Chaos at Revolut 😳; Stripe's demand-driven crypto strategy is worth stealing 👀; PayPal is selling Xoom? 🤯
You're missing out big time... Weekly Recap 🔁
👋 Hey, Linas here! Welcome back to a 🔓 weekly free edition 🔓 of my daily newsletter. Each day I focus on 3 stories that are making a difference in the financial technology space. Coupled with things worth watching & most important money movements, it’s the only newsletter you need for all things when Finance meets Tech.
If you’re not a subscriber, here’s what you missed this week:
EU probe into Apple Pay is a big headache for Apple 😓 [+ a deeper dive into Apple Savings]
Credit card debt remains at a record high 😳 [+ worries & opportunities]
Sezzle shows how BNPL should be done 💸 [steal their strategy!]
ChatGPT for Personal Finance is finally here, and it’s a game-changer 🤯
Zepz to lay off 26% of the workforce, and it’s not about efficiency 🤔
FinTechs that are raising right now should expect 50% to 70% correction 😳
As for today, here are the 3 FinTech stories that were disrupting the world of finance as we know it. This week was really intense in the financial technology space, so make sure to check all the above stories.
Chaos at Revolut 😳
The news 🗞 Another one… When I thought that we had enough, Revolut drops another bombshell.
This time the British neobank and super app wannabe is facing an investigation following complaints that its former UK head, James Radford, accidentally sent a text message to an angry customer stating that he would be waiting for them "in the garden with my shotgun."
You can’t make this up… 🤦♂️
More on this 👉 Radford reportedly intended to send the text to someone else after dealing with numerous complaints about a frozen business account linked to his personal mobile phone.
Instead, Radford mistakenly messaged the customer, expressing his intention to wait for them with a shotgun in the garden.
Zoom out 🔎 Revolut is currently investigating the allegations, while Radford left the company in March. If that wasn’t enough, the firm's CFO also resigned recently, as Revolut's pursuit of a UK banking license faces uncertainty (I’m getting more and more confident they won’t get a UK banking license).
✈️ THE TAKEAWAY
What does this mean? 🤔 The latest news adds to a growing list of challenges and potential reputational damage for Revolut, which has been struggling as of late. If there’s one word to describe the current state of affairs in one of the UK’s most valuable startups, it’s chaos. And that chaos is gripping Revolut’s fate, which is moving in a way that’s becoming hard to control…
ICYMI: Tell me Revolut is in trouble without telling me Revolut is in trouble 😨 [+2 more bonus reads]
Stripe's demand-driven crypto strategy is worth stealing 👀
The news 🗞 FinTech giant Stripe remains committed to exploring cryptocurrency payments and is actively considering how digital currencies can be integrated into its plans.
Let’s take a quick look at this.
More on this 👉 According to Axios, John Collison, the president of Stripe, emphasized the company's recognition of crypto's potential and its usefulness in specific applications, particularly in situations where it outperforms traditional fiat payments.
Collison specifically highlighted cross-border transactions in countries with weak payment infrastructure as an area where crypto excels.
Following the consumer 💸 Stripe intends to follow consumer demand to determine which aspects of cryptocurrency to prioritize. This approach allows the company to align its efforts with the areas that present the most significant opportunities and address the specific needs of its customers.
We must remember that Stripe has had a mixed experience with cryptocurrencies. While it was one of the early adopters of supporting crypto in 2014, it faced limited user adoption and subsequently scaled back its operations. However, the company has since launched a crypto toolkit of APIs, partnered with FTX (before its collapse), and introduced fiat-to-crypto payment solutions and a crypto onramp.
✈️ THE TAKEAWAY
Why this matters? 🤔 Stripe's continued interest in cryptocurrencies despite the market turbulence over the past year is significant. It demonstrates the company's confidence in the utility of digital assets and their potential use cases. This confidence could inspire other payment providers to follow suit and develop their own crypto operations. Looking ahead, industry forecasts anticipate a 16% growth in crypto payments this year, reaching a total value of $9.28 billion. Yet, the unpredictable nature of the market may deter many financial institutions from fully embracing cryptocurrencies. Stripe and other firms that allow market demand to guide their investment decisions may gain a competitive advantage in navigating this evolving landscape.
ICYMI: Stripe is diversifying beyond payments 💳 [a deeper dive into Stripe + a ton of bonus reads]
PayPal is selling Xoom? 🤯
The (breaking?) news 🗞 Finance giant PayPal PYPL -1.10%↓ has enlisted Goldman Sachs GS -1.22%↓ o help it explore a potential sale of its international money transfer subsidiary Xoom, as per The Information.
