More Fuel for the BNPL Fire: Affirm Raises $500 Million

In a series G round, buy-now, pay-later company (BNPL) Affirm brought in $500 million, bringing the company’s total raised to $1.3 billion.

Leading the round were Durable Capital Partners LP and existing investor GIC. Other returning investors Lightspeed Venture Partners, Wellington Management Company, Baillie Gifford, Spark Capital, Founders Fund, and Fidelity Management & Research Company LLC also contributed.

Affirm Founder and CEO Max Levchin referred to the new round as a “vote of confidence” that will help the company advance its mission “to build honest financial products that improve lives.”

Along with the funding announcement, Affirm also unveiled an interest-free and fee-free bi-weekly payment product for transactions over $50. The new product aims to help Affirm’s tools compete with credit cards. “Affirm is now an even more attractive payment option for everyday wants and needs,” Levchin added. “We can also now better support merchants who offer smaller ticket items and bring their customers a more transparent, flexible way to pay.”

Affirm’s BNPL tools reach 6.5 million shoppers across the U.S. and Canada. The company has 6,000+ merchant partners in the U.S., including brands such as Walmart, Peloton, Oscar de la Renta, Audi, and Expedia.

Affirm’s funding comes days after Klarna unveiled its $650 million raise, which brought its total funding to $1.4 billion and boosted its valuation to $10.6 billion.

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Striata Acquired by Doxim

Secure messaging company Striata announced this week it has been acquired by Doxim, a customer communications management (CCM) software company. Terms of the deal were not disclosed.

Doxim will use Striata’s technology to expand its CCM platform and provide personalized digital interactive experiences in a secure manner. Doxim CEO Mike Rogalski expressed that the global pandemic has accelerated the need for communications technologies. “Especially with the impact of COVID-19, which has meant fewer face-to-face meetings,” noted Rogalski, “organizations need to find scalable ways to orchestrate and distribute multi-channel communications that are both personalized and legally compliant.”

“The joint strength of Striata and Doxim will power a world-class digital CCM platform and expert team for enterprises and small to mid-sized businesses,” said Striata CEO Michael Wright (pictured). “We look forward to working with Doxim to integrate our technology, systems and culture. The value proposition of the combined organization promises to be a formidable force in the market.”

Striata was founded in 1999 and, with a focus on security and compliance, has worked heavily in the financial services industry. The company’s services include message design, generation, security, delivery, and storage across multiple channels.

Striata is headquartered in New York City, with operations in London, Johannesburg, Hong Kong, and Sydney and partners in North and South America, Africa, Europe and Asia Pacific.

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Square Staves Off Competition with the Launch of Two New Payroll Features

Since its launch in 2009, Square has always catered to small business owners. The payment services company is best known for offering micro-to-medium sized merchants an easy way to accept payments and today Square is launching two services to make those business’ payrolls even more robust.

Explaining the problem, Square Payroll GM Caroline Hollis said, “The traditional payroll process is slow and rigid, creating cash flow constraints for employees and businesses alike. This is even more pronounced now given the current economic conditions.”

The new features include On-Demand Pay for employees and Instant Payments for employers. On-Demand Pay will allow employers to offer their workers early access to some of the wages they’ve earned, while Instant Payments helps businesses fund payroll faster than the typical time of three-to-four days.

There is a bit of a catch with these services, however. Both offerings hinge on Square’s Cash App, a mobile wallet that effectively serves as a checking account for P2P payments. With On-Demand Pay, employees can transfer up to $200 of their earned wages to Square’s Cash App for free. Transfering the funds to a third party debit card, however, incurs a 1% or $2 fee. As for Instant Payments, employees that elect to be paid via Square’s Cash App receive their pay within minutes, while those paid via direct deposit get paid “as soon as the next business day.”

The new features are not new to the fintech scene. They will, however, help Square compete with new offerings from other third party fintechs and serve as a way to help Square maintain its multi-million user base of sellers.

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Marcus and the Marriage of Banking and PFM

On the day that Goldman Sachs announced that its digital banking solution Marcus would now feature a suite of PFM tools, FinovateFall Digital attendees were busy listening to the architect of this new feature – Adam Dell, Head of Product at Marcus – making the case for, among other things, the union of digital banking and PFM.

Successful digital financial services offerings in the post-COVID era will have three main features, Dell said. They will have a low cost means of delivery, they will represent a fair deal for the consumer, and they will provide what he called “delightful digital experiences.”

The new PFM solution, known as Marcus Insights, is currently available on iOS and will be made available on Android platforms and on the web soon. Marcus Insights aggregates the user’s financial information in a single dashboard, and offers tools and trackers to provide an easy-to-understand overview of their finances. After linking their checking, savings, loans, and/or investment accounts, users can analyze their spending in pre-set categories such as travel, shopping, and dining, as well as get instant insight into their spending and saving patterns, and their investment performance.

