A recent Finch Capital report shows that paytech deals drove Europe’s fintech funding in the third quarter, which fell slightly from the April to June period. Overall, paytech startups raised €896 million the third quarter, up 117% from €413 million sequentially.
A key third quarter paytech deal was XBO Ventures’ US$25 million strategic investment in Rapyd’s Series F round, which raised US$500 million in March at a US$4.5 billion valuation. Acting as a bridge between the crypto economy and traditional finance, this investment grants XBO Ventures and its portfolio companies priority access to Rapyd’s extensive global fintech infrastructure.
Those portfolio companies and other digital asset firms can now fast-track their global scaling efforts by leveraging Rapyd’s existing infrastructure, which operates in over 100 countries and supports more than 1,200 payment methods. This reduces the need for them to build complex compliance and payment systems from scratch.
The biggest-ticket paytech round of the third quarter was Fnality’s US$136 million Series C, a deal that is significant for bridging traditional wholesale finance with institutional tokenized assets using Distributed Ledger Technology (DLT). The massive capital injection is intended to speed up expansion of Fnality’s settlement network to other major currencies beyond the existing Sterling Fnality Payment System, which launched in the UK in December 2023, including the CAD, EUR, JPY, and USD.
The funding will advance solutions that provide real-time, on-ledger settlement using central bank-backed cash, which is a critical foundation for enabling 24/7 trading of digital bonds and other tokenized securities. It also also positions Fnality as a foundational element of a new global settlement layer that provides settlement interoperability for stablecoins and tokenized deposits.
Of particular interest to us was the involvement of several heavyweight financial sector incumbents in Fnality’s Series C, including Bank of America and Citibank, which suggests growing acceptance of tokenized assets. In a news release, Deepak Mehra, Head of Digital Strategy, Citi Markets said,“Fnality’s work in wholesale payments aligns with Citi’s ongoing commitment to delivering innovative solutions for the digital asset landscape. Their regulated DLT-based approach offers a compelling pathway for more efficient and resilient financial market infrastructure.”
We’ve written about Klarna several times in recent weeks as its IPO was one of the biggest fintech payment stories of the third quarter. The company’s successful exit showed that investors remain confident in its buy now, pay later-first business model – with a few caveats.
But the arguably more interesting exit of the September quarter was Lloyd’s US$161 million acquisition of Curve, a strategic deal focused on accelerating the bank’s digital transformation and enhancing its mobile banking customer experience. The acquisition will allow Lloyds to integrate Curve’s digital wallet and payment orchestration technology directly into its existing platform, positioning the UK lender to better compete more effectively with native digital players like Revolut and Monzo while reducing reliance on third-party payment providers like Apple Pay.
Lloyds’ decision to acquire Curve is a bold move, but likely a wise one as well. For a bank established before the American Revolution, it represents a strong step to tackle the real challenge posed by digital disruption that is becoming a feature rather than a bug.
That said, the road ahead will not be easy. Lloyds must figure out how to blend its culture with Curve’s, manage the tech transition, and ensure shareholders see the value in this investment. Plus, they need to demonstrate that Curve’s technology can actually scale profitably across their huge customer base. While some investors from Curve think the US$161 million price tag is too high, for Lloyds, it might just be a worthwhile investment to bolster their digital future.