Stripe's most expensive mistake ever ??♂?; Monzo's license-less US expansion. Smart move or just foolish? ??; Visa-powered Super App in Africa ????

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?? Hey, Linas here! Welcome to a ?? weekly free edition ?? of my daily newsletter. Each day I focus on 3 stories that are making a difference in the financial technology space. Coupled with things worth watching & most important money movements, it’s the only newsletter you need for all things when Finance meets Tech.

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

1. The biggest-ever divorce in FinTech: FIS ditches Worldpay ?? [deep dive]
2. PayPal's solid results and why it's one of the strongest companies in the digital money space ?? [deep dive + 5 bonus reads]
3. Apple takes another step towards becoming a bank ???? [how they are building the future of underwriting + Apple Bank strategy]
4. Affirm's latest results: missed earnings, layoffs, and the biggest risk??
5. Amazon's growing appetite for Web3 ?? [& why their strategy could be an inflection point for Web3]
6. Tinder date doesn't guarantee a relationship: Robinhood kisses goodbye to Ziglu ??
7. Bakkt reminds us again why FinTech is hard ??
8. American Express & Microsoft want to disrupt business travel expense reporting with AI ??
9. A neobank for Latino families ?? [+3 bonus reads on the verticalization of neobanking]

and more! Don't miss out and join the community here????

Last week (13-17 February) was crazy hot in FinTech. We will look at Stripe's most expensive mistake ever; Monzo's license-less US expansion - is it a smart move or just foolish?; Visa-powered Super App for Africa’s Farmers, 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.

Stripe's most expensive mistake ever ??

The news ?? The Information got Stripe's pitch deck that’s currently being used to raise fresh capital. It provides some fascinating new data about the payments giant so let’s take a brief look.

More on this ?? The most shocking part is that Stripe needs $4 billion by the end of 2024 (which is a larger total than previously known) to cover a massive tax withholding bill that comes due when it modifies employees’ stock grants set to expire before a potential public listing. Wow ??

When it comes to numbers, here’s Stripe in 2022:

• Gross revenue: $14.3B, up 27% YoY
• Net revenue: $3.2B, 25% up YoY
• Net revenue minus fraud losses: $2.8B, up 18% YoY
• Net revenue from non-payments products: $280M

If you remember my last week’s writings, it seems that Stripe is growing slower than both Adyen and PayPal’s Braintree. That’s pretty shocking.

?? THE TAKEAWAY

Sigh ?? Stripe is existing for almost 13 years and yet it still needs to raise billions in new funding so it could pay the bills. That isn’t something you would expect from one of the most promising FinTechs ever. Also, the fact that its growth has slowed down is also a bit worrying. So in hindsight, not going public in 2021 is probably Stripe’s most expensive mistake ever.

Bonus: Adyen is the fastest-growing global payments platform ??

PayPal's solid results and why it's one of the strongest companies in the digital money space ??

Monzo's license-less US expansion. Smart move or just foolish? ??

The news ?? UK digital challenger bank Monzo is reportedly doubling down on US expansion but has no immediate plans for pursuing a banking license in the world’s biggest economy, according to Sifted.

More on this ?? We must remember that Monzo Bank first tried to conquer the United States around February 2021. They hired a US CEO and even applied for the banking license but had to withdraw the application in the end when it became clear regulators were unlikely to give their approval.  

Now Monzo has eyes on the US again and has ditched the idea of a license before launching in the market.

How then? ?? At the core, the British neobank is thinking about a sophisticated, and segmented version of Monzo in the US that would likely target one specific demographic (e.g. age, geography, race) aka pivoting to a vertical neobank.

According to Monzo’s COO Sujata Bhatia cited by Sifted, the vertical approach can be big enough to start scaling in the US. Revenue-wise, Monzo believes it should be economically viable because the interchange rates in the US are many times higher than in Europe (even though they would be splitting this with US partner banks).

