From gold to silver; from oil to gas, tokenization is in full swing! Read now to find out: How, Why and What? 

What is Asset Tokenization?

Asset tokenization is the process of digitising both tangible and intangible assets and transforming them into tokens that may subsequently be kept on the blockchain. One asset does not always equal one token: assets are frequently divided down into smaller portions, resulting in a large number of tokens.

Once an asset has been tokenized and entered the digital realm, it is feasible to hold and exchange it fractionally or entirely, as well as transfer it to other proprietors.

The most basic example is cashing out a bank account. Tokenization is the process of replenishing virtual money at a cashier counter or ATMs, and tokenized assets are the virtual money received. However, it is claimed that any type of financial assets has the capacity to be tokenized.

It is said to include three essential components: the input asset (£100 in cash), entity’s substitution mechanism (bank’s internal infrastructure) and the virtual output (updated balance on the card). When a distributed ledger is used to tokenize an asset, the ledger replaces the bank infrastructure, and cryptocurrency tokens replace conventional digital currencies. In every other way, the procedure is similar to the tokenization of cash within the banking ecosystem, Forex instruments or equity. 

Benefits of Tokenization

To put it another way, the blockchain’s ability to tokenize assets is what sets it apart from banks and traditional financial exchanges. All of these distinctions may be boiled down to the following benefits.

1. Divisibility:

The capacity to break blockchain technology into fractions of various coins is another key feature. It is now feasible to make the market liquid, which was previously impossible. Tokenization divides investment shares into quantities that are accessible to a large number of people (potentially unlimited). The real estate business is the finest illustration of asset divisibility. You don’t have to rent or own the entire property to invest in it.

For example, a $300,000 house may be split into tokens, drastically lowering the investment barrier for many. However, blockchain tokenization is not confined to real estate, artwork, and collectibles, among other assets that have benefited greatly from the technology.

2. Enhanced Accessibility:

The division of the asset into tokens and the ability to partially own an asset after it has been tokenized reduces entry barriers for new investors and for those with smaller investment capacity.The benefit of enhanced accessibility allows a broader investor base to participate in the investment process. 

3. Disintermediation:

When it comes to buying stock on the stock market, there are so many middlemen to trust before making a successful purchase. Each share purchase seems to have a middleman, which raises transaction complexity, costs, and decreases trust and security.

Asset tokenization on a blockchain, on the other hand, eliminates middlemen because the technology is trustless and does not require human verification. This reduces the expense of middlemen, accelerates the investment process, and eliminates the possibility of human error.

4. Transparency:

Blockchains have a technology composition comprising cryptography, mathematical models, economic models, and algorithms. The underlying distributed ledger system makes blockchain technology safe and open to inspection. The blockchains are also immutable. So valid transactions cannot be deleted or changed as any such attempt would leave an easily detectable trace. 

Types of Tokenized Asset

Awareness precedes choice and choice precedes results. Now that we know what asset tokenization is all about, get ready to know the many faces of this process. Broadly, there are four types of tokenized assets each characterised by their different use. These are: 

1. Security Tokens

While the term ‘securities’ is quite well known in the financial world as tradable financial assets, not everyone can access these assets making them difficult to trade and value. However, through various software solutions, these financial assets can now be turned into tokens on a blockchain. Once they’ve been created, these tokens can enter global markets with a low barrier of entry for investors.

2. Utility Tokens

Tokens need not only be about representing a share in a company, it is possible to extend the functions of tokens. This is what ‘Utility tokens’ are all about, they are programmed with additional rules to improve their functionality, or as rightly named, utility. 

3. Non-fungible tokens

A non-fungible token is a non-interchangeable unit of data stored on a blockchain, a form of digital ledger, that can be sold and traded. Types of NFT data units may be associated with digital files such as photos, videos, and audio. Because each token is uniquely identifiable, NFTs differ from blockchain cryptocurrencies, such as Bitcoin.

4. Currency Tokens

Indeed, innovation has no limits! Today, humanity can build an entire monetary system through tokens by creating a program or as we like to call it, a smart contract. This program is created on a blockchain in which tokens can be traded. This has its limitations by not being the native token of the blockchain on which it operates.

