Blueprint: Global Payments buys EVO for $4B, sells Netspend for $1B; MENA BNPL Tabby raises $150MM; Bank tech Savana gets $45MM to wrap the core
Hi Fintech Futurists —
You are the best, today’s agenda below.
BNPL: Dubai-based PayTech Tabby raises $150MM in debt finance (link here)
Paytech: Global Payments to acquire B2B paytech EVO for $4B and sell B2C business Netspend for $1B (link here)
Digital Banking: Savana raises $45MM in Series A funding round led by Georgian (link here)
Long Take: Rebuilding ownership and identity, avoiding financial abstraction, protects us from fintech and big tech collapse (link here)
Podcast conversation: Eliminating payday loans and overdraft fees for 2.5MM employees, with Matt Kopko of DailyPay (link here)
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Short Takes
BNPL: Dubai-based PayTech Tabby raises $150MM in debt finance (link here)
BNPL firm Tabby secured $150MM in debt from Atalaya Capital Management, the largest credit facility for any fintech company in the Gulf region. This popular shopping and payment app helps over 1 million users browse brands and pay for online purchases in installments, with 0% interest. Revenue is generated from merchant fees and penalties for missed payments.
Credit card ownership is only 20% in Saudi Arabia vs. 60-65% in Western Europe, which suggests that users are often gaining access to credit for the first time through Tabby. This had led to 8x growth in active users and 10x growth in revenue during the prior year. On the merchant side, BNPL can driven higher prices and conversion rates, and Tabby has seen 3x growth in retail partners in 2022. Following the Klarna playbook in a region with lower access to credit means this thing is likely to keep growing and underwriting that commerce.
Islamic customs prohibit charging interest on loans, and consumers are culturally deterred from using credit cards. Tabby’s announcement of a tap now pay later Visa card, however, brings BNPL out of the digital shopping experience into physical retail as well. We see Tabby as competing to be the market leader in the MENA region, which needs localized execution, but will be globally valuable. See our view on Uber/Careem, Grab.
Paytech: Global Payments to acquire B2B paytech EVO for $4B and sell B2C business Netspend for $1B (link here)
Global Payments agreed to acquire B2B paytech company EVO Payments for $4B, with the deal expected to close by 2023. Global Payments expects to finance the acquisition with cash, with Silver Lake making a strategic investment of $1.5B in Global Payments in the form of convertible notes.
EVO is an integrated merchant acquirer and payment processor, and processes over $100B in transaction volume annually, facilitates card acceptance for 550,000 businesses, and provides payment options via its EVO Snap* solution. The acquisition of EVO is expected to deliver combined net revenue of $9.8B and a footprint of 4.5 million merchant locations. For context, Global Payments is growing revenue to $8.5B and EVO had revenue of $500MM in 2021. At this scale and for this type of payments technology, horizontal integration and M&A is often the main meaningful growth vector.
The news comes in the same week that Global Payments agreed to sell its Netspend consumer business to Rêv Worldwide for $1B in cash — a reshuffling to shift back to B2B payments processing. Netspend is a prepaid card business, where users can charge up a card in over 130,000 location. Rêv helps established financial companies launch digital products, founded by the same people who originally built Netspend.
Still, we are quite surprised to see such a large cash transaction underwritten by the firm, though perhaps it is instead underwritten by PE firm Searchlight Capital.
Digital Banking: Savana raises $45MM in Series A funding round led by Georgian (link here)
Savana, an API-based provider of financial engagement for banks, announced a $45MM Series A round. Fiserv also invested. Savana’s software is geared towards clients looking to keep pace with digital banking needs through digital engagement software — think orchestrating customer, account, and transaction requests — while connected to a traditional core banking platform.
The platform is pre-configured and designed for ease of implementation, regardless of what core the underlying financial institution uses. The engine wraps and abstracts around older systems in order to deliver products experiences customers across different channels in real-time.
This is an interesting approach, and resembles what embedded finance as a whole has done to legacy financial technology architecture. We think of this as a combination of robotic process automation with embedded finance, reformatting the service and middleware layers of financial institutions into something that is more programmable and accessible.
More generally, the no-code/low-code market is growing at a 23% CAGR and it is predicted that these types of platforms will be used by 75% of large enterprises by 2024. Companies like OutSystems (e.g., $200MM+ in revenue) and Mendix help enterprises build integrated apps faster than ever.
Long Take: Rebuilding ownership and identity, avoiding financial abstraction, protects us from fintech and big tech collapse (link here)
We respond to Jason Mikula’s excellent post on what happens to failing neobanks by trying to understand the broader point. Why do users lose access to their funds? How much can they lose through fintech interfaces, crypto brokers, cross-chain bridges?
In particular, we look at analogies in the social media world, and in particular at the algorithmic changes Instagram has been attempting to put in place, and the backlash against those changes that remind us of de-platforming certain creators. Lastly, we propose a mental framework for understanding this disintermediation in the context of abstraction and compression of information and identity, and offer a provocation about Web3.
Podcast conversation: Eliminating payday loans and overdraft fees for 2.5MM employees, with Matt Kopko of DailyPay (link here)
We chat with Matt Kopko – DailyPay's Vice President of Public Policy, where he manages DailyPay's interactions with regulators, legislators, other government officials and stakeholders.
Rest of the Best
Here are the rest of the updates hitting radar.
BNPL: Halliday Raises $6MM For 'Buy Now, Pay Later' Ethereum NFTs
INVESTING: Little-Known Stock’s 32,000% Surge Ends With $175B Drop
INVESTING: GloriFi Lists On Nasdaq Following $1.7B Merger With DHC
CBDCs: Bank Of Thailand To Embark On Pilot Study For Retail CBDC
CRYPTO: Brevan Howard Scores Largest Crypto Hedge Fund Launch Ever
CRYPTO: Revolut To Expand Crypto Capabilities With A Hiring Spree
CRYPTO: Coinbase Hit With Another Class Action Lawsuit Following SEC Allegations
METAVERSE: Netflix Builds ‘Gray Man’ Metaverse Experience In Decentraland
DEFI: Nomad Recovers $22MM Of $190MM In Ethereum Tokens Stolen In Hack
NFTs: CryptoDickbutts Ethereum NFTs Surge 690% in Daily Sales Volume ← gotta love this timeline
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