Today’s news roundup looks at fintech’s fast-forward impact on the payments industry and e-commerce around the world. Q1 2017 VC funding of EU fintech companies jumped 222% and could reach more than $2.6 billion by and of year according to CB Insights. In contrast, comparable US VC funding dropped 9% in the first quarter. A new report from Deloitte says London and Singapore continue to lead as fintech hubs followed by New York, Silicon Valley and new entrant Chicago.
The UN Better than Cash Alliance says payments from Alipay and WeChat grew from $81 billion in 2012 to more than $2.9 trillion in 2016. The report claims digital payments help provide services for the “underbanked” as well as create new business opportunities. Critics such as an ATM industry Association claim cash is still the most trusted and reliable payment method. A UNA report highlights consumer concerns about crime, trust and privacy with e-commerce.
Amazon, Apple, Alibaba, Tencent, eBay and other e-commerce giants are competing hard to rule the digital payments marketplace which is expected to reach $4 trillion by 2020. Apple may be revisiting its entry into the peer-two-peer payments space, directly competing with Venmo and other successful P2P payments sharing players.
New research from Persistence Market Research says the mobile payments market could be worth $27.8 billion by 2026. India payments powerhouse Paytm introduced Digital Gold, an investment service that lets users buy and sell gold on their smartphones. Indians hold an estimated $900 billion in gold according to the World Gold Council.
Apexx, a UK fintech startup, plans to create a transparent marketplace where merchants can pick and plug-in a payments partner from a variety of competing payment services. FIS and The Clearing House Payments Company launched a real-time payments incubator service for early stage financial institutions in the US.
European fintech funding enjoys buoyant quarter while US market tanks
VC funding to fintech companies in Europe spiked in Q1, while US deal activity cooled, according to the latest figures from CB Insights. Amid upcoming legislation that could open the door for fintech companies to challenge incumbent banks, Europe saw Q1 funding to VC-backed fintech companies jump 222% sequentially. The spike in deal activity puts total funding dollars on pace to surpass $2.6 billion at the current run rate, the report states.
In total, fintech startups in Europe raised $667 million across 73 deals in Q1. Compared to the same quarter last year, Europe fintech funding rose 121%, while deals rose 38%.
Spurred by big dollar bets on Atom Bank and Funding Circle, the UK enjoyed a 57% jump in fintech deal activity for the quarter, re-affirming Britain’s status as Europe’s top fintech market despite the recent triggering of Article 50 and a planned withdrawal from the European Union. Via finextra.com
London and Singapore remain world’s top fintech hubs
Fintech has become a truly global phenomenon, with hubs popping up in cities around the world, although established players such as London and Singapore continue to be the top centres, according to a report by Deloitte. The study is the second output of the Global Fintech Hubs Federation, an initiative by Swift’s innovation arm Innotribe and the UK’s Innovate Finance to create a cross-border and open platform that brings established and emerging hubs together.
The second report – expanded to cover 44 hubs – provides an overview of the fintech hubs emerging globally, with an analysis of local market facts, figures and future trends as well as an index performance score that determines the ease of growing a fintech business in each hub. London and Singapore come out on top, followed by New York and Silicon Valley, with one of the 24 new cities – Chicago – making a strong debut at number five. Via finextra.com
Huge: Alipay & WeChat Payments Have Risen from $81 Billion in 2012 to $2.9 Trillion in 2016
The UN sponsored Better than Cash Alliance is out with an interesting report on Fintech and payments in China. The Alliance partners with governments, companies, and international organizations that are the key drivers behind the transition to make digital payments widely available around the globe. According to their recent research, Alipay and WeChat payments have risen from transactions of less than $81 billion (RMB 1 trillion) in 2012 to an estimated $2.9 trillion (RMB 20 trillion) in 2016. That is incredible.
