Issue #98: Apple Card Tops 12m Users, Ramp Announces An Acquisition, And Mastercard Launches A Gen AI Tool
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A curated round-up of the most interesting and relevant news from the world of fintech. In each issue, I focus on what caught my eye from the previous week — so don’t expect a weekly smorgasbord of press releases and partnership announcements. The aim is to serve the meaty bits in a neat, nibble-worthy package. It's all about spotlighting the head-turners and giving you the nitty-gritty without the fluff.
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As always, it’s been a busy week for fintech, so without further ado, let's delve into the major happenings from last week.
📣 The News Grab Bag
⤷ Apple Card tops 12 million users, $1bn in cashback paid out last year
Last week, Apple disclosed that Apple Card users in the United States earned over $1b in Daily Cash rewards last year. The tech giant also announced that the card now has more than 12m users, and nearly 30% of those customers make two or more payments per month. Additionally, more than 1m users are sharing the card via Family Sharing, and almost 600,000 users are building credit equally with their spouses or partners.
The vast majority of users auto-deposit their cash into savings, and nearly two-thirds of users have deposited additional funds from a linked bank. Apple has also revealed that more than 200,000 users have been approved for an Apple Card after enrolling in the Path to Apple Card program.
🥡 Takeaway: There’s been a fair bit of chatter about these stats on fintech Twitter. What does this mean? Is this impressive or abysmal for a company with 140m+ iPhone users in the US? To be honest, I don’t think these are interesting questions to ask.
On the face of it, yes, it’s unimpressive that they’ve only been able to convert 12m (<10%) into signing up for the product with only 3.6m MAUs. Having said this, many vastly underestimate how hard it is to ‘acquire’ a customer for an embedded financial services offering — even for Apple.
Having seen it firsthand, I can tell you it’s much more complicated than just popping up a modal in an app with an offer. In many ways, I think one of the lessons we can draw from this is that it’s damn hard to get people to sign up for FS products — even in your walled garden.
Don’t get me wrong, it’s pretty clear that Apple has been hamstrung (some of their own doing by not making it a standalone product that lives outside of Apple Wallet) in turning this into a breakout product for them. I’d also suggest this is likely to never be a breakout success for Apple.
It’s a neat product and shows Apple can offer a reasonably complete FS offering. Still, the reality is that to push this, they’d have to stomach all the regulatory scrutiny that comes with providing a standalone Apple Card offering. Can you imagine how quickly a competition regulator would come at Apple if they heavily marketed the offering on an iPhone or in-store? In this regard, it’s not surprising the article announcing the numbers was “Apple Card is helping more than 12 million cardholders live healthier financial lives.”
Unfortunately, in the current regulatory environment, Apple’s FS aspirations are doomed to be nothing more than a sideshow to the main business of selling devices.
⤷ Fintech Ramp acquires another AI-powered startup
Spend management startup Ramp has acquired AI-powered startup Venue as part of its expansion into the procurement space. Venue, founded in 2022, aimed to simplify vendor management for businesses.
Ramp acquired the company last August but announced it just recently. According to the article, the acquisition aligns with Ramp's goal to automate and implement AI in back-end business processes. Ramp claims to power over $10b in accounts payable spend each year and aims to become a one-stop-shop for all financial operations.
🥡 Takeaway: It’s fascinating to watch the battle in SMB banking converge so quickly on trying to be the central hub for a company's financial operations. It wasn’t that long ago that there was a clear delineation between players like Ramp (and Brex) and companies like Navvan (formerly TripActions) and Bill (which acquired SMB banking player, Divvy). Now, the line is incredibly blurred.
One way to look at the segment is that it has matured fast, moving from just a ‘dumb’ account with basic card access controls for a company to a fully-fledged operations platform — or so players like Ramp hope it will be.
If it wasn’t clear, the SMB players are coming for every part of the financial operations stack. Today, it’s expense and vendor management; tomorrow, it’s the GL and everything in between.
⤷ Amazon and SellersFi partner to offer sellers credit lines
Amazon has partnered with SellersFi to provide credit lines of up to $10m to eligible sellers on its platform. This move aims to help small and medium-sized businesses access the financial tools they need to grow their businesses.
SellersFi uses AI-driven credit scoring models and integration with e-commerce sites to offer merchants working capital and cash management solutions. According to the article, Amazon's relationship with SellersFi is designed to further its commitment to providing flexible and convenient access to capital for its sellers, regardless of their size.
🥡 Takeaway: Whether it’s Amazon extending its credit options for sellers, Shopify through its Shopify Capital offering, or Stripe and Paypal through their lending products, the SMB lending space seems to be getting crowded.
The question in this segment is turning into who is best placed to make this a core part of their business. There’s no doubt Shopify, Amazon, Stripe, and Paypal can all eat; after all, business credit lines are a huge global segment, and the SMBs looking for these dollars are incredibly diverse.
Having said this, in some ways, Amazon, Shopify, Stripe and Paypal (along with all the other players) are chasing a similar profile customer in this particular segment. It’ll be interesting to see who ends up being best placed to service this customer — the marketplace (Amazon), the software provider (Shopify) or the payment platforms (Stripe and Paypal).
⤷ Mastercard Launches Gen AI Tool to Better Protect Consumers
Mastercard has launched Decision Intelligence Pro, a transaction risk assessment tool that assesses the relationships between multiple entities surrounding a particular transaction. It uses Gen AI to scan one trillion data points to predict the likelihood of a genuine or false transaction in real time.
