989: News: Stripe partners EBANX to push Pix for SMBs in Brazil, and Brex breaks into Europe

30:07We sort of took it for granted a bit. So it's interesting as that goes away. Maybe last quick question on Brex. Maybe for you, Bruno. I mean, Brex sort of seems to have shifted a little bit from smaller businesses to larger enterprises. It seems to me that there's a huge opportunity still with small businesses. But do you think the opportunity of larger corporations is more obvious? Well, you know, it tends to be, I believe that the challenge of offering to SMBs is also complex in terms of also monetization and all that. You go to a big one, it's like in terms of revenue and all of that, it seems, you know, a easier route.

30:57But in terms of competition, I think it's hard to be honest in some cases. But yeah, we've noticed that and I think it's more in the case of we've seen some other players playing to the SMB game and doing good. But the case for Brexit was just like, I think is a route to try to grow stronger on corporations. So it's an interesting pivot. And it used to be, when you think back of Brexit, just like it was the startup banks, especially in the U.S. But it doesn't seem to be like the case anymore. But anyways, I think it's, and especially looking at their expansion to Europe, I think that the low-hanging fruit here is like really working with U.S.

31:51companies based in Europe as a start, but the acquisition of new corporations, it's a long cycle to do in terms of sales and acquisition. So it's different. That's a really good point, actually, that they will probably do best, at least initially, in serving the European subsidiaries of existing American clients where you start getting that benefit of having a global provider and that that will be a lot easier for them to win customers than trying to serve existing Spanish or French or Italian businesses or whatever. Okay, well, on that note, we will take a quick pause here and we will be back very shortly.

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33:38We're back and so is After Dark. Before we dive back into the news, we've got something big to share. We're stepping out of the studio and hitting the stage once again with a special live edition of our industry-leading FinTech Insider News podcast. Join us at London's Village Underground on Wednesday the 24th of September, where we'll also be celebrating a major milestone, our 1000th podcast episode. Tickets are available now. Head to 11fs.com slash afterdark to secure yours. We'll also put a link in the description below. So, back to the news. Marketa is acquiring TransactPay to bolster its card program management.

34:19Marketa has officially acquired TransactPay to boost its card program management capabilities in Europe. The deal strengthens Marketa's digital payments infrastructure, enabling smoother expansion for customers into European markets. TransactPay brings critical regulatory licensing, including the ability to issue e-money, prepaid and virtual cards, under European and UK regulations. Marcin Glogowski, Senior Vice President Europe and UK CEO at Marketa, stressed the urgent need for compliant, scalable payment products in today's volatile regulatory landscape. Erin, it's great to have you on the show.

35:01So fantastic news. Congratulations to you and all of your colleagues. What does the acquisition mean for you and your team at TransactPay? Firstly, thank you. We're all incredibly excited about this. And thank you to everyone who's worked on the deal as well, because as Tensie is the case, there's a lot of effort gone into making this happen. So I think what we're anticipating and what we hope for are a number of improvements to our position in the market as a result of the transaction. So if I take a look at where we've sat historically as TransactPay, as I mentioned at the top in the session, we've been sponsoring.

35:42I believe we've punched above our weight in terms of the business we've been able to do. But the reality is, as a relatively small business, we've sometimes struggled to make the transition into signing those real big corporate clients. Some of those clients we discussed here, you might be internationalizing from North America to Europe, for example. And the first big change we anticipate is by having that big corporate NASDAQ backing of Marquette, that we hope to be more successful in those deals moving forward. Secondly, the technological expertise for Marquette to bring to the table is something that we quite frankly didn't have in-house before.

36:19So we anticipate this is going to accelerate our product development and, frankly, the variety of services that we're able to provide, largely on the accounts and wallet side, which has become a real focus for us over the past two years. And then I'd say the final improvement we're hoping for is Binswanship at the moment, particularly if you're working with early stage fintechs, has capital and collateral challenges that manifest in different ways. It could be pre-funds, it could be card scheme collateral, for example. And having that large-scale corporate backing, we believe will better position us to deal with those challenges.

36:57So I think that's the improvement on the advantages of the transaction from the Transat Pay side and from the Marquetta side. I think we touched upon it earlier when we spoke about some of the other news. Having that internal regulatory expertise and licensing, we hope will better enable us to support the managed by services from our Keter offer at the moment. And whilst we've done that effectively to date, I'd be surprised and disappointed if we weren't able to do that far more effectively in the months and years for our to come. Fabulous. Presumably this is going to enable you to do potentially new services, new product offerings, go after new customer segments and market segments as well.