Interestingly, due to a restrictive data sharing agreement, users will not be able to link their Apple Cards to Marcus Insights. This is despite the fact that Apple is a Goldman partner. Also partnering with Goldman and Marcus on this initiative is Finovate alum Plaid, which was acquired by Visa for $5.3 billion at the beginning of the year.

Goldman launched Marcus, which was named after the investment bank’s founder Marcus Goldman, in 2016 and, just this year, unveiled a mobile app for the online bank. As of January, Marcus has $60 billion in customer deposits, and $5 billion in loans. CNBC reported that Marcus plans to add a digital checking account and an investing service in 2021.

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Klarna’s $650 Million Funding Round Boosts Valuation to $10.6 Billion

As the buy-now, pay-later (BNPL) craze explodes, some fintechs are in just the right place to catch the sparks. Payment services company Klarna is one of these players, and it has just landed $650 million in funding.

Today’s round adds to the company’s $1.4 billion in previously raised funds, bringing its total to just over $2 billion. The investment also boosts Klarna’s valuation to $10.6 billion, ranking the company as the highest-valued private fintech in Europe and the fourth highest worldwide.

The round was led by Silver Lake, GIC (Singapore’s sovereign wealth fund), and accounts managed by BlackRock and HMI Capital. Additional funds came from Merian Chrysalis, TCV, Northzone, and Bonnier, which have acquired shares from existing shareholders.

Klarna will use the funds to invest in product development, fuel global expansion, and build on its growth.

“We are at a true inflection point in both retail and finance,” said Klarna CEO and Co-founder Sebastian Siemiatkowski. “The shift to online retail is now truly supercharged and there is a very tangible change in the behavior of consumers who are now actively seeking services which offer convenience, flexibility and control in how they pay and an overall superior shopping experience. Klarna’s unique proposition, consumer preference and global retailer network will prove an excellent platform for further growth.”

As consumers seek alternative methods to finance their purchases, Klarna’s BNPL tool that enables users to pay in interest-free installments has gained impressive traction. The company’s shopping app has more than 12 million monthly active users worldwide, with 55,000 daily downloads.

And Klarna’s game is also strong on the merchant side of things, as many retailers have sought to increase online sales during stay-at-home orders. During the first half of 2020, the company added more than 35,000 new retailers to its existing merchant base of more than 200,000 partners including Sephora, The North Face, Timberland, and Ralph Lauren.

As a result of this growth, the company’s volume grew 44% over the first half of this year to more than $22 billion and its revenue increased 36% year-on-year to $466 million over the same period.

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ABN AMRO Adds Subscription Management Courtesy of Subaio

ABN AMRO is updating its Grip app this week by integrating Subaio’s white label subscription management feature for banks.

The integration comes at a time when users are spending more than ever before on subscriptions, especially digital subscriptions such as movie streaming services and cloud storage products. According to the New York Times, consumers spent an average of $640 on digital subscriptions in 2019, up 7% from 2017.

ABN AMRO’s Grip PFM app now leverages Subaio’s subscription management feature that enables users see all of their recurring payments in one place. The tool alerts users of any changes in subscriptions and even helps them cancel subscriptions from within the app. Subaio relies on an algorithm that uses machine learning to detect patterns in frequency, amount, merchant name, and more.

“Since the launch we’ve already seen tens of thousands of Grip users coming in to see their overview and also cancel subscriptions. It’s fantastic to help people get control of their subscriptions,” said Subaio CEO Thomas Laursen.

Today’s partnership with ABN AMRO is Subaio’s seventh bank partnership. Among the company’s other partners are Nordea and challenger bank Lunar. The company has found that the average user has eight different subscriptions, and that the users are saving $253 (€213) every time they use Subaio’s solution to cancel a subscription.

Founded in 2016, Subaio showcased at FinovateEurope 2020. The company has raised $2.4 million and has 20 employees.

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Credit Suisse Launches Challenger Bank Competitor

Challenger banks have been slowly making their way into the mainstream banking sector. By offering competitive rates, unique services, and digital-first user experiences, this new breed of banks has disrupted the traditional banking scene, causing some incumbents to rethink their approach.

This certainly seems to be the case with Credit Suisse, a 164-year-old bank. The Switzerland-based firm is steeling itself against challengers by launching its own digital bank, CSX. The new offering aims to be a hybrid approach between challengers and incumbents, and “combines the flexibility and cost effectiveness” of a digital bank with “the comprehensive range of services and expertise” of a traditional bank.

“CSX is intended for all private clients in Switzerland who want to complete their banking business swiftly and easily and who value digital, professional financial advice,” said Anke Bridge Haux, Head of Digital Banking at Credit Suisse. “Of course, we are still available to serve our clients in person. CSX clients can decide for themselves how they want to interact with us, depending on their individual needs.”