The report explains that as governments looks to boost financial inclusion and growth, the power of digital payments is becoming quite relevant. Fintech, and payments specifically, have emerged as an effective method of providing financial services to the underbanked while improving economic opportunity for both individuals and small business.
AliPay, part of the Alibaba group of companies, was only created in 2004. The one-two-punch of powerful pent-up demand and fast emerging mobile internet has driven Alipay to process an astounding 175 million transactions per day – the majority through smartphones – a platform that has emerged only in recent years. WeChat, a creation of Tencent, has approximately 806 million active users each day. While there is competition, AliPay and WeChat dominate the payments space in China as both platforms look to broaden their reach beyond the home country border – something that is taking place now. Via crowdfundinsider.com
E-commerce giants look to dominate payment gateways
E-commerce competition is heating up globally, with giants Amazon, Apple, Alibaba, Tencent and eBay all vying for bigger stakes in the market. Retail sales are expected to surpass $27 trillion by 2020, and e-commerce is expected to account for more than $4 trillion of that figure.
One key area that is becoming the next battleground for these companies is payments. Payments may seem to be an inherent part of e-commerce platforms that facilitates the checkout process. However, the boom of financial technology (fintech) has made payments a major segment in financial services, creating major opportunities for these businesses to tap into wider markets.
Forget platforms. Forget application suites. It’s about building ecosystems.
What’s emerging as a critical component of today’s ecommerce ecosystems is payments. Customers demand a quick, secure and convenient way to pay for purchases. According to marketing automation platform GetResponse, complicated checkout processes, card security and not having enough payment methods are all factors in shopping cart abandonment. Via networkworld.com
Apple is in talks to launch its own Venmo
Apple’s on-again, off-again flirtation with building its own money-transfer service appears to be back on.
The company has recently held discussions with payments industry partners about introducing its own Venmo competitor, according to multiple sources familiar with the talks. The service would allow iPhone owners to send money digitally to other iPhone owners, these people said.
One source familiar with the plans told Recode they expect the company to announce the new service later this year. Another cautioned that an announcement and launch date may not yet be set. Apple previously held talks with banks about such a service back in 2015 but did not end up launching anything.
If it happens this time, the new Apple product would compete with offerings from big U.S. banks as well as PayPal, its millennial-popular subsidiary Venmo, as well as Square Cash in the increasingly competitive world of digital money-transfers. Chase’s QuickPay service processed $28 billion in transfers last year, while Venmo registered $17.6 billion in volume and is still doubling year over year. Via recode.net
Consumer Mobile Payments Market to Reach US$ 27.8 Bn by 2026
Mobile phones, developed to facilitate telecommunications, have now become wallets for consumers. Digital payments through mobile phones have revolutionized commercial settings across the world. Growing development of m-commerce platforms have also stepped in to promote the adoption of consumer mobile payments. Persistence Market Research’s latest report (Global Market Study on Consumer Mobile Payments: Retail End Use Industry Segment Anticipated to Create High Absolute $ Opportunity During 2016 – 2026) on the global market for consumer mobile payments projects that the market, which is presently worth over US$ 870 Mn, will register explosive growth at a whopping 41.4% CAGR to procure US$ 27,771.8 Mn revenues by the end of 2026.
Such an exponential growth for global consumer mobile payment market is factored by rising proliferation of smartphones and advanced features added to existing payment platforms. The world is flooded with various mobile wallets, and such applications are expected to remain trending in the years to come. Increasing burden on e-commerce platforms is also expected to get divested across m-commerce platforms. Furthermore, government initiatives prompting adoption of cashless transactions is also stipulated to boost consumer mobile payments. Less time consumed by transactions, and immediate currency conversion serve as key proponents for consumer mobile payments. Via prnewswire.co.uk
e-commerce reaching limit? $2.9 trillion Chinese payments but UN trust concerns
Two recent UN surveys show conflicting views of e-commerce and Internet:
The PayPers report that: “Alipay and Wechat Pay have enabled USD 2.9 trillion in Chinese digital payments in 2016, representing a 20-fold increase over the past four years, a new study from United Nations reveals. The data show that digital payments, using existing platforms and networks, provide access to a wider range of digital financial services, expanding financial inclusion and economic opportunity throughout China and neighbouring countries.”
