Posted In:

Payments


#450
Cold Hard Cash

Published:

Aug 13, 2022


Author:

Roxy Horrie

Posted In:

Payments

Published:

Aug 13, 2022


Author:

Roxy Horrie


Share:

Consumers may be turning back to cash after years of increasing digital payments penetration during the pandemic. Britain’s Post Office, which operates a host of ATM branches in the country, said this week that it handled a record £801m in cash withdrawals in July. The figure is up ~8% MoM and ~20% YoY. The agency has pointed to a want for spending control contributing to the increase in cash usage as people prepare for a recession, per the Bank of England’s forecast last week.

Digital payments offer many advantages over traditional cash payments - increased speed and convenience at payment sites, offers and discounts from various card providers and ability to pay in different currencies, to name a few. The onset of the COVID-19 pandemic further accelerated the digital payments adoption curve globally. According to the 2021 McKinsey Global Payments Report, cash payments declined 16% globally in 2021, while non-cash transactions grew 6%.

However, the cash vs. digital debate can be about more than ease of use for consumers. In fact, some people have cited the very convenience of swiping a card or tapping a phone to pay as a problem when they are trying to control spending. Plans like the “30 day cash challenge” have as a result emerged to try and help people control spending. The genesis behind the challenge is that when people see cash bills leaving their wallet the acknowledgement is stronger, which hopefully curbs spending behavior when there is a set/lower budget.

Still, we think digitizing payments continue to be the path forward for both consumers and other players in the payments ecosystem. Countries like Israel have started to impose restrictions on large cash transactions (most recently to $1,760 for businesses and $4,400 for personal transactions) to allow authorities to better track money laundering, criminal activity and tax evasion. But for the money-conscious consumer today: cash = king! (+Venmo?)

Cold Hard Cash

MoneyLion reports record second quarter 2022 results - MoneyLion released Q2 earnings this week, raising full year 2022 adjusted revenue guidance and reaffirming breakeven adjusted EBITDA target exiting 2022. The company posted record quarterly adjusted revenue, up 131% YoY, record new customer adds of ~950k, and total customers grew 124% YoY to 4.9m. MoneyLion also reported maintaining leading unit economics - with CAC decreasing to $9 (from $16 in Q1) and ARPU increasing to $76 (from $74 in Q1). Read more

Wise, Plaid launch open finance partnership - “FinTech has become so critical to daily life that most U.S. consumers (69%) would consider switching institutions if their primary account could not connect to their favorite fintech apps and services,” the companies said in a press release. “To meet this growing demand, Wise and Plaid have partnered to serve millions of consumers the secure data access they need to live healthy financial lives.” Read more

Octane announces significant milestones on its journey to transform e-commerce - Octane achieved record-breaking success in 2022 and delivered consistently strong performance. Between January and June 2022, Octane increased originations by 67% year over year through its in-house lender Roadrunner Financial. The company overcame inventory constraints and other headwinds to solidify its position as one of the top three non-captive lenders in the industry. Octane also entered two new markets, tractors and trailers, which enabled the company to bring speed and ease to the buying experience for even more consumers, dealers, and OEM partners and expanded its total addressable market to $40b. Read more

Cold Hard Cash


Cash is back as Brits try to control spending, says Post Office - The pandemic brought a shift toward digital payments, but now it seems more and more consumers are turning back to cold hard cash to help budget during the cost-of-living crisis. Britain’s Post Office, which has 2,700 ATM locations across the country, said its branches handled a record £801m in cash withdrawals in July. That’s up almost 8% compared to June and 20% from the same period last year. Read more

Israel puts the brakes on cash to spur digital payments - Authorities in Israel recently put in place further restrictions on cash payments as a means to combat illegal activity and spur digital payments in the country. Some believe this will see an upswing in crypto uptake, but two experts are not so sure. Read more

Industry News


Ethereum software update planned for September after successful test - Called the Merge, the software upgrade has been in the works for years, and it will change the way Ethereum orders transactions to become more energy efficient. Instead of using energy-guzzling computers called miners, the network will deploy so-called validators using staked Ether tokens -- a setup called proof of stake. Following years of delays, the time for the Merge is finally being set after Wednesday’s completion of the Goerli merge test, which simulated the Merge on a smaller scale. Read more

Mastercard faces retailer backlash over installment payments - Mastercard is facing pushback from retailers over a new product that allows customers to pay off their purchases in installments. The payments giant has begun telling merchants and their banks that it will charge retailers 3% of a purchase price each time a consumer opts to use the new program. Read more

BlackRock launches private trust offering direct bitcoin exposure - The trust will be available to US-based institutional clients and will be BlackRock's first product that offers direct exposure to the price of bitcoin. Earlier this month, BlackRock announced a deal with crypto exchange Coinbase to offer institutional investors access to crypto, beginning with bitcoin. BlackRock, which manages around $9t of customer funds, will use Coinbase Prime to provide the service. Read more

Jack Henry to acquire Payrailz, add tools to help FIs compete with disruptors - This acquisition will enhance Jack Henry’s payments-as-a-service (PaaS) strategy by adding the Payrailz consumer and commercial bill pay, real-time person-to-person, account-to-account and business-to-customer payments to Jack Henry’s virtual payments hub. Read more

Ex-JPMorgan traders convicted in federal fraud trial - The convictions are the capstone of a seven-year Justice Department campaign to punish a style of deceptive trading in futures markets known as spoofing. The rapid-fire strategy was prevalent at some Wall Street banks before Congress outlawed spoofing in 2010, and persisted even after its prohibition, according to prosecutors. JPMorgan paid $920m in 2020 to settle regulatory and criminal charges against the bank over the traders’ conduct. Read more

