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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
It’s a big week for Flywire. The global payments platform made a dual announcement yesterday that it closed a round of funding and sealed the deal on an acquisition.
The $120 million in funding brings Flywire’s total raised to $260 million. Goldman Sachs led the Series E round. The Massachusetts-based company will use the funding to digitize payments across education, healthcare, and travel.
“We are thrilled to lead the Series E round for Flywire”, said Ashwin Gupta, Managing Director at Goldman Sachs’ Merchant Banking Division. “They bring together a unique blend of a payments network, platform and vertical-specific solutions to completely digitize the payments experience for their clients across industries. We look forward to continuing to help accelerate Flywire’s growth.”
Along with the investment news, Flywire unveiled that it has acquired healthcare billing and payment solutions company Simplee for an undisclosed amount. The acquisition blends Flywire’s tech platform with Simplee’s solution that focuses on patients and providers. The combined companies power four of the top ten U.S. healthcare systems and together process $10 billion+ in payments per year.
“Flywire is uniquely built on a global payments network, which is the cornerstone of how we move billions of dollars across 200+ countries and 150 currencies, and an industry-leading payments platform” said Flywire CEO Mike Massaro. “This digital foundation enables us to develop vertical-specific applications that make payments more efficient and cost-effective for our global clients. The Simplee acquisition improves patient engagement and healthcare affordability and extends these capabilities to a broader customer base.”
Flywire, which originally launched has peerTransfer in 2009, has processed $12 billion+ in payments for 2,000 clients. The company has office locations at its headquarters in Boston, as well as Chicago, London, Manchester, Valencia, Shanghai, Singapore, Tokyo, Cluj, and Sydney.
Payment processing company Cloverannounced a new capability for dine-in restaurants to offer their guests. The Fiserv-owned company launched Scan to Pay, a tool that enables diners to pay for their meal at their table without the help of their server.
Available on Clover Dining, Scan to Pay prints a QR code on the customer’s itemized bill. Once guests scan the code with their iPhone they can pay via Apple Pay without opening a separate payment app. After the transaction is complete, the server sees a notification on their Clover terminal that their customer has paid. This allows the customer to leave the restaurant without further interaction.
“As restaurants look for new ways to adapt to consumer trends and offer quality dining experiences, Scan to Pay puts the power of when to pay and leave into the hands of the restaurant guest, creating a better dining experience and reducing extra tasks for servers,” said John Beatty, co-founder of Clover. “Scan to Pay represents another step forward for Clover as we continue to build out our core technology capabilities and provide additional solutions that can help merchants grow their businesses and delight their guests.”
Restaurants using Clover Dining can access Scan to Pay without additional cost, though they are charged card not present (CNP) rates for Scan to Pay transactions.
While the potential user base is limited to iPhone users and further limited to those that have set up ApplePay, the user base for payment services such as Scan to Pay is growing. 9to5Mac recently reported that Apple Pay is used for 5% of card transactions across the globe. And by 2025, that number could reach 10%.
Clover was founded in 2010 and was acquired by First Data in 2013. First Data, in turn, was acquired by Fiserv in July of last year. Clover, which demoed at FinovateSpring 2012, offers a range of card present and CNP technologies and processes more than $100 billion in payment volume each year.
Digital banking and client lifecycle management solutions provider Fenergobrought in $80 million in funding today, bringing its total raised to $155 million and boosting its valuation to $800 million.
The funds come from new investor ABN AMRO Ventures and existing investor DXC Technology, which have taken a 10% stake in Fenergo. “We are very happy to add Fenergo to our investment portfolio,” said Hugo Bongers, Director at ABN AMRO Ventures. “This investment will contribute to ABN AMRO’s strategic priority to build a future proof bank and fight financial crime. We are impressed with the management team and solution Fenergo offers. In addition, this gives us additional exposure to a group of tier one investors.”
