Affirm inks deal w Amazon ??; Payments still hot - Melio triples valuation with the latest funding ??; Remitly IPO & $1.5T remittances opportunity ??

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Last week (30 August – 3 September) was a really hot and super exciting week in FinTech.?We will look at?Affirm's partnership with e-commerce giant Amazon; Melio tripling its valuation; Remitly's upcoming IPO and other interesting news and developments.

Without further ado, let us dive into what has happened in the financial technology sector last week. Let’s connect the dots.

Affirm inks deal with Amazon ??

Amazon goes BNPL ???Amazon?is diving into the buy now, pay later space. The e-commerce giant has teamed up with?Affirm?for its first partnership with an installment payment player on the popular e-commerce site.

Affirm’s buy now, pay later checkout option will be available to certain Amazon customers in the U.S. starting Friday with a broader rollout in the coming months. The partnership will let Amazon customers split purchases of $50 or more into smaller, monthly installments.

Affirm said some of the Amazon customer loans will bear interest, but some will come with 0% APR. Other installment-type options are available on Amazon through credit cards.

The effect ???Affirm’s stock spiked as much as 48% after-hours Friday on the news, adding more than $8 billion to its market capitalization, later settling up around 33%. Amazon shares were unchanged.

Affirm is one of the best-known installment payment options. It works with more than 12,000 merchants, including?Peloton?and?Walmart.

?? THE TAKEAWAY

BNPL is here to stay.?That’s more and more obvious now, especially considering that younger generations prefer this payment method over traditional credit cards (I’ve written about that in earlier newsletters). Furthermore, it’s a massive move for Affirm as it now gets to have two of the largest retail heavyweights tied to its payment network (hence, the massive stock surge). When it comes to Amazon itself, it’s definitely part of their strategic thinking and customer-first approach. I’d probably view it as a trial and if it takes off very well, I wouldn’t be surprised to see?Amazon Pay Later?sometime soon.?

Payments are still hot - Melio triples?valuation with the latest funding ??

The funding ?? Melio?Payments, an Israeli-founded company, is set to triple its valuation in new funding round, The Information reported.

The round is expected to value the company at a whopping $4 billion, the report stated, citing 3 unnamed sources. That increases?Melio's?valuation by about x3 since their last funding round… in January! ??

Yet, it must be noted that the new round is still open, and the valuation is subject to change, the report stated.

The USP ???Founded by Matan Bar, Ziv Paz, and Ilan Atias, Melio enables businesses to pay suppliers directly from within the QuickBooks accounting software, which is popular among small businesses in the US.

It does not collect a commission on transfers between bank accounts, but if a business wants to pay suppliers on credit, it is charged a 2.9% commission, and Melio transfers the money to the suppliers with its own check. Melio thus helps businesses pay on credit - that is with a payment that is not immediate but happens once a month - while it pays the suppliers by check, which many of them prefer since it does not involve a commission.

Strong growth in the US?????In order to meet the growth in demand for payments services in the US, Melio has to recruit more and more people in Israel, on terms that will give it an advantage in the tech employment market.

According to LinkedIn data, Melio's workforce has grown by nearly 80% in the past six months alone, and it now employs about 385 people in its offices in Tel Aviv and New York. Melio is currently opening a new branch in Denver, Colorado, a move that will bring it closer to the market of small businesses in the US Midwest and West, and that will result in the recruitment of 250 people.

?? THE TAKEAWAY

Biz Payments > Retail payments.?The business-to-business (B2B) wholesale payments industry — in which businesses pay their suppliers for goods and services — still often relies on paper invoices. As crazy as it may seem… One interesting stat is that circa 42% of B2B transactions in the US are still done with paper checks which result in a roughly?$25T market . And that’s what Melio is after. Could it become the Stripe of B2B payments? ??

Remitly IPO & $1.5T remittances opportunity ??

The filing???Remittance player?Remitly, preparing to go public, has recently submitted its S-1 with the Securities and Exchange Commission (SEC). The interesting part??Surprise, surprise…?it’s remittances!

The Opportunity ???The company has detailed a cross-border payments opportunity worth in the trillions of dollars annually and said that the global remittance market is ripe for a tech-led overhaul toward mobile channels.

According to Remitly, in terms of the overall market size, cross-border remittance and banking are “two of the largest financial services markets in the world.”

The cross-border remittance market saw $1.5 trillion in total migrant remittance inflow volume in 2020, and as Remitly said in the filing, it generates $40 billion in transaction fees worldwide.?Not too shabby!

Still, lots to do ???Remitly emphasized that the market is hampered by a lack of technological innovation, and is still dominated by banks, brick-and-mortar locations, and informal channels – which translates to a lack of financial inclusion. The company said there are more than 280 million immigrants across the world who are excluded from access to common financial services.

?? THE TAKEAWAY

Why remittances??Because it’s still hot. In 2020 alone, Remitly did 31M remittance transactions with send volume of $16.1B. And that’s only ~1% of the total addressable market. The company’s growth is also strong - it grew 103% YoY bringing $257M to the top line. Maintaining a digital-first approach tailored to immigrants, Remitly still has a ton of room for growth. If we would take TransferWise’s public debut in London as a benchmark, I’m pretty sure Remitly will do pretty well too.

Extra Reads & Quick Bites for Curious Minds??

• BNPL-as-a-Service ???US-based PSP?LaCore Payment Technologies ?has partnered with payments company?Sezzle ?to offer installment plans for e-commerce transactions. Sezzle is integrated as a payment gateway into LaCore’s enterprise platform which allows merchants to implement installments at checkout as an alternative method to traditional credit card options.
• Super App. From a retailer ???Japan-based retail group?Aeon ?has announced it will launch its mobile payment service Aeon Pay in September 2021. Aeon aims to make its mobile payment service a super app that any retailer can use, and plans to consolidate its online shopping businesses and prepaid cards under Aeon Pay. According to Nikkei Asia, the company is one of the latest players in Japan's booming mobile payment sector where internet companies are vying to create one-stop shopping solutions for varied services -- from banking to travel to telephone access.
• Revolut is serious about Australia?????UK-based?Revolut?has planned for a banking license in Australia and is engaged in talks with the country's regulator to be allowed to take customer deposits, according to?Reuters.

Money Moves??

• US-based investment analytics firm? Aumni ?has secured $50M in a Series B investment round led by?JPMorgan.
• Germany-based technology company?Taktile?has announced completing its seed funding round and collecting $4.7M.
• US-based?FV Bank , a dual-licensed challenger bank and digital asset custodian has announced the successful closing of its Series A funding round worth $8M.

Continue reading by subscribing to?Linas's Newsletter.?You will receive fresh news about FinTech with hot takeaways every day.

P.S.?You might enjoy my earlier pieces as well:

???The Perfect Pitch Deck: How Coinbase Raised Seed Capital and Began Journey Towards $100B Worth Public Company

???Cutting Through the Noise: Bitcoin Fundamentals & Why it Was Created

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About: I am?a business developer, sales professional, FinTech strategist, as well as Cryptocurrency and Blockchain enthusiast. I'm highly passionate about Financial Technology and Digital Innovation, and strongly believe that it will change the world for the better. Apart from my daily job at a global payments startup where I'm leading the company's expansion into Europe, I'm an active member of the FinTech community and a TechFin evangelist.

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