Blackstone plans to back tech startups in $2b–plus lending push - Blackstone is gearing up to make its first major push into lending to startups and technology companies joining a corner of the debt market that’s quickly heating up. The firm expects to invest at least $2 billion in technology debt deals over the next few years, including venture debt. Read more

Enterprise tax compliance software maker Avalara to be acquired by Vista Equity Partners for $8.4b - In an all-cash deal expected to close in the second half of 2022, Vista will acquire all outstanding Avalara shares for $93.50 per share. That is below Friday's closing price of $95.55 but represents a 27% premium over its closing share price on July 6 — the day reports of the transaction first emerged. Read more

Brazil’s Central Bank President sees room for Pix expansion in Latin America - The president of the Central Bank, Roberto Campos Neto, will meet with the president of the central bank of Colombia, Leonardo Villar, so that the Andean country can "copy" Pix, the Brazilian instant payments model. In Colombia, fintech startup Minka and ACH Colombia created the Transfiya system, with the proposal to be a 24/7 payment method, in real time, like Pix. Read more

Asset managers bet big on crypto despite market rout - Big-name money managers are stampeding into digital assets, finding new ways to monetize investor interest even as trading volumes and prices for bitcoin and other cryptocurrencies have slumped. Read more

Tornado Cash crackdown shows limits of regulating cryptocurrency services - Decentralization leaves authorities without target for enforcement; ‘difficult, if not impossible, to shut down’. Read more

Loan danger: India's illegal finance apps bring worry, regret - The wide adoption of fintech has benefited many people in Asia, especially among the region’s large unbanked populations. But rapid tech developments can also come with a darker side. Read more

Chinese municipal bank issues first digital yuan loan holding IP as collateral - China’s central bank digital currency (CBDC) pilot testing continues to onboard new use cases for the digital yuan. The country has now recorded its first instance of Intellectual Property (IP) financing on the CBDC platform. In a press release, the Suzhou Market Supervision Bureau confirmed that a loan of 500,000 yuan (about $74,000) was issued to an unnamed business to fill its capital turnover gap. Read more

US Bank delivers real-time payments to auto dealers - With another innovative RTP Network solution, U.S. Bank can now provide loan funds to auto dealers instantly after the loan contract is finalized by the bank. Following a successful pilot completed in June, U.S. Bank has already enabled more than 800 auto dealers to receive funds from auto loans via a real-time payment. The bank expects to deliver the solution to more dealers in the coming months as the bank continues to improve operational efficiencies for auto dealers. Read more

Select Financings


Ageras - Denmark based accountant marketplace raised €35m in growth funding led by CIBC Innovation Banking. Read more

Ansible Labs - San Francisco based blockchain payments startup raised $7m in a Seed funding led by Archetype. Read more

Appital - London based equity capital marketplace raised £1.7m in Seed funding led by Frontline Ventures. Read more

Boulevard - Los Angeles based salon focused booking and payments company raised $70m in Series C funding led by Point72 Private Investments. Read more

Dana - Indonesia based digital wallet provider raised $250m in growth funding led by Sinar Mas. Read more

Dezerv - India based wealth management startup raised $21m in Series A funding led by Accel. Read more

Fair.xyz - London based NFT minting platform raised $4.5m in Seed funding led by Eden Block. Read more

Farther - New York based wealth management startup raised $15m in Series A funding led by Bessemer Venture Partners. Read more

Finix - San Francisco based embedded finance startup raised $30m in new funding led by The General Partnership. Read more

Forage - San Francisco based payments processor for grocers to accept SNAP EBT online raised $22m in Series A funding led by Nyca Partners. Read more

Fortress Blockchain Technologies - Las Vegas based blockchain infrastructure firm raised $22.5m in Seed funding led by Ayon Capital. Read more

Injective - New York based layer-1 blockchain focused on DeFi and finance applications raised $40m in new funding led by Jump Crypto. Read more

Jito Labs - Arlington based Solana infrastructure startup raised $10m in Series A funding led by Multicoin Capital. Read more

Marble - Seattle based rental management software startup raised $2m in new funding led by 1984 Ventures. Read more

Merkle Science - New York based blockchain analytics company raised $19m in Series A funding led by BECO Capital. Read more

Modern Life - New York City based life insurance brokerage for advisors raised $15m in Seed funding led by Thrive Capital. Read more

Old Street Digital - London based crypto-based institutional asset manager raised £2.8m in Seed funding led by Draper Associates. Read more

Penfold - U.K. based digital pensions provider raised £7m in Series A funding led by Bridford Group. Read more

Pinata - Nebraska based decentralized media management system for NFTs raised $18m in Series A funding led by Greylock. Read more

RISC Zero - Seattle based zero-knowledge proof crypto startup raised a $12m Seed funding led by Bain Capital Crypto. Read more

TeamApt - Nigeria based operator of a business payments and banking platform raised over $50m in new funding led by QED. Read more

Truework - San Francisco based income verification startup raised $50m in Series C funding led by G Squared. Read more

Unstoppable Finance - Berlin based startup DeFi wallet raised €12.5m in Series A funding led by Lightspeed Venture Partners. Read more


Share:

FinTech Collective Newsletter

Curated News with Context

Delivered every Saturday, the weekly newsletter, produced by our team, provides a tightly edited rundown of global fintech news, along with a bit of our original analysis.