Posted In:

BNPL, Lending, Payments

Alphabet Soup


Sep 18, 2021


Posted In:

BNPL, Lending, Payments


Sep 18, 2021



Acronyms abound - BNPL has taken the crown in 2021. As consumers and the fintech community continue to pile into the space, it looks like it is here to stay.

Buy Now Pay Later (BNPL) by all means has been around since the first recorded debt systems in Mesopotamia around 3500 BC and in its current form is really a 200-year old relic. Installment plans became popular when a growing number of essential — and expensive — consumer goods came into the market. These started with things like shovels used during the California Gold Rush in 1849, and went on to include refrigerators, sewing machines, and of course, the automobile.

With the credit card taking the share of daily purchases in the US - the revival of installment buying was sparked by the online purchase of large ticket items (think Peloton) and high-value fashion items. Fast forward (a couple of months) and BNPL options are available for small daily items, offline services, and even business transactions.

This “new” form of payment is great for customers and businesses alike. Buyers who may not qualify for credit cards are afforded “credit” at the point of transaction while businesses are increasing conversion and sales. Some reports indicate that more than half of consumers have already purchased with BNPL. Large retailers, who have long complained about the fees from payment networks, are all jumping in with the hopes of circumventing the oligopoly of Visa and Mastercard.

The market opportunity is large with some 53m adults in the U.S. lacking traditional credit scores. BNPL providers typically charge a higher merchant discount rate [i.e. the fee that is charged to merchants for processing debit and credit card transactions] in order to offset losses and payment fees. Skeptics point to a potential “credit bubble” and the potential for a surge in late payments.

Of all the acronyms sweeping our world of fintech and venture - there’s a good chance this one is not going anywhere (just like IRL).

Portfolio News

MoneyLion launches crypto investing ahead of planned SPAC deal - MoneyLion CEO Dee Choubey called the initial development "the beginning of the education process" for its consumers during the "early innings of DeFi" and talked about the potential to explore different yield products, crypto payment applications and NFT marketplaces down the road. Read more

Flutterwave teams up with Currencycloud - Africa’s leading payments technology company, Flutterwave, one of TIME's 2021 100 Most Influential Companies, has partnered with Currencycloud, the experts in simplifying business in a multi-currency world, in order to accelerate the launch of their payment network in Europe and the US. Read more

Alphabet Soup

Amazon is doing it. So is Walmart. Why retail loves ‘buy now, pay later.’ - Installment plans are back in style. One reason: shoppers who don’t qualify for credit cards. Buy-now-pay-later companies say they rely less on—and in some cases bypass altogether—traditional credit scores and reports. Doing so allows them to approve more consumers. Shoppers gain the ability to buy things even without cash on hand—translating to higher sales for retailers. Read more

As 'buy now, pay later' surges, a third of U.S. users fall behind on payments - The latest survey found younger consumers were more likely to miss payments. More than half of Gen Z or millennial respondents-- those born between the early 1980s and mid-to-late 1990s-- said they had missed at least one payment. That compares with 22% of Gen X, who were born in the early 1960s to early 1980s, and 10% of Baby Boomers, those born between the mid-1940s and 1980. Read more

Goldman says $2.2b purchase of BNPL provider GreenSky will help expand Marcus - GreenSky operates a platform that facilitates loans for big-ticket items, enabling brands to offer installment loans to customers at the point of sale, thereby increasing sales and conversions for its clients. GreenSky then sells off those loans to a number of banks and other lending partners. The deal could be seen as a way for Goldman to buy its way into the “buy now, pay later” trend, offering Marcus users additional ways to finance their purchases. Read more

Capital One to test 'buy now, pay later' product this year, CEO says - Capital One is rolling this out as competition for consumer loans builds from financial technology firms providing merchants with easy ways to offer cheap financing for purchases. Chief Executive Richard Fairbank said the test will include point-of-sale loans for customers at a "select set of merchants" with which it already has relationships. Read more

Industry News

Beijing to break up Ant’s Alipay and force creation of separate loans app - Chinese regulators have already ordered Ant to separate from its main business the company’s two lending units — Huabei, which is similar to a traditional credit card, and Jiebei, which makes small unsecured loans — into a new entity and bring in outside shareholders. Now officials want these lending businesses to have their own independent app as well. Read more

Wall Street influencers are making $500,000, topping even bankers - The teens and 20-somethings who steer online conversation — about life hacks, beauty products, Hollywood blockbusters, you name it — are now blazing their way into finance. Influencers can translate concepts like passive investing or tax harvesting into digestible social media videos using playful twists, music and colorful captions, making investment products and the like feel accessible to millennials and Gen Z-ers. Read more

Google takes giant step towards powering blockchain-based Web 3 - Search engine giant Google will not be refused a leadership position in powering the next generation of the world wide web, supercharged by blockchain. Today, Google Cloud announces it has joined forces with Dapper Labs, a Canadian startup best known as the developer of the $680m NBA Top Shot marketplace, to support and scale Dapper’s Flow blockchain. Read more

Fintech startup Pagaya reaches $9b SPAC deal to go public - Based in New York and Tel Aviv, Pagaya operates an artificial-intelligence network to make financial transactions like lending more efficient and give more people the ability to borrow. Backed by investors including Singapore sovereign-wealth fund GIC Pte. Ltd., former American Express Co. CEO Harvey Golub and the venture capital arm of insurer Aflac Inc., Pagaya is raising about $200m in a PIPE associated with its SPAC deal. Read more

