Tag: payments

  • TikTok steps up its fintech foray 

    TikTok steps up its fintech foray 

    Chinese social media giant TikTok is borrowing a page out of the book of Alibaba and Tencent with its push into digital financial services. The ByteDance-owned company has super app ambitions. 

    Fintech is a logical progression for the massively popular short video app, which generated an estimated US$23 billion in annual revenue in 2024. It is the top-earning global app, driven by advertising, in-app purchases (coins/gifts), and rapid growth in TikTok Shop. 

    However, the ByteDance-owned company is highly dependent on advertising for revenue. The Business of Apps estimates the company makes 77% of its revenue from advertising, with the rest coming from commerce and in-app purchases. Moving into digital financial services could help it diversify revenue 

    Having observed the popularity of tools like Venmo and Cash App among younger users, TikTok believes it can become a key financial touchpoint for its massive digitally native Gen Z user base. This demographic already spends so much time online (and specifically in the TikTok app) that persuading them to use it for payments and other financial services should not be difficult.

    Yet in TikTok’s home market of China (where it is known as Douyin and operates under very different rules than overseas), Alipay and WeChat Pay have an effective payments duopoly. Their ecosystems are so comprehensive and embedded into everyday life in China that no competitors can easily build market share. 

    Additionally, since late 2020, Chinese regulators have tightened restrictions on fintech, broadly targeting the market dominance of big tech firms. This crackdown, which included putting Ant Group’s IPO on ice, put an end to the Chinese fintech boom and forced ByteDance to backtrack on plans to offer a wide array of financial services to Chinese consumers. 

    But in some markets outside of China, TikTok has strong potential as a provider of digital financial services. To that end, according to Reuters, the firm is planning to apply for two financial licenses in Brazil, where it has about 91 million users. Brazil is a promising market for fintech startups and is home to Nubank, one of the largest digital banks on the planet.

    The licenses are for electronic money and direct credit. The former license would allow TikTok to offer digital wallets and prepaid accounts. Users would be able to hold cash balances, receive funds (such as creator payouts), and make payments directly within the app. The latter  This would permit TikTok to act as a lender, using its own capital to offer loans to its users. While it could not take public deposits like a traditional bank, it could facilitate credit for e-commerce purchases or bridge borrowers with other lenders.

    Further, TikTok is reportedly looking to integrate Pix, Brazil’s highly popular instant payment system, directly into its interface to streamline social commerce and person-to-person (P2P) transfers. 

    What may augur well for TikTok’s fintech aspirations in Brazil is that it has already demonstrated a long-term commitment to the country. In late 2025, ByteDance said it would invest more than R$200 billion (US$37.7 billion) in a data center in Brazil, its first such facility in Latin America. 

    Before its push into Brazil’s financial services market, TikTok tried to enter the Indonesian e-commerce and payments markets in 2023. However, it was tripped up by regulatory obstacles. The Indonesian government implemented a regulation forcing a split between social media and e-commerce platforms, requiring a separate app for transactions. The rise of TikTok Shop was perceived as a threat to traditional, offline brick-and-mortar retail markets, such as Tanah Abang in Jakarta. 

    To avoid losing its operating license in one of its largest markets, TikTok was forced to halt its integrated e-commerce services and restructure its operations. Ultimately, the disruption forced TikTok to pivot and rethink its Indonesian strategy to comply with localization policies and improve relations with local businesses.

  • Is the U.S. having second thoughts about stablecoins?  

    Is the U.S. having second thoughts about stablecoins?  

    It was only a matter of time before the United States had second thoughts about rapidly adopting stablecoins. Even if the White House remains supportive of fast adoption, powerful regulators are less sanguine about the fiat currency-backed cryptocurrencies. 

