payments

Plaid names former Meta exec as its new payments head • ZebethMedia

By zebethcontrolPosted on November 17, 2022Posted in Fintech, payments, Plaid, StartupsNo Comments

Plaid today announced that it has named Meta veteran John Anderson to serve as its new head of payments. The fintech startup has slowly been evolving its offerings beyond its core product of account linking. Earlier this year, it moved into identity and income verification. Payments feels like a natural evolution of its business. In an interview with ZebethMedia, Anderson explained that while Plaid will be personally facilitating payments through its Transfer offering, it will also continue working with its dozens of payments partners, which include the likes of Square, Stripe, Marqeta, Gusto and Silicon Valley Bank. Its end goal is to generally give consumers more choice when it comes to bank payments. “There has been so much innovation on POS [point of sale] in the last 10 years, but purely digital — no physical interaction — experiences for payments is still nascent,” he said. “This is where we are focused.” In its own way, Anderson pointed out, Plaid has been involved in digital payments for years, by enabling nearly a billion ACH transactions for things like account funding and account-to-account transfers. Along the way, the company partnered with nearly 50 payments companies. In other words, Plaid has its services for clients that range from account verification to risk assessment and processing. It also has built its data products to be modular with the goal of “maximizing choice” for its customers and “ultimately expanding the use of bank payments.” “This time last year, same-day ACH grew by nearly 75% year over year with numbers in the trillions — that’s a lot of growth for an already sizable number,” Anderson said. “There is a lot of market for many players and overall Plaid works with a broad network of payment partners. We plan to invest — not shift — in that ecosystem and strategy.” So generally, when it comes to payments, Anderson said, Plaid is focused on building products that help companies have “more cost-effective, efficient and flexible bank payments.” “Much of that work is through our partners as we ultimately want to maximize choice for consumers and businesses,” he said. “This is why we take an ecosystem approach to payments. It is not an us versus them, but instead a ‘we’ working together to innovate and create better infrastructure that is safer, smarter and faster for all participants.” As mentioned, among Plaid’s payments partners is frenemy Stripe, which in May unveiled a new product of its own. Specifically, Stripe’s Financial Connections was designed to give that company’s customers a way to connect directly to their customers’ bank accounts, to access financial data to speed up or run certain kinds of transactions — exactly what Plaid has done historically. In working with its payment partners over the years, Anderson said that Plaid saw a consistent challenge — that it usually took several days for an ACH transfer to complete. “That’s because it provides settlement time to cover assessing returns and fraud,” he said. “But that speed of transfer is very limiting to many of our customers — if you’re someone like Robinhood who wants to be able to have customers fund their account instantly and immediately start trading, 2-3 days ACH clearing time feels like a lifetime.” Trying to solve that challenge led to the genesis of Plaid’s Signal offering, which uses machine learning to analyze more than 1,000 risk factors and provide scores and insights that Plaid says provide “more certainty that a transaction will settle,” so a company can accelerate access to those funds without increasing risk. “We wanted to use intelligent data signals to be able to identify low-risk ACH funding events that can clear immediately,” he said. “By accurately predicting risk and fraud, we can help companies build much more real-time funding solutions so their consumers can get going on their financial goals immediately. Signal today is moving out of beta, during which Robinhood was a pilot customer. In addition to Robinhood, fintechs like WeBull and Uphold have incorporated Signal into their risk models “to unlock instant ACH,” Anderson said. “We currently de-risk nearly 3 million transactions valued at nearly $1.5 billion each month,” he said. “We’re excited to offer this service to more customers and empower them to expand the applicability of ACH-based bank payments and transfers more safely and securely.” Looking ahead, he said, Plaid is actively building and partnering on real-time payment rails. Plaid’s RTP and FedNow products are designed to help drive further adoption of bank payments, Anderson said, “not only because of the speed and certainty of settlement, but also through further innovation across the financial and payment ecosystem.” “We want to unlock the next phase of bank payments with a focus on a great consumer experience, adapting Signal for emerging risk and fraud vectors, and other activities that will accelerate the adoption of real-time payments in the U.S. through our payment partners and customers,” Anderson said. Also, in an interview with ZebethMedia, Anderson explained his decision to join Plaid. The executive left Meta in March after a 10-year stint that included him serving as that company’s head of payments and commerce. Anderson said he was drawn to the space because simply, “finances are at the heart of everyone’s lives.” Acknowledging that the “world is increasing in inequity,” the executive described financial access as an “uneven playing field getting ever more bumpy.” “Across so many of this amazing generation of new financial services, the common thread is Plaid is there in the background helping them build secure data accessibility, fast payments and managing risk and compliance,” he said. It’s not Anderson’s first foray into fintech. He developed a fintech app called GroupCard that went on to be acquired by InComm, a $13 billion prepaid and payments technology company. He also at one time worked in payments at eBay. “As a developer of an early fintech app, I experienced firsthand the challenges that many of Plaid’s customers face today,” he said. “On a very personal level, I came to Plaid because I

