Riding on my blog Plaid and Decoupled Debit.. It looks like Plaid and Marqeta just created a new product with Affirm as the first customer.
Affirm Debit Card – https://www.affirm.com/debit
New Decoupled Debit – Affirm/Plaid/Marqeta
5
Visa vs Amazon – When Merchants Get Leverage
Updated 17 Nov
At Money2020 this week and I have to say I’m having a blast. Seeing friends face to face and getting back to “normal” was well worth taking my first plane flight in 20 months.
Visa Announces earnings today at 5pm, the big question institutional investors are asking me is about the Amazon – Visa discussions. It is a big game of chicken right now, with earnings ramifications. To understand whats going on here, let me attempt to give some abbreviated history.
Plaid and Pay By Bank
As I sit down with my coffee this morning I’m asking myself what are the key questions to answer:
- What is the Plaid service? What innovation have they created?
- Is it a threat to V/MA?
- What merchants/Consumers will use it?
- What do banks think of this? Can they stop it?
Short Blog – PayPal and Pinterest
PayPal and Pinterest – Super Distraction?
What’s behind this deal?
PayPal needs
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- Increase users and platform engagement (MAU)
- Grow the merchant value proposition
- Get into the START of a consumer shopping experience
- Enable a new mobile first shopping experience – focused on small merchants – from beginning to end (like Alipay)
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- “Inspiration to Action” – They are missing the action beyond a ad click.
- Stalled user growth
- 50%+ Revenue growth with consistent operating loss.
- 454M Users with ARPU of $5.08/User vs PayPal’s $21/User
- Ad Growth to Action. Advertising business with solid advertising relationships with CPGs and large retailers. However you don’t click to buy from a CPG.
- Needs platform to complete consumer journey.
Apple Pay Fees (Short Blog)
Thought I would give more detail on whats going on with V/MA, Issuers and Apple (from WSJ article yesterday Apple Pay Fees Vex Issuers). Perhaps I’ll collect a fee from the WSJ.. odd that I mention Apple Pay fees on Monday to have it come up in the WSJ on Tuesday. Oh well..
Google Plex – On Track Pivot
I was quite surprised to see the front page of my Saturday WSJ emblazoned with “Google Is Scrapping Its Plan to Offer Bank Accounts to Users”. As the former guy responsible for Citi’s online banks globally, and also a guy working in creation of the original Google Pay (as consultant), I thought I would provide some much needed clarity here (consistent w/ blog Google’s Bank Plans and the 20 others I’ve written on Google Pay over the last decade).
Payments and the Observer Effect
Most of you techie’s out there had a physics class at some point and can recall the Observer Effect in Quantum Physics: the act of observation can change the measured results. Observation in payments has become the second largest driver of margin and has enabled many new specialists…. so I thought I’d outline some broad thoughts and tell a few stories.
Why is observation important? Payment behavior is truth marked data of what a consumer actually did (offline). While I may search for Ferrari’s, or visit dealership (mobile location) what I actually bought is much more important in predicting behavior and evaluating risk. Purchase data is the most valuable data for that reason (and issuing banks had a lock on it.. Until about 5 yrs ago). The lock has been broken and payment data has become the “missing link” to unite heterogeneous data sets.
PayPal’s New Mobile Bank
Quick thoughts on today’s announcement
This is a solid product.. Not a “super app” but perhaps the best mobile first bank in the US (and beyond). What is NEW?
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- Mobile UI to integrate all those heterogeneous apps (and acquisitions)
- High yield savings account (0.4% APR) powered by synchrony
- Integration of Honey offers/rebates/loyalty programs
- Better Direct Deposit/Bill Pay integration (ex faster clearing/availability of direct deposits)
PayPal – ?Super App?
PayPal has been my #1 holding for last 5 yrs, and it has been on a fantastic ride… especially so over the last 18 months! (see MVP – Continued Domination for more).
Paypal announced 2Q21 earnings 2 weeks ago (7.28). TPV growth was 40% with eBay, 48% without out, while sales grew at a 32% clip without 
eBay versus 19% with. Earnings? Not so much as margin erosion has hit the business. One core driver of margin has investors particularly concerned: “Take rate” (net merchant revenue less cost to clear payments) fell from 2.21% in the fourth quarter of 2020 to 2.11% in the first quarter and 2.01% in the second quarter.
Square in Crypto/DeFi
From Bloomberg yesterday 16 July
Why is this a great thing for Square and DeFi?
#1 Today DeFi and Crypto in Commerce (POS and eCom) are in need of a “core” that can manage either compliance and connections to existing financial services, or operate in critical mass with minimal interaction to banks (ex – custody, exchange, platform, consortium-diem).