Some companies have used this as a way to create tokens that are artificially stable in value, called stablecoins, so they can more easily be used for payments.

Over the past decade, currency tokens have come and gone. While some people have created them in the endeavour to create a nemesis for Bitcoin, many others have just done so to explore the less travelled paths.

Challenges of Tokenization

What is life without a few challenges? Every little step of progress is often tainted with the challenges of risks. Similarly, while asset tokenization has a lot to offer, it has its own share of challenges. These are: 

1. Data security and privacy:

Privacy issues regarding tokenization may arise due to a blockchain’s distributed structure, involving the sharing and storing of sensitive user data across multiple blockchain nodes. Blockchains are secure, but the security of individual nodes in the network cannot be always guaranteed.

2. Technological reliability:

In the eyes of many investors and asset owners, blockchain is still a relatively new technology. After Bitcoin, several other blockchains have maintained a successful record. However, smart contracts and other blockchain applications have not yet reached a desired level of reliability in some industries.

3. Legal and regulatory uncertainty:

Security regulations do not generally take into account the underlying technology. This means that the technology must adapt to existing regulatory and legal boundaries. In the case of tokenized assets, some of them can fall under the full scope of relevant regulations, and these may vary from jurisdiction to jurisdiction. Regulatory uncertainties slow down the initiation and trading of tokenized assets.

With this, we conclude our take on the ever evolving tokenization of assets. In a nutshell,  tokenization means the digitalization of real-world tradable assets.  This digitalization which seemed like a far fetched future, now stands as a reality. With its many faces now before you, it is up to you to continue observing and maintain your distance or venture into it with full momentum.

The post Asset Tokenization Explained: A Glimpse of the Various Facets appeared first on CFTE.

Stablecoins are digital currencies backed by secure assets such as the US Dollars, fiat currencies, other cryptocurrencies, or gold. As a result, their values are stable. These coins’ prices remain consistent due to their stable assets, which make them less sensitive to price changes. A computer program is also used by certain stablecoins to keep their value relatively stable.

What are Stablecoins?

Stablecoins are a type of cryptocurrency designed to provide greater stability than other cryptocurrencies. Some are backed by a reserve of the asset they represent, while others rely on algorithms or other techniques to keep their values stable.

How do stablecoins work?

• Endurance to Volatility: Stablecoins have the advantage of being constructed to endure volatility in a way that other cryptocurrencies are not. They can also provide mobility and accessibility. It is a more stable and decentralized cryptocurrency. This means that it is not a part of a centralized system or organization. As a result, it gains autonomy.

• Ease of Movement of Money: Stablecoins are popular with investors for a variety of additional reasons. It enables for speedier movement of money and offers anonymity of financial data. Stablecoins also help consumers to avoid paying fees for financial services.

• Stable Value: Stablecoins differ from other crypto assets in various ways. In terms of value, they’re made to stay put. This indicates that, while there will be no decrease in value, there will also be no increase. When comparing the USD coin to the Bitcoin coin, this becomes clear. The value of the US dollar coin has hardly changed since its introduction. In 2019, Bitcoin was worth $4,000, and by May 2021, it was worth $60,000.

• Unkown Risks: Stablecoins should be considered as a sort of digital cash. It is, nevertheless, still a cryptocurrency, despite its stability. As a result, it is still a relatively new entity with unknown risks. If you wish to put all of your savings in cryptocurrency, it can be a risky alternative. Approach stablecoins with an open mind and a desire to learn more about them. Stablecoins can also be used as a starting step towards investing in cryptocurrencies.

Types of stablecoins

Stablecoins come in a variety of shapes and sizes, depending on the asset that backs them and gives them some semblance of stability. These are the sorts of stablecoins that are currently accessible, according to Benzinga: Commodity-Backed Stablecoins, Cryptocurrency-Backed stablecoins, Fiat-backed Stablecoins, and Seigniorage-Style Stablecoins are examples:

1. Seigniorage-Style Stablecoins

Stablecoins of the seigniorage form, also known as algorithmic stablecoins or non-collateralized stablecoins, are ones whose prices are kept stable by an algorithm, a process, or even a working mechanis.