In order to serve clients from a range of demographics, Credit Suisse’s new digital bank will be divided into two offerings, CSX and CSX Young. Both take a mobile-first approach, from onboarding to a virtual debit card. Credit Suisse will launch the two accounts at the end of next month. After launching, the app will add services including investments, pensions, and mortgages.

In conjunction with today’s digital banking announcement, Credit Suisse also unveiled plans for a new concept branch that focuses on personalized advice. The bank is piloting the new concept at a new branch in Zurich and is building out the idea with a Digital Bar that offers interactive, personalized advice via video conferencing. Branch locations will also include co-working spaces, multimedia group rooms, and an event zone that can be booked by third parties.

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Payoneer Launches Cross-Border Tool for Banks

Cross-border payments platform Payoneer announced a major development this week. The New York-based company unveiled Payoneer for Banks, a tool to help banks make and receive cross-border payments.

The company’s new bank partnerships will offer secure low-cost international payments made in real time using the banks’ existing infrastructure. “By integrating with our APIs, banks can offer a seamless cross-border payments experience to their customers with low investment, which offers the potential for additional revenues, enriched offerings for customers and a competitive advantage,” said Eyal Moldovan, General Manager of SMBs for Payoneer.

The company reports it has already signed on 10 banks, challenger banks, and eWallets in 10 countries and it is in the middle of launching more partnerships. Among the list of disclosed partners are ANNA Money in the U.K.; Bank Asia in Bangladesh; BSB Bank in Belarus; EasyPay in Armenia; GCash, the leading mobile wallet in the Philippines; eZ Cash in Sri Lanka; Faysal Bank and JazzCash in Pakistan; Kuda Bank in Nigeria; Privatbank and Monobank in Ukraine; and Prex in Argentina.

Payoneer noted that now is an ideal time for the bank-focused product since many operations are moving to digital channels and international payment capabilities remain slow and unreliable.

“We focus on creating a bank that customers would love, and that drives a lot of our decisions,” said Monobank Cofounder Michael Rogalskiy. “It was extremely easy to work with Payoneer, because we have the same shared values and the same ideas around money transfers. Our integration allows our customers to have a better user experience, lower fees, and faster access to their international earnings. It’s a relationship that brings value for us, for Payoneer, and for our shared customers.”

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Identity Verification Innovator Sumsub Secures $6 Million in New Funding

London-based identity verification platform Sumsub (which stands for “Sum & Substance”) raised $6 million in Series A funding this week. The round brings the company’s total funding to more than $7.5 million. With the additional capital, the company plans to intensify its product development initiatives, expand into new markets, and pursue its goal of more than 1,000 new SME and enterprise customers by the end of next year.

Sumsub co-founder and CEO Andrew Sever highlighted the compliance and risk management questions that global businesses face when operating in multiple jurisdictions, and pointed to his company’s technology as an answer. “We solve the issue by presenting teams with a single solution to drive customers and enhanced due diligence from one place, customizing the onboarding flow to any jurisdiction or requirement.”

Sumsub provides a single, AI-powered identity verification and compliance risk management toolkit that automates the identity verification process and boosts conversion rates to as high as 97%. The company’s technology offers accelerated ID verification, digital fraud detection, and compliance for businesses in more than 200 markets around the world such as the U.K., North America, Germany, Singapore, and Hong Kong, and has verified “tens of millions of users” since launch in 2015.

The Series A was led by MetaQuotes, a financial trading software development company. The round featured the participation of several existing investors, as well as individual investor Ilia Perekopsky, VP of Telegram messenger.

Earlier this year, Sumsub announced that it and another ID verification company Veriff, had partnered with international money transfer firm TransferGo. TransferGo Compliance Manager Milda Mačiulaitytė said Sumsub’s platform would enable TransferGo to not only deliver a “tailored money transfer experience” but also to make sure that experience provided in a compliant and secure way across all regions.

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Promises Made, Promises Kept: Challenger Jiko Buys a Bank

Almost three years ago, Jiko co-founder and CEO Stephane Lintner told TechCrunch that his company “at some point” would own its current bank partner.

Late last week, Lintner made good on that prediction. The former Goldman Sachs managing director announced that the challenger bank he founded in 2019 had completed its acquisition of $100 million asset, Mid-Central National Bank, a Minnesota-based retail bank that’s served its community for 63 years.

“The past decade of fintech and online banking innovations has exposed new customers to our industry and demonstrated that innovation in the financial sector is needed,” Lintner said. “People’s relationship to money must be fundamentally improved for everyone. One of Jiko’s primary goals is to give people what they deserve: more organic and direct returns, without intermediaries and unnecessary friction.”

