• Cardstream is launching PayFac-as-a-Service, a new white label service for companies seeking to become payment facilitators.
• PayFac-as-a-Service clients will benefit from Cardstream’s regulatory position, enabling customers without a license to operate compliantly.
• Cardstream has built a network of 400+ acquirers, alternative payment methods, shopping cart platforms, and fraud providers.

European payment service provider Cardstream announced the launch of new white label PayFac-as-a-Service.

The cloud-based service will offer acquirers access to Cardstream’s third party payment facilitator program and provides a pathway for those looking to become a payment facilitator. PayFac-as-a-Service users will also benefit from Cardstream’s regulatory position, as customers without a license will be able to operate compliantly.

“Our complete PayFac-as-a-Service is the quickest and most versatile way for companies to enter the rapidly growing billion dollar global marketplace,” said Cardstream CEO and Chairman Adam Sharpe. “Any company keen to capitalize on the rapidly growing PayFac space should put us on its shortlist, be it an Acquirer; a company applying for its own PayFac regulatory approval; or one opting to benefit by operating under our FCA regulated OBN.”

PayFac-as-a-Service offers merchants a holistic approach to the payment facilitator market. Cardstream is including workflow onboarding, underwriting, compliance due-diligence, real-time fraud screening and monitoring, dispute and chargeback management, funds management, automated fee collection, invoicing, referral commissioning, and more.

Founded in 1999, Cardstream has built a network of 400+ acquirers, alternative payment methods, shopping cart platforms, and fraud providers. The company supports all global currencies and major card schemes in more than 120 countries. Cardstream’s client portfolio includes 100+ reseller partners and their 18,000+ merchants.

In today’s announcement, Sharpe hinted at ambitions to grow Cardstream, sharing plans to round out its platform with additional services later this year. “As we move through the rest of 2023, we expect to have a series of further announcements of many new, additional Cardstream Group services,” he added.

The payment facilitator market in Europe is heavily regulated, with the introduction of the second Payment Services Directive (PSD2) in 2018, which aims to increase security, competition, and innovation in the payments industry. The market, which is expected to reach a value of $1.72 trillion (€1.57 trillion) by 2024, includes a sizable number of players ranging from traditional financial institutions to fintech companies and digital payment providers. Among the top payment facilitators in Europe are PayPal, Adyen, Stripe, Worldpay, and Klarna.

Photo by Anna Shvets

• Digital banking solutions company Payfare is expanding to offer clients earned wage access.
• Payfare will target workers in Canada and in the U.S., which it estimates to have a total addressable market of over 131 million people.
• Payfare’s solutions target gig workers and its client base include Uber, Lyft, and DoorDash.

Digital banking solutions company Payfare is expanding into the earned wage access (EWA) market. The move will enable the company’s one million active users to receive access to wages they’ve already earned.

The Canada-based company believes the move will benefit its one million active users across the U.S. and Canada by smoothing out their cashflow. By jumping into EWA, Payfare joins a handful of fintechs already operating in the space, including Payactiv, Wagestream, DailyPay, and more.

Founded in 2015, Payfare serves both end consumers and businesses with digital banking, instant payment, and loyalty rewards solutions. The company offers gig workers and contract laborers faster access to their earnings with a payout debit card featuring cashback rewards and tandem mobile app with financial wellness tools. Businesses can use Payfare’s technology to send payouts to their workforce with lower processing fees than traditional paycheck services.

“We don’t believe payday loans should exist in the modern world with real time integration to payroll records as well as the capability to repay at source,” said Payfare CEO and Founding Partner Marco Margiotta. “We have built an award-winning digital banking product that has helped our gig platform partners reduce their worker acquisition costs and boost productivity. We look forward to sharing progress on our expansion into EWA over the course of 2023.”

Payfare reports the market for an EWA tool is sizable in both the U.S. and Canada. In the U.S., for example, more than 78 million workers earn a wage hourly, more than 131 million people earn an annual salary of less than $75,000, and 12 million people rely on a payday loan at least once a year. In Canada, over 22 million people earn under $75,000 annually.

Since inception, Payfare has raised $49 million (C$65.4 million). The company’s clients include gig worker platforms such as Uber, Lyft, and DoorDash.

Photo by Tima Miroshnichenko

• Amsterdam-based digital bank bunq announced plans to expand to the U.S.
• The bank will be targeting the population of five million European expatriates living in the U.S.
• Since launching in 2012, bunq has expanded to more than 30 markets in Europe and now facilitates payments in 16 different currencies.

