TCH Phase 1 – eCom Wallet

Phase 1 of TCH’s token efforts will be in SRC model. A bank branded “wallet” acting in the DCF role for TCH PIs . Go to market is through 4 eCom processing partners: PayPal, Stripe, Shopify and Square.  

Short blog – 80% confidence

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Phase 1 of TCH’s token efforts will be in SRC model. A bank branded “wallet” acting in the DCF role for TCH PIs . Go to market is either as:

  1. TCH as SRC System, or
  2. Visa as the SRC System for all TCH banks (V and MA) with TCH is a “unique role” managing all consumer data, registration, payment tokenization, …
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Pay By Bank – Where does it work and why?

Pay by Bank (aka Push Payments) are tremendous efforts driven by local market bank groups. Their core success is in cash replacement (ex P2P) and where there is high consumer-merchant trust (ie bill pay/recurring payments). Data clearly show that Push Payments are NOT a threat to V/MA but part of a rising electronic payment “tide” that lifts all boats. 

© Starpoint LLP, 2022. No part of this site, blog.starpointllp.com, may be reproduced in whole or in part in any manner without the permission of the copyright owner.

Friday I was a tad “let down” in the Sionic/TCH/MX release of Pay-by-Bank. Per my blog on Google/TCH launch and Google P2P I was anticipating something much bigger. To be clear I firmly believe that TCH is working on an “ApplePay Competitor”, which will entail TCH tokens inside of Google’s phone, but this will be 3-6 months out.  Per the blogs above, I see neither pay-by-bank nor TCH Tokens in Google Pay as a threat to V/MA. 

Today I thought I would drill down into “pay by bank”, the dynamics of why it works in some markets, and why I see little threat to V/MA in replacing core cards in eCom or at POS.

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Affirm Debit+ is Revolutionary

A consumer “pay anyone” product that lets the consumer pick and choose what items they want to finance after they purchase them.  

Update 8 November – Original post is below the image.. I had doubted Visa’s support here. But clearly this is a real product.

Affirm Debit+ is a decoupled debit on the Visa network with Evolve Bank as ODFI/Issuer. I doubt if Visa fully vetted this product.. it MUST have “slipped through”. For more info see Affirm’s investor day presentation.


Per my blog last week, my hypothesis is that the new Affirm Debit+ will be revolutionary.. which is why it is currently causing a massive firestorm amongst Banks. Today I want to drill into what I believe the value proposition will be (my hypothesis) and why Visa had to support this. 

Today Affirm is “limited” in growth to the merchants it can directly integrate to. How can they solve this problem?  Create a consumer “pay anyone” product that lets the consumer pick and choose what items they want to finance after they purchase them.  Connect any of your bank accounts or all of them.. Finance anything you buy on improved terms. Affirm will also work with Stripe and others to create an improved checkout process, which will improve both conversion AND consumers ability to purchase (ie underwriting). The first mover advantage will be tremendous and step on much of the Neo Banks (already slim value prop).  

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PayPal – ?Super App?

Paypal has clearly won in the massive shift to eCom/mCom during the pandemic. A time where 10 yrs worth of consumer behavior change was compressed into 18 months (behaviors which will stick long-term). However, the future growth story must ride on something else AND Paypal must prove it can generate improving margins within that growth

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. 

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Amazon 2% + PayPal Discover

Two HUGE payment events this week

Amazon 2%

Per Bloomberg, consumers that don’t want to go for the 5% back Amazon store card (SYF) can now link their DDA and earn 2% back.  This may be the biggest payment innovation of the year! 

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Browser Tokens – Payments in OS Part 4

My last articles on this topic were
I’ll forgive you if you didn’t see the big news out of Google I/O. There is a MUST READ article in Android Police that is spot on. Summary? Google (Chrome/Android) and Apple (Safari) are ready to integrate payment tokens in the browser.. Buy buttons will be integrated into ads, product listings, or a single “pay” button with no subsequent user information to fill out “quasi one-click”. From Android Police
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