37:39So this is a big, potentially big change for you. Does it mean you're going to move headquarters? You're going to move into swanky new offices? Well, we've just renovated our head office, so absolutely not. No, no, but in all seriousness. No, we've got a HQ year in Gibraltar. It's where the people are and the expertise sits and also a really kind of key office in Malta. So we don't expect those kind of operational changes, certainly not in the short to medium term. But of course, it's natural that we would expect to see much, much closer alignment between what we do operationally, what Marquetta does over the foreseeable future.

38:24So maybe not operationally, but in terms of what we can do, we're really looking forward to being able to, in particular, leverage that technological capability that Marquetta bring into the table, which I think has been, in all honesty, possibly lacking in our business previously and is going to become even more important when we start to develop wallet services and other non-card services that will become increasingly important to our business model. Thank you. Theodora and Bruno, I'm seeing a bit of a connection between these first three stories with Stripe and Brex and Marketa partnering, acquiring licenses, trying to become more cross-border, trying to serve customers in more markets around the world.

39:11Theodora, am I seeing a pattern that isn't there? Or do you think there actually is a sort of fundamental trend here that businesses are just seeking to serve more customers in more markets? I think it's natural extension, isn't it? Because payments without borders, that's what we often look at. You crack your local market and then you expend abroad. So I think it's a good natural extension of where we need to be. I think the more interesting, and I might be a little bit biased, but the more interesting stories that I find often come out from areas or economies that have less of a legacy structure, right?

39:55that things that have less in abundance. And, you know, earlier you talked about PICS and we talked about South America, we talked about Asia. A lot of these markets is where we see a lot more extension of systems beyond the physical border. And I think that's where the story for the next five, 10 years is going to grow. Do you agree with that, Bruno? What do you think? Definitely, yeah. And it's interesting. And first of all, congrats, Aaron, for the deal and other things. But I think it's basically the quote on, you know, think globally and act locally. And you need to really have the regulatory aspect covered.

40:37You need the local expertise covered. So that's what enables like the things that we just saw in the terms of agreement of Stripe with eBanks. In the case of the M &A transaction here for TransactPay, I think this whole abstractions that we still have when you're looking on expanding globally, you know, it needs to be covered. It's a very important point in terms of the level of expertise and of the partners involved. So to look for, like, for Stripe to look for companies like eBanks, which, you know, have been proven, you know, an exceptional company on doing that. And the same thing here for these M &A transactions, the market really looking at a local partner that can deliver that.

41:29So it's important. I think that things are turning global fast, and that's the search, I think, which is common in the cases that we just discussed here. It's interesting to me that some of these, a number of these are sort of American firms acquiring European businesses. And, obviously, in the case of a business like yours, Aaron, TransactPay, obviously, American firms seeking a partner in Europe and seeking the regulatory licenses. So, to some extent, your business was always likely to be attractive to an acquirer from outside Europe because, you know, you bring assets that they couldn't otherwise get.

42:07But do we think maybe, is there a wider trend of the American firms just being able to get better funding, get higher valuations, and just having that advantage from the American capital markets that just means American businesses just that bit better able to sort of build global businesses? I mean, that's a huge question, isn't it? Theodora, maybe you've got a view on that. I don't know if it's a completely unfair question, but do American firms have an advantage in this sort of global competition to become leading fintechs? Why am I on the spot?

42:51I don't know. I just thought you might have a view on it. I don't realize that's a horribly difficult question. No, no, no. I think it goes back to yes and no, right? It goes back to what are you trying to do? if you are looking at, let's say, a big technology platform, right, where you need a lot of capital to stand up and you need a lot of capital to get data for training, you need a lot of that, such as the big techs of the world, then yes, I think there's definitely an advantage to be an American company, to have access to the capital, to the data, to the resources, the talent, etc., to expand abroad.

43:33When it comes to purely financial services play, yes or no, I'm still a big fan of localization, Bruno, to your point. I'm a big fan of companies that understand where you are locally, the needs. You know, what Southeast Asian consumers need are very different than what consumers want. in North America, right? So there is the cultural nuance. Those things, it will inhibit American firms to expand abroad. I mean, you know, easy example, look at WhatsApp payment, right? WhatsApp has been trying to expand to Brazil. It's been trying to expand to India. But at the end of the day, it's the local companies that went out to consumers.

