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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
PhonePe is selling a $700 million stake in its company to existing investors, including Walmart, which led the financing round. The digital wallet and online payments company will use the funding to distance itself from Flipkart, which Walmart purchased in 2018. As part of the deal, Flipkart’s ownership of PhonePe will drop from 100% to 87%, according to TechCrunch.
India-based PhonePe anticipates that the $700 million in capital– along with independence from parent company Flipkart, which operates an ecommerce division– will help boost its growth in the ever-growing digital payments arena.
Further cementing PhonePe’s independence, the company has appointed its own board of directors, including PhonePe Founder and CEO Sameer Nigam and former Flipkart executive Binny Bansal.
“We are really excited to have access to dedicated long-term capital to further our ambitions in the financial services distribution sector as well as creating large innovative growth platforms for India’s micro, small, and medium enterprises,” said Nigam.
Founded in 2015, PhonePe is estimated to be worth around $5.5 billion. The company anticipates it will be profitable by 2022 and plans to go public in 2023. PhonePe currently has 100 million active users and recorded almost one billion transactions on its platform in October.
Lloyds Banking Group is making instant, cross-border payments possible, thanks to a partnership with global secure financial messaging services provider SWIFT.
The U.K.-based bank announced it is the first bank to go live with SWIFT’s gpi Instant Connection, a new service that helps consumers and businesses send money in seconds across the globe.
gpi, which stands for Global Payments Initiative, was launched in 2017 to facilitate international payments. Since then, SWIFT has amassed more than 4,000 financial institution clients who collectively use gpi to send more than $300 billion each day in more than 150 currencies.
“At Lloyds Bank we strive to continually evolve and create innovative solutions for our clients,” said Ed Thurman, Managing Director and Head of Global Transaction Banking at Lloyds Banking Group. “The gpi Instant service is set to be a game changer in cross-border payments and we are very excited to be the first bank globally to offer the service here into the U.K.”
The new service leverages SWIFT gpi, SWIFT’s high-speed cross-border rails, and connects with a country’s own real-time infrastructure. In Lloyds’ case, SWIFT gpi is connecting with the U.K.’s Faster Payments, the region’s own real-time payments initiative.
“We developed gpi Instant with our community through responsible innovation and equal emphasis on four core needs — speed, security, transparency and compliance,” said David Watson, Chief Strategy Officer at SWIFT. “We look forward to continuing our work with market infrastructures and financial institutions to bring the benefits of seamless cross-border payments to customers across the globe.”
The launch with Lloyds comes after SWIFT tested out the service earlier this year in a pilot with Lloyds, Barclays, Commonwealth Bank of Australia, DBS, Wells Fargo, and BBVA. The real-time payments capabilities are part of SWIFT’s new strategy to retool cross-border infrastructure to facilitate instant and frictionless transactions.
Branded payments firm Blackhawk Network has always been busy over the holiday season. Between its gift cards, digital rewards, and prepaid cards, the California-based company has helped people embrace the spirit of giving.
And while Blackhawk Network is still helping fuel the gifting and rewards economy this year, it is moving to an even more 2020-friendly (that is to say, digital-first) approach.
Last week Blackhawk announced it has teamed up with Evite to power the digital greeting card and invitation company’s eGift card program. Evite users can now choose from more than 100 eGift card options from popular brands including Lowe’s, Red Lobster, and Old Navy.
“It’s no surprise we’ve seen the demand for virtual gifts and greetings skyrocket in 2020. Contactless gifting is now a must-have, especially with the holidays approaching,” said Evite CEO Victor Cho. “Adding an extra touch like an eGift card can help people create personal connections with family and friends that they haven’t been able to see. It also helps our users stay safe, creates maximum flexibility for gifters and receivers, and modernizes the 2020 gifting experience. Thanks to Blackhawk’s expansive network of eGift card choices, our users have a broad selection to choose from at the tip of their fingertips.”
Brett Narlinger, head of global commerce at Blackhawk Network, noted that Blackhawk has seen a 70% increase in eGift sales– all before the peak holiday shopping season.
In addition to its partnership with Evite, Blackhawk announced a new payment solutions suite called Pay4It that connects physical and digital payments. The suite helps merchants reach underbanked populations with the ability to add cash to a digital wallet, mobile app or account, or make payments for digital goods with cash. It also offers consumers more choices to pay by enabling additional digital wallets and transforming loyalty points and rewards into purchasing power. Finally, Pay4It brings the gift card mall to non-traditional locations and into the digital realm.