Amsterdam-based digital bank bunq announced this week it is “bringing the bank of The Free to the land of The Free,” meaning it has officially applied for a U.S. banking license.

Founded in 2012, bunq set out to make a bank that customers love to use that is designed to make life easy. When the company received its European banking license in 2014, it was the first organization in 35 years to do so. Since then, bunq has expanded to more than 30 markets in Europe and now facilitates payments in 16 different currencies, provides both personal and business banking accounts, and offers a mortgage product.

When bunq launches in the U.S., the company will target the population of five million digital nomads– European expatriates and businesses operating in the U.S. that struggle to obtain a traditional bank account as non-U.S. citizens.

“We’re going stateside with a simple proposition, offering a banking product that enables U.S. consumers and businesses to bypass banking bureaucracy by opening a fully fledged international bank account in just five minutes,” said bunq Founder and CEO Ali Niknam. “Using bunq, they can effortlessly manage their finances from anywhere in the world.”

bunq has received $260 million in funding and was valued at $1.9 billion in 2021. The company recently became profitable, having secured $2.5 million in profit in the last quarter of 2022. If successful in its mission to obtain a U.S. banking license, bunq may be able to build on that profitability into the rough waters of 2023.

Other European fintechs have proven that the route to success in the U.S. may not be easy, however. Germany’s N26 pulled out of the U.S. market in late 2021 after initially launching in the region in 2019. When U.K.-based Monzo faced difficulties securing its U.S. banking license in 2021, the fintech ultimately decided to partner with a traditional bank to launch its services stateside. Similarly, Revolut is also working with a partner bank in the U.S., though it is currently awaiting the approval of its U.S. banking license.

“In our opinion, applying for a U.S. license is the only way we can maintain independence and provide The Free with the easy and safe banking experience they deserve,” said Niknam. Will bunq’s U.S. expansion look like that of other European digital banks that have gone before it? If it does, the company may need to sacrifice a bit of that independence and find a partner bank that shares its vision to create “the bank of The Free.”

Photo by Karolina Grabowska

• Pinwheel launched Smart Branch today.
• The Smart Branch tool offers banks a digital way to help customers set up direct deposit when they visit the branch in person.
• Pinwheel reports that the new tool will prove useful for the 75% of consumers who prefer to open a new account in-person, since setting up direct deposit is a natural next step in the process.

Payroll data connectivity platform Pinwheel unveiled Smart Branch today. The new tool gives banks a digital way to set up direct deposits for customers who come into their physical bank branch.

“A customer’s account setup experience should automatically include direct deposit set up when they visit their bank,” said Pinwheel CRO Lauren Crossett. “For banks, it’s a simple fact that the customer relationship starts with a person’s paycheck. People are staying at jobs for shorter periods of time while the prevalence of gig-based jobs continues to grow, as does the number of people with multiple income sources, so banks will have more opportunities than ever to onboard their customers’ direct deposits.”

Smart Branch enables end users to use their smartphone to set up direct deposits and verify income without requiring paper-based forms. This new tool will prove particularly useful for the 75% of consumers who prefer to open a new account in-person. That’s because, as Pinwheel describes, having their income deposited directly into their new account is the “next natural step” when opening a new account.

When banks eschew paper forms for Smart Branch, their customers will use their smartphone to scan a QR code, which will direct them to enter information to connect their payroll or income accounts. Customers without a smartphone can use a bank teller computer or iPad to set up the connection.

“Banks see millions of new account openings per year, so that’s hundreds of thousands of opportunities for banks to set up customers’ direct deposits in one easy step when they visit their branch,” said Pinwheel Client Solutions Lead Kate Marienthal. “There’s no reason the customer experience should fracture when the need to set up direct deposits is presented. Now, thanks to Pinwheel Smart Branch, banks won’t need to send customers away to fill out paper forms at home. They can finalize the process right inside their locations. We’re excited about what the availability of this new solution means for our customers’ omnichannel strategies.”

An iteration of Smart Branch geared toward credit unions and community banks is already in the works. Pinwheel is currently working on a product for smaller FIs that need a swift, lightweight direct deposit switching deployment option. Crossett said the company plans to roll out the new version next month.

Pinwheel was founded in 2018 to create a fairer financial system with its API that connects to more than 1,600 payroll platforms and more than 40 time and attendance platforms. In all, the system covers 80% of U.S. workers and more than 1.5 million employers. Since launch, Pinwheel has amassed $77 million in funding from investors such as GGV, Coatue, and First Round Capital. Kurt Lin, who Finovate interviewed earlier this year, is CEO.

Photo by EKATERINA BOLOVTSOVA