Consumers start spending as inflation continues. Upgrade’s valuation jumps on 70% increase in revenue. Branded payment and rewards card startup Imprint raises $38Mn. Upstart works with bank and credit union partners to offer sub-36% small-dollar loans. Cross River Bank partners with fintech Payment Approved. MoneyLion acquires content creator network MALKA. nCino acquires homebuying tech platform SimpleNexus. DoorDash partners with Payfare for real-time pay. Oportun acquires Digit as part of “superapp” strategy. 

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Consumer Spending Rises — But So Do Prices

Initial unemployment claims are steady, coming in at 268,000 last week, in a sign that layoffs have hit a plateau as employers seek to hang on to the workers they have. Inflation may be dampening consumers’ outlook on the economy, but it’s not stopping them from opening their wallets. October saw retail spending jump 1.7% despite accelerating prices, driven in part by a holiday shopping season starting even earlier than normal, amidst fears of supply chain-driven holiday shortages.

Upgrade’s Valuation Jumps 83% in Just Four Months

Consumer lender Upgrade, which offers a payment card that turns users’ purchases into installment loans, raised a $280Mn Series F led by Coatue and DST Global at a $6.28Bn valuation. That’s a sharp increase from the $3.43Bn the company was valued at just four months ago. According to Upgrade founder Renaud Laplance, the rise in valuation was driven by a 70% increase in revenue since the last fundraising round in June.

Upgrade’s huge jump in revenue in just the past four months is a testament of how fintech lenders have been able to increase their originations, despite generally anemic growth in consumer credit in the traditional banking sector. Upgrade is capitalizing on the BNPL growth, offering a product that combines the convenience and universal acceptance of credit cards with an installment loan. Congratulations to the team and founders Renaud and Adelina on the raise! 

Source: Tech Crunch, PeerIQ

Branded Payments & Rewards Startup Raises $38Mn

Branded payments and rewards company Imprint announced it has raised a $38Mn Series A co-led by Kleiner Perkins and Stripe. The company’s core product is a new take on an old idea: the branded store card. But instead of a branded credit card, Imprint empowers retailers to offer a debit-like card, which is more aligned with evolving consumer preferences for payment and financing products that feel less like debt. 

The benefit to the brands? Lower payment costs. According to Imprint, retailers offering branded payment cards may be able to save 60% – 90% on payment processing. Brands can use those savings to offer rewards to shoppers, providing an incentive to use the cards and increasing loyalty.

Store cards and rewards points aren’t themselves new. Imprint’s offering enables stores to offer loyalty products without the debt of private label credit cards (or BNPL, for that matter). It reflects some consumers’ shift from traditional credit cards toward products viewed as more “transparent,” like installment loans, BNPL, and debit cards. It also reflects the trend of “embedded finance” and the proliferation of payment methods — both of which are likely to continue. Still, the appeal of a branded payment card with rewards may be limited to stores at which they shop frequently (think Starbucks or Dunkin) or brands they have high affinity for (say, Apple or Nike).

Upstart Announces Plans for Sub-36% APR Small-Dollar Loans

On its recent earnings call, Upstart announced it is working with banks and credit unions to offer a small-dollar loan product at APRs at or below 36%. According to the company, its AI-powered risk models will allow it to dramatically reduce the cost of origination, enabling its partners to offer sub-36% products to low- and moderate-income customers. Upstart’s move follows interagency regulatory guidance during the early days of the pandemic that laid out principles for responsible small-dollar lending, in an effort to encourage banks and credit unions to offer more of these types of products. Upstart said interest in offering small-dollar products among its partners has been “off the charts,” in its recent earnings call.

Small-dollar lending products, especially to customers with little credit history and those who have been traditionally underserved, have been largely absent from the market — especially at APRs below 36%. If Upstart has been able to crack the code by using AI to better underwrite risk and reduce origination cost, that’s good news for banks and borrowers.

Cross River Bank Partners with Fintech Payment Approved

Under the partnership, Cross River will provide the payments and technology infrastructure to facilitate disbursements through Push-to-Card capabilities on both the Visa and Mastercard networks. It will also be the sponsor bank and will offer clearing accounts, FBO management and merchant acquiring services to the clients of Payment Approved. Payment Approved clients can now send and receive money, process payments, exchange currencies across borders and track all movement through a digital ledger powered by Cross River. 

MoneyLion Acquires Creator Network MALKA Media

Consumer finance app MoneyLion has acquired the content creator network MALKA Media, the companies announced. MALKA creators produce content across verticals like gaming, live streaming, entertainment, sports, and more. The two companies have already been working together for four years. 