A new UNA global survey – 2017 CIGI-Ipsos Global Survey on Internet Security and Trust – reveals that Internet users are increasingly concerned about their online privacy, and that 49 percent of users polled say lack of trust is their main reason for not shopping online. The survey, conducted by Ipsos and the Centre for International Governance Innovation (CIGI), in collaboration with the United Nations Conference on Trade and Development (UNCTAD) and the Internet Society, showed that;
– among those worried about their privacy,the top sources of concern were: cybercriminals (82%), Internet companies (74%), and governments (65%)
– Lack of trust is most likely to keep people off e-commerce platforms in the Middle East, Africa and Latin America
– great differences in e-commerce behavior when it came to how users are purchasing goods online. For example, in China, India and Indonesia, more than 86 percent of respondents expect to make mobile payments on their smartphone in the next year, compared with less than 30 percent in France, Germany and Japan. Via ctmfile.com
After payments and e-commerce, Paytm bets on gold
Seeking to go beyond its traditional wallet offering, Alibaba-backed digital wallet firm Paytm has entered into wealth management with Digital Gold, which allows users to buy, store, and sell gold on their smartphones.
The Noida-based company, run by One97 Communications Ltd, has collaborated with precious metals processing facility MMTC-PAMP India, a joint venture between bullion refinery PAMP SA Switzerland and public sector metals firm MMTC Ltd, to launch Digital Gold. Customers can buy 24 karat gold from MMTC-PAMP.
Under the programme, users can buy and sell gold for as little as Rs 1, after which it will be stored in lockers run by MMTC-PAMP. Users can also get the gold delivered to their homes as minted coins or they can sell it back online instantly.
Indians currently hold more than 24,000 tonnes of gold worth $900 billion per World Gold Council estimates. Indian households bought more gold in 2016 than any other financial asset despite the challenges of buying pure gold and storing it. Via vccircle.com
Industry veterans launch merchant payments marketplace Apexx
Apexx, a fintech startup founded by former staffers at Zapp, Evo Payments and Xcordia, is launching in London with the goal of creating a transparent marketplace where merchants can browse and plug-in to competing services from a network of acquirers and payment brands.
Using the Apexx platform, merchants can see how costs compare and get expert advice on the payment providers that will best suit them. The founders say the approach could save merchants upwards of 15% on the cost of processing credit or debit card payments and alternative payments.
Apexx is launching with the support of a host of high-profile international partners including Alipay, iZettle, Mastercard, NTT DATA, Visa iPay88, Payvision, Credorax, SIX payment services, Paysafe Group, Processing.Com, Transact Europe, CardStream and JetPay. The company says it expects to announce its first merchant customers in the coming weeks.
Via finextra.com
Real-Time Payments Incubator Lets Banks Get Started Without Big Investment
FIS is giving a nudge to the sometimes painfully slow progress toward real-time payments in the U.S. FIS and The Clearing House Payments Company today announced the launch of a hosted Real-Time Payments Incubator service for early adopter financial institutions in the United States. It will let financial institutions begin application and testing of real-time payments in a secure, verified environment without need for heavy investment.
“We put into a hosted environment the real-time payment capability,” said Doug Gross, executive director of corporate banking solutions for the Americas at FIS.
“This breakthrough incubator service from FIS takes the hassle out of connecting to The Clearing House Real-Time Payments platform, enabling financial institutions to get to the future faster and begin realizing the benefits of real-time payments,” said Anthony Jabbour, chief operating officer for banking and payments at FIS. The incubator will let banks expand real-time payments on the FIS cloud platform or move them in-house. h/t forbes.com
LET’S CONNECT