Let’s look at all the biggest headlines in the fintech world. The German challenger bank N26 continues to grow, Stripe and Klarna sign a new partnership that cements their influence in online payments, and Visa comes under fire from the US Department of Justice. Read all the latest fintech news here:
The United States investigates Visa
The payment processing giant has come under fire by the US Department of Justice for its relationships with fintech companies, citing antitrust concerns. Regulators and investigators are examining how Visa works with companies like Square, Stripe, and PayPal to see if there is activity that would deem these relationships as creating a monopoly within the industry.
The investigation seemingly stems from incentives Visa gives fintech companies to facilitate the majority of transactions through the Visa payment network. As a result, fintechs may find it more challenging to utilize other card networks—like MasterCard and American Express.
This is one area where blockchain solutions are disrupting finance. By processing payments on distributed networks, fintech companies can subvert Visa and other payment processors altogether.
Nubank files for IPO
With backing from heavy hitters like Berkshire Hathaway, the Brazilian fintech company Nubank has announced its intentions to go public on the New York Stock Exchange at a valuation that could top $50 billion. The company offers its more than 40 million customers in Latin America streamlined banking services and low fees, both things that are welcomed in a region with slower technological and financial advancement than much of the world. As a result, the company is considered the second largest digital bank in the world. After its first year in profitability, Nubank hopes this IPO will propel it to more prominence and growth.
In a press release by Nu Holdings Ltd. (Nubank’s parent company), it appears shares of the company will be sold on both US and Brazilian exchanges:
“The proposed IPO includes (i) the registration and listing of Class A ordinary shares in the United States; (ii) the registration and admission to negotiate a program of Brazilian Depositary Receipts (“BDRs”) in Brazil; and (iii) the registration of initial public offering for distribution of BDRs in Brazil representing a fraction of Class A ordinary shares.”
The German challenger bank is doing more than challenging industry incumbents; it’s becoming a force to be reckoned with. When N26 recently announced its $900 million funding round, it didn’t just secure capital to propel it in the future; it valued the company at $9 billion, making it the second-largest bank to come out of Germany.
Such a high valuation has many wondering if the company will seek an initial public offering in the future. It’s something that co-CEO Maximilian Tayenthal has thought about but doesn’t see happening in the near future.
“We have no hurry to go public… With increasing profitability, the kind of money we are raising right now, it really takes away any time pressure.”
However, not everyone is enamored with N26’s growth. EU regulators are now limiting sign-ups on N26 to 70,000 per month, asking the challenger bank to improve its internal controls to better secure its customers. This comes on the heels of news in September that N26 paid €4.25 million in fines for delaying the submission of suspicious activity reports, a no-no when it comes to anti-money laundering policies in the EU.
Fintech purchase financing exceeding expectations
Fintech has advanced the world of online shopping so much that many sites are now integrating options to make purchases today and pay for them in installments. The latest partnership between two fintech giants, Stripe and Klarna, should only grow these product offerings.
Klarna’s CTO, Koen Koppen, is excited at the partnership: “Together with Stripe, we will be a true growth partner for our retailers of all sizes, allowing them to maximize their entrepreneurial success through our joint services.”
Yet, maybe the even bigger story in delayed financing is that Affirm Holdings beat earnings expectations and saw its stock soar as a result. Affirm had quarterly revenues of $269.4 million, a 55% increase from this time last year. Additionally, the company announced a partnership with Amazon that will result in having Affirm as a payment option on the e-commerce platform sometime soon.