“Retailers’ and merchants’ businesses changed instantly this year, and Blackhawk has responded with a product suite that brings once-disparate physical, digital and stored value payments together, keeping brands and consumers connected in a seamless way,” said VP of Global Product Strategy at Blackhawk Network Helena Mao.
An alum of FinovateFall 2012, Blackhawk Network was founded in 2001 and was acquired in January of 2018 by Silver Lake and P2 Capital Partners in a deal worth $3.5 billion. The company works with more than 1,000 brands and card partners, is in more than 200,000 retail locations in 28 countries, and connects with more than 300,000,000 shoppers each week. Talbott Roche is CEO.
Taking the opportunity to seize a fresh start that comes with a new year, Facebook’s Libra Association has rebranded to Diem Association.
The group chose the name Diem, which is Latin for “day” to signal a new day for the association. The rebrand will not change the mission of the organization, which is to build a safe, secure, and compliant payment system. The move will, however, serve as a way of “reinforcing its organizational independence.”
“The Diem project will provide a simple platform for fintech innovation to thrive and enable consumers and businesses to conduct instantaneous, low-cost, highly secure transactions,” said the Diem Association’s CEO Stuart Levey. “We are committed to doing so in a way that promotes financial inclusion – expanding access to those who need it most, and simultaneously protecting the integrity of the financial system by deterring and detecting illicit conduct. We are excited to introduce Diem – a new name that signals the project’s growing maturity and independence.”
As Levey suggests, the new name serves as a way for Diem to distance itself from Facebook, which initiated the association in June of 2018. This isn’t the first time the group has attempted to disassociate itself with Facebook. In May, the association changed the name of the Diem digital wallet from Calibra to Novi.
In addition to the rebrand, the Diem Association and its subsidiary that serves as the regulated payment system operator, Diem Networks, is reinforcing its ranks. The group has appointed Dahlia Malkhi as the Association’s Chief Technology Officer, Christy Clark as Chief of Staff, Steve Bunnell as Chief Legal Officer, and Kiran Raj as Executive Vice President for Growth and Innovation and Deputy General Counsel.
The news of the new hires comes on the heels of the company’s appointment of James Emmett as Managing Director, Sterling Daines as Chief Compliance Officer, Ian Jenkins as Chief Financial and Risk Officer, and Saumya Bhavsar as General Counsel.
Regardless of today’s seemingly upbeat news, Diem is still currently in limbo. The association is still waiting on regulatory approval, including a payment systems license for the operational subsidiary of the Association from the Swiss Financial Market Supervisory Authority (FINMA).
Venture investing platform OurCrowd is taking home an investment of its own this week. The Israel-based company announced today it received $60 million in capital from Japan-based ORIX. The investment brings OurCrowd’s total funding to $172 million.
The goal of the funding and strategic partnership is to bring opportunities for Israel-based startups in the Asia region and will strengthen trade between the two regions.
“We are excited about investing in OurCrowd, Israel’s most active venture investor and one of the world’s most innovative venture capital platforms,” said ORIX UK CEO Kiyoshi Habiro. “We intend to be active partners with OurCrowd and help them accelerate their already impressive growth, while bringing the best of Israeli tech to Japan’s large industrial and financial sectors.”
Today’s deal isn’t the first time OurCrowd has made Japanese ties. Last year the company teamed up with Toyota Tsusho Corporation, a Japanese general trading company, to scout for startups that support autonomous driving industry.
OurCrowd was founded in 2013 and offers a platform that allows its 58,000 users to invest in 220+ pre-vetted startups and 23 venture funds. Jonathan Medved is CEO.
One of the most compelling aspects of Finovate conferences is that they help you keep up with the latest trends in the industry. And with changes happening at such a fast pace these days, there’s never been a more important time to stay informed.
Fortunately, we’ve done the hard work for you and picked out a few trends to keep your eye on at FinovateWest next week, November 23 through 25.
COVID aftermath
No, we’re not over the pandemic, but we are starting to see the effects of long-term economic consequences. You can expect to hear panelists and presenters discuss strategies to deal with the long term impacts of COVID across a range of subsectors.
Harnessing AI
Despite (or maybe because of) the turbulence brought on in 2020, AI remains a top trend. With companies more focused than ever on their digital strategy, it’s a good time to think about the benefits of incorporating AI into not only your core offering, but also your back office tools, customer experience, and more. At FinovateWest next week AI will be one of the top areas of discussion.
Customer experience
This is yet another trend heightened by the recent pandemic. With so much of the customer experience taking place in the digital realm, it can be difficult to craft the perfect offering for all users. Many of the conversations taking place at FinovateWest will center around the customer.