44:26I asked two bigger questions, I think, but I love your answer. It's fantastic. It's fantastic. Erin, I think this is a super exciting deal for you and I look forward to great things from you and your team enabling all sorts of companies across Europe to create better financial products for their customers. So congratulations to you again. So now we're going to move to a story that's maybe close to Theodora's heart to your point about financial inclusion and markets that we don't look at so often. So our next story is from Cambodia, where WingBank has issued a two-in-one combined debit and credit card.

45:07The card, which is Cambodia's first of its kind, is fully managed through the WingBank app, where customers can set payment terms, view statements, reset pins, and manage both credit and debit functions. The WingBank MasterCard OneCard is available in platinum and gold versions, offering elevated benefits and different credit limits depending on the tier level. It features a numberless design, enhancing security by omitting the printed card details and relying on tokenization to reduce the risk of fraud. The innovation supports financial inclusion and digital transformation in Cambodia, aligning with WingBank and Mastercard's shared mission to deliver more flexible, secure and inclusive financial solutions.

45:52So Theodore, I would like to come to you first, because, you know, we've been talking about some of these markets. I look at this and I think, well, that's very interesting. But is a two-in-one combined debit and credit card the thing that Cambodian customers need most? Let's go back to, do they actually need credit and debit card? Is that the right market for it? Wingback has been there for a long time. So I am sure they know there is a particular market that they are targeting that will need that. Now, with that being said, we talked about financial inclusion, right, in Brazil. And same in Cambodia.

46:33The stat looks dismal. Trying to find the right word for it. because, you know, it's only, what, a little bit over 30-something percent of Cambodians aged 15 and above have a bank account. So it means there is a huge untapped opportunity. But there is nuance in that data. For example, if we look back at 2017, that was an older version of the global FINDEX database that was published. The unbanked and the underbanked, that was even worse. that number, the percentage was less than 18%. So less than 18 % of adults at that time in 2017 have access to a formal bank account. Fast forward to less than 10 years, that number has doubled.

47:23So it means that something is working. And if you look at a lot of the consumers in the Southeast Asian market, a lot of them gravitate towards Curaco payments because it's easy. You scan and you pay. That success story has been written and repeated many, many times in the last, what, 15 plus years? And so I think that's where we can continue to see progress. Not so much so because it's a credit debit card. It's the ease of use. It's how you're reaching people who don't have access. So Cambodia, for example, if you look at that, there's a huge rule and urban gap is over 30 % of the people. So the question goes back to how can we reach the people in the rural areas that don't have access to banking services?

48:11Mobile is a great way to do that. So you need to increase mobile penetration. And it goes back to, we often say, there's no true financial inclusion without digital inclusion. So you need to get the mobile infrastructure in there. You need to get the access in there. You need to have affordable technology for people to get access. And then you can continue to improve the numbers. and it doesn't really have much to do with whether or not it's a credit debit versus a e-wallet. I think e-wallet is something that has worked really, really well for many in that region. Just makes sense. Love it. Love it.

48:46What do you think, Prino? Completely agree with Theodora. I think in the last decade, we saw a lot of tech thin and thin tech approaches on trying to get to the last mile and really make inclusion happen in certain countries. And it's the same at Cambodia. It's the same we saw in some countries in Africa. Latin America has also happened. I think we have some particular cultural aspects and nuances, but it comes down to we have like digital access. Is it available? Digital infrastructure, I think, which is important. and all the details on how that converts in terms of usability, all the interfaces and things like that.

49:31I think that's another story, I think, that we still have other aspects to consider. But I think we're doing well, just like the numbers that Teodoro just mentioned. I think it shows that we're moving to the right direction here. Aaron, I'd love your view on the technical side of this. So it's a numberless card, So instead of having the sort of numbers embossed on the front of the card, they're not there. They're going to try and use tokenization, or they are using tokenization. Do you think we're going to see more and more of that in card markets? I mean, I sometimes almost wonder whether the card itself eventually just disappears.

