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Issue #114: Peru To Adopt India’s UPI Tech, Robinhood Looks To Acquire Bitstamp, And Monzo Gets (Pre-Tax) Profitable
👋 Welcome to another edition of Fintech Radar, your weekly go-to source for deep insights into what’s happening in fintech.
If you’re new, here is a breakdown of what you can expect from each issue.
This weekly missive is written for founders, operators, and investors in fintech. Each week, I prioritise quality, depth, and provocation over just rehashing press releases and partnership announcements. Rather than simply covering news, I explore the implications of what’s happening in the industry — without all the fluff.
My goal is to spark discussion, highlight emerging trends in fintech that could become central themes in the coming years, and help you connect the dots.
If you missed our recent editions, you can catch up here. Some previous issues you might want to check out if you’re new include “A Deep Dive Into The Cash App's Growth Machine”, “The Future Of Payment Initiation”, and “Current: Doing It Differently”.
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⤷ Peru adopts India’s UPI technology for real-time payments
🏃♂️ The Rundown: The National Payments Corporation of India (NPCI) and the Central Bank of Peru have signed an agreement to develop a payment system similar to India's UPI.
This collaboration positions Peru as the first South American country to adopt UPI, enhancing financial connectivity and promoting digital payments. The initiative aims to boost financial inclusion, reduce reliance on cash transactions, and drive innovation in Peru's payment ecosystem.
🥡 Takeaway: The NPCI has been on a global expansion spree, with agreements in place which enable merchant acceptance of UPI in countries like Sri Lanka, Mauritius, Singapore, UAE, Bhutan, and France. To put it in perspective, this means that if an Indian tourist visits any of these markets they’re able to natively pay using a UPI app in their local currency — just as if they’d made the purchase back home in India.
The way UPI is quickly spreading through many parts of the world via partnerships and development agreements is one of the most under-discussed trends in payments. In a time where most faster payment networks are still trying to gain local market acceptance from banks (yes, I’m referring to the US) and consumers, UPI is going global and building a network of markets where the Rupee is now a natively accepted currency.
In the coming years don’t be surprised to see other national payment networks trying to follow the ‘UPI playbook’ and build similar cross-border central bank partnerships. In the meantime, when you’re travelling through Southeast Asia and the subcontinent keep an eye out for UPI as a payment method — at this rate it’s going to become ubiquitous across the region.
⤷ Robinhood to Acquire Bitstamp
🏃♂️ The Rundown: Robinhood last week announced its agreement to acquire Bitstamp, a Europe-based cryptocurrency exchange established in 2011.
The deal is expected to close in the first half of 2025 pending regulatory approvals. The deal will enable Robinhood to expand globally, tapping into Bitstamp's customer base across the EU, UK, US, and Asia. The acquisition, valued at approximately $200m also marks Robinhood's entry into institutional crypto services.
🥡 Takeaway: At a time when crypto is running hot again, it’s no surprise that Robinhood has decided to go deeper. Moving from offering a very consumer-friendly product to acquiring pureplay exchange signals they’re pushing harder into the segment and looking to expand their appeal into the more crypto-native consumer.
I’m sure part of this is driven by demand, but also the higher margins that crypto offers as compared to stock trading. Beyond this, it marks a significant step in its European expansion, enhancing the UK brokerage and EU crypto trading services it launched in the past six months. This move also represents Robinhood’s entry into the Asian market and institutional services.
I’m most interested to see how they translate their consumer-facing expertise into the institutional markets — which are firing up on the back of growing demand related to Bitcoin and upcoming ETH ETFs.
⤷ Affirm Says Two New BNPL Offers Better Align Payments With Paychecks
🏃♂️ The Rundown: Affirm has introduced two new BNPL options, Pay in 2 and Pay in 30, allowing consumers to split costs into interest-free payments or pay in full within 30 days. These interest-free options allow customers to split payments into two monthly instalments or pay in full within 30 days.
The launch aligns with the fact that 80% of U.S. e-commerce transactions are under $150, according to Affirm’s head of product, Vishal Kapoor. Affirm's data shows increased cart conversions with these options.
🥡 Takeaway: In a crowded market where every BNPL player’s offering looks identical — pay in 4, a card, marketplace for merchants etc — it’s no surprise players like Affirm are looking to differentiate even if it’s in ways that are well… not all that innovative.
Although the article notes that Affirm has data that suggests these payment options convert better, they feel very much like they’re drifting back towards offering a credit card product. Pay in 30 days? Sounds familiar.
⤷ Fighting Fraud: Capital One, Adyen and Stripe Share Data
🏃♂️ The Rundown: Capital One has joined forces with fintech giants Stripe and Adyen to combat fraud by offering a free product called Direct Data Share. The API enables real-time transaction data sharing to enhance fraud prevention, particularly beneficial for e-commerce.
The collaboration allows real-time transaction data sharing, enhancing fraud detection across all platforms. Jon Borman, Capital One’s Head of Fraud Strategy, highlighted the importance of comprehensive data in mitigating fraud risks.
🥡 Takeaway: Data sharing is becoming more common in several markets as payment players look for ways to fight fraudulent transactions. For example, late last year banks in Australia entered into the Scam-Safe Accord to invest in a confirmation of payee system which is to be rolled out across all banks in the country.