Elon Musk details his vision for a Twitter payments system • ZebethMedia

By zebethcontrolPosted on November 9, 2022Posted in Apps, Elon Musk, Fintech, payments, Social, TwitterNo Comments

Elon Musk detailed his vision for Twitter’s plan to enter the payments market during a live-streamed meeting with Twitter advertisers, hosted on Twitter Spaces on Wednesday. The new Twitter owner suggested that, in the future, users would be able to send money to others on the platform, extract their funds to authenticated bank accounts, and later, perhaps, be offered a high-yield money market account to encourage them to move their cash to Twitter. The new remarks followed a report this morning by The New York Times which confirmed Twitter last week had filed registration paperwork that would allow it to process payments. The report cited Twitter’s filing with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN), noting that a business would need to register before it could conduct money transfers, exchange currency or cash checks. In today’s meeting, Musk explained how paid verification, which Twitter is rolling out now with its revamped Twitter Blue subscription, as well as support for a creator ecosystem could pave the way for a payments system on its platform. He stressed that, initially, Twitter would need to make fundamental technology architecture changes in order to better support video. The company was recently reported to be working on a “Paywalled Video” feature that would allow creators to charge for access to their content. This suggests Twitter could be moving into a space where it may try to compete more directly with various social media video providers, like TikTok, Instagram Reels, YouTube Shorts, and others. The Washington Post saw mockups of this concept where a tweet with a video could be unlocked for as little as $1.00. It said creators may be able to choose from preset prices, like $1, $2, $5, or $10 when paywalled videos were launched. As a result, creators would end up with a cash balance as they began to monetize their content. In addition, Musk noted that Twitter’s paid verification program would help in its plan for payments because anyone who subscribed to Twitter Blue would have already been verified by the “conventional payment system.” That is, Twitter Blue subscribers have to sign up using a credit or debit card and have their payments processed through the app stores’ in-app purchase system, which helps to combat fraud. Musk then explained how this payments system could scale saying that, once users gained a cash balance, Twitter could prompt them to move that money on its platform. It could even make a small donation to users’ accounts to get them started. “Now we can say, okay, you’ve got a balance on your account. Do you want to send money to someone else within Twitter? And maybe we pre-populate their account…and say, okay, we’re gonna give you 10 bucks. And you can send it anywhere within Twitter,” Musk said. Later, the user could move their money out of Twitter by transferring it to an authenticated bank account, he added. In the longer term, however, Musk appeared to be toying with the idea of establishing bank accounts on Twitter’s platform that would pay a high-interest rate to attract users. This could become a competitor, perhaps, to Apple’s recently launched Savings Account for its cardholders, various fintechs or other payment providers, like PayPal and Venmo, which encourage their users to retain cash balances within their own ecosystems. Explained Musk, “the next step would be this offer for an extremely compelling money market account where you get an extremely high yield on your balance.” If such a system existed, he believed people would move cash to Twitter. “And then add debit cards, checks, and whatnot and…just basically make the system as useful as possible. And the more useful and entertaining it is, the more people will use it,” he said. The move to enter the payments business also ties to Musk’s larger plan to turn the social media platform into an “everything app” or “super app” called “X.” While that plan today is still fairly vague, the general sense is that Musk aims to combine payments, social networking, entertainment and other things into one experience, similar to China’s WeChat (though that plan could be misguided.) Musk has experience in payments, of course, as he founded an early digital payments company X.com. It’s not surprising that he would try again, given the opportunity Twitter presents. His ideas about Twitter payments, however, may not have been good fodder for a conversation with advertisers who are already worried about Twitter’s long-term commitment to their goals, given the company’s move into subscriptions which signals a desire to reduce reliance on ad dollars. Musk tried to assuage these fears by saying that Twitter was thinking about protecting advertisers’ brand safety in the longer term, not just about its ability to drive short-term sales.

