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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
Stripe is building out its tools for small businesses this week. The ecommerce technology company launchedStripe Tax, after completing a six month long pilot.
The new tool helps businesses automatically calculate and collect sales tax, VAT, and GST on the merchant’s behalf. Not only this, the new offering also generates reports and helps businesses navigate complicated regional requirements. The capabilities will lift a burden off small businesses, especially in the U.S., where there are over 11,000 different tax jurisdictions.
“No one leaps out of bed in the morning excited to deal with taxes,” said Stripe Co-founder and President John Collison. “For most businesses, managing tax compliance is a painful distraction. We simplify everything about calculating and collecting sales taxes, VAT, and GST, so our users can focus on building their businesses.”
Stripe Tax features include:
Real time tax calculation, which leverages the customer’s location to calculate and collect the right amount of tax and keeps up-to-date with rate and rule changes
Frictionless checkout, which reduces checkout friction by using location information to calculate and show taxes to customers.
Tax ID management, which helps B2B businesses collect the tax ID number from customers and validate VAT IDs for European customers
Reconciliation, which creates comprehensive reports for each market in which a business is registered to collect tax
The tax calculation and collection capabilities will be available in Australia, Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, New Zealand, the Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, the U.S., and the U.K.
The launch follows Stripe’s acquisition of tax tool startup TaxJar in May. “With TaxJar, we will help millions of internet businesses running on Stripe with their sales tax and make it easier for them to sell internationally,” commented Stripe CFO Dhivya Suryadevara. “And as a CFO, I’m delighted to welcome so many new colleagues who care deeply about taxes!”
It also comes after a rather sizable funding round the company announced in March, when Stripe raised $600 million in funding. The Series H round brought the company’s total funding to $2.2 billion and boosted its valuation to $95 billion.
Global payments company SumUp announced this week that it is collaborating with Google Pay. The two have partnered to help merchants make business transactions safer and easier using their SumUp card, which was launched in February of last year.
The partnership will enable SumUp’s 125,000 business cardholders in the U.K., France, Italy, and DACH to add their SumUp payment card to their Google Pay mobile wallet. Google Pay will also support virtual cards, which will allow merchants to make purchases from suppliers without having their physical card. It will also allow new cardholders to start using their SumUp card immediately after it is issued, instead of waiting for the card in the mail.
“At SumUp, we’re always looking to help our merchants find new ways to improve their businesses, particularly as we move out of this pandemic and hopefully towards a more economically positive future,” said SumUp VP of Banking Dimitri Gugunava. “Collaborating with Google Pay is a really important development for us, because it means we can remove layers of friction for small businesses who need to make quick (but safe) payments on the go.”
SumUp was founded in 2012 and helps three million merchants accept card payments using a mobile point-of-sale (mPOS) device and a Mastercard-branded small business payment card. The U.K.-based company also offers small business tools including invoice-creation software, inventory management, customer loyalty features, employee time roll, and reporting technology.
The collaboration announcement comes after SumUp pulled in $895 million in debt funding from Goldman Sachs, Temasek, Bain Capital Credit, Crestline, and others. SumUp Co-founder Marc-Alexander Christ said that the cash will help the company grow its customer base and drive the development of new services for its small business clients across the globe.
Coinciding with today’s news, SumUp released a new TV ad today that promotes the company’s mPOS device for small and micro merchants. Check it out below:
Digital banking giant NuBank is about to become even more gigantic. That’s because the Brazil-based pulled in $750 million in Series G funding. When added to the $400 million it raised in January, the funds bring the Series G round to $1.15 billion.
Today’s round was led by Berkshire Hathaway, which contributed $500 million. Additional investors include Sands Capital, Canada Pension Plan Investment Board, MSA Capital, Advent’s Sunley House Capital, Brazilian asset managers Verde Asset Management, as well as Absoluto Partners.
With the new investment comes a new valuation. NuBank is now valued at $30 billion, a figure that rivals the valuation of Brazil’s number three bank, Banco Santander Brasil.
NuBank was founded in 2013 to serve the underbanked population across Brazil, a group that adds up to 30% of the country’s population. Today, the digital challenger has 40 million customers and offers a robust range of banking services including a debit card, insurance, loans, small business accounts, and P2P payment tools.
Today’s news comes after the company brought on two C-level hires, Matt Swann as Chief Technology Officer and Arturo Nunez as Chief Marketing Officer.
NuBank will use the funds from today’s investment to fuel further expansion into Mexico and Colombia, launch new products, and hire more employees. While the company has been in Mexico since 2018 and Colombia since last October, NuBank’s banking tools are currently limited to credit cards in both nations.
