Uncle Sean's Update - 10/29/21

Happy Friday & Happy Halloween!!!
 
I can’t believe that Monday is November 1st already – well they say that time flies when you’re having fun; and this year is FLYING by!!!  Don’t forget to sign up here to have the Uncle Sean Update sent direct to your inbox each week and avoid FOMO!  Here is the Uncle Sean Update for 10/29/21:
 

• It’s Halloween Weekend and Cybersecurity Awareness Month – so here is a terrifying article from CoinDesk detailing how criminals “can pay as little as $150 (usually in bitcoin) on the black market for a ready-to-use, verified account in someone else’s name” on many leading crypto exchanges and some very well known payment services.  Keep in mind that “verified” does not mean legit (so much for KYC).  The new “face” of identity theft for the purpose of tax evasion on crypto capital gains…. Yikes!!!

                

• Moving on to some happy news - congratulations to Capital Federal Credit Union in Lubbock, Texas for obtaining their federal charter and National Credit Union Share Insurance Fund coverage.  Capital FCU expects to begin operations by the end of the year and “will provide services to a multiple common-bond field of membership that will include employees of Capital Mortgage Services of Texas, members of the League of United Latin American Citizens — Lubbock, Texas Council #263, and an underserved portion of Lubbock County consisting of 39 census tracts.  The credit union will work to obtain the low-income credit union designation by focusing on serving the Latin American population in the underserved area.”

 

• GreenState Credit Union makes another bank acquisition by purchasing Midwest Community Bank (Cert #19628; $353M in Total Assets; $47.5M in Tangible Common Equity) and its subsidiary Blueleaf Lending, LLC.  Terms were not disclosed. 
  • For those keeping score, this makes 12 CU acquisitions of banks YTD thus far, and is GreenState CU’s 3rd bank acquisition in 5 months (source: FedFis M&A database).

 

• Buy Now, Pay Later (BNPL) seems to be the dominant headline everywhere you look these days….  Here are some BNPL updates for the week:
  • Affirm announced a partnership with American Airlines to offer eligible travelers the added flexibility to purchase flights and pay over time with Affirm.   
  • Also announced this week, Affirm has been talking about a debit card for some time now, but more details have emerged as they announce their Affirm Debit+ platform.  It’s still on “wait list” mode, but is expected to be widely available at the beginning of 2022.  Basically, you link your existing bank account via Plaid (that sure smells like a prepaid GPR to Uncle Sean), and you can use your Affirm Debit+ Visa card (issued by Evolve Bank & Trust) to pay in full up front, or over time (BNPL) for certain purchases through the app with no fees and no interest.
  • Visa CEO, Al Kelly, mentioned in their earnings call this week that they are frequently behind the scenes processing those BNPL payments and allowing new entrants to scale.  Per this Payments Dive article, he went on to state, "what I think is going to happen is that BNPL players will become issuers who will issue Visa credentials that will have their value proposition for installments embedded within the product itself so that they can, therefore, scale very, very quickly" and connect to the millions of merchants who use Visa.  “And that's what I'm referring to when I say BNPL 2.0.” said Kelly.
    • Yep, that sure seems to be what transpired above with the Affirm Visa Debit Card…..
  • Visa also went so far as to issue a separate press release this week further reiterating how Visa fuels BNPL growth around the world – which kind of felt like some ‘old school chest pounding’ – LOL!!!
  • Klarna announced a partnership with Stripe where retailers using the Stripe can now activate Klarna as the preferred payment method at checkout.  It is worth mentioning that Stripe and Klarna are the two largest fintech companies in the world (by valuation) at an estimated $95B and $46B respectively – so this is a pretty big deal!
  • Amount announced an agreement with Marqeta providing “the first virtual card and loan origination partnership to help banks rapidly enter the buy now, pay later (BNPL) space.”
  • Elavon (by U.S. Bank) CEO, Jamie Walker, stated this week that the card payments processor is assessing how to capitalize on BNPL; and mentioning that the firm will likely both build and buy its way into the buy-now-pay-later market.
  • Opy USA (U.S. division of Australia’s Openpay) launches BNPL in the U.S. offering “customized payment plans with spending power for up to $20,000 with longer terms of up to 24 months.”  Targeted industry verticals include healthcare, dental and veterinarian services, education, home improvement, auto repair and servicing, and big-ticket retail.

 

• Nationwide pawn store operator FirstCash (Nasdaq: FCFS) announced an agreement to acquire fintech firm American First Finance to enter BNPL market.  Currently, American First Finance (AFF) installment loans are originated by FinWise Bank as the sponsor bank.  I am curious to see if FinWise remains as the originator after completion of this acquisition.  AFF currently hosts over 6,500 merchant partner stores and e-commerce platforms.
  • Funny side note – For years now Uncle Sean has joked about where to draw the line on “what is a fintech” especially on the lending side (trying to differentiate from “fintech/embedded finance” versus good ole fashioned “trade/supply chain finance”).  My internal recurring joke “was” a reference to pawn shops (since they technically “lend”, does that make them a fintech?)…  Well…..  Personally, I still think this is a bit of a stretch to call this a “FinTech” solution, but I am certainly eating some crow and everyone on the FinTech Team here at FedFis is laughing uncontrollably at my expense (including me 😊)……..  I’ll never hear the end of this – LOL!!!!!

 

• Visa makes an undisclosed strategic investment in Deserve (the credit card-as-a-service firm).  Recall a few months back where BlockFI launched their Visa credit card (issued by Evolve Bank & Trust by the way) with bitcoin rewards powered by Deserve.  A quick update by BlockFI shows that within 90 days of launch, this card is currently pacing towards over $2B in annualized spend.  The update also states the “average BlockFi client is on track to spend more than $30,000 per year on average, 450% higher than the average of $5,000 per year on all Amex, Mastercard, and Visa cards in the US.”  WOWZA!!!!