2. Commodity-Backed Stablecoins

According to Benzinga, commodity-backed stablecoins are “stabilized by physical assets such as gold or real estate.” Commodity-backed stablecoins are frequently made of gold, but other metals have also been employed. Examples of commodity-backed stablecoins include Tether Gold and Paxos Gold.

3. Cryptocurrency-Backed Stablecoins

In addition, cryptocurrency can be used to back up other cryptocurrencies. The quantity of this type of stablecoin is usually low. Wrapped Bitcoin is an example of a cryptocurrency-backed stablecoin.

4. Fiat-Backed Stablecoins

Stablecoins that are backed by fiat currencies, such as the US dollar, are known as fiat-backed stablecoins. Precious metals like silver and platinum, according to Benzinga, can also be deemed fiat. Examples of fiat-backed stablecoins are the USD Coin and Tether. The prices of both are based on the US Dollar.

How Safe are Stablecoins?

Usually Stablecoins are safer than other variant of cryptocurrencies. Stablecoins are appealing because they are designed to survive volatility in a manner that other cryptocurrencies are not, while still maintaining mobility and accessibility. A more stable cryptocurrency is still decentralized, which means it isn’t bound by centralized laws and regulations. This opens the door to the world of DeFi, with benefits such as speedier money transfers, access to financial services without the need for apps, the privacy of financial data, and the avoidance of financial service costs. Stablecoins with a centralized backing provide a digital choice backed by a traditional currency.

List of top 10 Stablecoins

According to CoinMarketCap, a cryptocurrency statistics and analytics firm, these are the Top 10 Trading Stablecoins by Market Capitalization.

The post What are Stablecoins and how do they work? appeared first on CFTE.

The emerging industry of fintech has revolutionised traditional finance, including services such as fintech payment companies. The payments sector has contributed to the growing trend of implementing technology to improve efficiency, security, and consumer satisfaction in financial services.

Here are the Top 10 Largest Payments Companies in 2022:

Find the complete ranking of payments companies in fintech in our full list of fintech unicorns by market capitalisation

Which countries do Payments unicorns come from?

Countries with the largest Payments unicorns include the United States (19 unicorns), the United Kingdom (8 unicorns), India (5 unicorns) and Israel (4 unicorns).

Payment solutions and their penetration level is substantial due to the surge of online transactions caused by the pandemic. Furthermore, the capitalisation of projects focusing on online payments also contributed to the surge.

What were the biggest trends in Payments in 2021-2022?

According to Finaria.it, the global digital payments industry is expected to hit $6.6 trillion in value in 2021.

The top 5 trends in payments:

• Rise in Innovative Payment Products

Globally, people today are trying to go contactless in every possible area. Products such as NFC and EMV, where things like tap and go QR codes and contactless cards would are more popular than ever.

• Focus on stronger security

Due to increasing cybersecurity threat, improving existing cybersecurity framework is a must. The best approaches that are currently being taken is AI (Artificial Intelligence) and ML (Machine Learning) powered systems.

• Integrated Payments

According to Accenture, 50% of adults are comfortable letting third party’s initiate payments on their behalf, mainly due to the offering of a seamless checkout experience for customers.

• B2B Payments Redefined

Integrated payments will allow the B2B payments sector to connect with payment facilitators and take a revenue cut from the transaction cost.

• Evolution of P2P payments

Platforms like PayPal and Stripe have seen a growth in popularity with their customers broadening from tech-savvy millennials to older generations. The pandemic contributed to this, making the platforms see a surge in their average transaction volumes

What is the future of Payments in the next 5 years?

According to analysis by PwC and Strategy&, Global cashless payment volumes are set to increase by more than 80% from 2020 to 2025. Figures include about 1tn transactions to almost 1.9tn, and to almost triple by 2030.

With respect to continients:

• Asia-Pacific will have cashless transaction volume growing by 109% until 2025 and then by 76% percent from 2025 to 2030
• Africa will have cashless transaction volume growing 78% until 2025, 64% from 2025 to 2030
• Europe will have cashless transaction volume growing 64%, 39% from 2025 to 2030
• Latin America will have cashless transaction volume growing 52%, 48% from 2025 to 2030
• US and Canada growing least rapidly at 43% until 2025, 35% from 2025 to 2030

The post Top 10 Fintech Companies in Payments | 2023 appeared first on CFTE.

