Apple’s state ID feature as a growth factor for Apple Pay ??; Revolut plans to enter the BNPL wars ??; PayPal is super serious about BNPL????

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Last week (6-10 September) was a chili hot week in FinTech ?? We will look at?Apple’s state ID feature as a growth factor for Apple Pay;?Revolut's plans to go into the Buy Now, Pay Later wars;?PayPal being super serious about BNPL 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.

Apple’s state ID feature as a growth factor for Apple Pay ??

The news???Residents in 8 states, including Arizona, Connecticut, and Georgia, will soon be able to add their state IDs and driver’s licenses to the?Apple Wallet, Apple confirmed in a press release.

It’s not going to stop here ???Apple plans to enable the feature in other states soon and said that the Transportation Security Administration (TSA) will accept the digital IDs for travel at select airport security checkpoints. The tech giant first?hinted?at plans to enable the feature back in June.

Why this matters? ???At the core, the digital ID feature can help boost?Apple Pay’s US user base, which is expected to hit 43.9M this year, accounting for 43.4% of all proximity mobile payment users. Which means there’s still a ton of room for growth.

?? THE TAKEAWAY

Apple ID first, Apple Pay later.?Despite seamless experience and functionality, the digital ID feature by Apple might incentivize iPhone users to put credentials in Apple Wallet that eventually get them on board with Apple Pay.?Because as of right now,?less than?40%?of iPhone owners use Apple Pay, giving the wallet a large untapped addressable market. And converting these customers into Apple Pay users could not only bolster?volume?but also increase Apple’s share of US mobile payments. Furthermore, we have to speak about the engagement here.?Giving existing Apple Pay users another reason to use Apple Wallet keeps customers tied to its ecosystem. This can increase Apple’s already strong brand loyalty and might make users more inclined to try out other Apple payment solutions, like the Apple Card.

Revolut plans to enter the BNPL wars ??

The plan ???Nikolay Storonsky, founder and CEO of FinTech giant?Revolut, said his company was working on a checkout feature and the ability to let its customers spread the cost of any purchase made using its cards. However, the feature is in early development and is only likely to be trialed next year across some European markets.

All via card ???“Simply a button which you switch on and then your card becomes a buy now pay later product,”?Storonsky explained . “Instead of paying upfront everything, you pay a third, and then in two weeks' time we charge you a third and then another third.”

Taking action ???Revolut’s plan to enter the Buy Now, Pay Later market comes just a few months after it became Britain’s most valuable private tech company in history. Investors valued the business at $33B as part of an $800M funding round in July. The newest funding definitely boosted FinTech’s activities - it recently launched a salary advance feature in the UK, shared plans to launch a credit card in the US, among other things.

?? THE TAKEAWAY

Smart move.?Going into BNPL is definitely a smart move both for banks and neobanks as it allows users to split big transactions into instalments.?There’s talking that Monzo's testing?its own version, and Australia's Commzbank has one in mind too. Looking at the bigger picture, the consumer-facing BNPL market is getting more intense as providers experience massive growth and hence look to?reshape?financial services by becoming super apps. Hence, by getting in on the space, banks and players like Revolut can capitalize on this growth and fend off competition from BNPL-only players (think Klarna, Afterpay, and the likes), which have been?creeping?into their?banking?territory too. Finally, BNPL is still a massive market. Take the United States as an example. The number of US BNPL users is projected to reach 45.1M in 2021?and will catapult to 76.6M by 2025,?according to?some estimates. Having that in mind and eyeing US expansion, Revolut could hit two birds by one stone.

PayPal is super serious about BNPL????

The scoop ???Payments giant?PayPal?has agreed to acquire Japan-based Buy Now, Pay Later provider?Paidy ?for a whopping $2.7B. It must be noted that this is reportedly a mostly-cash deal (which makes a ton of sense for PayPal).

Unicorn in Japan???? Paidy, founded in 2008, is one of Japan’s few unicorns. The company launched the country’s first zero-interest post-payment service in 2020.

Paidy allows its 6 million registered users to split the cost of goods into three equal instalments with no interest. Users can pay off their balance using cash at convenience stores or bank transfers. The company has relationships with some of the biggest brands worldwide.

No IPO… ??♂??Paidy was valued at $1.3B when it raised $120M in March 2021 and was expected to list its shares in Tokyo in 2021. It has been backed by trading house Itochu, Goldman Sachs, and Soros Capital Management along with PayPal.

Having the exit offer which is x2 the last private valuation, the choice is obvious.

?? THE TAKEAWAY

PayPal is serious.?And it’s especially serious about the BNPL. Paidy’s acquisition deepens PayPal’s push into the crowded BNPL sector, where consumers are increasingly willing to spread the cost of goods over a small number of payments. More importantly, the tie-up builds on PayPal’s payments capabilities in Japan, which is the world’s third-biggest e-commerce market.

Extra Reads & Quick Bites for Curious Minds??

• FinTech Guidance ???Guidance published in collaboration with several federal agencies was recently handed down to offer voluntary counsel for community banks launching partnerships with FinTechs, according to a?recent report . The Federal Deposit Insurance Corporation (FDIC), the U.S. Federal Reserve (Fed), and the Office of the Comptroller of the Currency (OCC) collaborated to develop the 20-page report, called “Conducting Due Diligence on Financial Technology Companies: A Guide for Community Banks.”
• Bank from a Bank???Standard Chartered ?has agreed on a joint venture deal to launch a digital-only bank in Singapore with the country's?National Trades Union Congress (NTUC) . A Standard Chartered vehicle will take a 60% stake in the venture, worth $107.28M, with the NTUC's enterprise arm taking the remaining 40% stake. The Standard Chartered vehicle involved in the transaction obtained a full Singaporean banking licence in December 2020.
• New Robinhood feature???The brokerage app company said that the feature would help reduce the impact of crypto's volatility by allowing users to invest in intervals rather than in large lump sums—a strategy known as dollar-cost averaging. The product will be available to a select number of users starting Wednesday.

Money Moves??

• Challenger bank?Point ?has raised a $46.5M Series B funding round. The company offers an account associated with a debit card, positioning itself as a premium debit card company and trying to offer credit card rewards with debit cards.
• BP Ventures, an investment company of UK-based?BP , has invested EUR 20M in Germany-based payments startup?Ryd ?to expand its services in the international market.
• Egypt-based microfinance lending and payments company?MNT-Halan ?has received an investment of $120M. MNT-Halan has more than 4 million customers in Egypt and has disbursed more than $1.7B in loans, the investors told Reuters.

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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