    In a speech to the Federalist Society on March 31, Federal Reserve Bank Governor Michael S. Barr noted that, Congress in 2025 passed the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, which provides some needed clarity to issuers of stablecoins about how they can fit into the regulatory framework. He pointed out that while there remains much work do by the relevant agencies to fill in the specifics during the rulemaking process, increased regulatory certainty could lead to more rapid development of stablecoins.

    Barr went on to talk about money laundering risks – par for the course when regulators talk about cryptocurrency. Not much to see here. 

    More significant was what he said about financial stability. “Stablecoins will be stable only if they can be reliably and promptly redeemed at par in a wide range of conditions, including during stress in the market that can put pressure on the value of otherwise liquid government debt and during episodes of strain on the individual issuer or its related entities,” he said. 

    “Caution is warranted because we have a long and painful history of private money created with insufficient safeguards.”

    Barr noted that in the early 1800s, during the so-called Free Banking Era, the United States had competing forms of private money in the form of bank notes, which often traded below par. “There were frequent bank runs and even financial panics,” he said. Though improvements were made in the 1860s with the National Banking Acts, financial crises persisted. The particularly severe Panic of 1907, which featured a run on trust companies that offered deposit products backed by less liquid assets, led eventually to the creation of the Federal Reserve System in 1913.

    Beyond these systemic financial risk concerns, incumbent banks are weighing in against crypto firms’ push to allow competitive yields, which they say would create unfair competition. Banks are actively lobbying against proposals that allow such rewards, causing a stalemate in the Senate, with many wondering if legislation can pass before the 2026 election cycle.  

    From what we understand, the Digital Asset Market Clarity Act’s compromise language on stablecoin yield has circulated among crypto and banking industry stakeholders in closed-door Capitol Hill sessions. A Senate Banking Committee markup is now planned for the second half of April, though the text still has plenty of detractors. 

    An equally important issue – and one crypto diehards often overlook – is whether the U.S. needs stablecoins. Unlike emerging markets where banking is often slow or inaccessible, the U.S. has a highly functional payment system. Most consumers and businesses find existing rails (like credit cards, Venmo, or ACH) sufficiently fast and secure, leaving no obvious market gap for stablecoins to fill in the immediate future.

    Research by FIS indicates that approximately 75% of U.S. consumers would only feel comfortable using stablecoins if they were offered by a traditional bank. Most users still view stablecoins with skepticism due to concerns over security, privacy, and past high-profile de-pegging events.

    Banks will undoubtedly be pleased with the FIS survey. It also found that 53.9% of respondents view banks offering stablecoins as a positive development, and the majority want traditional financial safeguards applied to digital currency. 77.4% of survey respondents believe stablecoins should be regulated like traditional payment methods, and 66.3% say FDIC-style insurance would increase their likelihood of use.

    Meanwhile, though the GENIUS Act made important progress in creating a regulatory framework for stablecoins, the rate of adoption in the U.S. will largely depend on how federal and state regulators implement the statute.  

  • Revolut doubles down on India expansion

    Revolut doubles down on India expansion

    Revolut has long had its eyes on India, the world’s largest remittances market and the country in Asia where its growth prospects are most promising. The UK fintech unicorn first entered India five years ago and has been gradually beefing up local operations.

     Revolut’s India foray now looks set to kick into high gear—but not from a customer standpoint, at least not yet. Rather, the company announced in late March that it will base about 40% of its global workforce in India by the end of 2026, expanding its global capability center with 1,600 new hires that will increase its total headcount in the subcontinent to 5,500.

    This move follows Revolut pledging last October to invest US$670 million in India over five years. “India is a critical market as we see ourselves becoming a truly global bank. We’re taking a long view on all the critical markets we enter. We’re very optimistic about the growth in India and the future success point. So, we want to build for that future,” group chief banking officer Siddhartha Jajodia told India’s Economic Times.

    If all goes smoothly, the India hub could really become the heart of innovation for Revolut—think of it as an engine driving cost efficiency and managing global processes for the firm. This might help Revolut roll out new products faster across the globe. Yet there could be some bumps along the way: regulatory changes, fierce competition for talent, or challenges in syncing operations in India with other markets. If things don’t go as planned, the UK neobank could end up facing delays in product launches or operational hiccups.