With everything going digital lately, digital payments and currency are expanding globally as well. Consumers today are going cashless and this innovative evolution is just the beginning. Below, are the top five Payment trends to look out in 2022 from our CFTE experts today:

1. Significant Payment Trend throughout the Year from Jean-Michel Godeffroy

Jean-Michel Godeffroy is the President at JMG Consulting and former Chairman of the T2S Board at European Central Bank.

In October 2020, the Central Bank of Bahamas issued “Sand Dollars” which was the first CBDC. Later, in December 2020, the “Libra cryptocurrency” was renamed “Diem” due to the progressive ambition of becoming a global currency. In July 2021, the People’s Bank of China issued a white paper for their digital currency, e-Yuan to replace some of the circulation cash. Up till now, residents in China opened at least 140M wallets. In July 2021, ECB launches its digital Euro project aims to ensure that in the tech era, companies and consumers can continue to have accessibility to the safest form of money which is the central bank money. In October 2021, Jon Cunliffe made a speech on whether cryptocurrency is a financial stability risk at SIBOS. He stated that crypto assets are worth $2.3T of the global financial system and 95% of them were unbacked. So, just to be cautious, we have to think very carefully about what could happen and be concern about the other regulatory authorities as these sometimes may be overlooked or unfamiliar by people.

2. Instant Payment Trend is the New Normal from Fred Bär

Fred Bär is a Co-Author of “GAIN DIGITAL TRUST” and Secretary General of EACHA. He was a Senior Associate Consultant at Payments Advisory Group in the Netherlands and a Senior Lecturer at CFTE.

A2A instant payments are the new normal in Europe. As some countries such as the UK, Denmark, and Sweden have started the digital payment system since 2013, instant transfers are outpacing traditional credit transfers by an increase of 30% from 2020, now becoming 50%. However, Euro countries from 2017 upon such as the Netherlands and Spain are still in the process of catching up rapidly. Nonetheless are in the lead for the instant transfers in contrast to France and Germany. The European Central Bank implemented mandatory interoperability.

Facebook’s shelved “Libra” and changed to “Diem” to be a stable coin for the US only. The innovative potential remains but annoyed regulators worldwide remain. Hopefully, in 2022, facebook may regain strength and improve relations overseas. CBDC has already implemented live implementations from China, Bahamas, and Cambodia to jump on digital currencies. For proof of concept, Sweden, South Africa, and Canada accelerated development for CBDC. This past year, we saw a huge increase in the number and size of funding for scale-up companies such as Stripe, Square, and Klarna who are still in the growth sprint stage. CFTE is also keeping an eye on the mature payment giants such as Paypal, Alipay and Mastercard are now starting to gain market value by simply keeping their platforms available and performing.

3. Southeast Asia Contactless Payment Trend from Grace Chong

Grace Chong is a First Class LLB Graduate from UCL who now works as the Lead of Regulatory and Digital Business (Payment Specialist) at Simmons & Simmons for Singapore and Hong-Kong. She is also the Board Member of Women in Payments, IAPP, ACCESS Singapore and AML Committee Member of The Singapore’s Laws Society.

Fintech dominates the financial digital services and products such as “Super app” which are the bundling of financial services on payments apps like KakaoPay and Gojek. BNPL is gaining momentum among millennials and Generation Z. Partnerships such as Standard Chartered Bank announced a 10-year partnership with Atome, Singapore’s BNPL financial service. Regulators in various countries like Singapore, Australia, and New Zealand are considering responsible lending laws. E-payments and E-commerce industries to expand by 5.5% by the end of 2021. 61% of Southeast Asia (SEA) residents prefer cashless methods as 91% of them have moved to contactless payments. In Singapore, 66% of consumers do non-cash transactions using QR-codes in their daily life. Malaysia, 40% has the highest mobile wallet usage in SEA, followed by the Philippines. One to watch is Patriot, a Singapore Interbank payment system founded by JP Morgan, DBS and Temasek launched its first pilot to focus on USD and SGD. Digital asset payments are gaining popularity as Grab and TripleA are enabling crypto. Bitcoin in El Salvador is the current paradigm as a legal tender.

