payments
Stripe Becomes a Digital Credit Card Issuer
August 8, 2018
Stripe has recently started offering a new API, or programming feature, that allows its merchants to offer physical or virtual credit cards to their employees. The product, called “Issuing,” is still being tested and is currently by invitation only, although it does appear as an offering on the company’s website. Merchants can request an invitation.
According to the website, creating a card is an easy three step process that involves providing identifying information about the cardholder, then literally creating the card (physical or virtual) and finally, activating it. Physical cards can be shipped either to the merchant or the cardholder, while virtual cards are available to use immediately.
The merchant can manage cards by creating restrictions, like maximum purchase amounts, charges can be disputed, and physical cards can have customizable designs, just like cards issued from a bank. However, Stripe is not a bank. Stripe did not respond in time for this story, but it is likely that the company has partnerships with companies that can underwrite and offer lines of credit to their customers. On the Stripe website, it indicates three of its financing partners: Funding Circle, Iwoca and Clearbanc.
Stripe is a payment platform that facilitates online payments. The company takes 2.9% plus 30 cents of every successful charge a merchant makes. Stripe customers are small business owners, but also include giant companies like Facebook and Target. Founded in 2011 by brothers John and Patrick Collison, Stripe is headquartered in San Francisco. It also has offices in Dublin, London, Paris, Singapore and Tokyo, and it employs more than 1,100 people.
Apple Pay is Closing in On PayPal
August 2, 2018
According to Apple’s quarterly earnings that were released on Tuesday, Apple Pay transactions tripled from last year at the same time to more than 1 billion transactions. CEO Tim Cook said during Apple’s recent earnings call that this is more than Square did in the last quarter and exceeded the number of mobile transactions via PayPal. PayPal, the industry leader, reported 2.3 billion transactions over the last quarter. This still puts them well ahead of Apple Pay, by 1.3 billion; but not as far ahead as last year, when PayPal led by almost 1.8 billion.
Apple also reported today that it hit a $1 trillion market cap. The success of Apple Pay is further confirmation that giant technology companies are also becoming fintech companies. Google has the Google Pay service and Facebook’s WhatsApp is rolling out a payment feature. To keep up with fintechs, last year, a group of the largest American banks (including Bank of America, Wells Fargo and Capital One) launched Zelle, a peer to peer payment service. So far, Zelle has proven to be a good idea.
According to eMarketer, a research firm, Zelle is expected to surpass Venmo this year in terms of users. With these expectations, Zelle will grow by more than 73% in the US, to 27.4 million users by the end of the year, outpacing Venmo (owned by PayPal), which should have 22.9 million users and Square Cash, which should have 9.5 million.
PayPal’s Actions Convey Continued Expansion of Lending Business
July 27, 2018PayPal announced its Q2 2018 earnings yesterday. Notably, total payment volume grew 27%, which is 1% higher than Q2 of last year. And the popular payment app Venmo, which is owned by PayPal, grew 78%, only slightly less than its growth of 80% from the last quarter. As expected by Wall Street analysts, revenue growth lagged total volume growth as Venmo is still largely unmonetized.
PayPal demonstrated continued commitment to its online lending division, PayPal Working Capital, when last month it made a significant investment in LendUp, a startup that offers loans to subprime consumers. This follows PayPal’s September 2017 acquisition of Swift Financial, for $183 million.
In yesterday’s Q2 earnings conference call, PayPal CEO Dan Schulman spoke about the company’s consumer lending division, PayPal Credit. He said that the company has strengthened its partnership with eBay by signing an agreement to extend its long-standing consumer financing offer to eBay’s marketplace.
“With this agreement,” Schulman said on the conference call, “eBay will continue to accept and promote PayPal Credit through 2025.”
As PayPal continues to grow both PayPal Credit and PayPal Working Capital, it does have the advantage of strong name recognition. After all, it started back in 1998 as one of the first major websites on the internet. To emphasize this, during the conference call, Schulman cited a recent ComScore study that reported that 52% of mobile consumers said they made more online purchases because PayPal was offered. And one-third of all PayPal mobile customers surveyed said they will abandon a purchase if PayPal is not offered as a checkout option.
Snapchat to Terminate Payment Service Snapcash (And its x-rated subculture?)
July 24, 2018
Snapchat will be terminating its payment service platform, Snapcash, on August 30. Launched in 2014, Snapcash allows users to send money to each other (via a cash app) in a fast and free way. Money goes to users’ bank accounts that are linked to their debit cards and the payment processing is handled by Square.
“Snapcash was our first product created in partnership with another company – Square,” a Snapchat spokesperson told Techcrunch in a statement. “We’re thankful for all the Snapchatters who used Snapcash for the last four years and for Square’s partnership!”
Snapchat’s decision to discontinue the payment service may come because of steep competition from Venmo, PayPal, Zelle and Square Cash, which all specialize in payments. But Snapcash may also be a liability for the company since it’s reportedly been used for X-rated activities. When Snapcash was first introduced, a story on Motherboard suggested that it would enhance Snapchat’s lingering subculture of amateur pornography. By the following year The New York Times reported that although the payment activity attributed to such pursuits was small, both strippers and adult video stars (male & female) were indeed using the service to charge users for personalized photos.
Although Square’s partnership with Snapchat will be coming to an end, Square made it clear in a statement to Techcrunch that its peer to peer Square Cash product is still alive and well with more than 7 million monthly customers.
It is unclear if the phase-out of Snapcash will result in job cuts at the company. But Snap Inc., which owns Snapchat, already laid off about 200 employees in March of this year. The company went public last year on the New York Stock Exchange as SNAP. Snap Inc. also has a hardware division called Spectacles, which sells sunglasses with a camera in it. According to a Cheddar story today, the chief of Spectacles, Mark Randall, has left Snap Inc. to start his own company.