    From a customer standpoint, India offers Revolut some of its best opportunities for growth among emerging markets. And Revolut’s India leadership has been vocal about the company’s ambitions in the subcontinent, which are somewhat modest by its standards. An Oct. 2025 Tech Crunch article noted that Revolut is targeting about 150 million Indians in the long run, with plans to sign up about 20 million as customers by 2030 and process US$7 billion of their transactions.

    Revolut India CEO Paroma Chatterjee has called the high foreign exchange fees Indian banks charge their customers “criminal”—an interesting way to put it.

    That description may reflect frustration. Revolut feels restricted in India from the type of torrid expansion for which it is best known. It does hold approvals from the Reserve Bank of India (RBI) to operate as a fintech in India, including a full license to issue Prepaid Payment Instruments (PPI) for wallets and cards. The UK firm also operates as an Authorized Dealer Category-II (AD-II) for forex and cross-border remittances.

    But Revolut does not have a full banking license in India. As a result, it cannot offer traditional bank accounts, savings accounts, interest on balances, or credit cards. Because the UK firm operates as an e-money/prepaid instrument issuer rather than a bank, customer funds are not covered by the DICGC deposit guarantee scheme.

    While Revolut’s heavy investment in Indian talent and operations should sit well with Indian regulators, it is difficult to say whether this strategy will translate into faster regulatory approval for a full banking license. With the exception of Google Pay, most foreign fintech firms have struggled in India. They face intense competition from entrenched local players, complex regulatory compliance requirements, and the need to adapt to a unique, low-margin, high-volume market.

     Revolut is also a global company that is simultaneously ramping up expansion in Europe, Latin America, and the United States. While valued at US$75 billion, it does not have unlimited resources.

    A cautionary tale for Revolut is WhatsApp Pay, which thought its dominant messaging app would lead to a large market share in the Indian payments sector. But regulators slow-walked its key approvals due to data localization concerns. It has never gained a strong foothold in India.

    Fortunately for Revolut, it lacks Meta’s baggage. Time will tell if it can navigate the complex Indian regulatory environment more adroitly.

  • Airwallex charges full speed ahead in EMEA

    Airwallex charges full speed ahead in EMEA

    When AUSTRAC announced in January it would audit Airwallex for suspected breaches of anti-money laundering (AML) and counter-terrorism financing (CFL) laws, the plucky fintech unicorn remained cool as a cucumber. Like many well-funded fintech disruptors, the company has become supremely confident in its prospects. It’s going to take more than an audit (or two) to rattle the company.

    To that end, the B2B payments fintech plans to invest more than US$1 billion in expansion across continental Europe, the UK, Africa, and the Middle East by 2030. “We’re seeing exceptional momentum across Europe, with rapid revenue growth reflecting the increasing demand for modern, global financial infrastructure,” Christos Chamberlain, general manager of the UK and Europe at Airwallex, said in a statement.

    In the fourth quarter of 2025, the company posted 116% annual revenue growth in EMEA and a 226% increase in transaction volume. The company says that the growth is being driven by an increase in high-growth customers and higher-value deals across multiple products—especially for business customers in travel, software, and e-commerce.

    The investment supports launching new products tailored for European clients, such as enhanced expense management and cross-border payment tools. Beyond its London hub, Airwallex is focusing on expanding its footprint in Germany, France, and Sweden. Following a December 2025 Series G funding round that valued the company at $8 billion, this planned investment widens Airwallex’s international expansion efforts, which previously focused on the United States and Asia Pacific.

