Welcome to The Interchange! If you would like to receive this information in your inbox, please sign up here. It was an event-filled week in the fintech world, with the launch of FedNow, ex-fintech CEO Bolt, and the company itself being subpoenaed by the SEC, among other things. Let’s dig in here.
Last week, the U.S. government’s instant payments system, federal service nowis finally live.
fed now Is an instant payment infrastructure for transfers that promises to be a faster payment gateway for financial institutions, providing instant access to funds no matter when and where. As you know, this is a huge problem because banks traditionally don’t operate 24/7 or let you receive your money and spend it the same day.
While other countries (including Brazil, India, the UK and the European Union) have offered similar services for some time, the US is still considered “behind”. In fact, in Brazil, the country’s similar system, Pix, is rumored to be so widespread that people even use it instead of credit cards to pay street vendors. There is also data to support this.
On Friday, we took a deep dive into what the long-awaited launch of the service might mean for the US. But we didn’t mention one thing: how banks choose to price FedNow to their customers and how that might affect the speed of its adoption.
Adam Shapiro, Partner, Financial Services Advisory and Investment Firm Email Claros GroupNote that the Fed charges banks about 4 cents for FedNow payments, compared to less than half a cent for ACH payments. However, he added, banks are free to charge customers as much as they want for these payments. As a result, Shapiro said, “if banks make FedNow significantly more expensive than ACH, corporate customers who are deciding which to use may be put off.”
He added: “Businesses may be willing to pay 3.5 cents to make someone money faster, but paying 25 cents draws the line. Also, how fraud is handled and the scope of liability if something goes wrong will affect adoption.”
Christine reports on the fact that in April, a letter was written on behalf of the attorney bolt Investors said the U.S. Securities and Exchange Commission is investigating whether Bolt’s statements about the 2021 fundraising violated federal securities laws. The letter was sent to Bolt’s general counsel as part of a fact-finding mission. According to a letter cited by The Information, Brian Reinken of WestCap Management and Arjun Sethi of Tribe Capital Management, which participated in Bolt’s Series C and B rounds respectively, have requested to see the company’s records, alleging that former CEO Ryan Breslow allegedly “misled” investors about the company’s $355 million Series E round. You may recall that Breslow stepped down as CEO in January 2022.
Mary Ann teamed up with Rebecca Szkutak to examine how much fintech valuations have fallen since the height of the venture capital boom (see chart below). Not surprisingly, most of the most highly valued fintech companies saw their valuations fall, with three notable exceptions – all operating in the same space.They looked at valuations based on secondary stock activity (as Notification Network), which some believe may be a more accurate reflection of the company’s value than the public valuation at the time of the financing. They also spoke to some industry experts to find out what the future holds. Check it out here: Fintech valuations have fallen. Where do they go from here? (TC+)
TC’s Alex Wilhelm and Anna Heim dig into the insurtech space on TechCrunch+, noting that while some sectors will be able to overcome their overvaluation woes from 2021 onwards, this sector doesn’t appear to be one of them. So much so that one report called it “the death of InsurTech 1.0.” Alex and Ana look at the performance of start-ups around the world and whether there are signs that the industry can indeed recover. (TC+)
Journalist Dominic-Madori Davis writes about the aftermath of a takeover involving Neobank Greenwoodcatering to black and Latino customers, and Assembly point, a social club with similar interests. As you’ll see, everything was going well… until things went awry. Now there are unpleasant feelings and lawsuits. While there was no comment from either party, Dominique Madori detailed what went wrong. With the recent closure of another LGBTQ+-focused neobank, Daylight, the debate continues over whether niche-focused neobanks will ultimately succeed.
Get your palms ready!Reporter Sarah Perez reports amazonBy the end of this year, all 500 Whole Foods stores owned by Amazon will adopt palm scanning payment technology. Here’s how it works: With a biometric payment system, a customer hovers their palm over a reader device, which recognizes an individual’s unique palm signature and links it to the customer’s payment card on file in order to charge them for purchases. Don’t worry, your handheld data will not be shared.
Medical procedures often involve complex webs of billing and payments that can span months or even years. I (Christine) personally had a collection agency chasing me for a $50 urine test (I was 21 and didn’t know much), so I can imagine what it’s like to be someone who owes thousands of dollars in medical bills. This week I wrote about Collectly, a company that has developed a proprietary interface that integrates with electronic health records and practice management software to make billing easier for patients. The company claims that by streamlining the payment process, medical company clients have been able to increase, on average, 75% of patient billings from medical group partners and reduce “days receivable” from 60 to 90 days to 12 days.although collectivelyMy customers are medical institutions, and I think the digitization of medical bills can also help patients. Who wouldn’t want to access and pay all of their surgery-related bills with one click?
CB Insights posted its Q2 State of Fintech Report Unsurprisingly, global funding in the sector nearly halved last week to $7.8 billion, the lowest level since 2017. But at least one region had a decent quarter. Can you guess which one it is? Meanwhile, payments — historically the fintech darling — haven’t had a good three months. Read more here.
visa and MasterCard Antitrust lawsuit filed by fintech firm jam. In the lawsuit, filed July 14 in the U.S. District Court for the Eastern District of New York, Block accuses the two credit card giants of “conspiring to substantially overcharge the Square payments platform, causing consumers to pay higher retail prices” and maintaining market share by raising interchange fees. According to Bloomberg.
technology giant apple In late March it finally launched the Apple Pay Later service, which allows users to spread the cost of Apple Pay purchases into four equal payments over six weeks, with no interest or late fees. The move puts Apple in direct competition with the likes of Affirm, PayPal and Klarna. How is it going so far? Well, according to JD Power, pretty good.recent Report About one in five BNPL (buy now, pay later) customers said they used Apple Pay Later in the previous three months, the study found. Additionally, the report reveals that Apple “has a more stable and sustainable user base than its competitors. Beyond that, the data suggests it may attract first-time BNPL users who might otherwise not consider BNPL as an option.” All this leads JD Power to conclude: “There are no guarantees, but there are many benefits to Apple Pay Later — and overall, a good thing, especially as Apple itself ventures further into financial services.”
Sundae sets out to build a kinder way to buy run-down homes (TechCrunch reports on the company’s 2021 raise here.)
Funding and M&A
See on TechCrunch
Thunes raises $72M at over $900M valuation to expand its cross-border B2B payments platform
Karat, a startup building financial tools for content creators, raises $70M
Cognaize raises $18M to build a better LL.M. for the financial industry and get people involved
Runway secures $27.5M to simplify financial planning for businesses
Egyptian fintech Flash raises $6 million
do you know?Invesco Real Estate invests an additional US$20 million in SFR platform. (Read TechCrunch’s previous coverage of Mynd.)
KASO Raises $10.5M in Seed FundingLaunched fintech vertical offering payment services and extended credit terms to restaurants
Join us at TechCrunch Disrupt 2023 this September in San Francisco as we explore the impact of fintech on today’s world. This year, we’ll have a full day dedicated to all things fintech featuring some of today’s leading fintech personalities. Save up to $600 on passes now through August 11, plus save 15% with promo code INTERCHANGE. learn more.