Snap Inc. was founded by in 2011 by CEO Evan Spiegal, Bobby Murphy and Reggie Brown. The company is headquartered in Los Angeles.
Lendr Launches New Business Debit Card
April 9, 2018
Chicago-based Lendr is launching a new business debit card program, according to an announcement the company made at LenditFintech.
This will give them the ability to fund business owners in real-time via an instant access virtual Mastercard followed up with a traditional plastic card. This system is different than pushing funds to a merchant’s existing bank debit card, which fellow online lenders Kabbage and LendingPoint announced at LendIt.
“The idea is to offer a product that makes access to capital as easy as ‘1-2-3,’” CEO Tim Roach told deBanked. “We will have the ability to deposit funds on the Mastercard in real time, making the process seamless for our clients.”
Kabbage, LendingPoint to Offer Real Time Funding Via Push Payments
April 9, 2018
Kabbage and LendingPoint each separately announced today that they will soon be able to get funds into their customers’ business accounts instantly and 24/7 via their pre-existing bank debit card. Hopes for this are not brand new. Last October, OnDeck announced a partnership with Ingo and Visa that would provide this convenience to borrowers, although this has not yet come to fruition, according to an OnDeck spokesperson. This is also not Kabbage’s first foray into real-time loan funding.
“We launched [a real-time loan product] through the debit network three years ago and we were really excited about the results,” said Kabbage co-founder Kathryn Petralia . “Our customers really liked it, [but] our challenge was that we couldn’t get broad enough coverage. Only a small percentage of our customers were able to use it…so we’re excited about our partnership with Ingo because it gives us the ability to broaden this to about 90 percent of our customers.”
Kabbage has entered into a relationship with Ingo and has plans to make this service available to customers this summer. One might wonder why, on a weekend, a merchant needs money and can’t wait until Monday?
“Our customers are always looking to expedite the process,” Petralia said, “not because they’re desperate for cash, but because they really are desperate for time, and they don’t want to spend a bunch of time reconciling their bank accounts [and] making sure the funds have arrived. This is a much cleaner way for them to get access to capital.”
Meanwhile, as part of an announcement by LendingPoint today, the company said that later this year it will be able to “instantly disburse loans to approved borrower accounts through their debit cards, 24/7/365.” This will be facilitated through the TabaPay platform, which also enables LendingPoint borrowers to use their debit card to make loan payments.
eBay to Part Ways With PayPal, Bring Payments in House
February 2, 2018
We all must leave our parents one day and branch out on our own.
However, this is probably not what PayPal Holdings Inc. had in mind.
The company is surrendering its duties as the primary payment option for its former parent, eBay Inc.
On Wednesday, eBay announced that Adyen, a Dutch company, will take over as the main payments processor when the current deal with PayPal expires in mid-2020. The change will allow the platform to host more of the transaction process in house.
eBay was motivated to make a change by the desire to intermediate the transactions taking place on its site and to allow buyers and sellers to complete their business within one website (eBay).
“As a leading global commerce company, eBay believes that payments intermediation is strategically important to improve the buyer and seller experience on its platform and will enable the company to further innovate on behalf of its customers,” the company said in its statement. “In a rapidly changing and competitive e-commerce landscape, shoppers expect to be able to both shop and checkout on the site on which they transact. As eBay intermediates payments, shoppers will be able to complete their purchases within eBay.”
However, this will not be a total break between the two companies that were once attached at the hip. PayPal will remain an option for eBay users until the summer of 2023.
PayPal’s stock took a nosedive following the news. As of 9 a.m. on Friday in the company’s HQ of Palo Alto, CA. the stock had slid from $85.32 on Wednesday morning, down to $77.25 with brief rebounds along the way.
While the move may not have done any favors for PayPal’s stock, eBay is optimistic that it will be a boon for merchants that use the platform to sell their wares.
According to the release, most sellers can expect their costs of payments processing to be reduced after completing the transition. They should also enjoy a “simplified pricing structure and more predictable access to their funds.”
Amazon Wants to Add Fintech Companies to its Shopping Cart
April 5, 2016
It’s Amazon’s turn to go shopping and it wants to buy fintech companies.
The e-commerce giant just turned the heat up on fintech and said that it will look to acquire startups as the dust around valuations settles. It made its foray into payments in 2013 with ‘Pay with Amazon’ a payment tool integrated on other websites for Amazon customers. Now, the service has 23 million users worldwide.
On Monday, (April 4th), at the Money 2020 Summit in Copenhagen, it announced that it will extend the service to third party merchants hosted on its marketplace.
“The Amazon Payments Partner Program provides Partners with the tools and resources needed to extend the trust and convenience of the Amazon experience to their merchant customers,” Patrick Gauthier, vice president of Amazon Payments, said in a press release. Which is another way of saying that wherever merchants go, Amazon will follow.
This announcement comes after Square released a similar service last week (March 30th) with APIs of its payment integration tool for merchants to use on their sites. Amazon is simultaneously stepping into the turfs of PayPal and Visa while threatening smaller but strong rivals like Square and Stripe. As far as customer acquisition goes, the company doesn’t have to look beyond its own marketplace and what seems like a small step for Amazon could be a giant leap for the industry. The company coincidentally also makes loans to its own customers, just like both Square and PayPal.
Startups in payments and lending are making hay while the sun shines bright. And in this case, that’s nearly half of all the fintech dollars invested. If Amazon is hunting for a good deal, it might be a bit longer in what still seems to be a seller’s market — there are over 152 fintech startups deemed ‘unicorns’ or having valuations of at least $1 billion.
But maybe Amazon is the corrector the market needs?
