Fintech Newsletter for 5/8/21

Below are news related to the fintech industry this week.

General News

Fintech companies PayPal and Square reported earnings this week.

PayPal earnings report

Significant highlights from quarterly earnings,

By numbers

  • Total Payment Volume(TPV) of $285 Billion.

-eBay contribution to TPV this quarter was 5.5% of TPV.

-Venmo contribution to TPV of $51.4 Billion or 18% of TPV.

  • The total number of transactions was approximately 4.4 Billion.
  • Total “active accounts” of 392 million with 14.5 million net-net “active accounts” added this quarter.
  • Total merchants in the platform of 31 million with 1.4 million new merchants added this quarter.
  • PayPal tracks its engagement metrics as “transactions per active account” (i.e., Total number of transactions for last twelve months divided by the total number of active accounts for that quarter, with 42.2 transactions per active account the metric had a 7% year over year growth — which shows that PayPal customers have been using its product in high volumes in recent times compared to last year (i.e., pre-lockdown).

Even though the recent Covid lockdowns have caused the uptick in digital transactions, PayPal is bullish that the trend will continue post Covid.

Products, Acquisitions, and Partnerships,

  • The Buy Now Pay Later(BNPL) trend continues to be strong, with $1B in TPV in the U.S alone. PayPal is quoted to have 30,000 merchants implementing their BNPL feature.
  • QR code-based transactions have increased as well, with nearly 1 million merchants accepting QR codes.
  • PayPal announced its partnership with Alibaba’s wholesale marketplace and Aliexpress, Alibaba’s retail global market. PayPal has entered a commercial agreement with FlutterWave to expand its presence in Africa. In the Middle East, they are partnering with TelR.
  • As previously mentioned in our newsletters, PayPal is planning to launch its “Super App” with its new digital wallet functionality so that consumers can have a one-stop app for all their financial transactions.
  • PayPal announced the completion of the acquisition of Israel-based cryptocurrency security startup -Curv. The company operates a cloud-based service to access crypto wallets without any hardware device and also has an approval process to mitigate risks with unauthorized withdrawals of crypto assets.

Talking about financial “Super App” — PayPal in the call mentioned in a recent survey PayPal was deemed the second most trusted brand. However, reviewing the survey, Google was the most trusted brand. With Google recently announcing many features with its Google Pay service will be a formidable competition to PayPal’s Super app.

Square earnings report

By numbers

  • 80% of total revenue came from “Cash App.”

- 69% of total revenue came from the Cash App bitcoin leading the overall revenue by segment

- 20% of total revenue came from the “Seller Ecosystem.”

  • 17% of total revenue came from Seller Ecosystem — transaction-based revenue ,second-most revenue-generating segment.

However, looking at the gross profit margins. The high cost of bitcoins leads to low gross profit margins,i.e., only approximately 8% of total gross profit margins came from the bitcoin segment. While “subscription and service-based” segments were the high-margin business for the quarter.

In terms of products and services, the Square team is bullish on the Cash app and Jack Dorsey, CEO of Square and Twitter, believes bitcoin will be the “currency” of the internet. In that regard, Square continues to invest in the bitcoin ecosystem.

Less than expected April U.S job numbers released.

Bill.com to acquire Divvy, a leader in spend management for SMBs

Divvy is a software platform that combines expense management and corporate credit cards into a single platform. The acquisition has good synergies for Bill.com’s business. Now their customers can manage accounts payable, accounts receivable, and corporate credit cards in one place.

New product announcements.

eBay plans to take crypto payments and allow NFT sales.

Tala and Visa partner to use crypto coins in emerging markets.

WhatsApp Pay enters Brazil’s Payment market.

Fintech New Venture and IPO

  • Upshot,Boston based blockchain-based protocol for questions and answers raised $7.5m in series A funding.
  • Bitski,a San Francisco based NFT enablement platform,raised $19m in series A funding.
  • Boost Payment Solutions,a New York based payment company ,raised $22m in series C funding.
  • HoneyBook,a San Francisco based client communication and financial management platform for service based SMBs and freelancers raised $155m in series D funding.
  • Persona,a San Francisco based platform that helps companies protect, verify and manage customer identities raised $50m in series B funding.
  • Vanta,a San Francisco based automated security and verified compliance platform ,raised $50m in series A funding.
  • LoanSnap,a San Francisco based lending startup,raised $30m in Series B funding.

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