PayPal just launched what it calls a super app. It has a cash account with a 0.40% interest rate, direct deposit, money movement, bill pay, and remittance features. It also integrates shopping functionality with rewards and cash back. In this analysis, we compare this offering with Google Pay and Square Cash App, as well as trace the DNA of PayPal to understand whether such an offering will succeed where others failed.
In this analysis, we want to update the discussion of card networks, money movement, and the potential existential threat — or perhaps evolution — to existing infrastructure. It continues the thread on articles like Is Plaid cheap at $5.3 billion for $500 billion Visa? and Marqeta's $300MM of revenue & Ethereum's $20B in ann. transaction fees highlight opportunity and industry structure, and Who are the customers of Embedded Finance, and what do they reveal about Stripe, Affirm, DriveWealth, and Green Dot?, and more generally in this research section. We map Plaid’s progress in building out a payments ecosystem, and highlight Affirm’s debit card product powered in a novel manner through open banking. The analysis visualizes a likely evolution of the space with the introduction of Web3, and highlights a couple of early symptoms.
In this discussion, we explore ways that Stripe — arguably the best American fintech company full-stop, although who would want to mess with Square — could be entering the crypto space. We consider approaches similar to the payment onramps, then discuss the underlying market structure powering those experiences, and highlight more generally the role of gateways relative to protocols. We touch on the role of custodians, banks, and wallets, as well as Square’s attempt, the tbDEX, where KYC/AML comes down to forms of opt-in identity. Finally, we address questions about Circle and USDC, and how stablecoins differ from the rails on which they travel.
Let’s do some math homework. It’s good for you:
The Federal Reserve money movement system broke for several hours. We look deeply into its volumes and transactions, and value it like a Fintech unicorn.
The Ethereum ecosystem is throwing around as much volume in settlement as the Fed check processing system. We explore scalability barriers and solutions.
Can eCommerce fit into our emerging infrastructure? We anchor to the market numbers in China and the United States.
Things break.
Sometimes the things that break are the US Federal Reserve ACH service, Check 21, FedCash, Fedwire, and the national settlement service. They were down for a few hours — discovered at 11AM on Feb 24th and still in trouble at 3PM that day. Everything is now up and running again.
In this conversation, we chat with Richard Turrin – an award-winning executive, previously heading FinTech teams at IBM, following a twenty-year career, heading trading teams at global investment banks. He’s also the author of the number one international bestseller, Innovation Lab Excellence. One of his books is Cashless: China’s Digital Currency Revolution, which brings the story of China’s incredible new central bank digital currency to the west. He lives in Shanghai, China, where he’s had the privilege of living in China’s cashless revolution firsthand.
There is poetry in the symmetry of this situation. Bitfinex is looking to raise $1 billion in capital to support the most popular stablecoin Tether, which it controls. Facebook is reportedly looking to raise $1 billion in capital from First Data, Visa and Mastercard and other payments companies to shore up its own stablecoin asset. Poetry is where the similarities end, and all these devils are in the details.
In this conversation, Will and I break down a few important pieces of recent news. MetaMask, the crypto wallet, hit 1 million month active users in yet another sign of the acceleration of retail adoption.
Square’s market cap is now equal to that of American Express, and the former also announced it has purchased $50 million of Bitcoin with its balance sheet. What do these pieces of news mean?
Greenwood Financial launched, a neobank led by Andrew J. Young, a civil rights legend, Killer Mike, a rapper and activist, and Ryan Glover, founder of Bounce TV network. How much scope is there for financial services for affinity groups instead of traditional geographical or product coverage areas?
In this conversation, Will Beeson and I break down a few important pieces of recent news — the SPACs for SoFi and Bakkt, and Plaid/Visa falling apart.
SoFi is going public with a SPAC deal worth over $8 billion. A few things we touch on in detail: (1) this is still largely a lender, (2) there is a gem of an embedded finance play called Galileo that SoFi owns, and (3) the multiple is a little over 10x T12 revenues, which is not crazy expensive, but not cheap.
Speaking of Galileo and finance APIs, we transition to Plaid, and how it is is not going to be one of the networks in Visa’s network of networks. Who wins and who loses in the equation? And last, we cover the Bakkt SPAC of over $2 billion and our view on its future.
Oliver Hughes is the CEO of Tinkoff Group, one of the world’s most successful digital banking groups with over 10 million customers. This is one our most interesting conversation to date, full of fantastic operating advice.
Tinkoff is publicly listed with a $3.8 billion market capitalization, which brings clarity to its operating model in a time when many noteworthy consumer digital banks are pursuing customer acquisition at the expense of profitability.
Oliver has led Tinkoff through three financial crises, and brings experience and perspective to the current COVID crisis. This is a fascinating discussion about unit economics in digital banking and winning business models with a CEO with thirteen years of experience in this space.
Jump is an electric bike that is being distributed by Uber, and it just happened to be launching 350 of them in the London borough of Islington. You can rent a bike for 5 minutes at £1, and pay £0.12 per minute thereafter. That's generally cheaper than a taxi, on average more expensive than a public bike subscription. So why am I going on an on about these bikes? Two things come to mind as jumping off points for deeper discussion: (1) the incentives and tactics of economic organisms under capitalism to gather and retain attention, and (2) the monopoly powers of Uber and Facebook, leading to the impact of Libra's cryptocurrency on open competition, as well as the public responsibilities of supra national corporations.
