️ THE TAKEAWAY
Distribution & growth 🚀 First and foremost, working with third-party payment providers like Stripe gives Apple a massive distribution channel. Stripe has more than 2M business customers, which means that by integrating its softPOS solution Apple can take advantage of its existing merchant networks. This effectively gives Apple more customer touchpoints than if it kept the solution in-house. To add to that, such integration might also be less complicated for merchants because they can use Apple’s softPOS offering through a provider that they’re already working with (whether it’s Stripe, Adyen, or anyone else for that matter). Second, this move should be a strong catalyst for Apple Pay's growth. SMEs have been somewhat hesitant to adopt mobile payments because of the costs associated with acceptance - but softPOS solves this problem (think also here about the rise and popularity of Square, SumUp, etc.). Previously, softPOS was only available on Androids. But with Apple entering the arena, it can capture some of this volume and further capitalize on its large base of iPhone users. Apple Pay is reportedly accepted by more than 90% of US retailers, which is massive. Leveraging third-party integration, therefore, gives Apple not only stronger ties to small businesses, but also encourages spending with Apple Pay, which inevitably leads to even more growth for Apple.
Coinbase's ad backfires terribly. But it’s genius! 👏
Super Bowl 🍚 Crypto exchange giant Coinbase briefly crashed on Sunday after an eccentric Super Bowl ad sparked a surge in traffic. But that’s genius. Continue reading.
The ad 👉 The 60-second ad featured a floating and colorful QR code bouncing around the screen, similar to a bouncing DVD logo. The QR code directed people to a link offering $15 in Bitcoin to those who sign up for a Coinbase account before February 15. Meanwhile, existing users had the chance to opt-in for a chance of winning a $3M prize.
The crash 💥 The ad proved so popular that the app crashed for about an hour.
To be more precise, Coinbase had more than 20M hits on its landing page in one minute and the engagement was 6 times higher than previous benchmarks. It was hence historic and unprecedented.
As an effect, the Coinbase app also skyrocketed in popularity, rising from 186th place to 2nd on Apple's App Store.
The effect 🙌🏼 Given how the major sporting event regularly attracts more than 100M viewers, critics argued that Coinbase really should have seen this coming. In fact, many said that all would have been fine if Coinbase would have handled the load.
I disagree with that and actually believe this is probably one of the best marketing campaigns the FinTech industry has ever seen. Here’s why👇🏼
✈️ THE TAKEAWAY
Epic play 🏈 Let me say that again - Coinbase’s Super Bowl ad might be the best marketing campaign in FinTech ever. The crypto exchange reportedly paid nearly $14M for a minute-long ad. That sounds huge but think about it for a second. Given they got 20M website visits in just ONE minute, it’s around $0.7 per click. That’s nearly x2 cheaper than Facebook ads and almost the same as Google (Search). Which is a massive win. Furthermore, because of the crash, even more people started talking about it, which in turn facilitated even more exposure and engagement. So now everybody’s talking about Coinbase. And we all know that there is no such thing as bad publicity. Therefore, whether this was intentional or not, Coinbase won big time here and their Super Bowl play was an epic touchdown. Well played 👏
Warren Buffett's $1 billion bet on Nubank🇧🇷💸
The news 🗞 Warren Buffett's Berkshire Hathaway has dumped a portion of its Visa and Mastercard holdings and increased exposure in Nubank, the largest FinTech in Brazil and the biggest challenger bank in the world by customer count.
More on that 👉 In a securities filing late February 14, the industrial conglomerate run by the legendary investor disclosed that it had purchased as much as $1 billion worth of Nubank Class A stock in Q4/2021. This adds to $500M invested in the startup in July 2021, before it IPOed.
While the purchase is not super surprising, given Buffett’s earlier commitment to Brazil’s FinTech star, the interesting piece lies within the sell-off. Berkshire has thus sold $1.8B and $1.3B worth of Visa and Mastercard stock, respectively, which potentially signals the Oracle’s of Omaha a shift away from incumbent credit companies to gain exposure in fresh and promising FinTech startups.