4. Cross Ecosystem Payment Trends and their Effects from Fabian Vandenreydt

Fabian Vandenreydt is the Owner of FabianVDR Advisory Services, Advisory Board Member of RE5Q, Startup Genome, Features Analytics and Greenomy, Advisor of eppf, ADGM Academy, Star, TISATech Ambassador, Senator of WBAF, Industry Partner of Motive Partners and Program Director of Payments in Digital Specialisation in CFTE.

The term CBDC is still fluid, whether it is public or private, commercial or central bank money or stable vs unstable? Tokenization of existing securities and digital assets will go institutional. Users need fragmentation and providers overlap and focus on small medium-sized enterprises with cross-border payments. The value of payment data is increasing so financial crime compliance is increasing in financial institutions. New solutions for cross-ecosystem and rails analytics require good talents to move to real-time analytics and come up with detection. Now, innovation and regulations are far more intertwined than they used to be.

5. Fintech Products and Investments Trend from Ritesh Jain

Ritesh Jain holds a PhD of Finance and Banking from University of Portsmouth and Bachelor of Engineering in Computer Science from RGPV. He previously was the Chief Operating Officer of the Global Head of Digital Technology Delivery in HSBC Bank. Currently, he is the Co-founder of Infynit and Senior Lecturer of CFTE. He is also an Advisor Member of the Harvard and MIT Technology Review.

Nowadays, consumers prefer BNPL rather than credit cards and overdrafts. However, since there are no fixed regulations, there may be an overwhelming load of debt for the fintech company offering these. Contactless card transactions reach $2.5T in 2021 dominating the contactless landscape and there is the growth of 45% between 2020 and 2021. Cryptocurrency penetration tripled and led investment movement to purchase crypto. Overall fintech investments have hit $91.5B in 2021, doubled than last year’s total. There were 42 unicorns in the 3rd Quarter of 2021 as the pandemic led to the birth of new fintech startups.

Conclusion

The Covid-19 pandemic may have fastened the growth of digital wallets and contactless payments with BNPL and cryptocurrency taking the lead. It will be fascinating to see what 2022 digital trends may progress further.

The post 5 Payment trends to look out in 2022 appeared first on CFTE.

Welcome to CFTE’s Fintech Shot- A newsletter specially made for you to give you the lowdown on the most important Fintech matters.

The final week of Q3 is finally over and it’s time to look at what’s happening in the world of Fintech. One of the biggest developments in the last few days has been PayPal’s decision to become a superhero (or rather Super App) with its mobile app!

What is a Super App?

Super apps are described as mobile applications that have a variety of features and functionalities alongside payment and financial transaction processing. 

PayPal’s History

The first version of PayPal was launched in 1999. It was birthed from the merger between x.com, an online financial services company founded by none other than Elon Musk. 

Why does PayPal want to become a Super App? 

PayPal as a Super App will increase its usability in daily life to facilitate an individual’s daily transaction while providing additional features that provide value to the user. 

Through the integration of cryptocurrency, blockchain, messaging and shopping features, they’ll enable more individuals to buy into their already thriving ecosystem. We’ve seen technology giants like Amazon and Facebook take advantage of Super Apps to improve their platform’s product offering.

 “We know that about half of customers in the United States don’t even have a savings account, much less one with a very competitive rate,” notes PayPal SVP of Consumer, Julian King. “So all in all, we think that by bringing together the full set of solutions on the platform, it’s a really competitive offering for an individual.” PayPal is helping underbanked consumers with poor access to competitive financial products, an offering that is both accessible and efficacious. 

Our Take

• PayPal is enhancing its product offering into a Super App to empower users to have access to more innovative products.

• But PayPal’s appetite to become a Super App doesn’t only arise from an identified consumer need, it’s a defense tactic to fend of competitors like Square, Shopify, and Stripe, for the merchant’s relationships.