    However, the B2B payments startup shows no sign of slowing down in either of the latter geographies. For instance, in January, the payments startup acquired South Korea-based Paynuri, a company that holds payment gateway and prepaid electronic payment instrument licenses as well as a foreign exchange business registration in the Northeast Asian country. By securing payment, prepaid, and foreign exchange approvals in South Korea, Airwallex aims to serve Korean businesses that are expanding internationally while avoiding the delays associated with organic licensing. This acquisition accelerates the company’s entry into a high-barrier market, allowing them to offer local, cross-border payment services to Korean businesses and global clients.

    “Korea’s fast-growing e-commerce, creative, and entertainment sectors present immense opportunities for Korean businesses on the global stage. Our goal is to support these businesses with a more efficient solution to expand beyond borders,” Airwallex APAC general manager Arnold Chan said in a statement.

    The Paynuri acquisition closely followed Airwallex taking a majority stake in Indonesia’s PT Skye Sab, a move intended to strengthen its footprint in Southeast Asia. This acquisition allows Airwallex to offer local Indonesian payments, remittances, and cross-border services, helping local SMEs expand globally and international firms enter Indonesia.

    In Sept. 2025, Airwallex acquired San Francisco-based OpenPay in a move aimed at making the Australia-founded firm more competitive with Stripe Billing. This tie-up helps Airwallex to integrate advanced recurring billing and subscription management tools into its global financial infrastructure, allowing the company to offer a complete, end-to-end payment and billing solution. With automated, flexible, and scalable subscription management, Airwallex can directly compete with Stripe Billing. The capability to handle complex billing—such as tiered or usage-based pricing—allows Airwallex to better attract larger companies and SaaS businesses.

    Looking ahead, we will be carefully watching how all this expansion affects Airwallex’s IPO plans. Previously, co-founder and CEO Jack Zhang said that the Australia-founded firm would be “IPO-ready” by 2026, but that does not seem to imply an imminent market debut. A recent Wall Street Journal report noted that the IPO could “occur in the next three to four years,” suggesting that Airwallex does not feel any immediate pressure to provide investors with an exit.

    We expect that Airwallex will want to resolve the current AUSTRAC audit and strengthen AML and CFT controls before starting the IPO process. The company will want to be sure that it can address any regulatory concerns adequately.

  • Will Stripe buy PayPal?

    Will Stripe buy PayPal?

    A Bloomberg report about a possible Stripe acquisition of PayPal has spurred intense discussion in the fintech industry. After all, Stripe is the digital payment colossus of 2026, the most valuable private fintech firm in the world. PayPal once dominated the online payment processing market, but not anymore.

    Any conversation about the digital payments pioneer being acquired or broken up should start with what went wrong at the Peter Thiel-founded company. PayPal has struggled with declining stock value, missing growth targets, and intense competition from rivals like Apple and Google. Its share price has fallen from a high of US$300 in 2021 to just US$40. Its push into AI seems reactive.  

    The former digital payments hegemon lost its edge by continuing to focus on payment volume and card processing over product innovation even after digital payments became commoditized. Flagship Advisory Partners notes, “There was real friction in digital payments until the last ten or so years, but today nearly every bank app in North America and Europe (PayPal’s core markets) has built-in person-to-person payment capabilities… Merchants no longer rely on PayPal to drive conversion through ease of payments.”

    The payment giant’s travails explain why Alex Chriss only lasted 1 ½ years in the CEO job. David Marcus, who served as the firm’s president from 2012 to 2014, said on X that Chriss—whose background is in software rather than payments—erred by removing much of PayPal’s leadership team with a deep understanding of payments. Marcus does not express confidence in Chriss’s replacement either, noting that new PayPal CEO Enrico Lores is a hardware executive (he formally served as HP president).

    While PayPal has lost its competitive edge, it remains a profitable company with an enormous consumer user network of roughly 400 million active accounts. For Stripe, whose core strength lies in B2B payments, merging with PayPal would allow it to control the entire payment stack—from backend processing to the consumer “pay” button—while diversifying away from reliance on partners like Shopify. A combination would create a closed-loop system, connecting Stripe’s merchant base directly with PayPal’s user base, potentially reducing reliance on traditional, high-fee card networks.