The massive size of this round and the notoriety of the lead investor offer a hint that digital-only banks are not just a fad limited to 2020. These newcomers have the ability and willingness to serve populations that banks have consistently ignored. Because of this, existing digital banks have increased their customer numbers in the past year, and there has been a massive onslaught of new digital banking players vying for a niche subset of the population.
Identity verification company Trulioo just closed a $394 million funding round. Investors include TCV, which led the round, with participation from existing investors Amex Ventures, Citi Ventures, Blumberg Capital and Mouro Capital.
Today’s investment brings Trulioo’s total funding to almost $475 million and boosts its valuation to $1.75 billion, bringing it into unicorn status.
The funds come at a time of rapid growth for not only Trulioo, but the online security sector in general. That’s in major thanks to the pandemic, which accelerated digital transformation and in turn created more opportunities for fraudsters. In fact, One World Identity estimates that the U.S. digital identity market will increase to over $30 billion by 2023. This spike has prompted Trulioo to expand into new verticals, bolster its leadership team, and add offices in Dublin, Austin, and San Diego over the course of the past year.
Trulioo’s large fundraise follows in the footsteps of competitors. Jumiopulled in $150 million earlier this year and Socure landed two investments– a $100 million round in March and an undisclosed amount last week from Capital One Ventures.
“The shift to online has brought digital identity to the forefront,” said Trulioo President and CEO Steve Munford. “This new round of funding will enable us to accelerate our goal to become an end-to-end identity platform. Our vision is to break down fragmented data silos caused by disparate identity networks, and we will work in partnership with TCV to expand our investments in product innovation, build out artificial intelligence/machine learning capabilities and accelerate our global go-to-market strategy.”
Canada-based Trulioo was founded in 2011 and offers identity verification, document authentication, business verification, and an AML watchlist tool. The company maintains a Digital Identity Network that provides developers access to an API that runs identity verification checks on five billion consumers and 330 million businesses worldwide.
Banking technology provider Temenos has teamed up with telecommunications equipment and consumer electronic giant Huawei this week. Through the partnership, Temenos will make its cloud-native core banking solution available on the Huawei Public Cloud.
The agreement makes Temenos the first core banking software certified with Huawei infrastructure and Huawei Public Cloud.
Specifically, banks will be able to use Huawei Public Cloud to modernize their core banking systems, an action that is critical in today’s digital-first, partnership-forward banking environment. Ultimately, modernizing their core will help banks scale, reduce cost, and gain operational efficiencies by increasing agility and opening up new business models.
“Together, we can help digital-first banks as well as large banks in need of core modernization accelerate their move to the cloud,” said Temenos President of Strategic Growth Philip Barnett. “Our API-first, cloud-native core banking solution based on Huawei Cloud will provide flexibility, agility, elasticity, and accelerate time to market for banks.”
The two will focus on marketing in China, which represents a six billion dollar addressable market. Temenos’ solution will also be available to the broader APAC region and include Africa, Europe, Latin America, and the Middle East.
Temenos serves 3,000+ banking and financial institutions worldwide representing 1.2 billion people with its cloud-native, API-first technology. Huawei counts more than 2,000 financial institution clients worldwide, including 47 of the world’s top 100 banks.
Alternative investment platform YieldStreet announced a Series C funding round this week totaling $100 million. The investment brings the New York-based company’s total funding to $279 million.
Contributors to the round include Mitch Caplan, Alex Brown, Kingfisher Capital, Top Tier Capital Partners, Gaingels, Edison Partners, Soros Fund Management, Greenspring Associates, Raine Ventures, Greycroft, and Expansion Capital. YieldStreet will use the funds to attract new users and create new investment products. The company will also use the investment to fuel more acquisitions in addition to the two companies– WealthFlex and Athena Art Finance– it acquired in 2019.
YieldStreet connects investors with asset-based alternative investments that have traditionally been difficult for non-institutional investors to access, such as art, marine, legal, and real estate. Since it was founded in 2015, the company has paid out more than $950 million in principal and interest to its investors.
“These are investments that generate passive income. For example, we do a bunch of things in real estate such as financing warehouses, multifamily and distribution centers,” company founder and CEO Milind Mehere told TechCrunch. “We also do art, auto loans, or equipment finance. These are typically investments done by institutions and what we’re trying to do is really fractionalize them and get them to real estate investors. A lot of this stuff is asset-backed and it’s generating cash flow.”
The funding comes at a time when the public’s interest in investing is growing, and YieldStreet is benefitting as a part of that trend. The number of investment requests the company has seen grew by 250% from January to April of this year when compared to the same time frame last year. And YieldStreet has acquired more users so far this year than it had for the entirety of 2020. Today, the company has 300,000 consumers.