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Globally, nearly 250 million people send over $500 billion in cross-border remittances annually, according to a report by Citi earlier this year. But the problem of slashing the sky-high fees is one that has not been solved – the space is more than just ripe for disruption.

India’s Unified Payment System (UPI) and Singapore’s PayNow are working to link their systems, taking the lead on the front by enabling “instant, low-cost fund transfers”, as announced by both the countries’ Central Banks on 14th September. Continue reading to dive into each country’s payments systems and understand how they are changing the game for cross-border payments!

What is India’s UPI?

A UPI is a Unified Payment Interface, is a smartphone application that allows users to transfer money between bank accounts. The single-window mobile payment system was developed by the National Payments Corporation of India (NPCI) through a coalition of retail banks. UPI eliminates the need to enter bank details each time a transaction is initiated.

Used by a slew of local and global firms like Google and Facebook, the payments system processes over 3 billion transactions a month.

What is Singapore’s PayNow?

Similar to the Indian payments system, PayNow offers an enhanced fund transfer experience for customers to send and receive money from bank accounts or e-wallets by simply using their mobile numbers. The sender doesn’t need to know the nitty-gritty details of the recipient’s bank/e-wallet details while making the transfer.

How will the UPI-PayNow linkage work?

The decision for linking the Indian UPI and Singaporean PayNow system is surely a match made in heaven. The new project will allow users from either country to facilitate payments transfers without having to onboard themselves on the other system.

This move will anchor trade, travel, and remittance flows between the two countries, which amounts to more than $1 billion a year, according to the Reserve Bank of India.

Sopnendu Mohanty, Chief FinTech Officer of the Monetary Authority of Singapore, who is also CFTE’s expert and senior lecturer on the ‘Payments in Digital Finance’ course, commented that, “By reducing the cost and inefficiencies of remittances between Singapore and India, the PayNow-UPI linkage will directly benefit individuals and businesses in Singapore and India that greatly rely on this mode of payment.”

What is the benefit of the UPI-PayNow Linkage?

KEY TAKEAWAYS

• This move will anchor trade, travel, and remittance flows between the two countries, which amounts to more than $1 billion a year.
• The UPI PayNow linkage will facilitate instant, low-cost, cross-border fund transfers. 
• It is a major milestone in the development of cross-border payments infrastructure between India and Singapore that closely aligns with the G20’s financial inclusion priorities

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The post Singapore’s PayNow, India’s UPI, Link to boost $1 Billion Flows appeared first on CFTE.

London, 4 August 2021 – Fintech-as-a-service is seeing meteoric growth as the concept of “finance anywhere” goes mainstream. The proposition of fintechs offering their APIs to other players in the financial markets as software to be integrated into their systems, allows third parties to easily integrate financial services into their offering.

Rapyd, the fintech start-up riding on the Faas boom, has raised $300 million, a Series E that TechCrunch understands from reliable sources values the company at $8.75 billion. The company provides financial services like payments, mobile wallets, money transfers, card issuing, fraud protection and more through its API. The upstart has seen massive growth in the past year, primarily catalysed by the COVID-19 pandemic’s push to turn businesses into online formats.

The company has a portfolio of 12,000 small and medium-sized businesses using its services, with another 650 large enterprise clients.

The mega funding round was led by, Target Global , who has been making so big bets in the Fintech arena, along with new backers Fidelity Ventures, Altimeter Capital, Whale Rock Capital, BlackRock and Dragoneer, and previous backers General Catalyst, Latitude, Durable Capital Partners, Tal Capital, Avid Ventures and Spark Capital also participating.

Rapyd’s CEO and co-founder, Arik Shtilman, says the funds raising will be used partly for acquisitions, and partly for R&D.

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The post Rapyd, Fintech-as-a-service Platform, Raises $300 million at a valuation of $8.75 billion appeared first on CFTE.

London, 2 August 2021 – Square Inc., the payments firm led by Twitter Inc.’s founder, Jack Dorsey, is leading its largest-ever acquisition as it agrees to buy the Australian Buy Now, Pay Later company Afterpay Ltd. for $29 billion.

