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Digital Payments, Cash


#362
Turbo Charged

Published:

Nov 14, 2020


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Posted In:

Digital Payments, Cash

Published:

Nov 14, 2020


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Despite Treasury departments around the world printing unlimited cash (25%+ of all dollars were printed in 2020) - people aren’t even using it, and not because it’s dirty (Launder Your Money, FTC Newsletter Mar 20).

Less than 4% of all spending in Norway was made using cash in the last few months. Though hardly surprising - as Norway and Sweden are often cited as cashless exemplars - it is nevertheless remarkable. Three out of every four card payments in Norway are now contactless, and Sweden’s “cash-light” society is best represented by their cash-to-GDP ratio of 1%.

Under dramatically different circumstances, Venezuela continues to push the envelope of digital payments, by necessity. In addition to having more US dollars than Venezuelan Bolivars and the push for the “PETRO” cryptocurrency, US-based Zelle has been a catalyst to turn the country into a cashless test lab, providing relief from rampant inflation and a worthless local currency. It is estimated that 17% of transactions at retail establishments in Caracas go through Zelle.

Zelle, once viewed as the incumbent’s hope against fintech, has also been a strong beneficiary of the digital tailwinds in the US, having processed 323m transactions worth $84b in Q3 alone (compared to $532b in debit volume for Visa). Also noteworthy is Square’s cashless merchants increased 4x from 8% in Mar to more than 31% post-lockdown. Visa’s new “How We Will Pay” report indicated there are 18m consumers shopping for retail products using connected devices.

While it is easy to assume that cash will continue to be printed into 2021, the turbo-charged road to a cashless society is imminent, albeit under differing circumstances.

Portfolio News


Meet the $10b asset manager with a 10,000 BTC treasury, featuring NYDIG’s Robby Gutmann - One of the largest players in the institutional bitcoin space discusses the changing investor landscape in a podcast interview with CoinDesk. Read more

DeFi trading app Dharma now connects directly to US bank accounts - Portfolio company Dharma has now enabled automated clearing house (ACH) purchases in 13 U.S. states. ACH enables direct transfers from U.S. bank accounts so that users can go straight from holdings in U.S. currencies to cryptocurrencies. With the new feature, Dharma is betting it can stand out in the crypto space by making accessing blockchains easier. Read more

Turbo Charged


Norway has lowest physical cash use in the world, says report - Norway claims to use less cash as a proportion of total spending than any other country across the globe, according to a study by its central bank. Read more

Zelle has turned dollar-starved Venezuela into a cashless test lab - Venezuelans’ embrace of digital money is less a matter of choice than of necessity. Their own currency, the bolívar, is now about as valuable as Monopoly money, a casualty of mismanagement by Nicolás Maduro’s socialist government. Inflation is running above 4,000%, the largest currency note, the 50,000-bolívar bill, is equivalent to less than a dime, and a disastrous 15-year experiment with capital controls gave rise to a thriving black market for dollars. Read more

Visa unveils fintech partnership program in Europe - Visa is rolling out a new initiative aimed at connecting European financial institutions and merchants with cutting-edge digital payments services. The launch comes after a successful pilot program, with the focus of the chosen fintech companies ranging from small business credit risk and buy now, pay later to merchant search and transaction compliance. Read more

Will Facebook’s Libra be part of a new, faster payments system? - A new white paper from Mathieu Baudet, George Danezis and Alberto Sonnino — a trio affiliated with Facebook’s Novi wallet — says a proposed payment system targeting real-time gross-settlement functionality would be multiples faster than the Visa system. Read more

Industry News


The “Fin-influencer” boom: Why Instagram and TikTok are the new battlegrounds for digital banks - Fintech companies are now focusing their fight for market share and customers online, paying social-media influencers to post endorsements across Instagram, YouTube, Snapchat and TikTok. The trend reveals a quiet shift in fintech companies' tactics; dominating platforms where big banks don’t yet play. Read more

Are subscription services the future of fintech? - A recent survey even found that spending on subscription services had more than tripled since March, with one in three respondents saying they’d purchased a new online subscription while quarantining. Now, a new concern lingers: Is the market getting oversaturated? The question doesn’t just apply to streaming services and food delivery companies — it’s an issue financial technology businesses can’t afford to ignore. Read more