Fenergo will use the funds to bolster its products and hinted that the money will also fuel future company and product acquisitions.
Founded in 2009, Fenergo aims to help financial institutions revamp their client onboarding process by creating a seamless user experience while maintaining regulatory compliance. Demand for the company’s modern onboarding tools can be seen in the growth of its bottom line; last year, Fenergo grew its revenue by 21%.
The Dublin-based company boasts 70 clients, including two of its investors, ABN AMRO and BNP Paribas. Also on the list are ANZ, PNC, Banc of California, National Australia Bank, Canadian Imperial Bank of Commerce, UBS Asset Management, Anglo Gulf Trading Bank, Royal Bank of Canada, First Abu Dhabi Bank, Tricor, Exos Financial and Mizuho.
Mastercardannounced today it has received approval from the People’s Bank of China (PBOC) to set up a domestic bankcard clearing institution in China. PBOC has given Mastercard, along with its partner NetsUnion Clearing Corp (NUCC), one year to begin clearing activity in China.
This move comes after a long period of restricted payment card operations in China. For the past ten years, foreign payment card companies could only tap into China’s credit card market via partnership with state-run UnionPay.
“China is a vital market for us and we have reiterated our unwavering commitment to helping drive a safer, more inclusive and seamless payments ecosystem for Chinese consumers and businesses,” said Mastercard President and CEO Ajay Banga. “We remain focused on working with the Chinese government and local partners to grow the overall payments infrastructure.”
According to Bloomberg, which estimates the payments market in China to be $27 trillion, the country has 8.2 billion bank cards in circulation 90% of which are debit cards.
Thanks to a recent trade deal with the U.S., China has ended the monopoly of state-run payments and so far has already opened its doors to American Express and PayPal after the payments company took a 70% stake in China-based GoPay.
For all the excitement about challenger banking ex-U.S., there may be more going on in the alternative banking scene in America than many think.
Mobile banking company Varo Money, for example, announced this week that it has received approval for deposit insurance from the Federal Deposit Insurance Corporation (FDIC). This is a significant step on the company’s journey toward obtaining a national bank charter and moves Varo to the final stage of the approval process, the company said in a statement.
Varo Money CEO Colin Walsh said that the goal of earning a license to operate nationally was “part of Varo’s vision from the very beginning.” Walsh noted that the bank charter would help Varo also meet its goal of boosting financial inclusion. “Becoming a fully chartered bank will give us greater opportunity to deliver products and services that positively impact the lives of everyday people around the country,” he said.
Founded in 2015 and headquartered in San Francisco, California, Varo Money offers a mobile banking account with high-yield savings, direct deposit, and no account fees. The company had a big 2019 – forging partnerships with Galileo Processing, Socure, Cachet Financial, Bancorp Bank, and iHeartMedia in the second half of the year alone. Varo also raised a significant chunk of change in 2019 – picking up a $100 million investment from Warburg Pincus, Gopher Asset Management, and The Rise Fund that drove the company’s total capital to more than $178 million.
En route to earnings its national banking charter, Varo still needs to complete certain organizational requirements, as well as meet terms of both the OCC’s (Office of the Comptroller of the Currency) and the FDIC’s Federal Reserve membership. The company said that once it earns its charter it will expand its offerings to include products like credit cards, loans, and savings solutions.
Top U.K.-based challenger bank Starling Bank raised $77.5 million (£60 million) from existing investors Merian Global Investors and JTC.
Today’s investment brings Starling’s total funding to $417 million (£323 million).
“The support of our existing investors represents a huge endorsement of our business strategy, as we continue to ramp up our growth,” said Anne Boden, Starling Bank founder and CEO. “We’re constantly innovating and have big ambitions to turn Starling into a world-leading digital bank.”
Starling will use the funding to support “rapid expansion” efforts and to create products and services that compete with traditional financial institutions. Helping motivate its employees to push for this expansion, the bank is awarding shares to its staff.
