Stripe vs Plaid?; Embedded finance is on the rise; Re-imagining Cryptos;


In this edition:

  1. Fintech apps
  2. Stripe vs Plaid?
  3. Embedded finance is on the rise
  4. Economic infrastructure layer at the metaverse
  5. Crypto use journey: Onboard first-time crypto users through familiar Web2 constructs
  6. Re-imagining Cryptos
  7. 7 essential ingredients of a metaverse by Andreessen Horowitz
  8. What’s up with Revolut’s UK banking license?
  9. Alternative Payments: Why are “Alt Pays” on the rise?

Fintech apps

Globally, installs of fintech apps grew by 35% from 2020 to 2021 year-over-year, with November representing the largest spike, up 26% compared to the average of 2021, or 82% compared to 2020.

Post-pandemic user interest in investing apps continued to grow in 2021, with asset management apps seeing record installs in the U.S. in Q1, growing by an unprecedented 198% quarter-over-quarter.

While the “meme stock” trend drove high volume to stock trading apps such as Robinhood at the beginning of the year, a surge of user interest in cryptocurrencies led crypto apps to surpass stock trading apps to become the majority of asset management app downloads. Bitcoin and overall crypto market capitalization reached new all-time highs in April and November, with user interest closely following, while mainstream coverage of “meme coins” such as Dogecoin and Shiba Inu and the popularity of NFTs on the Ethereum blockchain drove a flood of new users into the space.

Many users who install fintech apps are reattributed users, highlighting the importance of maintaining a strong retention strategy and creating an excellent user experience. Reattributions hit a high in H2 of 2020, with a ratio of 0.07, and have since declined to 0.05. Payment apps represent the highest number of reattributions, coming in at 0.09 in H2 of 2021.

Looking at total time spent in app per day, we can see how many minutes these sessions are tallying up to. H1 of 2021 was the highest point, with a day 0 average of 2.8 minutes per day, 3.7 on day 7, 3.3 on day 14, and 3.1 on day 30. H2 followed closely behind, starting with 2.7 minutes on day 0 and 3 minutes on day 30. These numbers are significantly higher for crypto and stock trading, with the former averaging 6.6 minutes per day on day 0 and 5 minutes on day 30, and the latter posting 4.7 and 6.8 minutes for the same days.


Stripe vs Plaid?

Earlier today, payments giant Stripe announced a new product that fills in some significant gaps in its play to be the financial services layer for merchants and other businesses whose models are based on enabling transactions, as reported by TC’s Ingrid Lunden.

That new product is called Financial Connections and the company says it will give Stripe’s customers a way to connect directly to their customer’s bank accounts, to access financial data to speed up or run certain kinds of transactions.

If this sounds familiar, it’s because it is pretty much exactly what another fintech giant, Plaid, already does. And the move by Stripe positions the company directly against Plaid, a former partner.

The tension now is that some people, including Plaid CEO and co-founder Zachary Perret, believe that Stripe may have used its relationship with Plaid to glean information on how to build this sort of product.

Both Plaid and Stripe declined to comment on the topic.

But in a tweet in response to Stripe PM Jay Shah’s own tweet about his company’s new product, Perret wrote: “Wow! Jay, you took interviews with Plaid & asked probing questions multiple times over the past few years, and your team sent repeated RFP’s (under NDA!) to us asking for tons of detailed data. I wish y’all the best with these products, but surprising to see the methods.”

The tension now is that some people, including Plaid CEO and co-founder Zachary Perret, believe that Stripe may have used its relationship with Plaid to glean information on how to build this sort of product.

Both Plaid and Stripe declined to comment on the topic.

But in a tweet in response to Stripe PM Jay Shah’s own tweet about his company’s new product, Perret wrote: “Wow! Jay, you took interviews with Plaid & asked probing questions multiple times over the past few years, and your team sent repeated RFP’s (under NDA!) to us asking for tons of detailed data. I wish y’all the best with these products, but surprising to see the methods.”

The two companies were partners considering that at one time. On Plaid’s site, there are details of a partnership between the two companies to “offer frictionless money transfers without the need to ever handle an account or routing number.”

No word on if that partnership is still in place. But in light of today’s news, even if it technically still is, its future appears on shaky ground.


Embedded finance is on the rise

Payment processing competition continues to rise and many of the fintechs in the space are rolling out new products to grow share and drive margins. Adyen announced the expansion of its financial services offering as part of a wider push into marketplaces, while Stripe has added the ability to pay out in cryptocurrencies.

Key payment and financial service offerings offered by payment processor fintechs

As part of its range of services targeted at marketplace customers, Adyen will now offer issuing capabilities that will enable marketplaces to issue cards to their sellers, as well as multicurrency accounts for merchants to receive payments, initiate payouts and store money in different currencies.