?? THE TAKEAWAY

Hmmm… ?? In short, I’m not convinced, to be honest. The niche approach is great and it’s booming, but even in this vertical the competitive environment is only getting more difficult, not to mention the local market nuances and an outsider disadvantage (no foreign neobank has achieved anything meaningful in the US - why Monzo should be any different?). Furthermore, if interchange is the business model, I’d be worried. Primarily because you need a massive scale and be great at converting your users to active ones better than the competition. And that’s becoming increasingly harder given the growing competition and customer acquisition costs. Finally, there’s the capital element - in order to have a chance to win in the US, you need to throw in a lot of money and you need to throw it all at once. Unless you are very profitable and really well capitalized (not sure Monzo hits both here), that might be tough in the current environment. For the perspective, even Chime, which has 13M local customers and was one of the first neobanks to hit EBITDA profitability, had to cut costs and laid off 12% of its workforce just 4 months ago. With that in mind, if I were Monzo, I would focus on what I do best - keep on crushing in the home market and slowly start exploring growth opportunities where chances of success are more reasonable. And the US doesn’t seem to qualify…

Reread: The Monzo Pivot, or how challenger bank transformed itself in just 2 years ??

Visa-powered Super App for Africa’s Farmers ?? ??

The news ?? Nigerian Agri-FinTech company Tingo has teamed with card network giant Visa to launch digital payment offerings in Africa.

More on this ?? The partnership is aimed at Africa’s agricultural sector and comes amid a wave of investment by Visa in the region. It includes the launch of a Tingo Visa card and the TingoPay Super App and business portal.

According to the release, the partnership gives Tingo’s subscribers access to secure cashless payments at more than 61 million merchants in more than 200 countries using Visa’s network while helping business subscribers to accept payments from customers and other third parties.

Tingo merged last year with Nasdaq-listed financial services provider MICT in a $900M deal designed to help the companies expand across Africa and Asia.

?? THE TAKEAWAY

What it means? ?? This move isn’t surprising at all it follows Visa’s pledge to invest as much as $1 billion in Africa over the next 5 years to accelerate the deployment of digital payments across the continent. The payments giant is among very few companies that understand that Africa is the Next BIG thing. In FinTech and the world. If you aren’t doing this too, tomorrow might be too late. Go deeper and learn more here:

Visa knows that Africa is the world's next superpower. You should pay attention too??

Africa will be the driving force for cryptocurrency adoption globally ??

Extra Reads & Quick Bites for Curious Minds??

• Buying the dip ?? Cathie Wood strikes again. Ark Invest added about $9.3M worth of Coinbase shares to its portfolio on Friday, along with another $2.6M in Robinhood shares, The Block reported. Wood’s ARK Investment Management LLC has shown quite the appetite for Coinbase stock but has refrained of late from scooping up more of the exchange’s shares. But it seems Friday’s plunge on the heels of speculation about impending regulatory action was too much to resist. Go deeper & learn more here: The bullish case for struggling Coinbase ??
• Getting into savings ?? Starling Bank is rolling out its first savings product for small businesses offering a fixed interest rate of 2.5% over one year on balances of ￡2000 or more. The new 1-Year Business Fixed Saver is built into the app. Account holders can transfer funds immediately in-app or using Starling online banking from their primary business account to a dedicated savings space. Funds deposited in the Business Fixed Saver will not be accessible for one year. Interest accrued will be paid at the end of the full 12 months. Bonus: Starling Bank, the underrated FinTech success story ??

Money Moves??

• Weeks after a $350M raise, Indian digital payment platform PhonePe has secured another $100M in funding at a $12B valuation. The ongoing round was joined by Ribbit Capital, Tiger Global, and TVS Capital Funds. PhonePe says it expects further investment to follow. Bonus: how PhonePhe is building India’s dominant Super App & how India is disrupting the payment space globally.
• Growblocks, a Copenhagen-based revenue planning and execution platform, announced a raise of $6M in seed funding, led by Project A Ventures.
• Saudi Arabia-based fintech HALA has bought UAE-based payment startup Paymennt.com to expand its foothold in the SME sector.

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:

?? Top 10 FinTech predictions for 2023 ??

?? Top banking trends to watch in 2023 ??

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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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