Payments, Loans, and Money market accounts from lifestyle platforms

Payments, investment products and loans are bundled on e-commerce, telecom, and lifestyle platforms all over the world. I`ve picked Telecom examples in Telecoms, Banks and e-commerce giants.

In this post I travel from Africa, to Latin America and the West, to highlight that the competition is not only between incumbent banks and Fintech start-ups, but everywhere. Barriers to entry financial services with Baas and Saas offerings, are lower. Stay tuned. 

In Africa 

Jumia is Africa`s Amazon with an outreach in 14 African countries and 450 Million internet users. They have their own payment system, JumiaPay. They IPO`d on NYSE in April 2019 – JMIA.

In Latam

Mercado Libre is the Latin American Alibaba. It not only has its own payment system, Mercato Pago but also a significant fund business. Mercado Pago Fondos [1] was launched in September 2018 and in 8 months it accumulated 1.5 million accounts from Argentinian and Brazilian small savers. This is financial inclusion in practice. It has introduced a new investment option that was not available before to small savers.

With a return of 40.7% per annum, the fund can be launched from $ 2 that have the balance in Mercado Pago. [2] Source

In the West

Amazon, the legendary e-commerce company of the West is into lending since 2011. It a business that is part of its ecosystem and supports its marketplace. Small and medium-size digital entrepreneurs that use the Amazon marketplace to trade their goods, borrow from Amazon. Partly to fund their advertising budget on the Amazon marketplace and partly to grow their businesses generally. I have alluded to this `trick` in my article Advertising is the new high-priced tobacco and vendors are addicted to it. The significance of the growth in the Amazon advertising business has recently been emphasized by Business insider who put out a thorough report `In The Rise of Amazon Advertising: This is exactly what Amazon is doing to siphon billions of ad dollars from Google and Facebook and why brands love it`.

Amazon uses machine learning and all its proprietary data to offer small business loans to its customers. The program, however, is invitation only. The algorithm selects which small business could use a loan and proposes this. Amazon has been secretive about this part of their business (see details in this FT article). The latest numbers reported are a few years old  – 2016 are reported in the press – and they are around $1billion per annum in loans but declining.

Amazon may have to enrich the data it uses to train its ML algorithms with supplementary data from external sources. Basic credit history data seems to be necessary to manage properly a  loan book.

 [1] Mercado Libre shakes the board of common funds’ industry: companies can also invest

[2] Mercado Pago already moves u$s 17.500 million and has an exclusive strategy for 2019