JPMorgan to open digital retail bank in UK - Sanoke Viswanathan, head of JPMorgan’s newly formed “international consumer” division, said the biggest bank in the US would invest heavily to turn Chase into a serious force in the UK before potentially expanding into other countries in Europe and Latin America. Read more

Gary Gensler on crypto, SPACs, and Robinhood: Wall Street’s top cop wants to police new finance with old rules - Gensler is a traditionalist in the sense that he believes the laws currently governing the market, which date back to the Great Depression, are sufficient to handle modern inventions like bitcoin. There’s no need to rewrite the rules: The crypto exchanges should register with the government, regulators can decide whether various digital coins are actually securities (like stocks) by applying the historic standard known as the Howey Test, and discourse on Reddit isn’t so different from the early days of radio. He enjoys making references to antiquity. Read more

India and Singapore to link their payments systems to enable ‘instant and low-cost’ cross-border transactions - The project to link India’s Unified Payments Interface (UPI) and Singapore’s PayNow is targeted for operationalization by July 2022, both nation’s central banks said on Tuesday. Users on either of the systems will be able to make transactions to one another without having to sign up to the second platform, the banks added. Read more

MercadoLibre, Kaszek launch SPAC for investing in Latam startups - Latin American e-commerce company MercadoLibre Inc and venture capital fund Kaszek on Monday announced the creation of a special-purpose acquisition company (SPAC) to invest in digital businesses in Latin America. Read more

Robinhood is going on a college tour to recruit new customers - Robinhood will give students who sign up for brokerage accounts using their school email address $15 to trade, and enter them into a $20,000 giveaway. Robinhood executives will tour campuses of community colleges and historically black colleges and universities this fall. Read more

Coinbase seeks to raise $1.5b amid corporate borrowing binge - It is not the first time Coinbase has tapped debt markets to raise cash, having borrowed more than $1.4b through a convertible note earlier this year. However, it is the first time the company has sought to borrow from more mainstay bond investors. If the fundraising is successful, it would be a watershed moment for the cryptocurrency industry and its ability to access traditional sources of capital. Read more

Facebook to buy $100m worth of unpaid invoices from 30,000 small businesses owned by women and minorities - By buying up outstanding invoices, the Facebook Invoice Fast Track program puts money in the hands of small businesses that would have otherwise had to wait weeks if not months to get paid by their customers. Read more

Equifax will now offer credit reports in Spanish - The move will help more than 62 million Spanish speakers in the U.S. Equifax is the first credit reporting firm to offer the service. Read more

TransUnion to buy consumer-data aggregator Neustar for $3.1b in Cash - TransUnion expects Neustar’s OneID platform to help unify the digital identity capability TransUnion has built and acquired in recent years, including the TLO data assets and fusion platform, the Iovation device-reputation network, and the digital marketing capabilities of Tru Optik. Read more

Bitcoin to bucks: Crypto fans borrow to buy homes, cars—and more crypto - People use crypto-backed loans for the same reason they borrow against their stock portfolios: to reap the benefits of rising prices without diminishing the size of their bets. Ether, for example, has risen nearly 10-fold in the past year, eclipsing the interest on the average ether-backed loan. Borrowers can also use this strategy to avoid capital-gains taxes. Read more

SoftBank commits $3b more to investing in Latin American tech companies - The Japanese investment conglomerate announced the launch of the SoftBank Latin America Fund II, its second dedicated private investment fund focused on tech companies located in LatAm. SoftBank is launching the new fund with an initial $3b commitment. Read more

Select Financings

Abra - Mountain View based crypto wallet raised $55m in Series C funding led by Ignia and Blockchain Capital. Read more

Avalanche - Brooklyn based blockchain focused on speed and low transaction costs raised $230m in new funding led by Polychain and Three Arrows Capital. Read more

Ascend - Palo Alto based insurance payments platform raised $5.5m in Seed funding led by First Round Capital. Read more

Billogram - Stockholm based payments platform for recurring billing raised $45m in new funding from Partec. Read more

Coinfirm - London based reg-tech startup focused on digital currencies raised $8m in Series A funding led by SIX Fintech Ventures. Read more

Immutable - Australia based blockchain scalability protocol for non-fungible tokens on Ethereum raised $60m in Series B funding led by BITKRAFT Ventures and King River Capital. Read more

Melio - New York based B2B payments platform for small businesses raised $250m in new funding led by Thrive Capital and General Catalyst. Read more

Mynd - Oakland based real estate investing platform raised $57.3m in growth funding led by QED Investors. Read more

Pacaso - San Francisco based company for second home ownership raised $125m in Series C funding led by Softbank Vision Fund 2. Read more

Papaya Global - New York based global people management platform for the remote work era raised $250m in Series D funding led by Insight Partners. Read more

Peach Finance - Oakland based loan serving SaaS raised $20m in Series A funding led by Canapi Ventures. Read more

Pluang - Indonesia based investment and savings app raised $35m in Series B funding led by Square Peg. Read more

Ribbon - New York based homeownership platform raised $150m in Series C funding led by Greenspring Associates. Read more

Sayari Labs - Washington, D.C. based provider of financial intelligence and supply chain risk software raised $40m in Series C funding led by Centana Growth Partners. Read more

Self Financial - Austin based startup that helps consumers establish and build credit history raised $50m in Series E funding led by Altos Ventures. Read more

SpotOn - San Francisco based payments company focused on SMBs raised $300m in Series E funding led by a16z. Read more

TomoCredit - San Francisco based credit card for first-time borrowers raised $10m in Series A funding led by Kapor Capital and KB Investment. Read more

Xendit - Indonesia based payments infrastructure startup focused on Southeast Asia raised $150m in Series C funding led by Tiger Global. Read more


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