Mid-Central National Bank’s three branches in Minnesota will continue to operate, post-acquisition.

What makes Jiko different from other challengers is that it invests customer deposits in liquid U.S.-government backed Treasury bills (T-bills) instead of holding them. To do this the company has developed a core infrastructure which combines payment rails with real-time, 24/7 principal trading capabilities in T-bills. Add to this the requisite banking and broker-dealer licenses, and you have a banking platform that provides customers with an investment that is also a liquid, spendable alternative to cash.

That said, the lack of FDIC insurance may give some potential investors pause. Additionally, interest rates on T-bills have plunged in recent months (the three-month T-bill is at 0.11% today compared to 1.93% just a year ago). Fintech Futures reports that Jiko accountholders earned an annualized 3.3% return last year while the service was in beta. FintechLabs’ coverage of the Jiko’s bank purchase notes that the company may be less concerned with these issues as it focuses on B2B and BaaS customers and partnerships.

Lintner has positioned his Oakland, California-based company near the front of fintechs becoming banks (witness Varo Money’s securing of a national bank charter over the summer). And courtesy of approvals from both the Federal Reserve Bank of San Francisco and the Office of the Comptroller of the Currency (OCC), Jiko is the first to do so by acquiring a nationally regulated bank. The company plans to add a cash-back debit card and tokenized bank account numbers by year’s end.

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Wealthfront Unveils First Product in Self-Driving Money Suite

The fintech industry has long fantasized about automating finances. The earliest example of this is automatic billpay, which is so common today it is considered table stakes.

Wealthtech player Wealthfront is taking personal finance automation to a new level today with the launch of Autopilot, the first service under the company’s Self-Driving Money umbrella. Autopilot takes Wealthfront Cash clients’ savings and automatically monitors their balances and moves money around on their behalf to maximize their savings and returns.

Wealthfront Cash is a challenger banking service the company launched last year. The account, which is key to the company’s Self-Driving Money concept, is fee-free and pays accountholders 0.35% APY on their savings. When an accountholder’s paycheck is deposited into their account, Wealthfront optimizes the allocation of the funds by automatically paying bills and routing the remaining funds to investments, savings accounts, debt payoff, etc.

“Our clients are diligent savers and follow best practices to grow their savings, but they struggle to prioritize managing their finances among a long list of competing priorities,” said Chris Hutchins, Wealthfront’s Head of Autonomous Financial Planning. “This can lead to missed days in the market or missed days of compounding interest, which has a huge negative impact on your long term net worth. Autopilot is your free financial assistant, automating your financial tasks to ensure your savings are put to work immediately in the best account for your goals.”

Wealthfront’s next development will improve upon the speed of money movement within its ecosystem by implementing services such as same-day investing. The company already offers clients the option to receive their paychecks up to two days early when they use direct deposit with their Wealthfront Cash account.

“We’ve set out to build a new system that makes money with our clients, not off of them as traditional banks do,” said Wealthfront Co-founder Dan Carroll. “The system we’re building has the potential to be one of the biggest wealth creation engines of our generation, automatically optimizing your money in the background while saving you time and stress.”

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Sezzle Launches Virtual Card to Bring Buy Now, Pay Later into Brick-and-Mortar Stores

Buy Now Pay Later (BNPL) is having a moment in fintech. And one of the leading players in the space is expanding its innovations into the offline realm.

Minnesota-based Sezzle unveiled its virtual payments card this week, helping users benefit from its BNPL technology during their in-store shopping trips. The company has partnered with card issuing platform Marqeta to power its new virtual card.

Sezzle virtual cardholders will be able to use Sezzle’s installment payments technology in-store at retailers that already accept Apple Pay and Google Pay, as well as online. The purchases are interest-free and can be split into four installments, paid out over six weeks.

Sezzle Virtual Card

“As traditional, in-store retail re-emerges, it’s critical that we support our merchant partners by giving them new tools to jump-start sales, both online and in-store,” said Sezzle Co-founder and Chief Technology Officer Killian Brackey. “As a proven solution for driving incremental sales and new customer growth, we are thrilled to publicly announce an easy way for U.S. retailers to offer Buy Now, Pay Later in store.”

The in-store user experience is simple. At checkout, consumers authenticate themselves and tap their phone at the point-of-sale terminal, which will activate their Sezzle card.

Sezzle’s news comes on the heels of PayPal’s announcement that it plans to add a BNPL competitor. The payments giant revealed on Monday the launch of Pay in 4, a short-term payments installment product for U.S. customers. 

Four-year-old Sezzle, which listed on the Australian Stock Exchange (ASX) last summer, has seen a recent uptick in adoption, spurred by the economic effects of the coronavirus. The company added 325,000 new users in the second quarter of this year, up 326% from the same period last year. Sezzle has a market capitalization of $848 million.

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