PayPal says all users in US can now buy, hold and sell cryptocurrencies - The feature was already partially available in the U.S. before today, but PayPal had been onboarding interested customers via a waitlist. With the update, users will no longer have to wait for a spot to open. In addition, PayPal says that due to initial demand from its customers, it’s increasing its weekly cryptocurrency purchase limit from $10,000 per week to $20,000 per week. Read more

China Construction Bank to issue offshore bond based on blockchain - The deal, which aims to raise up to $3b in total, will allow investors to buy digital tokens that are backed by deposits at the bank’s branch in Labuan, an island tax haven in Malaysia. The move comes amid a wider push towards new technologies in in China’s rapidly evolving financial industry, with the central bank working on a digital version of the renminbi after a period in which online payments systems have taken off. Read more

Justice Department seizes $1b of Bitcoin tied to Silk Road website - The 69,000 seized bitcoins once belonged to Silk Road founder Ross Ulbricht, who was convicted in 2015 of distributing narcotics and money laundering and sentenced to life in prison. The Justice Department said the bitcoins had been stolen from him in 2012 and 2013 by a hacker who liquidated some of the coins but left most sitting untouched for years in a digital wallet. Read more

Brazil prepares launch of new regulatory sandbox - Named the “Controlled Tests Environment for Financial and Payment Innovations”, the sandbox promotes new business models and competition in Brazil’s fintech space. Potential entrants must employ “technological innovation” or promote an alternative use of existing technology. Read more

Ant posed threat to China’s centralized control - Longer lasting implications from the Ant fiasco may come in the less eye-catching area of fintech regulation. In this field, China’s battles may be instructive to the wider world because its financial technology companies — such as Ant, Tencent’s WeBank and the US-listed Lufax — rank among industry leaders both in terms of size and technological prowess. Read more

Businesses everywhere, get ready to disclose your climate risk - Two of the world’s major economies, the U.S. and the U.K., moved this week to make climate change-related risk disclosures the norm. Read more

Cross-border growth: LatAm startups look for new markets - Looking for synergies, scale and new opportunities, Latin American fintechs are expanding into neighboring territories. But it can be a difficult path. Read more

Experian lets Brits use Netflix subscriptions to boost credit scores - Experian is tapping Open Banking to help Brits instantly improve their credit scores by using their council tax and Netflix and Spotify subscription payments. Read more

Hong Kong and China pair up on digital currency experiment - The Hong Kong Monetary Authority (HKMA) is working with the Thai and Chinese central banks on using digital currencies for cross-border trade in Southeast Asia. Read more

Select Financings


Better.com - New York based mortgage lender raised $200m in Series D funding led by L Catterton. Read more

Bumped - Portland based startup that aims to reward consumers with stock in brands they frequently shop with raised $10.4m in Series A funding from investors including Canaan Partners, Commerce Ventures, Oregon Venture Fund, and Valor Siren Ventures. Read more

Coherent - Hong Kong based provider of digital tools for insurers raised $14m in Series A funding led by Cathay Innovation. Read more

Endpoint - California based digital title and escrow platform for real estate agents, buyers, and sellers raised $40m in funding from First American Financial Corporation. Read more

Highwing - Denver based commercial insurance tech startup raised $4m in Seed funding led by Baldwin Risk Partners and BrokerTech Ventures. Read more

Kuda - Nigeria based mobile-first challenger bank raised $10m in Seed funding led by Target Global. Read more

LinkAja - Indonesia based state-owned payments company raised $100m in Series B funding led by Grab. Read more

Local Logic - Montreal based residential real estate intelligence platform raised $5.4m in Series A funding led by GroundBreak Ventures. Read more

Maestro - New York based private equity tech platform raised $7.2m in Series A funding led by S&P Global Market Intelligence. Read more

Railsbank - U.K. banking-as-a-service (BaaS) startup raised $37m in new growth funding led by MiddleGame Ventures and Ventura Capital. Read more

Remote - San Francisco based HR technology platform for international payroll, benefits and compliance raised $35m in Series A funding led by Index Ventures. Read more

Truebill - Maryland based developer of an app for managing personal finances and improving financial health raised $17m in Series C funding led by Bessemer Venture Partners. Read more

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