The takeover is a ‘proof of concept’ moment for Buy Now, Pay Later – the business model that has upended consumer credit by charging merchants a fee to offer small point-of-sale loans which their shoppers repay in interest-free installments, bypassing credit checks.

The all-stock buyout values Afterpay’s shares at A$126.21, a 31% jump from Friday’s closing price of A$96.66.

The offer means that each of Afterpay’s founders, Anthony Eisen and Nick Molnar, would pocket A$2.46 billion. China’s Tencent Holdings Ltd., which paid A$300 million for 5% of Afterpay in 2020, would also make A$1.7 billion in earnings.

Square’s move to venture into Buy Now, Pay Later territory, is one that comes amidst a shift away from traditional credit, particularly seen among younger consumers. Square’s plan would be to integrate  Afterpay into both its consumer Cash App, and its Seller product for small businesses, Square’s Chief Financial Officer Amrita Ahuja said in an interview.

“Square and Afterpay have a shared purpose … We built our business to make the financial system more fair, accessible and inclusive,” said Square’s founder Jack Dorsey.

Want to keep up with the latest trends and technology in Fintech? For just 15 minutes a day, get to learn everything you need to know from Fintech to Payments with the Fintech360 programme – for free!

The post Square agrees to buy lending pioneer Afterpay in a $29 billion buyout appeared first on CFTE.

London, 29 July 2021 – A year and a half after Currencycloud raised $80 million in a round that included Visa, the London-based developer of APIs that power remittance and currency exchange services is getting even closer to the financial services giant. Visa announced that it would acquire Currencycloud in a deal valued at $963 million (£700 million).

This price is a very decent leap from that last funding round, when sources told us the startup was valued at around $500 million.

(As Visa already has equity in the company, the amount it will actually pay will be reduced by that amount.)

Currencycloud has some 500 customers in 180 countries that use its APIs to power multicurrency wallets, currency exchange services and account management, including some of the biggest startups around, such as Monzo, Moneze, Starling, Revolut and Dwolla. These will continue, and on top of that Visa will use the startup’s technology to bolster its own currency exchange rails to provide a wider set of services to its own customers, which include financial institutions, fintechs and more, as well as to build new services for consumers, as well.

The post Visa acquires Currencycloud, which makes APIs for remittances and currency transfers, in a $963M deal appeared first on CFTE.

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Visa has announced the acquisition of CurrencyCloud, the FX API Platform, for an amount of £700m.

2 weeks ago, we wrote about “Why is the Visa / Tink acquisition important” and mentioned that Visa had transformed its business model, from credit card network to digital payment network and even banking infrastructure. How does the CurrencyCloud acquisition fit in this approach? Read on.

FINTECH NEWS IN THE SPOTLIGHT

What is CurrencyCloud?

What is CurrencyCloud?

CurrencyCloud is a platform that offers FX services to Fintech startups and financial institutions.

CurrencyCloud was founded in 2007 by Nigel Verdon, a serial entrepreneur in Fintech (who also launched Railsbank in 2016, which raised $70m a few weeks ago).

Although FX in general is a very crowded space, CurrencyCloud was one of the only companies that focused on a B2B approach for Fintech startups. This helped new entrants quickly enter the FX market with a cloud-based, API platform, in the same way Stripe does it for SME payments.

They were well known in the Fintech community, because they helped power some of the most high profile startups such as Transferwise (now Wise), Fidor, or Monzo. CurrencyCloud grew quickly as the European Fintech ecosystem rapidly scaled and FX was a key offering of many new challenger banks and neobanks.

CurrencyCloud raised money quite regularly, with the main funding rounds as follows:

• $2m in 2012
• $10m in 2014
• $18m in 2015
• $20m in 2017
• $80m in 2020
• Acquired by Visa in July 2021 (at a valuation of $1bn)

Companies in the similar space as CurrencyCloud are Earthport (acquired for $250m last year by…. we’ll let you guess), Ebury (SME-focused, acquired by Santander for $450m) or Kantox (SME-focused).

Why is the CurrencyCloud / Visa acquisition important?

For the same reason that the acquisition of Tink was important: because payments (including credit card) was a siloed activity of financial services, but thanks to digitalisation and the rise of platforms, have become much more important.