The discussion sessions will take place throughout the three-day event, which goes live at 9 am Pacific on November 23. The fully digital conference will host keynote speakers, expert panelists, and some of the hottest companies in fintech as they demo their newest technologies. We’ve also carved out plenty of time and space for you to network with your fellow attendees. There’s still time to book your ticket so don’t delay!
Global identity verification and authentication platform AU10TIX teamed up with ride sharing company Uber this week to make rides in certain areas a bit more safe.
Under a new program, Uber is requiring users in Mexico, Argentina, and Chile who pay for their ride in cash to scan an official identification such as their voting credentials, national ID, passport or driver’s license for verification.
“In the current business climate, more drivers and riders are wanting added reassurance for cash payment options, and we want to give them that,” said AU10TIX active deputy chairman Ron Atzmon. “Working together with Uber, we are delivering on this with AU10TIX’s identity document verification technology that provides the reliability, efficiency and scalability required to help provide peace of mind.”
AU10TIX offers document verification, identity verification, KYC, and AML tools to firms in a range of industries. The company leverages deep learning-based image processing, biometric technology, and data, to offer an autonomous solution that increases risk assessors’ confidence to shut down fraud before it occurs.
This week’s news marks a continuation of an existing relationship between the two players. Uber and AU10TIX first teamed up last year and recently expanded their partnership to electric scooters and Uber Eats.
Hinting at what’s next, AU10TIX CEO Carey O’Connor Kolaja said, “We expect this launch to set the stage for us to expand into other countries where Uber is experiencing elevated demand for cash payments.”
The word Plex may have been a meaningless word yesterday but starting today you can expect to see it pulse throughout news headlines.
That’s because Google is making updates to its Google Pay app and has announced that it has partnered with 11 banks and credit unions to offer a new mobile-first bank account integrated into Google Pay. The tech giant will begin offering these bank accounts, called Plex Accounts, starting next year.
Among those on the list of partner banks and credit unions are:
Citi
Stanford FCU
Seattle Bank
The Harbor Bank of Maryland
State Employees FCU
BankMobile
Bank of Montreal
First Independence Bank
BBVA
GreenDot
Coastal Community Bank
Plex accounts will offer both checking and savings accounts, will not charge monthly fees, won’t charge for overdrafts, and will not have minimum balance requirements.
Users can download Google Pay to join the waitlist or apply for a Plex account through Citi or Stanford Federal Credit Union, which are pioneering the new accounts.
Google is also revamping its Google Pay app to centralize around relationships. Users can pay and view past transactions in a stream-like interface that is organized around conversations and activity.
Customers can also use Google Pay to find offers and loyalty info on businesses they frequent. In fact, Google has forged merchant partnerships with Burger King, Etsy, REI Co-op, Sweetgreen, Target, and Warby Parker to help users view and activate rewards.
Capitalizing on the embedded finance trend, Google has made multiple purchasing experiences available from within Google Pay. Users can order food at 100,000+ restaurants, buy gas at over 30,000 gas stations, and pay for parking in more than 400 cities– all from within the app.
Google Pay aims to be a hub for three things: paying, saving, and insights. When users connect their bank accounts, Google will provide periodic spending summaries and show trends and insights over time. This will look different from a traditional budgeting interface. Instead of pie charts, the spending insights will focus on bite-sized pieces of information such as how much the user spent over the weekend, or how much they spent at a particular location.
This type of Big Tech bank is something that the fintech community has been talking about for a long time. Will Google’s Plex accounts challenge the challenger banks? I guess we’ll find out in 2021!
The topic of data is one that pulses throughout conversations in the fintech industry. No matter what sub-sector you’re working in, it’s likely you faced the challenge– or are facing the challenge– on how to manage, store, and interpret data of all types.
I recently spoke with Joe Lichtenberg, Director of Industry Marketing at InterSystems, one of our FinovateWest sponsors. During our conversation, Lichtenberg spoke about recent trends he is seeing within financial services, the technology that is driving those trends, and how data is playing a role.
Be sure to catch InterSystems’ keynote on Monday, November 23 at 2:15 pm Pacific time. In his discussion, Jeff Fried, Director of Product Management for InterSystems, will be detailing seven steps to implementing machine learning in financial services. Finovate Analyst David Penn highlighted Fried’s session earlier this fall in a post titled, Giving AI and Machine Learning the Business.
If you’ve started online shopping for the holiday season you’ve likely seen buy now, pay later (BNPL) offerings at the checkout. And starting today, Chase cardholders have even more options to pay over time.