The tool enhances Mastercard's existing Decision Intelligence, which helps banks score and approve over 143 billion transactions a year. The tool will be available for banks and financial institutions later in 2024
🥡 Takeaway: I might not be the first person to say it (or maybe I was?), but compliance is where we’re most likely to see Gen AI take hold in FS.
What I’m interested in seeing is whether the incumbents take the lead (which seems to be the case so far) or whether we see fintech startups in the compliance space start to open up some new orthogonal offerings using Gen AI.
⤷ Volt and Bumper bring open banking to car dealerships
Real-time payments platform Volt has partnered with Bumper to bring open banking to UK and European car dealerships. Bumper works with thousands of dealerships and garages, helping drivers pay for servicing and repairs. Volt now powers Bumper's 'Pay Now' function, enabling real-time payments for cars, parts, and repairs.
The integration also offers mobile-first payment options, providing a smoother experience for car dealerships. This partnership aims to address the challenges faced by dealership owners and has the potential to expand real-time payments in the automotive industry.
🥡 Takeaway: One of the significant questions for me in the A2A payments space is where we will see the first real ‘killer’ use cases. To date, we’ve seen the likes of Tink and True Layer focus on the e-commerce use case — in other words, another button at checkout — which I think might not be where we see PIS take hold initially.
It’ll be interesting to see whether, instead of low-value transactions, which many are still used to using cards or Apple Pay, we see high-value transactions (like major car repairs) as the spot where A2A payments really find their stride.
💸 Notable Funding Announcements
Last week was (a lot) slower for fintech financing, with 43 funding rounds completed and companies collectively securing $381m in investment.
⤷ Metronome’s usage-based billing software finds hit in AI as the startup raises $43M in fresh capital
San Francisco-based startup Metronome has raised $43m in a Series B funding round led by NEA, bringing its total amount raised to over $78m since its 2019 inception. Metronome helps software companies offer usage-based billing and claims to have seen a 6x increase in ARR last year as more firms transitioned from subscription to usage-based models or a combination of both.
The company has a data platform that offers integrations "out-of-the-box" to reduce engineering investment required by firms. Metronome plans to use the funding to advance its product roadmap and hire staff.
🥡 Takeaway: No one at a startup wants to work on the billing infrastructure. It’s hard, tedious and unglamorous work, meaning most engineering teams are happy to hand this off to a third party. So, it's no surprise that companies like Metronome can secure $43m in a challenging funding environment.
The astute reader might ask, “Why isn’t Stripe playing in this space?” Surely, this is a trivial (and natural) extension of their offering. The answer is they do. Well, sort of.
Stripe offers a product called Billing that is meant to cover this. However, as discussed last week, it’s an example of where the offering is just too lightweight for anything as complex as what Metronome’s customers need (companies like OpenAI and Anthropic). As with most of Stripe’s product range outside of payments, it’s fine for the base case.
In a market where billing is only getting more complex, it’ll be interesting to see whether Stripe and other PSPs look to extend their offering or whether it becomes an interesting vector of attack for aspiring payment players.
⤷ Flexible benefits startup Benepass raises $20M
Flexible benefits startup Benepass has raised $20m in new funding led by Portage and Clocktower Technology Ventures.
The platform helps businesses provide personalised employee benefits programs, combining pre-tax benefits and employee perks in a single platform. Employees can view their benefits through a mobile app and use a single debit card to spend benefit dollars at selected vendors and merchants.
Benepass plans to invest in channel partnerships, build a broker channel, and expand its go-to-market team.
🥡 Takeaway: The benefits space is super interesting. In many ways, it’s one that you’d think has been/should have been won by the big HCM platforms. Yet most are rigid and haven’t adapted to a workforce (and employers) demanding more flexibility in their benefits packages.
Moreover, much like we’ve seen others around the HCM space look to add embedded offerings, this feels like the perfect spot for players to offer up value-added financial products on which they can also make additional revenue.
🎧 Resources & Recommendations
⤷ The Ultimate Guide to Vertical SaaS with Top Investor Dave Yuan of Tidemark
This isn’t exactly fintech-specific but covers a topic that many who are exploring vertical SaaS products with a fintech twist will find interesting.
In this episode of Run the Numbers, CJ Gustafson chats with Dave Yuan, an investor at Tidemark, about some of the classic vertical SaaS strategies that companies deploy when going after a segment.
More specifically, they discuss the importance of owning the ‘control point’ in a vertical, data gravity and identifying a multi-product strategy early on in a company’s life cycle. Those running a vertical-focused fintech strategy will find this valuable and worth a listen.
⤷ F-Prime State of Fintech 2024
This week, F-Prime dropped their State of Fintech Report for 2024, and it has a bunch of really interesting insights into where the fintech market is at.
Some of the more interesting findings of the report:
M&A activity hit a five-year low last year.
In private markets, investment volume fell by ~50%, and valuations trended
down at most stages.
The public fintech correction found its floor and began to recover in 2023.
There’s lots more in the report, and it’s well worth a read.
⤷ Tom Blomfield: How I Created Two Billion-Dollar Fintech Startups
This is a candid and insightful interview with Tom Blomfield of Monzo and GoCardless fame. Yes, it’s an ad for YC, but still well worth the 14-minute runtime. I’ll leave it at that and let you watch it for yourself.
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