    The implications for the payments industry would be significant, combining the largest fintech payments infrastructure provider and consumer brand. It would likely catalyze more consolidation and reduce the number of large independent payment processors. Further, a combined Stripe-PayPal entity would control massive troves of data on both the merchant acquiring and consumer sides.

    And for these reasons (and others), we doubt that this deal could clear all the necessary regulatory hurdles in the United States and Europe.

    In the meantime, PayPal and Stripe are not currently in sale talks, according to Semafor. While Stripe has expressed interest in PayPal’s assets, the company is focusing on operational execution and preparing for potential activist investor campaigns rather than an acquisition.

    Semafor makes a good point that has not come up in many other analyses about the hurdles facing this deal. It is not easy for privately held companies, especially those the size of Stripe, to buy a large public company if it does not want to be bought. “Stripe cannot pay with its own shares and would need rock-solid debt commitments to rebut any stiff-arm from PayPal,” Semafor notes.

    For now, we’re going to put this Stripe-PayPal deal in the same bucket as several other larger-than-life fintech mergers that never came to fruition. Visa’s abortive bid for Plaid comes to mind. In that case, the Department of Justice sued to block the merger, arguing that Visa was acquiring a nascent competitive threat to its payments monopoly. Another failed deal worthy of mention – even though it is not strictly fintech – is Grab/GoTo.

    Some mergers were just not meant to be.

  • Why Wise is growing so fast

    Why Wise is growing so fast

    Wise (formerly TransferWise) is growing briskly thanks to its combination of a disruptive low-cost business model, proprietary technology, and rapid expansion into business and partner banking. The UK-based firm currently serves 10.9 million active customers. Its quarterly cross-border volume grew 25% annually to £47.4 billion in the third fiscal quarter of 2026, while underlying income jumped 21% year-on-year to £424.4 million.

    Wise delivered 74% of payments instantly in Q3 FY26, up 9% year-on-year. “This is a clear benefit of our continued focus on infrastructure—our licenses, integrations, technology, andoperations,” Kristo Käärmann, co-founder and chief executive officer of Wise, said in a news release.

    In its early days, Wise talked a big game about challenging incumbent payment rails, and its core value proposition still relies on eschewing the high fees and slow transfer times of traditional correspondent banking. By reducing its average take rate to 0.58% in 2025, the company has made it difficult for competitors to match its pricing. 65% of its transfers are completed in under 20 seconds. 

    But the UK-based firm also increasingly works closely with incumbent financial firms. Notably, the Belgium-based Swift bank messaging network and Wise established a partnership in September 2023 that integrates the latter’s faster, lower-cost infrastructure into the traditional banking system. This collaboration allows banks using Swift to leverage Wise Platform’s technology for international payments without having to overhaul their legacy systems.

    The partnership has important benefits for both firms. It allows Wise to scale rapidly by partnering with large financial institutions and expanding its reach, rather than just relying on direct-to-consumer, or smaller business, transactions. At the same time, the tie-up allows SWIFT to maintain its role as the backbone of international finance while addressing the competition from fintechs that offer faster, cheaper alternatives. It also helps banks meet G20 targets for faster and more transparent cross-border payments.

    With its significant scale and solid underlying financials—including consistent profitability since 2021—Wise is ready to move its primary listing to the New York Stock Exchange (NYSE) while maintaining a secondary listing on the London Stock Exchange (LSE). The decision to undertake a dual listing is significant, as even among disruptive technology firms, it is not common. Compared to a typical single listing, a dual listing is costlier, has more regulatory complexities, and includes greater operational burdens.