Zooming out, Buffett’s move is important not only for Nubank but also for the FinTech & crypto sector in general. Here’s the takeaway:
✈️ THE TAKEAWAY
Nubank’s potential & softening stance on crypto. First and foremost, this is a huge vote of confidence for Nubank. Although their stock has experienced ups and downs since the IPO, it now remains somewhat stable with lots of room for growth. For starters, we can remember that the 5 largest banks in each of Brazil, Mexico, and Colombia (all of them Nubank is targeting aggressively with Brazil being their home market) still control between 70% and 85% of that market. That includes all loans, deposits, and overall banking revenue. Furthermore, there are said to be over 250 million people in Latin America that have no access to banking at all. This means that the market as such will grow significantly over the next 5-10 years. And Nubank is very well positioned to take a huge stake in it. So you just cannot be NOT bullish on them. As for Buffet, we all know that the Oracle of Omaha is always taking a very cautious approach to investing, especially when it comes to the hottest sectors such as FinTech. Hence, Berkshire's new stake in Nubank shows that Buffett has been softening up to FinTec lately, and definitely sees a huge potential there. Finally, there’s a crypto element attached to this too. One can remember that back in September 2020, Nubank has acquired Easynvest, a trading platform that has been actively offering a Bitcoin exchange-traded fund (ETF) since June 2021. Dubbed QBTC11, the ETF is backed by QR Asset Management and is listed on the B3 stock exchange, the second-oldest bourse in Brazil. This effectively means that Nubank is exposed to the emerging crypto sector, and now it could use the additional revenue opportunities to benefit its top investor, Warren Buffett. Despite his views that Bitcoin is a "rat poison squared."
🔎 What else I’m watching
OpenSea is a VC? 🤔 OpenSea is the latest crypto company to enter the venture capital scene. In an announcement Friday, the NFT marketplace said that it will back companies and projects across the market for non-fungible tokens and Web3 by offering capital and access to its leadership and investors, including Standard Crypto and a16z.
New BNPL giant in the making?🇫🇷 Only 3 years after its launch, Alma, the French financial platform offering installment payments and pay later solutions for merchants & consumers, has just completed a €210M Series C financing round, of which €115M in equity and €95M in debt. Existing investors (Cathay Innovation, Eurazeo, Bpifrance via its Large Venture fund, Seaya Ventures, Picus Capital) participated, as well as new investors Tencent, GR Capital, and Roosh Ventures. Alma wants to reinvent the relationship between merchants and consumers: Alma enables the latter to buy what they really want and upgrade to higher-quality items, and the former to convert more customers and increase basket sizes. With more than 6,000 merchants of all industries using Alma, the company’s transaction volume has already exceeded 1B euros annually. Could it threaten Klarna and the likes? 🤔
Jaime, Jaime, Jaime 😎 JPMorgan, the largest bank in the U.S., said it has become the first lender to arrive in the metaverse, having opened a lounge in Decentraland, a virtual world based on blockchain technology. The bank also released a paper exploring how businesses can find opportunities in the metaverse – including through NFTs and other digital experiences. Jaime Dimon should be proud of himself.
💸 Following the Money
Worldline is on the verge of selling its point-of-sale terminal business to Apollo Global Management for $2.3B, according to the Wall Street Journal. A deal could be completed within days as Worldline seeks to move away from hardware to cloud-based payment services, says the WSJ, citing sources.
South African-based fintech API startup Stitch has sealed a $21M Series A funding round led by The Spruce House Partnership, with investments from TrueLayer and PayPal Ventures among others. Stitch offers a suite of APIs that reduce the effort required for businesses to connect to their users’ financial accounts and enable bank-to-bank payments without leaving the existing app interface. The infrastructure-led approach supports a number of different use cases, including KYC & onboarding, personal and business financial management, lending, wallet top-ups, e-commerce checkouts.
Blockchain interoperability network Axelar raised $35M at a $1B valuation to connect users, assets, and decentralized applications (dApps) across multiple blockchains to unlock cross-chain composability and liquidity.
👋 That’s it for today! Thank you for reading and have a productive weekend! And if you enjoyed this newsletter, invite your friends and colleagues to sign up:
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