“We could not do this without the support of our 800 employees, who work so hard to provide a better banking experience for our customers, giving them more control over their finances. So I’m thrilled to be giving shares to them,” said Boden.
Since launching its banking app in 2017, Starling has amassed 1.25 million accounts and holds $1.61 billion (£1.25 billion) in assets under management. The bank was founded in 2014 and is headquartered in London with offices in Southampton, Cardiff, and Dublin.
Blockchain-powered payments platform Paystand has raised $20 million in Series B funding. The investment, which the company will use to grow its products and services, as well as sales, marketing, and engineering teams, featured the participation of both new and existing investors.
“We made a promise to reboot commercial finance because it’s insecure, inefficient, and built on trustless networks and technology,” Paystand CEO Jeremy Almond said. “Today markets another step towards realizing that vision and transforming enterprise finance.”
Paystand seeks to do for complicated commercial payments what Venmo has done for P2P transactions. By digitizing and automating a company’s cash cycle, Paystand’s payments-as-a-service platform helps businesses become more capital efficient, streamlines back office operations, and allows them to offer innovative payment experiences.
Paystand participated in our developer’s conference, FinDEVr Silicon Valley, in 2014. With offices in both Scotts Valley, California, and Guadalajara, Mexico, the company has added 80 new large enterprise customers in the last 24 months.
Last week we shared news of FinovateEurope alum Opentech and its partnership with Mastercard.
Now we can add that Swiss Bankers Prepaid Services has teamed up with Opentech to launch its latest money sending service, Send. The new offering is based on Opentech’s OpenPay Send solution which, as we learned last week, leverages the Mastercard Send platform to give users a convenient, “use-case agnostic” way to transfer money to locations around the world.
Swiss Bankers’ Send can be readily activated after a quick KYC process that only takes a few minutes via the mobile app. The solution is is available to all Swiss citizens who are Swiss Bankers cardholders.
Highlighting the rise of P2P payments as a preference for both domestic and international payments, Swiss Bankers CEO Hans-Jorg Widiger praised the partnership with Opentech. “Seizing this opportunity is a crucial step for us to remark and consolidate our positioning as a customer-driven, trustable and innovative company,” he said. “With Send we faced this challenge, relying on our long-dated partnership with Mastercard and Opentech to provide our customers with a distinctive solution in line with our quality standards.”
Fiserv Partners with Hong Kong Digital Bank Pioneer ZA Bank – ZA Bank, will use the company’s VisionPLUS global payment software, which supports the entire card payment lifecycle from origination and issuance to settlement and customer service.
Worldline to Acquire Ingenico in $8.6 Billion Deal – The combination of Worldline and Ingenico will create the world’s fourth largest payment services provider with 20,000 workers in 50 countries serving nearly one million merchants and 1,200 financial institutions.
Also on Finovate.com
Everything Fintech at Davos 2020 – We combed through the agenda to bring you a view of the discussions through a fintech lens. Here’s a summary of some of the most interesting fintech-related topics covered at the global event.
Finovate Launches New Gender Diversity Stream at FinovateEurope – FinovateEurope is innovative for us in a number of ways. This year we will debut our Women in Fintech stream.
Fintech and the Case for Senior-Based Solutions – Ensuring that the online and mobile worlds are a safer place for seniors is one of the important contributions that technology can make.
Can Amazon Help Goldman Sachs Get its Groove Back? – According to reporting in both the Financial Times and on CNBC, Amazon and Goldman Sachs are discussing a partnership that would enable the investment bank to offer loans directly to merchants via Amazon’s platform.
Business spending and expense management platform Divvy is opening up new financing possibilities this week for its business clients with the launch of Divvy Capital.
The new funding option is done via invoice financing. Divvy enables its business customers to “float” their invoices for terms of one, two, or three months. Repayment is straightforward and there is a single, flat fee with APRs ranging from 10.8% to 11.4%.