50:07What do you think about what MasterCard and WingBank are doing here, just in terms of the proposition and the security features? I think first I'd agree with both what Fiddle and Bruna said about. This feels like almost a nice to have rather than what is required to drive that inclusion. But if we think about the technology more broadly and what it's seeking to achieve, I think to me, I'm not sure I'm clear on what problem it's solving is my first point. I can see where it's cool functionality. so in some markets that might be attractive and it's coming, we know that we're going to see this in different regions but I think it also brings challenges as well from a consumer protection point of view, I think that it's going to be incredibly important if you can flip between credit and debit so easily and that ease needs to apply a degree of friction the last one we want is vulnerable consumers spending credit that they shouldn't be spending and finding themselves suffering harm as a result of that.

51:19So I think that there is a responsibility on issuers like us to make sure that if we are going to roll out those products in collaboration with the scheme, and again, I do think they're cool, but if we're going to roll them out, I think we need to be very, very responsible in the way that we do that because I do believe that there is a consumer, this potential consumer harm inherent in this particular new technology. Thank you. So to be fair to WingBank, I mean, we picked up on this particular thing that it's done and we're saying, maybe this isn't the most interesting and most relevant product it could have done, but we haven't looked at everything else that WingBank is doing.

51:59So I don't want to sort of criticize WingBank too much because this may be brilliant for a subset of their customers, even if perhaps there's other opportunities to innovate as well? Well, they are actually really interesting bank in terms of using technology. So one of the things with a lot of Southeast Asian population is, or even Asians, myself included, we like to use voice instead of typing, you know, with the characters or trying to write with the characters. So Wayne Bank actually has a means with their chatbot. They have trained to not just reading the languages, but also hearing and understanding.

52:40so you can interact with it with voice. So those are interesting nuances as we talk about how do we expand towards different market? What do those customers want? What do those consumers want? If you want to think about Southeast Asian market, you know that WingBank is a great example. Look at locals, they want to use voice notes. So here your chatbot needs to be trained with a particular local language and attuned to that. So they are interesting. Sorry, we did pick up on the different part of the story. Yeah. And that's actually a really lovely example of inclusion, isn't it? It's just, you know, making it easier for people to communicate.

53:18Yes, and of course, as a Westerner, it doesn't cross my mind that it's harder to communicate if you're using a character-based language. Try right, Chinese. There are a number of things I know I will never be able to do in my life. That's up there. Yeah, but it's a great example. Like my kids don't know how to write, but they can speak. So using the voice recognition, they can actually communicate. Yeah, I absolutely love that example. Okay, now for a quick look at one more newsworthy story this week that we don't have time to cover in full, but we think you'll find just as interesting. Which is that UK fintech unicorn GoCardless is in acquisition talks.

54:02GoCardless is reportedly in acquisition talks with Dutch payments fintech Mollie currently the frontrunner. The deal could close as soon as next month. For the year ended 30th of June 2024, GoCardless reported a pre-tax loss of£34 million, which was a significant improvement from the£77 million loss in the previous year. The company is seeking profitability by the end of this year, 2025. While no sale price has been disclosed, The move comes amid a broader industry shift towards profitability over sky-high valuations, especially as many fintechs struggle to sustain their previous unicorn status.

54:44So this is an interesting story. GoCardless is a great company that's done some great work, really trying to drive forward things like open banking payments in the UK. Lots of great people there. However, it's tough to get to scale. It's tough to get to profitability. And as we've been talking about earlier in the podcast, there's often a huge advantage of combining companies with licenses to operate in markets like the UK, with companies that have got licenses to operate in other markets in payments, in order to provide wider coverage for merchants and of course for customers across Europe or worldwide.

55:22so it won't surprise me if there's a number of other companies that are very interested in picking up GoCardless because of its fantastic assets and people so fingers crossed that that ends up being a happy story where the GoCardless family becomes part of a wider family somewhere else okay well let's move on to our final little story which we picked up in the Guardian in the UK, which is that the creator of the Freddo chocolate bar would apparently be rolling in his grave at its price today, according to his daughter. So Harry Melbourne, who invented the Freddo bar, which is a popular frog-shaped chocolate bar, which was created in the 1930s, it originally cost just a penny.

56:14According to his daughter, he would be rolling in his grave at how much the bar now costs. She, Leonie Wade-in, has vowed not to buy one since his passing, lamenting its diminished size and higher price. Freddo bars are now commonly priced in the UK at around 30 to 35 pence, though in some instances they've been spotted selling for as much as a pound, sparking public outrage as a symbol of inflation and shrinkflation. Now that's become a little bit of a national obsession in the UK, this concept that chocolate bars are being shrunk in size and that we're being ripped off. Bruno and Theodora, as non-Britans have possibly slightly perplexed by what a Freddo bar is, have you seen examples elsewhere in the world of inflation where something that people think should cost a certain price suddenly looks very, very different?