The product range, which is enabled by Adyen’s 2021-acquired US banking licence and 2017-acquired European licence, will also include capital and FX services, although details of the latter remain limited. However, the company has said that it expects to see meaningful revenue contributions from both issuing and capital in the long term.

The move puts Adyen in more direct competition with other payment service providers such as Payoneer, which has established a strong base in the marketplace space, including through Amazon’s approved programme. However, Adyen already has Facebook, Uber, H&M, eBay and Microsoft among its customers, giving it strong foundations to challenge in the marketplace arena.

Meanwhile, in February Apple unveiled its new ‘Tap to Pay’ capability that allows US merchants to accept cards, contactless and digital wallet payments on an iPhone instead of a card reader device, using a partner iOS app. Stripe is to be the first payment processor to offer such functionalities this spring, followed by Adyen later this year. This is likely to be a particularly appealing feature for SME customers, an increasingly important space among payment processors.

Stripe is looking to further differentiate itself in payouts with the expansion of its product range to enable payout in cryptocurrencies, initially via Circle-issued stablecoin USDC. The company has partnered with Twitter for a pilot of the service, enabling a select group of creators to use cryptocurrency-based rails to receive their earnings from Twitter.

Given this week’s potential sale of Twitter to Elon Musk, we may see further crypto-led developments in this area, so stay tuned for more.


Economic infrastructure layer at the metaverse

This layer includes the tech that will enable people to buy, sell, and store goods and services in the metaverse.

Despite the surge of interest around crypto and NFTs, startups and companies entering this space will likely only serve a small part of the metaverse — the decentralized metaverse. As a result, traditional payments companies will remain highly relevant. After all, if the metaverse were exclusively run on decentralized finance, companies would lose out on a massive opportunity to service non-crypto-carrying customers.


Traditional payment methods will not be obsolete in the metaverse. As economies in virtual worlds grow, customers will want to use their typical payments systems out of convenience, and providers will be eager to grab a slice of these transactions.

PayPal can be already used to buy virtual currencies in Roblox, Minecraft, and Second Life. Meanwhile, Minecraft accepts a number of payment methods for its in-world currency, Minecoin, including Visa, Google Pay, Apple Pay, and Mastercard.

Crypto exchanges:

These companies offer platforms for buying and selling crypto, including the cryptocurrencies native to decentralized digital worlds.

For example, The Sandbox’s cryptocurrency, Sand, can be traded on exchanges like Gemini,, and Binance. Similarly, MANA, the cryptocurrency native to Decentraland, can be purchased on Coinbase, Kraken and others.

Crypto wallets:

Crypto wallets act as login credentials for decentralized worlds.

In order to sign into a world like Cryptovoxels or Decentraland, a user needs to have a crypto wallet. The wallet’s unique ID allows it to function as a user’s personal account. As long as they have access to the wallet, they can log into decentralized worlds from multiple devices and receive digital assets such as in-world currency or NFTs of virtual land.

Sandbox, for instance, allows users to sign up with some of the most popular crypto wallets, including Venly, Bitski, and MetaMask.

NFT marketplaces: These startups are supporting commerce in decentralized worlds by developing platforms where users can buy and sell NFTs of everything from virtual land to avatar clothing to virtual yachts.

Non-fungible tokens (NFTs) are not exclusively a metaverse concept — people can buy and sell NFTs of tweets, videos, and more without ever participating in the metaverse. However, NFTs are emerging as the backbone of economic activity in decentralized virtual worlds given that they provide proof of ownership for metaverse-based property.

NFTs for metaverse items can also be listed on external NFT marketplaces. For example, marketplaces like OpenSea or Rarible already support the sale of virtual real estate and items from Decentraland and The Sandbox. Similarly, startups like DMarket are developing NFT marketplaces specifically catered to trading goods for decentralized worlds and games.


Crypto use journey: Onboard first-time crypto users through familiar Web2 constructs

Onboard first-time crypto users seamlessly through familiar Web2 constructs (e.g., logging in with your email address). Many web3 apps that exist today invite users to log in by connecting their wallet.

This will likely be a default option for many applications in the future — wallet logins are extremely convenient and secure. But first time crypto users may be confused, overwhelmed, or even suspicious if they don’t recognize what they’re looking at. For many first-time crypto users who don’t have wallets, traditional login methods are the only option they’re willing to use when experimenting with a new app.

This is an especially important step of the user journey for creators who are increasingly seeking to use web3 technologies to create new forms of fan engagement. Fans who support an artist early in their career might receive benefits in the form of creator access, recognition, and perks. (The design space here is almost infinite, and waves of innovation and experimentation are just beginning.)