In many ways what Capital One, Adyen and Stripe are doing is different but at its core, the trend of players working together to share fraud data is something I think will continue to gain momentum as payment fraud rates rise.
⤷ UK neobank Monzo reports first full (pre-tax) profit, prepares for EU expansion with Dublin hub
🏃♂️ The Rundown: UK neobank Monzo has announced its first full-year pre-tax profit of £15.4m for 2024, following losses of £119m in 2022 and £116m in 2023.
The company’s revenue surged by 250% to £880m, driven by its lending product and high interest rates in the UK. Monzo plans to expand into Europe through a new hub in Dublin and has raised $620m in recent funding rounds, valuing the company at $5.2b. Additionally, Monzo's customer base grew by 2.3m to 9.7m, with expectations to reach 11m in the next year.
🥡 Takeaway: Monzo is on fire. A massive capital raise, renewed global expansion plans and now hitting profitability. Congrats to them 👏
However, more generally it’s crazy how quickly opinions have shifted on the neo-bank segment. It wasn’t all that long ago most VCs were adamant that neobanks were a bad investment. The merry-go-round seems to have gone full circle — from a market where everyone was throwing money at the next Revolut and Monzo to all funding drying up and back to startups like Monzo raising $620m at a $5.2b valuation. And all in just 24 months.
In large part the market has been buoyed by the fact that we’re seeing more neobanks… gasp… turning a profit. Again, the prevailing view was that it was impossible, but it turns out that when you run at a small fraction of the cost of an incumbent bank, and build a loyal and happy customer base all while having a comparable (if not lower) CAC you can get to profitability. Not everyone, but the best have shown it is possible.
Yes, I’m being slightly facetious. But it also turns out that all the best-in-breed neobanks needed was just time to build out their businesses. Now for the next test for this class of neobanks — listing.
⤷ Kleiner Perkins leads $14.4M seed round into Fizz, a credit-building debit card aimed at Gen Z college students
🏃♂️ The Rundown: Kleiner Perkins leads a $14.4m seed round into Fizz, a credit-building debit card for Gen Z college students founded by Carlo Kobe and Scott Smith in 2021.
Fizz, launched in early 2023, aims to help users build credit and improve financial literacy through AI-driven budgeting tools and gamified courses. The card is available at over 300 colleges, including Ivy League institutions. With support from SV Angel, Y Combinator, and others, Fizz is expected to exceed nine figures in annual card volume this year.
🥡 Takeaway: As noted above, the consensus view on neobanks has shifted from “unfundable” to back in vogue and Fizz is yet another example of how this next wave of neos is approaching the opportunity.
Obviously, Fizz isn’t the first to go after the college demographic. The meme of “banking for millennials” typified the first wave of neobanks and replacing it with Gen Z is not all that novel. Historically, the retort to going after this demo is that it’s simply hard to monetise them — outside of interchange in the US, there aren’t all that many financial services products a college student needs.
The long game of capturing these (hopefully one day) HENRYs is a game many have tried and one that is yet to land a meaningful outcome. It’ll be interesting to see how the Fizz team navigate what is a challenging segment as they further grow the offering.
As a side note, I also thought it was interesting that they noted in the article that the Fizz team built their infrastructure as opposed to “becoming a patchwork quilt of fintech SaaS vendors”. I love this and think it’s something more consumer fintech will be doing — going direct with their banking relationships and building more of their own infrastructure.
⤷ Nium raises $50m in series E round
🏃♂️ The Rundown: Nium secured $50m in a series E funding round, raising its valuation to $1.4b. The round was led by a Southeast Asian sovereign wealth fund, other investors who participated in the round included Bond, NewView Capital, and Tribe Capital.
CEO Prajit Nanu highlighted plans for B2B payments market growth, global expansion, and M&A activities. Nium's 2023 revenue surged over 50%, driven by strategic product development. Notable clients like Weel and Emirates NBD showcase their market traction.
🥡 Takeaway: Building a global BaaS product in a single market is hard, but doing it across several markets is almost impossible. There’s a reason why few have gone after this opportunity. This to me is what makes what Nium is doing super impressive.
Having known the team for a while it’s cool to see how they’ve pivoted from being a remittance company to a global BaaS player. Beyond this, having worked in many markets in which they’ve built banking and payment partnerships I can tell you how hard what they’re doing is. It’s really impressive.
Keep an eye on what the team over at Nium are building because I predict their name will come up more often when people talk about global BaaS players in the coming years.
⤷ Building the modern CFO stack: Brex’s financial chief on spend tech, going public & cross-functional partnership
In this episode of the Tearsheet Podcast, Ben Gammell, CFO of Brex, discusses the company’s evolution from startup to serving over 120 public companies. It’s a fascinating look into the role of a CFO at a high-growth fintech startup and is well worth a listen for all you finance nerds.
⤷ Mesh Payments Founder & CEO Oded Zehavi - Automating Travel and Expense Management
In this episode of the Wharton Fintech Podcast, Joshua Benadiva hosts Oded Zehavi, co-founder of Mesh Payments, to discuss how Mesh Payments is taking on the crowded expense management segment.
Oded shares insights from his experiences with PayPal and Payoneer, and talks about the challenges of launching fintech products internationally. They also delve into how Mesh Payments is thinking about cross-border B2B transactions through working with the card networks and how the company pivoted during the COVID-19 pandemic to support remote teams. It’s a great listen and well worth adding to your playlist.
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