57:14Well, I think that's the case of the US that they have a can of beverage, I think, which costs$1 and it's just like$1.99, I think. And well, that's inflation. It's economics. So I don't think there is much to do related to that. But there used to be a symbol of how steady sometimes we would see economies of some of those countries just like in the U.S. with this can, which I just forgot the name, that had these drinks for 99 cents. And, you know, things are changing. Yes, things are changing indeed. I think a great example that is from the U.S. this has been going on for quite a few months now is the egg of prices.

58:02Yes. It's, you know, it's right. It's something basic. Like everyone has eggs and we buy eggs. And last, when I went grocery shopping last week, it's about 10 US for a dozen eggs. $10? Yeah, it used to be about four or five. Now, is it inflation? Is it because of bird flu? Is it because of supply chain problems? I don't know. But, you know, when it got to the point where some of the diners in here, they are actually increasing the price for breakfast. because eggs cost more. It's a very simple story, but yet, you know, the question goes to why are we seeing what we're seeing and why are we not seeing it in the economic numbers that sometimes are reflected out from a certain bureau?

58:51So there are a lot of questions. But I think the interesting part of this is, and I'll give you a little tidbit. I don't know if it's something that people can relate to. I just came back from Hong Kong And we love Japanese rice. It's stupid. But we love it because the texture is amazing. It's beautiful. It's wonderful. Two kilograms of rice in the local store in Hong Kong cost about a fourth or maybe even a fifth of how much it would cost if you buy the exact same bag in the U.S. so needless to say the question goes back to to your point is it inflation that we are getting things five times more expensive in the US or is it some other unseen force I don't even know where I'm going there but you know I think just for the record I just remember the name of the can it's Arizona it's Arizona drink yeah it's just 90 cents and now they turn their threat because the price of the aluminum of the can also is something So there are a lot of variables here to consider when you look at this kid.

1:00:03Yeah, yeah, exactly. It's tariffs. Yes, with the aluminum, it's tariffs. So, yeah, exactly. And I think the story behind inflation is how does that impact consumers' wallet, right? And how does that impact supply chain? I think that is the big story. Because regardless of what we like to say, the inflation is 2%, 3%, 4%, how much eggs cost? at the end of the day is what do consumers feel and how does that impact their choices? And then when it comes to payment options, such as buy now, pay later, such as different means to help consumers stretch what they have in their wallet, how can we then as financial institutions, as FinTechs provide the tools on the other hand to help them cope with the different costs, to help them have tools in their hands to better manage all the candies that we dangle in front of them?

1:00:56That's a brilliant point to end the podcast on, except that we haven't asked Aaron his opinion on the Fredo bar. So I love your point, Theodore. It's wonderful. Aaron, are you appalled by the increase in Fredo bar prices or not bothered? I'm torn between agreeing with the incredibly serious point Theodore has just made and also the less serious point of voice in my view that I've still not recovered from space-rated crisps being increased from 10 pence many years ago. But yeah, it's appalled is the short answer. Well, the three of you have been an absolutely fantastic, fabulous panel. I've so enjoyed the past hour.

1:01:41Thank you so, so much for joining me on the podcast. Where can people find out a little bit more about you and your companies? Aaron, where can people find out more about you and TransactPay? Check us out online on the socials or on our website www.transactpay.com Bruno, where can people find out more about you and about Spirulam? Well, I'm more active at LinkedIn So if you type like Bruno Geniz there and it matches my face here So it's me And also through spiruland.com, which is my company, and brunogenese.com as well. And Theodora, where can people find out more about you and unconventional measures?

1:02:30So LinkedIn, Theodora Lau, that's the easiest way, or unconventionalventures.com or bankingonaibook.com. I'm always online. Wonderful. and as for me, Benjamin Linsall, you can find me on LinkedIn or you can find out more about the work the team are doing at 11fs.com. So thank you all so much for listening to today's Fintech Insider. If you've enjoyed what you've heard, please do follow us on your favorite podcast platform of choice and please do recommend us to your friends and colleagues. If you want to join the conversation, seek us out on social media, just search for 11FS or Fintech Insider.

1:03:07Thank you all so much again and goodbye. You