More on this 👉 PayPal has been working on a sale process for Zoom - which it acquired for nearly a billion dollars in 2015 - for several months, according to The Information.
The possible sale could be related to influence from activist investor Elliott Management, which purchased a stake in PayPal in 2022, says The Information.
But that’s not it.
✈️ THE TAKEAWAY
Looking ahead 👀 We must remember, that in its most recent quarterly earnings, PayPal revealed that P2P total payments volume (TPV) — PayPal, Venmo, and Xoom — rose just 2% to $91 billion and represented 26% of TPV. Cross-border TPV made up 13% of TPV, down from 14% last year. Meanwhile last year, PayPal missed revenue, adjusted operating margin, and net new active users targets for the year, leading to a big pay cut for CEO Dan Schulman, who is leaving the firm this year. Hence, while the sale might be logical from a cost-cutting perspective, it makes little sense if PayPal still has ambitions to become the global financial Super App 🤔
We now know that remittances is a tough business to run, but if a sale indeed happens, who might end up buying Xoom? I only see two possible options here - it’s either a private equity firm (PE) or a legacy giant like Western Union. The latter would make the most sense though.
Bonus: PayPal’s focus on efficiency is starting to pay off 💸 [+ lots of good stuff]
ICYMI: Zepz is to lay off 26% of the workforce, and it’s not about efficiency 🤔
🔎 What else I’m watching
Ripple is making moves 🌊 Fresh from its acquisition of crypto custody provider Metaco, Ripple is rolling out an end-to-end CBDC platform for central banks, governments, and financial institutions to issue their own digital currencies and stablecoins. Developed to address multiple use cases including wholesale and retail CBDCs on a private ledger or issuing a stablecoin, the Ripple platform comprises ledger technology, issuer capabilities for minting, distribution, redemption, and destruction of tokens, inter-institutional settlement and distribution functions, and end-user wallets. Ripple is currently engaged in CBDC and stablecoin pilots with the Republic of Palau, the Central Bank of Montenegro, and the Royal Monetary Authority of Bhutan. The firm has also commenced a trial with Hong Kong Monetary Authority and Fubon Bank to showcase a real estate asset tokenization and equity release project as part of the central bank's inaugural e-HKD Pilot Programme. Another great move by Ripple. Also, ICYMI: Ripple wants to dominate the Enterprise 😎
Market making no more 🙅 Last week, prominent crypto market makers, Jane Street, and Jump Crypto, revealed their plans to wind down some of their crypto exposure, primarily in the United States. This decision is driven by the prevailing regulatory uncertainty in the industry. The reduction of these market makers' involvement is expected to have significant implications for liquidity in the crypto market, which has already witnessed the departure of several key players in the past year. Surprisingly, the announcement did not cause a substantial shift in market depth for Bitcoin (BTC) or other cryptocurrencies.
Over the past month, market depth has remained relatively stable, indicating that either Jump and Jane Street had already reduced a significant portion of their exposure or they are yet to make the necessary adjustments. The fact that market depth has been gradually declining throughout the year suggests that the former is more likely.
More BNPL 😎 US-based non-dilutive funding provider Capchase has launched Capchase Pay, a B2B BNPL solution that aims to reduce the length of SaaS deal cycles and increase sales. The launch of Capchase Pay follows a new market tendency that sees SaaS companies report extended payment collection terms and delays in closing new contracts. Capchase Pay offers SaaS companies the option to collect the entire contact worth of the product delivered to their clients while allowing customers to opt for flexible payment plans through ACH or via credit cards.
💸 Following the Money
Odin, a UK-based platform that makes it easier for startups, angel syndicates, and fund managers to raise cash, has picked up a $3M seed round.
African fintech M-Kopa has closed over $250M in new debt and equity funding to expand its financial services offering to underbanked consumers across Sub-Saharan Africa.
Jia, a blockchain-based fintech providing loans to micro and small businesses in emerging markets, has raised $4.3M in seed funding, and an additional $1M commitment for on-chain liquidity, in a round led by early-stage backer TCG Crypto, with participation from some funds including BlockTower, Hashed Emergent, Saison Capital and Global Coin Research.
👋 That’s it for today! Thank you for reading and have a relaxing Sunday! And if you enjoyed this newsletter, invite your friends and colleagues to sign up:
its up to you i have something about payments.ia not any bank account. ..thank you so much.for your support