That’s because Chase is launching My Chase Plan, a BNPL option available to Chase credit cardholders. The new tool allows users to select a purchase of $100 or more they’ve made within the last 90 days and choose a payment duration ranging from three to 18 months.
Cardholders will not be charged interest on the purchase but they will face a monthly fee for using the service. Chase doesn’t list a range for the fee but the bank does disclose that the fee is based on the amount of the transaction selected, the number of billing periods, and “other factors.” In the example on Chase’s website, a purchase of around $587 split into six month increments incurs a monthly fee of $2.35.
“We developed My Chase Plan to provide our cardmembers with more flexibility and control of their payment options,” said Chase Card Services General Manager of Lending and Pricing Anthony Cirri. “We are thrilled to offer My Chase Plan as a tool to help cardmembers make the most of their money and pay for their purchases over time. With the holidays fast approaching, this embedded card feature can be used to pay off gifts and everyday purchases alike.”
From a business model perspective, Chase is taking a different approach than traditional BNPL players. Most BNPL companies work through merchant partners, charging the retailer a fee for each customer that makes a purchase using the BNPL technology. This offers a large incentive to the customer, since they receive more flexible purchase terms for free. Chase is coming at the equation from the other side, targeting the customer after they’ve made the purchase and charging them instead of the merchant.
Chase’s new feature is reminiscent of U.K.-based Curve’s tool that allows users to “go back in time” and switch their purchase from card-to-card. While Curve doesn’t enable users to pay over time, it does help with users who may have paid with the wrong card or need to free up some cash on a debit card by shifting a purchase to a credit card.
When is BigTech too Big? Ant Group may have the answer to that.
After anticipating its IPO and setting share prices in late October, the China-based tech giant’s plans were put on hold when Chinese regulators suspended the IPO.
At $34.5 billion, Ant’s IPO would have been the largest public offering to-date, surpassing the previous highest IPO set when oil company Saudi Aramco went public at $29.4 billion earlier this year.
So what is China’s qualm with a successful tech giant going public? The answer may lie in fintech’s favorite four-letter word: data. That’s because big fintechs such as Ant rely on data traditionally held by the Chinese government such as salary and debt levels to provide lending or credit services. Overall, the communist party is worried about losing centralized control by giving a large tech company control over valuable data.
Some also speculate that the suspended IPO was directed at Jack Ma, Ant Group’s controlling shareholder and founder of tech giant Alibaba, as a way to humble him. Just before the IPO was suspended, Ma had given a speech at a conference in which he criticized regulators and Chinese banks.
“What happened to Ant reinforces that sense that it’s really essential to show respect for party-state authority,” said Kellee S. Tsai, the dean of the School of Humanities and Social Science at the Hong Kong University of Science and Technology told the New York Times. “Capitalists have to play by the political rules of the game.”
It’s a stark contrast to the scene in the U.S., where the economy relies so heavily on large companies in key industries that the government is willing to shell out millions to bail them out. In either situation, however, Ant Group’s recent predicament has taught us that it’s important to remember who’s boss.
Mastercard has been busy this week. In addition to finalizing its acquisition of data aggregation provider Finicity, the company is also enhancing its Mastercard TrackBusiness Payment Service.
Mastercard launched its Track Business Payments Service in May of this year to help modernize the business payments experience. The overall goal of the initiative has been to provide businesses with a richer data exchange experience and greater control over payments.
Today’s launch adds account-to-account (A2A) functionality to the Track Business Payments Service. The new addition offers businesses a similar experience for A2A payments as they had with card payments. That is, businesses can exchange data with greater efficiency and facilitate payments across multiple payment rails including Real Time Payments (RTP) and the Automated Clearing House (ACH). Overall, the new tool enhances security, as it doesn’t require suppliers to share their bank account details with buyers, nor does it require buyers to store those details.
“Today, the vast majority of B2B payments are made through bank account transfers. Extending Mastercard Track Business Payment Service to support these transfers is a step on our way to building out the best and most secure B2B payment network in the world,” said Mastercard EVP of Global Commercial and B2B Solutions James Anderson. “Our commitment to supporting multiple payment rails has always been about helping customers operate more efficiently and effectively leveraging all the capabilities available in the market with as little change as possible.”
The A2A functionality is now available for Track Business Payments Service customers in the U.S. Mastercard plans to roll out the service for users in all geographies by the end of next year.
“This milestone is another step in the journey away from paper-based frustration, incomplete data, and manual reconciliation work and toward a fully digitized business payments process,” added Anderson.
