Welcome to The Interchange, an overview of this week’s fintech news and trends. To get this in your inbox, Subscribe here.
We’ve all kept up recent drama from Stripe vs. Plaid. Instead of rehashing all of that here, I’ll point you to some of ours Recent Articles on the topic and summarize: The two fintech startups have recently become (much) more competitive.
As if things weren’t turbulent enough, another startup has very publicly emerged as a formidable competitor to Stripe: finix.
Well, Finix doesn’t come out of nowhere. The SaaS startup — which began selling its payments technology to other companies in early 2020 — raised a $35 million Series B led by Sequoia. In an unusual twist, Sequoia just 1 month later walked away from the deal It reportedly wrote the self-proclaimed payments infrastructure company a check for $21 million. As TC’s Connie Loizos reported at the time, Finix told employees that shortly after writing its check, Sequoia concluded that Finix was competing too directly with Stripe, the payments company that was one of Sequoia’s largest private holdings, and in turn Sequoia was among its largest outside investors.
Fast forward to last week. Finix announced that it will become a payment intermediary, allowing other companies to facilitate payments. That move puts it in direct competition with Stripe, something that CEO and co-founder Richie Serna is not shy to admit.
In an interview last week, Serna elaborated that Finix actually started developing software that gave any software company the ability to become their own payment broker.
“We built technology that would require three years of in-house construction by dozens of engineers with tens of millions of dollars in technical R&D and investment, and reduced that to a few months by getting developer-friendly APIs to start monetizing their payments,” he said. “That was our biggest core offering. What we have done now is become the payment broker ourselves so that we can not only provide the payments but also all the back office requirements and compliance certifications so our customers can get up and running in days rather than months.”
He says the move gives Finix the ability to work with companies and software platforms from $0 in processing volume to billions of dollars in processing volume.
“This enables these customers to have a better product experience and faster time to market, and allows us to handle those non-technical aspects of launch and monetization and receiving payments,” added Serna.
Historically, companies had to reach a certain volume threshold before Finix could work with them. But now, Serna says, they can start working in their earliest stages.
“Clients can start working with us from day one, using finance APIs, and when they’re ready to take more ownership and more accountability around risk, underwriting and compliance operations, they can graduate and be their own become a payment intermediary,” he said, “as we’re still using the exact same APIs.”
Finix has also entered what the executive referred to as a “card presence” or personal payment space. This means it is able to provide software for many types of businesses to accept credit card payments.
“If you think of a software provider for restaurants, they need different equipment than equipment providers for gyms or food trucks,” Serna said. “And that’s something that we’re uniquely offering and bringing to market.”
So, in case you haven’t figured it out, Stripe had cause for concern as Finix actually competes directly with it. How are they different?
According to Serna, the answer lies in the fact that Finix has “built an open system and architecture that is modular and configurable”. Stripe, on the other hand, he said, “continues to double down on that vendor lock-in so that the system and architecture can continue to be closed.”
“We think very much like iOS,” Serna told TechCrunch. “We think of ourselves a lot more like Android… And I think we’ll continue to see those traits amplify as we evolve our products and our businesses.”
With just over 150 employees, Finix today serves over 12,000 merchants in the US with its APIs. It has raised approximately $100 million in funding from investors including American Express Ventures, Bain Capital Ventures, Homebrew, Inspired Capital, Lightspeed Venture Partners and Visa.
Meanwhile in a recent Forbes article, Stripe co-founder John Collison told Alex Konrad, reportedly with a shrug, “We’re going to be competing with a number of companies and working with a group. Everyone just has to be grown up and well behaved.” In the same article, sources told Alex that Stripe reported gross sales of about $12 billion in 2021, up 60% year over year. It also reportedly grossed about $2.5 billion in net sales.
Speaking of Stripe, Ingrid Lunden reported on May 24th that the company debuted its App Marketplace, a new offer where Stripe grants access to both third-party apps and scripts created by app publishers, users and Stripe itself that integrate those apps with Stripe. It represents possibly the biggest leap away from payments yet.
The Swedish payment giant Klarna allegedly Cut 10% of the workforce, or 700 jobs, in the past week. The move came shortly after The Wall Street Journal reported that the company would lower its valuation to raise fresh capital.
Start the checkout with one click Bolt is believed to have laid off up to 240 employees across go-to-market, sales and recruiting roles. Earlier reports had said 100 workers would be affected, but as details emerged, it was seemed to be more. In mid-February, founder Ryan Breslow made headlines after announcing on Twitter that Bolt is offering any employee the opportunity to borrow money from the company to exercise their stock options. Now it’s unclear what happens to the people who were laid off and borrowed money from the company. The company told Bloomberg that the number of affected workers who had taken out loans was “in the single digits.”
But not all fintechs are laid off. Fidel API says it’s “growing fast” after its $65 million. Series B Announcement and is hiring more than 60 positions across its engineering, sales, and customer experience teams. The fintech says it has doubled in the last 6 months and intends to double again before the end of the year.
Peggy Mangot has left her role to serve as an operating partner at PayPal Ventures the new head of fintech partnerships for JPMorgan Chase Commercial Banking. At PayPal Ventures, Mangot helped lead investments globally in fintech, commerce, infrastructure and crypto.
Both large and small companies maintain their crypto bullishness despite the recent market correction in the evolving tech space. According to Harold Bossé, VP of New Product Development and Innovation at Mastercard, mass adoption of blockchain technology and digital assets will happen sooner rather than later. Continue reading here.
Financing and M&A
Seen on TechCrunch
That’s it for this week! If you’re reading from the US, hope you enjoy the rest of your long weekend and have a great day and week everyone else. And to borrow from my brilliant friend and colleague Natasha Mascarenhas, you can support me by forwarding this newsletter to a friend or Follow me on Twitter.
Finix goes head-to-head with Stripe – TechCrunch Source link Finix goes head-to-head with Stripe – TechCrunch