    But for the payments firm, a dual listing has advantages. On the one hand, the company first went public through a direct listing on the LSE in July 2021, so a secondary listing now is not overly burdensome. On the other hand, the U.S. is Wise’s largest market. By listing on the NYSE, the company can increase its profile in the U.S. market and access deeper, more liquid capital markets. Wise’s investors are enthusiastic about this move: More than 90% of shareholders approved it.  

    Once Wise is listed on the NYSE, which is expected to happen in the second half of this year, it will be well positioned to pursue its long-term objective in the U.S. market: obtaining a national bank charter. By pursuing a U.S. national trust bank charter, Wise aims to settle U.S. dollar payments directly with the Federal Reserve, bypassing intermediary banks and lowering costs.

    The proposed entity would be a nondepository trust bank supervised directly by the Office of the Comptroller of the Currency (OCC) with headquarters in Austin, Texas. As a trust bank, it would not take traditional deposits or offer lending, focusing instead on custodial services and payment settlement.

    These narrow objectives could bode well for Wise’s effort to obtain the bank charter, though some incumbent banks are opposed to its plans. The Independent Community Bankers of America (ICBA) sent a letter to OCC in Oct. 2025 urging the regulator not to approve Wise’s application, arguing the company has inadequate AML/CTF controls.

    Wise will have to adequately address compliance concerns if it expects to obtain the national bank charter.

  • Why Stripe won’t commit to an IPO

    Why Stripe won’t commit to an IPO

    Stripe is one of the oldest fintech unicorns to remain a private company. Founded in 2010, Stripe is arguably past prime time to go public. Why the delay?

    It’s complicated. 

    With a valuation of $106.7 billion, the San Francisco and Dublin-headquartered company is one of the most successful payment startups of all time. Its seed round backers included Sequoia, Elon Musk and Peter Thiel – who all have records of making extraordinarily successful bets on nascent upstarts. 

    The company generated an estimated US$5.84 billion in revenue in 2025 and serves millions of businesses. It has expanded beyond payments to become a full-stack financial infrastructure platform. It has added services like subscription management, business setup, fraud prevention, lending and revenue/tax automation.  

    In 2024, Stripe reached profitability for the first time in a calendar year while total payment volume reached a massive US$1.4 trillion. In a Feb. 2025 news release, the company said that in each of the last six years, it had reinvested a higher proportion of its earnings in R&D “than any comparable company.” Cofounders Patrick and John Collison believe “this ability will prove particularly important in the coming years, as stablecoins, AI, and other forces reshape the landscape.”

    Unsurprisingly, Stripe is leaning into its AI capabilities as it seeks to capitalize on the massive expectations that investors and large corporations have for the technology. The payments firm emphasizes that it has invested in AI models “that are delivering significant revenue and performance uplifts for its users.” The payments company says that Hertz increased authorization rates by 4% when it moved its payments to Stripe, while Forbes saw a 23% boost in revenue with the payments startup managing its subscription payments. Carsharing marketplace Turo captured $114 million in additional annual revenue with Stripe’s Optimized Checkout Suite.


    While some startups would seek to use the momentum from AI-fueled growth to pave the way for an IPO, Stripe has shown no such inclination. Co-founders Patrick and John Collison have said that public companies are often suited for the “extract stage” rather than the “expand stage.” They say that staying private allows the company to focus on infrastructure building and long-term investments without the constant scrutiny and pressure to meet quarterly earnings per share (EPS) targets that come with being publicly traded. 

    At the same time, Stripe is profitable and cash-flow positive, so it does not need public market funding for capital. Unlike other fintech startups facing a financing squeeze, Stripe can finance its operations and acquisitions with existing cash and private funding rounds.

    Stripe also regularly arranges tender offers and secondary sales, allowing early investors and employees to sell their shares and get liquidity without the need for a public listing. This reduces a key incentive for an immediate IPO.

    Still, there are drawbacks to Stripe’s approach. On the one hand, tender offers and share buybacks may provide some liquidity to employees, this is a temporary fix and not a sustainable, long-term alternative to public market access.