Loop lassos ex-Uber talent and money to finally fix freight invoicing • ZebethMedia

By zebethcontrolPosted on November 3, 2022Posted in Fintech, Founders Fund, logistics, Loop, payments, Startups, UberNo Comments

Matt McKinney was a data science manager at Uber, helping launch Uber Freight, along with software engineer Shaosu Liu. One of the main problems the pair saw there was that while they were able to grow the top line, they found it difficult to grow the bottom line because they were “losing a bunch of money” to bad debt and late payments. When digging in to understand why, the duo realized that “there’s so much complexity in a single freight bill.” For example, they found out that 20% of all freight invoices have an error. They also discovered it takes 50 days on average to process and pay a single invoice. “A lot of people in this business aren’t like Uber — they don’t have 250 engineers working on problems to figure this out,” McKinney explains. “So Joe’s Trucking in Cincinnati, Ohio, for example, probably has very similar billing and payment problems as Uber Freight.” In speaking to about three dozen shippers, carriers and brokers in the industry, McKinney and Liu kept hearing the same thing: “It’s hard for us to get paid and it’s hard for us to pay.” “So as an entrepreneur, when you hear that pain described so vividly verbatim 35 different times, you kind of, you know that the pain is your opportunity to build a product that doesn’t exist in the market,” he told ZebethMedia in an interview. So the pair spent nights and weekends building a prototype for Loop, a startup that sits at the intersection of logistics and payments, before leaving Uber in May of 2021 to focus full time on the business. Soon after, they raised a $6 million seed round co-led by Susa Ventures and 8VC. And then earlier this year, they raised a $24 million Series A round led by Founders Fund. Both financings were not previously publicly announced. During their exploratory phase, three of the 35 companies — unnamed large enterprises — they talked to told them if they built a tool to help solve the problem that they would help test out the prototype and be its first customers. Since then, the company has developed open APIs that it says “ingest data and streamline shipment document capture.” More specifically, the company said it uses natural language processing (NLP) and computer vision to digitize workflows and reconcile payments and that its technology “accommodates the lack of standardization and is able to extract data from a variety of document types and data sources to validate invoice accuracy, so that invoices and payments can be cleared in close to real-time,” or even to real time, depending on when the user wants to release their funds. Loop goes as far as to claim that its tech can reduce the lag time between the time an invoice is received and paid from 50 days to 3 days, as well as reduce invoice errors to “near 0%.” The startup’s target customers are shippers that manufacture or distribute goods (think Walmart, Pepsi, Coca-Cola and Nike). They also can work with brokers, or 3PLs, who broker a transaction between a truck driver and shipper. Loop launched its product offering in March and in its first month, did $25 million in booked total payment volume. Today, it’s doing over $1 billion in total payment volume. Image Credits: Loop One of the tailwinds that helped Loop, believes McKinney, is the COVID pandemic-driven secular shift of paper to electronic methods of payments. Also, geopolitical issues and the pandemic exposing vulnerabilities in the global supply chain have led to a surge in freight costs, which means that shippers “are looking for every way to cut costs,” he said. Loop’s aim is to help these companies minimize cost and be more efficient. And, McKinney claims, it can bring payments down Loop makes money by taking a percentage of total payments volume. It’s a fixed percentage based on tier, and as a company advances tiers, the percentage they pay goes down. A consumption-based revenue model was important to the pair, McKinney told ZebethMedia. “We want to align incentives so that if you’re getting value out of the product, you’re going to be using it more,” he said. “And that’s how we should get paid.” The company today has 35 employees, with engineers hailing from Uber, Google, Meta and Flexport. In fact, one senior software engineer from Flexport cold emailed Loop about a job. When he told Flexport founder and then-CEO Ryan Peterson that he was leaving for Loop, Peterson reached out. “He said, ‘You just stole one of our No. 1 engineers,’” McKinney said. “I want to know what you’re doing and I want to invest.” And so he did. Also showing no hard feelings in backing the company are Uber co-founders Garrett Camp, through his venture firm, Expa, and Ryan Graves, through his family office, Saltwater Capital. And more than 10 of Loop’s 35 employees came from Uber. Other investors include FourMore Capital, Lineage Ventures, Nichole Wischoff, 9Yards Capital, McVest Co, Mark Pincus and OEL Ventures. “We’re simplifying logistics payments but we’re also generating data and that data, and the quality of the data, is what differentiates us from a lot of the competition as well,” McKinney said. Founders Fund principal John Luttig, who led the Loop investment, told ZebethMedia via email that his firm was drawn to the startup because it is using a tech-first approach to eliminate friction for all parties in the supply chain “while competitors are simply throwing more people at the problem.” “As the domestic logistics renaissance continues and more companies look to reshore U.S. manufacturing, Loop’s technology will only become more valuable,” he added.