Most fans will not be crypto-native, however, and asking them to obtain hardware wallets and create security systems is asking too much. A fan should be able to sign up, pull out their credit card, buy their favorite creators’ token, and see it in their account — it has to be intuitive and it must mirror familiar web2 experiences in order to see the user through their whole journey. No crypto wallet, key management, “gas” (transaction) fees, stuck transactions, or any other foreign user experiences.

In this way, creators can build shared digital economies with fans that they could take with them anywhere on the internet, but in a way that isn’t too intimidating or cumbersome for fans to join.


Re-imagining Cryptos

Since stablecoins are often pegged to fiat currencies, they can be transferred between exchanges. This allows traders and investors to leverage opportunities in cross-exchange arbitration, lending, and borrowing. In Decentralised Finance (DeFi), through smart contracts, savers of stablecoins can provide instant liquidity to borrowers while earning interest.

Even as regulators and industry bodies mull over establishing governing frameworks, the use of stablecoins is expected to expand. JPMorgan Chase & Co.’s JPM Coin, launched in October 2021, and USDF, a stablecoin launched in January 2022 by a group of US banks, are expected to boost the adoption of stablecoins.

JPM Coin has been created to simplify the complexities that are generally rife in cross-border payments. It allows the company’s clients to transfer US dollars within the system, and eases the process of liquidity funding and payments. It also supports delivery vs. payment, payment vs. payment and machine-to-machine payments. Leading fintech players such as PayPal and PayU are expected to join the race shortly with their own stablecoins.

Africa’s Apollo Fintech has launched a gold-backed stablecoin that combines the features of a stablecoin, cryptocurrency and investment coin. Called Gold Secured Currency (GSX), it increases in value as new assets are added to the trust backing it. Holders of GSX stablecoins can easily track the value of each underlying asset while also reaping the benefits of annual dividends as a reward.

In Brazil, mobile-first DeFi platform Celo’s cREAL stablecoin is linked to the local currency, while $NZDS, created by financial service provider Techemynt, is the first stablecoin pegged to the New Zealand dollar. Techemynt’s investor portal offers consumers onboarding assistance along with buying and selling services. $NZDS, built on the Ethereum network, complies with New Zealand’s regulations, and leverages blockchain to make all transactions transparent. The company aims to integrate $NZDS with wallet providers and fintech applications in the coming months.

In the UK, the country’s first mortgage stablecoin will be launched by Coadjute, a real-time network for the property market, in partnership with technology firm R3. R3’s blockchain technology is already being used in many financial networks. These stablecoins are expected to transform mortgage transactions by driving efficiencies across the value chain, reducing fraud and, most significantly, lowering the premiums in professional indemnity insurance.


7 essential ingredients of a metaverse by Andreessen Horowitz

1. Decentralization

Centralized platforms tend to start friendly and cooperative to attract users and developers, but once growth slows they become competitive, extractive, and zero-sum in their relationships. Often these powerful intermediaries engage in user rights abuses and de-platforming, and they host captive economies with aggressive take-rates. Decentralized systems, on the other hand, exhibit more equitable ownership among stakeholders, reduced censorship, and greater diversity.

2. Property rights

People have grown so accustomed to renting from the centralized services of web2 that the idea of actually owning things — digital objects you can sell, trade, or take elsewhere — often strikes people as odd. But the digital world ought to obey the same logic as the physical world: when you buy something, you own it. It’s yours.

3. Self-sovereign identity

The cryptography at the core of web3 enables people to authenticate without relying on intermediaries, so people can control their identity directly or with the help of services they choose. Wallets (like MetaMask and Phantom) provide ways for people to verify themselves.

4. Composability

To feature composability — a concept closely intertwined with interoperability — a metaverse would have to offer high quality, and open, technical standards as a foundation.

In their strongest form, composability and interoperability are possible permissionessly across wide ranges of the software stack. Decentralized finance, or DeFi, exemplifies this strong form. Anyone can adapt, recycle, change, or import existing code.

5. Openness/open source

So what does open source mean in a metaverse development context? The best programmers and creators — not the platforms — need full control to be fully innovative. Open source, and openness, helps ensure this. When codebases, algorithms, marketplaces, and protocols are transparent public goods, builders can pursue the fullness of their visions and ambitions to build more sophisticated, trustable experiences.

6. Community ownership

Community ownership is the piece of the puzzle that aligns network participants — builders, creators, investors, and users — to cooperate and strive for a common good. This miracle of coordination — previously unwieldy or not possible without the advent of crypto and blockchains — is orchestrated through the ownership of tokens, the native assets of networks.