According to MoneyLion co-founder Dee Choubey, it is part of a strategy to make MoneyLion a daily destination for users that goes beyond their financial life. While this acquisition might seem like an odd one at first blush, MoneyLion isn’t the first or only one to pursue this kind of content strategy. Just two months ago, Chase, admittedly focused on a different demographic than MoneyLion, bought foodie website The Infatuation, which included Zagat, with designs on offering credit card holders exclusive perks. MoneyLion’s acquisition of MALKA follows a similar strategy, just focused on a much younger demographic.

nCino to Acquire SimpleNexus

nCino, a cloud core banking provider, announced last week that it has acquired SimpleNexus in a stock and cash transaction valuing the company at about $1.2Bn. nCino historically has focused on digital-first approaches to commercial, small business, and retail lending, treasury management, and account opening. The SimpleNexus acquisition will add functionality around the complex homebuying process to nCino’s suite. SimpleNexus provides a digital workflow that brings the various stakeholders in the homebuying process — loan officers, borrowers, real-estate agents, settlement agents, etc. — into a single platform.

Like in the B2C segment, B2B banking providers are broadening the scope of their offerings, seeking to boost customer lifetime value by cross-selling them into more products. nCino’s acquisition is a logical extension to its existing core banking functionality to build a fuller-stack offering to execute on such a strategy.

DoorDash to Offer Instant Pay to Workers with Payfare

On-demand delivery platform DoorDash has teamed up with Payfare to enable its “Dashers” to get paid instantly. DasherDirect, an embedded banking platform for the company’s gig workers, offers users a business prepaid Visa card and accompanying mobile banking app, including rewards like 2% cash back on gas purchases. Most notably, users can opt to get paid out automatically after each “dash” (delivery) — for no fee.

Instant everything is the new norm. This is even more critical for low wage gig workers, who may need those earnings for basics like fuel or car repairs — requirements to keep on the job. The ability to provide essentially real-time payouts to workers is a win-win both for DoorDash and its workers. Some form of instant pay out or earned wage access is increasingly becoming the new normal, especially in lower wage jobs. In a competitive labor market, many employers are coming to view such perks as a competitive advantage in attracting workers.

Oportun to Acquire Digit, Become a Neobank

Oportun is planning to acquire Digit for approximately $213Mn, with Digit’s 100 or so employees and CEO Ethan Bloch joining the Oportun team. Oportun, historically focused on consumer lending, announced it would acquire savings app Digit in a bid to pursue a “superapp” strategy by becoming a “one-stop-shop” for consumers. With the addition of Digit, the combined companies will offer personal loans, credit cards, saving, and investing products. Presumably a spending account is also in the works, which would round out the combined companies’ product stack.

While Oportun has historically been focused more on lending, primarily to the Latino community, through its bricks and mortar locations, the combination with Digit expands the focus to a broader segment of low-to-moderate income consumers and those with no or damaged credit — putting Oportun more squarely in competition with more establish challengers like Chime, Varo, and Current.

In The News:

Can OCC Nominee Calm Fears of Bankers, Senate that she is too Extreme? (American Banker, 11/16/2021) The nomination of Saule Omarova faces backlash from the GOP and bankers.

Fintech Startup Spectral Finance Raises Funds from Chamath, Polychain (Reuters, 11/9/2021) Spectral uses blockchain tech to calculate the user’s credit score which the company claims improves evaluation of credit risk.

Tech Startup FairPlay Aims to Root Out Lending Bias with AI (American Banker, 11/15/2021) FairPlay raises $4.5Mn, as regulators have recently spotlighted loan discrimination issues.

Aplazo Takes in $27M to Increase Adoption of BNPL in Mexico (Tech Crunch, 11/15/2021) Aplazo raises Series A to promote its BNPL product which allows users to buy items on or offline, an important feature as 95% of purchases in Mexico are made offline.

SEC Rejects VanEck ETF that Sought to Track Bitcoin Directly (CNBC, 11/12/2021) The SEC says that the Cboe had not done enough to demonstrate it could prevent fraudulent trading to protect investors.

N26 Cuts Short its American Dream (altfi, 11/15/2021) Struggling growth and regulatory trouble leads N26 to announce that it would no longer focus on U.S. expansion.

Earnest Becomes Nation’s Leading Refinancer Of Student Loans (Yahoo Finance, 11/11/2021) Earnest reached $4.4Bn in originations in first three quarters of 2021, 57% higher than its closest competitor.

Fintech Claims 88% of US Consumers Versus 95% by Traditional Banking: New Plaid Report (Tearsheet, 11/12/2021) Fintech adoption in the U.S. jumped 30 percentage points, from 58% in 2020 to 88% in 2021.

Amazon to Stop Accepting Visa’s UK-issued Credit Cards Over High Fees (Reuters, 11/17/2021) Since Brexit, the EU-enforced cap on fees charged by card issuers is no longer in place in the U.K.

Fico Unveils Loan Origination Platform (Finextra, 11/16/2021) The applied intelligence company launches its loan origination solution.

Lighter Fare:

Green Bay Packers Selling Stock for Sixth Time in Franchise History (NFL, 11/16/2021) Become an “owner” of an NFL team for just $300.