Homegrown Visa & Mastercard alternative in Zambia????; $HOOD buys UK crypto app Ziglu as it begins global expansion ??; Amazon's deep payments push ??

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If you’re not a subscriber, here’s what you missed this week:

1. BNPL is picking up speed in the B2B space too ??
2. Mastercard’s attempt to stay competitive in the crypto game ??
3. Y Combinator clone from Andreessen Horowitz ??
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Last week (18-22 April) was a massively hot week in FinTech.?We will look at Homegrown Visa & Mastercard alternative in Zambia????; $HOOD buys UK crypto app Ziglu as it begins global expansion ??; Amazon pushes deeper into payments & takes on Shopify with ‘Buy With Prime’, and other interesting news and developments.

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

Homegrown Visa & Mastercard alternative in Zambia????

The funding ???Zambia-based card issuing FinTech startup,?Union54 ,? has announced it raised $12M in a seed extension round led by Tiger Global, with the participation of Earl Grey Capital, and Vibe VC, among others.

The seed extension follows the company’s previous seed round funding of $3M, led by the same global investor Tiger Global.

The USP ???Union54’s API allows software companies from the African continent to issue and manage their debit cards without requiring a bank or a third-party processor, hence enabling cross-border payments and easing the overall process.?

The numbers ???Since its launch in October Union54 has grown to issue slightly over half a million virtual debit cards to its customers. The company also claims to have been growing revenues subsequently 50% month-on-month since November last year.

But that’s not the most interesting part. The interesting thing here is that this FinTech is?trying to create a homegrown alternative to worldwide giants Mastercard & Visa.?Here’s the takeaway:

?? THE TAKEAWAY

Creating an alternative.?Despite Visa and Mastercard being global and still dominant card issuers in almost every country (including African ones), there are certain challenges that come with this domination. One of the most pressing issues (especially in Africa) is higher fees for merchants, longer settlement times, and the difficulty in sourcing dollars. Union54 believes all of this could be addressed by creating its own card scheme. We must admit that it wouldn’t be the first one doing that - Nigeria already has a local card label called?Verve, the largest domestic card scheme developed by FinTech Interswitch, and it controls more than half of the card market in the country. And that’s solid. In addition to addressing fees & settlements issues, a local card scheme could also integrate more local payment methods as well as APMs (alternative payment methods), which would be a further value add for merchants. Zooming out, you might ask whether a local card scheme might be needed altogether, given that most merchants are pretty much used to Visa & MC rails. Well, the market thinks positively - one can remember that last year, the South African Reserve Bank (SARB) proposed a domestic card scheme?to go head-to-head against Visa and Mastercard in the country. Ultimately, we must understand that developing something in FinTech is often not so much a technical problem as it is a trust problem. If you win trust, you usually win the market. The same is with cards. If I’d be Visa or MC, I would seriously watch out for what Union54 is up to.

Robinhood acquires UK crypto app Ziglu as it begins global expansion ??

The news ???Nasdaq-listed trading platform?Robinhood?is acquiring?Ziglu, a London-based electronic money institution, and crypto-asset firm.

The financial terms of the deal were not disclosed.

The USP ???Founded in 2018,?Ziglu?allows U.K.-based retail investors to buy and sell 11 cryptocurrencies. Users can also earn yield via Ziglu’s “Boost” products, pay using a debit card, as well as transfer and spend money worldwide without fees.

The firm won approval to offer crypto services in the U.K. by financial watchdog the Financial Conduct Authority (FCA) in 2020, the third firm to gain such approval.

Ziglu raised over $7M on crowdfunding site Seedrs in November, the largest fundraise on Seedrs in 2021. It was valued at ￡85M back then.

At the core, the?Ziglu acquisition is all about global expansion and fueling stalling growth. Here’s the takeaway:

?? THE TAKEAWAY

Expansion + growth.?We must remember that Robinhood had ambitious plans for the United Kingdom when it decided to cross the pond back in 2019. Yet, in 2020, the company had abandoned its UK launch and put plans for global expansion on hold as it dealt with operational problems caused by an explosion of day trading in its core US market during the Covid-19 pandemic. With Ziglu's acquisition, it seems that Robinhood is dusting the shelves to rework that plan, and it will be not only the UK but European expansion as the ultimate goal. The most important piece in the puzzle here isn’t Ziglu - it’s their licenses. Having both EMI and more importantly - crypto-asset licensing (which only a few firms have managed to secure thus far), Robinhood has now a solid regulatory foundation for business expansion overseas (though additional licensing for the EEA will be needed regardless). Additionally, this also shows that the company’s global expansion will be “crypto first.” RH hence believes that the easiest path to go global and have the most traction now is probably through crypto. And they might not be wrong here. When you zoom out, you can see that Robinhood has been struggling as of late - according to Q4 earnings, Robinhood’s pretax losses widened to $420M (compared with a mere $19M a year before) while the average revenue per user slumped 39% year over year. That said, the trading app has started to increasingly look for novel ways to benefit from cryptos to reverse falling trading volumes. Crypto wallet that would let users directly hold and receive cryptos without having to convert them into fiat currency, now Ziglu’s acquisition is all about encouraging greater trading volumes and growing engagement.

Amazon pushes deeper into payments & takes on Shopify with ‘Buy With Prime’ ??

The launch ???Amazon is making moves to boost its relationship with sellers as rival Shopify continues to expand its presence and swoop in on the eCommerce giant’s turf, according to a fresh press release.

More about this ???Buy With Prime?will allow select Amazon merchants to sell their listed merchandise directly from their own websites. The new perk makes Amazon’s payments and fulfillment services available at checkout. Shoppers will get the option of using their Amazon Prime membership for quick, no-charge delivery and other benefits.?

Amazon’s new seller Buy With Prime tool is invitation only and will have an undisclosed fee attached.?

The rivalry between Amazon & Shopify (especially considering its recent acquisitions) is brilliantly summarized by Shopify’s CEO:

?? THE TAKEAWAY

Payments, payments, payments ???Ultimately,?Buy with Prime?is all about ramping up Amazon’s push into the payments space. One can remember that the e-commerce giant has been innovating quite a bit in the point-of-sale (POS) space.?Amazon One, which lets customers pay for services or authenticate identity with their palms, is now operating within more than 70 locations, including Whole Foods and third-party businesses. Furthermore, Amazon is reportedly exploring an initiative called?Project Santos, which aims to launch a POS system designed for small businesses. On top of that, Amazon has also strengthened the payment options available on its website by adding PayPal’s Venmo and Buy Now, Pay Later (BNPL) provider Affirm. Opening up its walled garden to even more third-party partnerships could help Amazon increase sales further. Zooming out, this move effectively advances the retail giant’s push into payments by bringing it one step closer to launching a full-suite online checkout solution for small sellers. And this is a pretty huge move.

Extra Reads & Quick Bites for Curious Minds??

• BoA is a proper digital bank ???Before too long, we might be calling Bank of America a digital bank. The company’s latest earnings results, and commentary from its conference call with analysts, show that more than 50% of consumer sales — 53% to be exact — came from digital channels, at $1.7B, where that measure had been $921M before the pandemic. That’s up from 49% a year ago. CEO Brian Moynihan said on the conference call that, as the company grew net new checking accounts by more than 220,000, “our digital sales are now twice the pre-pandemic level just three years ago. Even more impressive, Zelle and Erica's volumes were up more than four times in pre-pandemic levels.” The digital surge came as digital adoption by households came in at 71%, up from 64% pre-pandemic.
• Fancy a free POS? ???Smart payments platform?Plastiq?has launched a new Plastiq Accept Virtual Terminal, designed to help legacy businesses like manufacturers and wholesalers accept credit cards and debit cards with no merchant fees. The virtual terminal, according to the company, lets customers choose among a range of payment platforms — credit card, debit card, ACH deposit, or wire transfer. Merchants don’t pay any processing fees, and Plastiq said it shifts the costs of merchant fees to a company’s customers instead of the vendor or supplier. Customers accept the cost because of the convenience they obtain through paying electronically, according to Plastiq’s marketing materials.?Are we about to see others following a similar path????

Money Moves??

• Philippine-based BNPL startup?BillEase ?has raised a $20M debt facility to expand its business in the country.
• Pakistan-based financial platform?Abhi ?has raised $17M in a Series A funding round, at a $90M market evaluation.?
• US-based startup?NovoPayment ?has raised $19M in a Series A funding round co-led by IDC?Ventures and Fuel Venture, to expand its full-stack banking API platform.

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:

?? Bitcoin in 2021: a story in 5 graphs, and what might come in 2022

???A Wise pitch deck that led to London’s biggest and most successful direct listing ever

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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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