As for what’s next, YieldStreet is considering going public via a SPAC merger in the next couple of years. The company said it has been approached by a few special purpose acquisition companies and that the public markets would offer more visibility to potential users.
When it comes to trends, Asia has always been ahead of the rest of the world. Because of this, it’s worth paying attention to the fintech themes that will be popping up at FinovateAsia.
Taking place digitally June 22 and 23, FinovateAsia will highlight discussions featuring the latest thought leaders in the industry. Tickets are still available; book before June 4 to receive a discount.
Here is a highlight of some of the topics you can expect to see throughout the two day event:
Embedded finance
After last year’s transition to digital, embedded finance has more potential than ever. During the panel titled Embedded Finance and the Future of Finance, our experts will address how to harness the power of data and digitization to build new models of finance across verticals and how to empower customers through better offerings. The group will share new models for meeting customer needs, and discuss how incumbent firms fit into the new picture.
The customer experience obsession
Asia is known for its hyper-focus on the customer experience. What are some of the lessons firms can learn from super apps like Alipay that delight customers? Our customer experience panel will discuss changing customer demands in line with the current climate, as well as address how to build successful partnerships and distribution channels with customers in mind.
Empowering ESG
ESG is one of the hottest topics in fintech this year, and it’s no longer limited to investing. The ESG panel at FinovateAsia, titled Leveraging Emerging Technologies to Meet ESG Goals, will assess the activities that can be done around ESG, look at how banks can make ESG a commercially viable product and scale up ESG initiatives, examine how regulators are approaching sustainability, and discuss how sustainability goals are encouraging new ways of partnering.
Cross-border payments and real-time payments
When it comes to cross-border payments, the future is real-time and global. FinovateAsia’s panel titled Integration between cross-border payments systems – The evolution of RTP across Asia will look at what the industry needs to do to support the regulatory agenda and at the additional services and value banks can offer. The team of experts will consider current progress with the interoperability of RTP systems and what the industry needs to do to overcome obstacles.
Partnerships
If there’s one thing we’ve learned in the fintech industry over the past few years, it’s that partnerships are key for survival. In a panel titled, Overcoming challenges and fostering successful partnerships across new ecosystems, we’ll host a range of bank executives as they share expert advice on how banks can best cooperate with startups, make the most of their networks, work quickly without sacrificing quality, and develop an entrepreneurial mindset throughout the organization.
Identity verification and remote deposit capture solutions provider Mitek has acquired AI-powered biometrics company ID R&D this week. Terms of the deal were undisclosed.
Under the agreement, Mitek will integrate ID R&D’s portfolio of biometric technologies into its own identity verification solution. Additionally, ID R&D will continue operating under its own brand and will still sell its biometrics products directly to the market. The company’s solutions include IDLive Face, a passive facial liveness detection tool; and IDLive Voice, a voice anti-spoofing technology.
By integrating ID R&D’s technology into its own, Mitek will offer consumers and businesses a more holistic identity verification and fraud prevention product that protects a transaction from start to finish. The new solution will offer banks and other organizations with a single authentication tool that offers a simple approach to fighting fraud throughout each step of a transaction.
“With additional resources now available to the ID R&D team, we expect to bring exciting breakthroughs to the market at an even faster pace,” said ID R&D President Alexey Khitrov in a blog post. “Mitek’s financial strength, global reach, and scale will only enhance our ability to expand our core biometric product portfolio.”
ID R&D was founded in 2016 and is headquartered in New York City. The company has raised a total of $5.7 million across two rounds of funding, the most recent investment taking place in May of 2019.
Founded in 1986, Mitek went public in 2011 and now trades on the Nasdaq under the ticker MITK. The company has a market capitalization of $739 million.
The increase in consumers going digital has been beneficial to Mitek. Last year, Mitek saw a year-over-year growth increase of 20%. This growth is likely to increase. In fact, Juniper Research estimates that by 2025, 1.4 billion consumers will be using facial recognition to facilitate secure transactions.
Vehicle refinance startup MotoRefipulled in a $45 million Series B round of funding this week. The Virginia-based company received the funds from investors including Goldman Sachs, which led the round, along with IA Capital, Moderne Ventures, Accomplice, Link Ventures, Motley Fool Ventures and CMFG Ventures.
“In 2020, we proved we are the go-to platform for auto refinance. In 2021, we’re scaling that offering to make auto refinance accessible to everyone- helping more people save money on their car payments,” said MotoRefi CEO Kevin Bennett. “Goldman is the best in the business when it comes to financial services, and we’re thrilled to partner with Jade Mandell and the Goldman Sachs team on our next phase of growth.”