7. Social immersion

A metaverse does not have to exist in VR/AR. All that’s necessary for a metaverse to exist is social immersion in the broad sense. What’s more important than hardware is the type of activities metaverses enable. They will let people remotely hang out, work together, mingle with friends, and have fun, much like they do using Discord, Twitter Spaces, or Clubhouse today.


What’s up with Revolut’s UK banking license?

Revolut has applied for a British banking license, a crucial step in its plan to become a globe-spanning financial “superapp.” It already offers money transfers, store purchases, share trading and pet insurance. A license would add protected U.K. current accounts with overdrafts and loans, the backbone of any grownup bank.

But first the Brits want to be sure Revolut has the compliance and risk-management capabilities to avoid the stumbles of other finance “disruptors,” especially as it works with cryptocurrencies. A frustrated Storonsky, who’d hoped to get a license by the start of 2022, asked Sunak what was taking so long, according to people present: Three months later approval still hasn’t arrived. A new vigilance around any Russian-linked businesses hasn’t helped.

There’s a huge amount at stake. While Revolut does have a license for the European Union, the U.K. and U.S. are key territories. Much of its valuation depends on cracking the mainstream banking market globally. Its 2020 revenue was just $325 million so it’s a long way from justifying that $33 billion figure.

And the backdrop isn’t straightforward. The U.K. has concerns about Revolut’s crypto trading service, a big revenue contributor, and whether upstart banking apps are equipped to tackle money launderers and fraud, people familiar say.

In Britain, Revolut’s crypto-trading product has been in focus. The regulator hasn’t deemed it “fit and proper” because of worries about its know-your-customer approach and transaction monitoring, though it’s still available in the U.K. Revolut has indicated frustration at dealing with several different FCA contacts, with crypto discussions having to restart each time, according to a person briefed on the process.

It must show the Financial Conduct Authority that it has the right compliance and fraud-busting tools for a fully licensed bank — an expensive and onerous duty. The big lenders spend billions on monitoring transactions and clients. Revolut has about 300 people in its risk and compliance teams.

“Standards are very high to get a banking license in the U.K.,” says Mark Hipperson, who went through the process after cofounding Starling Bank in 2014. “You have to be very thorough in your know-your-customer procedures.” Another British startup, Monument Bank, took three years to get approval.

The potential prize is great. With the superapp concept, “We’re going back to the times when clients had a current account, loan, insurance, all in one place,” says Hipperson, who’s running a new fintech called Ziglu. Customers went cold on this approach in the ’90s because banks took advantage.


Alternative Payments: Why are “Alt Pays” on the rise?

New research from regulatory intelligence specialists VIXIO suggests half of major merchants in American and Britain plan to launch their own “closed-loop” payment schemes in 2022.

“Closed-loop” schemes work by keeping the entire payments ecosystem — issuing an own-branded card, acquiring and processing transactions, loyalty and customer management — within the merchant’s control.

This helps to reduce costs and, proponents argue, provide greater customer benefit. In particular, merchants are looking at launching affinity payments cards which can be used at participating partner merchants.

Examples of this already exist, with France’s Lyf Pay digital wallet permitting payments at Total (petrol stations) Auchan (groceries) and BNP Paribas (banking).

In creating such ecosystems, merchants remove interchange fees and — so the argument runs — can encourage cross-selling between partners through shared loyalty schemes and other promotions.

The challenge of such “closed-loop” schemes is wider acceptance outside the partnerships created by merchants.

That said, the growing prevalence of such schemes, especially in North America, perhaps speaks more to merchant dissatisfaction with high fees and limited service options from acquirers than it does to the benefits of issuing payment cards to regular customers.

A2A all the way

VIXIO’s research also says just under half of payment firms in the US and UK want to launch account to account (A2A) payments at the point of sale (POS).

Their study claims 45% of payments FinTechs and PSPs plan to launch a closed-loop payment product in 2022, with 53% saying they will develop A2A capability by the end of 2023.

A2A payments promise instant settlement, a feature that makes them especially popular with “gig” economy workers.

If consumers are overwhelmingly positive about A2A payments, with some 87% of respondents to a recent Icon Solutions survey saying they would prefer A2A payments over direct debits and debit cards, then there are problems.

Icon’s research also shows that less than one in five banks currently offer A2A solutions, with just 27% more planning to offer them in the next 18 months.

In part, this can be explained by the comparatively low fee income compared to interchange, and also by the emergence of A2A specialist providers such as Tink, Trustly and Zimpler.

However, Icon’s work reveals a more familiar and disturbing pattern: 54% of bank and PSP respondents say their existing technology and systems are just too limited.

This reflects existing infrastructure that simply does not have the flexibility to bring differentiated services to market quickly and safely.


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