 

• Mastercard and Bakkt teamed up this week to make it easier for Mastercard’s network of banks, merchants, and fintechs in the U.S. to integrate cryptocurrency services into their products allowing more customers to use crypto for purchases.  In short, Mastercard’s banks and merchants in the U.S. will be able to issue branded crypto debit and credit cards and enable consumers to buy, sell, and hold digital assets through custodial wallets supported by Bakkt.  Mastercard customers will also be able to offer their consumers the ability to earn and spend rewards points in cryptocurrency in lieu of loyalty points and convert their crypto to pay for purchases.

 

• Greenlight (teen banking app) launched an optional educational investing platform for parents as they expand their offering to the entire family.  Besides the education program intended for both parents and kids, the RIA platform (through Greenlight Investment Advisors, LLC; SIPC provided by DriveWealth, LLC as broker dealer) allows for fractional share investing and fee-free trades.  However, the investing platform is only offered with the additional subscription based plan so you have to choose to upgrade to Greenlight + ($7.98/mo) or Greenlight Max ($9.98/mo).

 

• American Express launches their new digital business checking for SMB's with first ever Amex issued debit card (it’s been a little more than a year after announcing the Kabbage acquisition).

 

• Ramp (business charge card) targets Bill.com with free payments software …….  And Bill.com announces a partnership with Marqeta to create new virtual card products for Bill.com FI customers.  Turf war???

 

• Fiserv announced Credit Choice, a card issuing and management platform designed specifically for smaller FI’s “to deliver a digital-first branded credit card program for consumer and small business cardholders.” 

 

• Synctera launches t-minus 10, a pre-launch developer platform that allows developers to “build an end-to-end FinTech application in a matter of days, including card issuance.” 

 

• Notable funding updates for the week:
  • Torpago (business card and spend platform) raised $77M in total funding including $2M in Seed add-on.  Valuation was not disclosed but the company stated “100% month-over-month increase throughout 2021, amid explosion in the corporate spending sector this year.”
  • Button Finance (fintech home equity mortgage lender) raised $2M Seed round
    • No relation to FedFis Rockstar Bobby Button by the way….  LOL
  • Simpay (fka Alpha Card Services – merchant service solutions) raised $17M term loan
  • Citcon (mobile wallet payment provider) raised $30M in Series C funding round citing annualized payment volume (based on 1H21) in excess of $1B representing 300% YoY growth
  • Devo Technology (cybersecurity) raised $250M in Series E funding round at a $1.5B valuation stating nearly 100% YoY revenue growth and over 100% customer growth
  • CoinList (platform for crypto offerings) raised $100M in Series A at a $1.5B valuation
  • Extend (digital payment infrastructure and virtual card issuer for FI’s) raised $40M in Series B round.  Valuation was not disclosed but the company has more than 2,000 business customers, is growing 30% month-over-month, and has a run rate of “close to $2 billion dollars” in processing volume.
  • Alchemy (Web3/blockchain dev) raised $250M in Series C funding round at a $3.5B valuation, which is a stunning 7X valuation increase in just six months (that’s $500M in valuation increase per month).  WOW!!!!!
  • Drip Capital (cross-border trade finance platform) raised $175M in capital including $40M in Series C and $135M debt facility.

 
 
Random Uncle Sean Stuff:

• It’s Halloween this weekend!  Don’t forget to watch It's the Great Pumpkin, Charlie Brown and hand out way too much candy to the local trick-or-treaters!!!  Every year, Aunt Patty and I set up a table in our driveway with tiki torches, pumpkins, candy, and Halloween music on the Alexa to greet all the kiddos in the neighborhood!!!
• The MLB World Series has been fantastic so far!  With only hours to go before tonight’s Game 3, the series is tied at 1 each with the Braves winning Game 1 with a score of 6-2 and the Astros winning Game 2 with a score of 7-2.  Go Stros!!!
  • Best wishes to Charlie Morton for a speedy recovery – in case you missed it, Charlie (Braves Pitcher and former Astro in 2017 and 2018) was hit in the lower leg by a line drive that actually fractured his right fibula unbeknownst to Charlie.  Amazingly, he finished the inning facing two more batters after that.  Even more shocking is that he came back out to the mound the next inning and struck out Jose Altuve before limping off the field for good.  DUDE – Much respect!!!!!
• And of course some obligatory Dad Jokes to finish off your work week:
  • Never try to fight a dinosaur….  You’ll get juarasskicked (I am literally crying laughing at that)!!!!! 
  • The scariest thing to read in brail is “danger, do not touch” (okay, okay that was a bad one and I kind of halfway apologize - LOL!!!)……
  • You know how at the end of the game the winning team throws the ball into the crowd in celebration…..  Well apparently I was informed that is NOT acceptable at the bowling alley….  😊

 
 
Have a GREAT Halloween weekend and please stay safe!!!
 
Uncle Sean
 
 
Sometimes known as Sean Mayo – contact me directly for scope and pricing of custom reports / analysis projects at smayo@fedfis.com | 214-604-6961 – or you can contact FedFis Sales Team at 512-960-0911 | info@fedfis.com #FedFisHasTheData FedFis
 
FedFis, LLC disclaimer – The views and opinions of Uncle Sean are of his own and may not necessarily represent the views, endorsements, and/or opinions of FedFis, LLC – we all know he’s a little bit different; but that’s why we love him.
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