First, in terms of revenues, payments have grown considerably (40% of total revenues). Secondly, payments are now the starting point for rebundling of the industry, both in B2C (i.e. Revolut mentioned last week, offering full-service banking), and B2B.

In the B2B space, Visa and Mastercard are now clearly competing to offer much much more than just credit card services, but the whole banking infrastructure, from Open Banking (Tink) to cross-border payments (CurrencyCloud).

This is what Visa calls the strategy of Network of Networks, which is certainly a catchy name, although it is not necessarily easy to understand!

The CurrencyCloud / Visa acquisition is therefore important because:

• This is an excellent example of rebundling of financial services in B2B
• It shows the accelerated trend of Fintech acquisitions in the $1 – $5bn range

KEY TAKEAWAYS

• Large companies can make successful strategic decisions in fast changing world
• Infrastructure is less in the news, but not less important
• Offering services to Fintech startups can be a good business strategy

INSIDE FINTECH

Payments: Innovation in Open Banking

The Revised Payment Services Directive (PSD2) came into force in all EU member states in 2018. One stated aim of this legislation was to create room for innovations in technology and business models in order to give account holders more choices and more direct control regarding access to their account information and ways of initiating payment transactions. Although an evolving array of new services and service providers has emerged over the past few years, the market remains in an early phase of experimentation.

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What are Cryptocurrency Wallets and How do they Work?

Today, with the ease of access to digital currencies, a speculated maturity in the market along with booming popularity fuelled by Elon Musk – cryptocurrency wallet users are exploding in numbers. 68 million wallet users exist worldwide as of 2021, a quantity that was just a few thousand 10 years ago, according to Statista. With these currencies taking full form in today’s digital world, if you are an outsider looking in to get your hands dirty and experiment, it is essential to understand what are cryptocurrency wallets and how blockchain technology makes transacting with them so easy.

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UPCOMING FINTECH EVENTS

27th July | Private Sector and Digital Euro – Stablecoins: Hype or Gamechanger?
Which different stablecoins exist? Which benefits do stablecoins provide? Learn more about Stablecoins with industry leaders from DEA, Circle, Monerium and Celo.

28th July | The Future of Money in Light of NFTs, Bitcoin, CBDCs and FinTech
What is going on in the world of digital currencies? Get up to speed about the development of CBDCs, NTFs, Bitcoin.

29th July | CFTE & WSBI: Embrace Artificial Intelligence and Prepare for the Future
Get a headstart on exploring the real-life implementations and use of AI in finance from credit decisions to risk management. Learn the secrets of the main players in the scene.

COURSE OF THE WEEK

15 Mins Daily Courses. Learn the Skills of Fintech, Payments, AI, Open Banking and RegTech

Learn from the world’s greatest minds with a range of experts from IMB to high growth startups such as Starling Bank. Develop an understanding of the importance of each Fintech sector, and the key players within the industry as well as gaining foresight into the future of Fintech and regulations through an analysis of current innovations and practices.

Start Learning Now ►

EVENT OF THE WEEK

CyberThreats in Finance

Data volumes have skyrocketed, and so does the number of cyber attacks. If you want to learn how to protect yourself and your organisation from an ever-growing number of cyber threats, listen to Christopher Muffat, the founder and CEO of Dathena, on how to prevent branches in security.

Start Watching Now ►

UNICORN OF THE WEEK

Indian Paytm prepares for IPO at $25-$30bn valuation

Why is it interesting?

• Would be largest tech IPO in India
• Huge acceleration of Fintech in India recently
• Would enter top 10 Fintech startups globally

See CFTE’s live and updated ranking of the largest Fintech companies ►

QUOTE OF THE WEEK

Sometimes think-tanks and incubators work, but sometimes the best ideas come from outside your milieu (…) Financial institutions of all sizes, but particularly larger financial institutions, need to find ways to engage in innovation outside their walls, because it’s moving that way anyway.

Ex-Goldman Sachs Asset Manager, Sheila Patel

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The post After Tink, it’s now CurrencyCloud. Visa on an acquisition spree. appeared first on CFTE.