    Secondly, kicking the can down the road indefinitely could result in a lower valuation when the company does eventually go public. Stripe may be the highest-flying payments startup today, but that may not be the case in three or five years. 

    Industry segments Stripe is targeting like AI and stablecoins may cool off in the coming years as investors realize their limitations. And Stripe is far from the first big payments fintech to undergo an overnight conversion to stablecoin believer – Sweden’s Klarna recently announced it plans to issue KlarnaUSD.

    While Stripe has hired major investment banks like Goldman Sachs and JPMorgan Chase to advise on future listing options, no official IPO date has been set. Instead of a traditional IPO, a direct listing may be a more likely route if Stripe does choose to go public in the future, since the company has no pressing need to raise more capital.  

  • Paytech deals drive Europe’s Q3 fintech funding

    Paytech deals drive Europe’s Q3 fintech funding

    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.

  • Klarna hops on the stablecoin bandwagon 

    Klarna hops on the stablecoin bandwagon 

    If there was any doubt that the world is in the midst of a stablecoin craze – we hesitate to use that loaded term “bubble” – it should be dispelled by the recent launch of a stablecoin by buy now, pay later (BNPL) behemoth Klarna. 

    In a news release, Klarna explains its rationale for the issuance of KlarnaUSD, which is currently in a testing phase and will be available to the public on mainnet in 2026 – likely the middle of the year. Citing consultancy McKinsey, the Swedish fintech giant says that stablecoin transactions now exceed US$27 trillion a year and could overtake legacy payment networks before the end of the decade. 

    “With 114 million customers and $118 billion in annual GMV, Klarna has the scale to change payments globally: with Klarna’s scale and Tempo’s infrastructure, we can challenge old networks and make payments faster and cheaper for everyone,” Sebastian Siemiatkowski, co-founder and CEO of Klarna, said in the news release. Klarna is the first company to launch a stablecoin on Tempo, a new independent blockchain started by Stripe and Paradigm that’s purpose-built for payments. 

    We aren’t holding our breath for stablecoins to relegate legacy payment networks to the dustbin of history, but we can see why Klarna’s leadership is latching onto stablecoins at this moment. With its core BNPL product facing intensifying competition, Klarna needs new engines for growth now that it is a public company that has to stand up to widespread investor scrutiny. 

    After several years of delays, the Swedish company finally went public on the New York Stock Exchange (NYSE) in September at a valuation of US$15.1 billion, which is about 1/3 of what it was worth in private markets back in 2021. Although the IPO itself was considered successful, the company’s share price has dropped 33% since September as investors worry about Klarna’s ability to generate sustained profits. 

    While Klarna’s third-quarter revenue reached a record US$903 million, its net loss widened to $95 million. Klarna says that it posted a loss mainly due to a US$235 million provision for credit losses, an accounting requirement tied to the rapid growth of its expanding Fair Financing product.

    The U.S. is a key growth area for Klarna, but its credit loss rates are higher there than in its core European markets. This is partly because Klarna must compete more directly with traditional credit cards in the U.S., where its primary users tend to be consumers who need more time to pay.

    Launching a stablecoin does not fundamentally address the issues with Klarna’s current business model, but it could reduce the US$32.7 billion in cross-border fees the company pays, lowering its costs and allowing it to make faster payouts to merchants. 

    But will this be a gamechanger? 

    Maybe not. 

    Indeed, we are skeptical that stablecoins traveling on blockchain-based payment rails – Tempo’s or anyone else’s – are going to pose a serious challenge to the interbank messaging network SWIFT, which has significantly improved the speed of transactions in recent years. Currently, 75% of payments travelling over the SWIFT network reach beneficiary banks within just 10 minutes. The interbank messaging network does acknowledge that “more work is needed at the final stage of a payment’s journey—the last mile—to address friction that delays funds from being delivered to end beneficiaries.” 