The Utah-based company describes the new offering as a “flexible, lightweight” funding option that is separate from the Divvy Credit Card, which gives businesses both a physical and virtual Mastercard that offers 1% cash back plus 15% to 50% off select travel expenses.
https://youtu.be/2yVnRpFNrmo
Since all of Divvy’s current business clients are automatically pre-approved, there is no need to wait on credit approvals and funds are disbursed in near-real time. The company has been testing the new financing model for the last six months and it is now opening it up to its wider customer base.
“Divvy Capital is our most important public move in that direction,” the company stated in its press release, adding, “but stay tuned—2020 is full of many more big announcements to come.” A look at the Divvy Capital page reveals that the company is planning to launch short-term loans of up to $50,000 for terms of up to 12 months and and option that allows businesses to float a portion of their credit card balance for a fixed fee.
Hong Kong’s first digital bank will use payment technology from Fiserv. The firm, ZA Bank, will use the company’s VisionPLUS global payment software, which supports the entire card payment lifecycle from origination and issuance to settlement and customer service. ZA Bank will leverage Fiserv’s suite of APIs to ensure fast and seamless app development and integration.
“We are pleased to partner with Fiserv as we embark on a journey to shift the lifestyle of future banking users,” ZA Bank CEO Rockson Hsu said. “With our companies’ combined knowledge and expertise in banking and technology, we are well-placed to respond fast to the ever-changing market with an agile product development approach.”
Licensed in March of last year, ZA Bank launched as a pilot in December with 2,000 retail customers. The pilot enabled the challenger bank to test services such as remote onboarding, time deposit, and facial recognition. ZA Bank offers 6% interest on three-month deposits of up to $25,000 (HK$200,000). Established by ZhongAn Technologies International Group, ZA Bank emphasizes a “community-driven approach” that seeks to match innovative technologies with the changing lifestyles of its customers.
“Ultimately, we want to offer superb user experiences via a robust and secure platform,” Hsu said. “I am confident that with the support of Fiserv, ZA Bank will be well-positioned to deliver relevant, convenient, and excellent service to our users.”
A long-time Finovate alum, Fiserv demonstrated its technology on the Finovate stage most recently at FinovateSpring 2018. The Brookfield, Wisconsin-based company, founded in 1984, acquired fellow Finovate alum First Data last year, and began 2020 with news of a pair of new credit union partnerships.
Speaking for Fiserv on the ZA Bank partnership, company EVP and head of Asia Pacific Ivo Distelbrink, put the collaboration in the broader context of financial innovation taking place in the region. Distelbrink called the launch of ZA Bank “an important milestone” for financial services in Hong Kong, and praised the firm as a “modern banking option aligned to the changing way people want to move and manage money.”
Financial services startup SoFi is partnering with The Bancorp to serve as the company’s backend banking provider and card issuer for SoFi Money.
The company launched SoFi Money last year to serve as an alternative banking product. SoFi’s challenger bank features include spending and budgeting tools, billpay, remote deposit capture, peer-to-peer payments, and a high interest cash management account.
Accountholders also have access to SoFi’s flagship borrowing products such as student loan refinancing, private student loans, personal loans, and home loans. As a competitive edge, SoFi also offers member benefits such as career coaching and VIP access to the SoFi Stadium, courtesy of last month’s partnership with Mastercard.
A rendering of the SoFi Stadium, set to open this summer in Inglewood, CA
The Bancorp is one of the top private-label debit and prepaid card issuers in the U.S. for Visa, MasterCard, Discover, and UnionPay. The company has more than 75 million prepaid cards in distribution and processes 1.1 billion transactions each year.
“As a true pioneer in the fintech space, SoFi has been setting and surpassing industry standards by providing outstanding products and services to its members,” said Damian Kozlowski, President and CEO of The Bancorp. “We are incredibly proud to be selected as a key partner that will support SoFi’s mission to deliver innovative products and services to new and existing members.”