MotoRefi will use the investment to boost growth by investing in its platform and build out its team.
The funds come just months after the company raised a $10 million Series A round in January. MotoRefi’s funding now totals $60 million.
Today’s news also comes during a time of major growth for MotoRefi. The company, which works directly with lenders to help them facilitate refinances on auto loans, has seen an increase in demand during the low interest rate environment. From the first quarter of 2020 to the first quarter of this year, MotoRefi has seen:
7x revenue growth
5x loan volume growth
2.5x team growth
Founded in 2016, MotoRefi has been in the fintech headlines a handful of times this year, having recently announced senior hires, a new headquarters location, and a new partnership with SoFi.
This is a guest post by John Minor, SVP of Product and Support at PayNearMe.
Pay by check? Yes, that’s still a thing. In fact, nearly a quarter of consumers (22%) pay their monthly utility bill and 9% make monthly mortgage payments by mailing a check or money order to the biller, according to a recent bill payment study by PayNearMe.
Traditional, non-digital forms of bill payment can be expensive. The labor cost to have employees available to accept cash or check payments and then manually count, sort, reconcile, and deposit these payments throughout the day is reason enough for businesses to encourage customers to adopt digital bill payments.
However, eliminating these familiar payment types and transitioning customers to electronic payments can be challenging. Here are three strategies to try:
Put electronic bill pay options front and center
At every opportunity, put digital pay options in front of your customers — on billing statements, through customer service representatives, via emails, on your website, and through push notifications.
For example, savvy billers are now generating personalized QR codes for customers that can be printed on paper billing statements. Customers then can pay their bill by scanning the code and choosing their preferred method of payment without having to log into their account. It’s frictionless, fast, and encourages your customers to pay their bills electronically.
Offer mobile payments
Mobile payments are nearly ubiquitous. The majority of Americans (74%) use their phone to order and pay for food and merchandise at least once a week, and nearly 1 in 3 Americans (29%) would like to pay with their smartphones all the time.
This same consumer behavior translates to the way they expect to pay their bills. In fact, according to this bill payment study, Americans are likely to pay their bills using one of the following forms of mobile payment, if they have the option:
26% — likely to pay bills via text message on their mobile phone
32% — likely to pay bills by scanning a QR code on their bill and paying using their mobile phone
37% — likely to pay bills using their mobile wallet (Apple Pay / Google Pay)
The data is clear: your customers want to pay with their mobile devices. To accommodate them, look for a payment platform that enables your business to accept multiple forms of payment, including Apple Pay and Google Pay.
Enlist your customer service staff
Every time traditional bill payers pick up the phone to make a payment or drop by the office to pay in person, the customer service agent has an opportunity to promote digital bill payment options. The agent can ask questions like:
“Have you considered paying your loan through our electronic payment system? Let me tell you why it is such a convenient option!”
“Can I email or text you a link so you can enter your payment information directly?”
“Would you like me to assist you in signing up for autopay to make your monthly payment easier?”
These one-on-one conversations can help get customers over the initial learning curve and help those who are hesitant feel more confident in making the switch from traditional to digital payments.
The majority of consumers (69%) prefer digital payment channels to paying bills by mail, phone, or in-person. But, getting set up on electronic payments has to be easy. Your customers don’t want to deal with lengthy forms, frustrating sign up processes, or having to provide payment details every month. Instead, use techniques like embedding personalized payment links or QR codes in billing statements and reminder messages so your customers can simply click a link or scan a code to go directly to their payment screen.
Transitioning your customers to digital bill payment will save your company time and money while affording your customers greater freedom and flexibility. It’s worth the effort.
John Minor is SVP of Product and Support for PayNearMe, leading the product, merchant services and support teams. By combining industry research with client and partner feedback, he ensures that PayNearMe’s solutions continue to lead the market in terms of mobile readiness, ease of use, and advanced bill pay and collection techniques.
Providing services for Generation Z is increasingly on the minds of both banks and fintechs alike.
One such fintech, EarlyBird, is making it easy for a child’s community to invest in their future. We spoke with the company’s CEO Jordan Wexler on the current childhood investing environment and what it takes to compete.
Talk to us about the current state of financial literacy in the U.S.
Jordan Wexler: The numbers tell us that most American families aren’t doing a great job at teaching financial literacy. According to a recent survey, 19% of Americans reported that their household spent more than their income over the past year. Add in the fact that 43% of adults say they haven’t got a rainy day fund, and that means huge chunks of our society simply aren’t prepared to face financial hurdles. This shows that good financial habits and knowledge aren’t being effectively passed down either.