    At the same time, stablecoins lack a single, globally accepted regulatory framework. Rules vary significantly by country, creating complexity and uncertainty for large institutions operating across multiple jurisdictions. SWIFT, on the other hand, operates within mature and well-understood legal frameworks.

    Sweden’s central bank notes that the use of stablecoins outside decentralized finance, for example for buying and selling of crypto-assets and use as collateral, is still limited but is growing rapidly in some areas. Whether this development will lead to wider use remains uncertain.

    Time will tell if Klarna’s stablecoin bet pays off. 

  • Why did GCash delay its IPO until H2 2026?

    Why did GCash delay its IPO until H2 2026?

    Ant Group-backed GCash, the most successful Philippine payments platform, has been eyeing an initial public offering (IPO) for several years. It achieved profitability in 2021, three years ahead of target. Having hit that milestone four years ago and boasting 94 million users, the company seems like it should be primed to go public.

    In fact, in June 2023, Ernest Cu, chairman of Mynt (the fintech firm that operates GCash), told Bloomberg that GCash was “pretty much ripe for it.” About a year later, he said, “We want to do it sooner rather than later. Sometime in 2025 would be the best estimate I can give you.”

    As it turns out, that estimate was overly optimistic. In late October, Bloomberg reported that GCash had decided to postpone its market debut until the second half of 2026. It is easy to see why: As of November 12, the Philippine stock market (PSEi) is down 10-11% year-to-date. On November 11, it hit a five-year nadir of 5,629.07. Investor pessimism has prevailed this year given global economic jitters linked to mercurial United States trade policy and a domestic corruption probe related to large-scale infrastructure projects.

    Some analysts believe the market may be near a bottom but emphasize that regaining confidence requires clear and credible government action, such as accelerating infrastructure spending and addressing governance issues. When that happens is anyone’s guess, but GCash’s management is betting that overall market conditions will have improved enough by the second half of next year to go ahead with its long-awaited IPO. 

    While some fintech startups face heavy pressure from venture capital investors impatient for an exit, GCash’s situation is different. Its key investors include the Philippine telecoms giant Globe (which owns 36% of Mynt, the fintech firm that operates GCash), Ant Group, and Japan’s UFJ Financial Group. These cash-rich corporates can afford to wait for better market conditions before cashing out.

    At the same time, GCash is in a strong financial position. During Business World’s One-on-One online interview series on September 29, Globe Telecom Inc. President Carl Raymond Cruz said that GCash does not need capital. It [GCash]generates its own capital so the need for an IPO technically, while it’s there, [is] not really high on the agenda right now,” he said. 

    Another factor contributing to GCash’s cautious IPO approach is the pressure on earnings caused by recent regulatory curbs on online gambling transactions. Such transactions previously helped the company rapidly grow its user base. Globe’s latest financial statements show that net contributions from affiliates, mainly Mynt, fell 24% sequentially in the third quarter to P1.6 billion from P2.1 billion in the June quarter. 

    During Globe’s third-quarter earnings call, chief financial officer Carlo Pruno said, “We do believe may see some pressure in the short term.” However, he added that Globe is confident in GCash’s medium and long-term growth given its strong fundamentals. 

    Meanwhile, GCash is continuing to prepare for its market debut. On Oct. 29, the Philippines’ BusinessWorld reported that Mynt had secured approval from the Securities and Exchange Commission (SEC) for its stock split, an importantstep toward its eventual IPO. The SEC’s approval allows Mynt to increase its common shares to P71.66 billion, at three centavos each, while keeping its authorized capital stock at P2.15 billion. A stock split boosts the number of shares without altering the company’s overall capitalization, effectively making each share more affordable and improving liquidity.

    Investor anticipation about the GCash IPO remains high, despite the delay. Analysts say the deal could raise $1.5 billion and be the Philippines’ biggest of all time, surpassing the $1 billion IPO of Philippine food company Monde Nissin in 2021.

    In this case, good things may indeed come to those who wait.