The collaboration could begin as soon as March. Amazon has not commented on the report either, other than to affirm that lending is one of the services it provides to its merchant partners. In a statement, the company praised its merchants for “account(ing) for more than half of everything sold in Amazon’s stores.”
Goldman’s potential alliance with Amazon follows news of the investment bank’s 2019 partnership with Apple and Mastercard as part of the Apple Card launch. It also comes as the firm makes a number of moves that suggest it is serious about financial technology. Financial News London noted that in addition to partnership changes in recent years that have led to fewer traders and more investment bankers, Goldman Sachs is also “clearing out space for leaders in the new consumer business (it) is building.” The article highlights a pair of new Goldman Sachs partners – the founder of PFM app Clarity, which Goldman acquired in 2018, and the CEO of United Capital, a recent wealth management acquisition – as evidence of this trend.
Another example of Goldman Sachs interest in fintech, of course, is its digital bank offering, Marcus, launched in 2016. At the company’s first investor day last week, Goldman affirmed its commitment to Marcus, pledging to add a digital wealth management component and a checking account to the platform in 2021. Goldman also unveiled a new mobile Marcus app that enables accountholders to check balances, schedule transfers, and make loan payments. As reported in the company’s fourth quarter results, Marcus has $60 billion in consumer deposits.
A possible partnership with Amazon is not the only fintech headline Goldman Sachs has picked up this week. Yahoo Finance is reporting that Goldman may seek to build its own financial services cloud platform as part of a “transformational, multi-decade effort.” The report quotes Goldman Sachs co-Chief Information Officer Marco Argenti who suggested that the company would leverage it own “core technology services” for external uses in the same way that Amazon has with its Amazon Web Services platform, and potentially provide a significant new revenue stream.
The actual scope of Goldman’s initiative is what has most observers and analysts buzzing. Does the company’s stated “transformational, multi-decade effort” essentially mean Goldman-Sachs-as-a-Service? Or a full-fledged AWS competitor? Bank of America and IBM announced their intention to develop a financial services public cloud platform last fall. It will be interesting to see if Goldman’s ambition is to meet, or exceed, that goal.
Sequoia Capital has led a $35 million funding round for payments infrastructure specialist Finix. The investment, which also featured participation from Acrew Capital, Bain Capital Ventures, Activant Capital, and Inspired Capital, takes Finix’s total funding to more than $55 million. The Series B will enable the company to further grow its product and engineering teams, as well as accelerate innovation in its payments-infrastructure-as-a-service offering.
Finix’s goal is to help companies “own their payment stack” which enables them to create the payment experience that best fits their customers and business. From enhancing the merchant onboarding experience to managing the flow of funds, Finix sees control over the payment process as a “strategic imperative” that companies should not relegate to third party payment service providers. In the same way that companies like Marqeta and Plaid have made it easier for businesses to issue cards and access financial information, Finix sees itself as empowering businesses to own payments.
“Every day, our customers prove to us they are able to build superior product experiences that delight both consumers and merchants when they have full control over their payment stacks,” Finix CEO Richie Serna said.
Finix also differentiates itself by the way it charges for its service. Instead of taking a cut from each transaction, Finix opts for a fixed pricing model plus a sliding scale fee based on the number of payments processed. Finix notes that companies can go live with its system in as few as two months and at a significant savings compared to building their own in-house solution.
“Historically, software companies have had two options: either take (the) pain and integrate payments into your software, or give it to your customers in the form of a disconnected experience,” Sequoia partner Pat Grady explained. Instead, he said, companies can use Finix’s “developer-friendly building blocks” to create an integrated, seamless payment experience for customers while adding payments as a new source of revenue.
Finix was founded in 2015 and is based in San Francisco, California. The company’s customers include Passport Labs, a mobility management platform, retail POS company Lightspeed POS, and small business financing and cash flow solution provider Kabbage.