Research suggests there isn’t much time to sow the seeds of financial literacy into a kid’s headspace. Children generally have their financial habits set by the age of seven. That means to set kids up for financial independence, they have to be taught the basics of financial literacy sooner rather than later. Not only will you instill good habits early, but you’ll also be setting them up to make smart investment and financial choices throughout their lives.
Most wealthtech tools target high net worth individuals. What benefits are there to having a young client base that typically has no income?
Wexler: The benefit of helping the youth is that we’re trying to set them up for financial success in the future. We aren’t encouraging spending – we’re instilling good financial habits early on that will help kids flourish in their adult lives.
With EarlyBird, our vision is to have parents start investing in their children from day one. That way, in 18 years, they will have a solid financial foundation for their child to give them the freedom to pursue their aspirations – traveling the world, going to college, starting a business, whatever it may be.
EarlyBird was built for more than the children with their name on the custodial account. It’s for parents, family, and friends that want to give meaningful and purposeful gifts to the children in their lives to help support them financially. We’re making it accessible to all because it doesn’t matter which household income bracket a family falls under, investing just a little bit each month for your child can go a long way.
What elements do you use to cater EarlyBird to such a young audience?
Wexler: We’re catering EarlyBird to parents, their children, and also the community around them that wants to see them succeed. For parents, we’ve simplified the process to kickstart their child’s future by opening a custodial investment account. It doesn’t matter if the parent is a beginner, novice, or expert in investing in the stock market, we’re allowing families to gift meaningful and sustainable financial contributions for all life’s milestones.
For children, we’re creating a platform that allows them to learn about finances. They can better understand investing/saving, watch their money grow, and then one day have a bank account with accumulated funds to use as they please. Our hope is that from being a lifelong EarlyBird user, they’ll know how to manage those assets responsibly.
We’ve also created a great user experience for the ‘givers.’ They are able to record a video memory with their contribution and can use it as an opportunity to pass down stories and knowledge from the world of money. Video memories are placed into an archive on the EarlyBird app for the children to look back on and learn from forever.
EarlyBird was founded in 2019. How have you seen the childhood financial services space grow since then?
Wexler: Being in the weeds in the childhood financial services space, it’s apparent that there’s been massive growth and that it’s on an upward trajectory, especially with latest funding news from services like Greenlight, Current, Step, and Till Financial.
One thing we are noticing right now is that “kids” and “children” are being somewhat generalized into one category of fintech. The reality is – there are different offerings in the space that make sense for different ages and parental comfort levels. I feel that we’re at the point where parents need to start to consider their “ideal mix” when it comes to the fintech tools and apps they use to save for their children, teach them financial literacy, and also get them started with spending when it’s time.
For example, parents can get started with EarlyBird when their child is born and then later on incorporate an app with teen-focused debit card to begin digital banking. This is similar to the “old school” trajectory of starting off with a 529 account then adding a standard savings account and later a checking account.
It’s great to see so much growth, innovation, and potential happening in childhood financial services. We’re beyond excited to be a part of this movement and to set the next generation up for financial freedom!
Millennial investing app Acorns announced plans today to go public using a merger with a special purpose acquisition company (SPAC).
The SPAC, Pioneer Merger Corp, is a blank check company founded in 2020 that aims to acquire Acorns in a deal valuing the fintech at $2.2 billion. The transaction is expected to complete in the second half of this year. Once finalized, Acorns will trade on the Nasdaq under the ticker OAKS.
Acorns’ new valuation of over $2 billion is more than double its last valuation. The company was estimated to be worth $860 million in January of 2019.
Prior to today’s announcement, Acorns was in the middle of another funding round, which would have added to the $207 million it had already raised since it was founded in 2014. Instead of closing another round of funding in the private markets, Acorns CEO Noah Kerner chose the SPAC route because he felt that Pioneer Merger Chairman John Christodoro was the right partner.
“Now was the time to go public to accelerate our growth and get the tools of responsible wealth-making in everyone’s hands as fast as possible, when they need it most,” Kerner told CNBC. “We just saw this as an accelerant on that journey.”
The timing is also right from a demand perspective. The pandemic, combined with media frenzy around meme stocks, fueled interest from new investors. Acorns clearly benefitted from this, having just completed its best quarter on record. The company doubled its number of subscribers compared to the fourth quarter of 2020 and now counts four million users.
Acorns has long been known for helping its millennial client base invest the “spare change” from their card purchases into index funds. The company has since expanded and now offers a debit card offering and more robust banking services such as mobile remote deposit check capture, direct deposit, check sending tools, and automated IRA investing for retirement.
