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Fintech Newsletter for 7/04/21

PayPal Zettles ‘Commerce In Box’ for SMB. US Job numbers look good. JP Morgan makes more inroads into fintech through acquisition.
Fintech Newsletter for 7/04/21

Below is news related to the fintech industry this week.

PayPal Zettles ‘Commerce In Box’ for SMB.

PayPal announced a new digital point of sale (POS) for SMB (small to medium business) called PayPal Zettle earlier this week. PayPal acquired Sweden-based iZettle in 2018 for $2.2B .iZettle before the acquisition operated primarily in Europe and Latin American markets.

The POS market is getting highly competitive, with many fintech companies competing in the space. For example, Stripe, Square, and Clover are popular fintech companies in this space in the U.S.

"omnichannel" commerce and the recent shift of consumers towards digital retail (especially during the current public health crisis lockdown) appear to be leading drivers to help small and medium business owners.

So what is Omni-channel commerce?

Before the dawn of "e-commerce," the majority of consumer shopping was primarily in retail stores. The only way a seller could expand his market share would be to open up more geographically distributed stores. However, with the advent of e-commerce, a seller could open a website and cater to customers in various geographical locations. The problem just became a marketing problem - i.e., a seller needs to reach out to his consumer base across different geographies.  Online advertising mitigated some of the marketing problems. Along the way, the seller got more avenues to sell his products online. Sellers are now able to list and sell products on marketplaces (such as Amazon, Shopify, etc.) and "Social shops" (for example, Facebook shop or Instagram buy).

So, many sellers now use the multichannel approach - Sell wherever customer shops.However, there is a fundamental problem with such an approach; the seller is now unaware if a customer has already window-shopped his product in any of the channels and how he can have a more compelling campaign to influence the customer to make a purchase.

And that is the "omnichannel" approach - Personalize the buying experience using cross channel data and sell wherever customer shops.

Suppose a consumer went to a seller's website and clicked on a product. Based on the product clicked a  few days later, a tailored ad campaign will target the consumer on all the social channels (for example, Facebook posts, youtube video ads, Instagram pins).

Further, if the customer engages with a particular channel or promotion type, the seller can tailor the next set of ads to consumer preferences. to influence the consumer additionally (for example, was the consumer more influenced by social responsibility messages or more engaged in price-related ads, etc.)

So how will a digital POS help SMB?

Digital POS will be valuable additions for SMB. They will have a single terminal to manage all payments across all channels. More importantly, the POS's will integrate other downstream systems used by the SMB owner, such as invoicing, accounting, inventory, sales tax, etc.

Overall this is a good product introduction by PayPal to extend its footprint in the physical eCommerce world and a critical component for their long-term vision of building a fintech "Super App."

Other News

JP Morgan acquires OpenInvest

JP Morgan earlier this week announced that it plans to buy OpenInvest, a venture-backed fintech company founded in 2015.

U.S Economic data

Employers in the U.S. added 850,000 jobs in June-a 10 month high.

Fintech New Venture and IPO

  • Tomo,a Connecticut based full stack digital mortgage provider,raised $70m in seed funding.
  • Karat,a San Francisco based credit card for creators,raised $11m in Series A funding.
  • Codat, a London based account software API platform,raised $40m in Series B funding.
  • Entera,a New York based single-family residential investment platform ,raised $32m in Series A funding.
  • Kikoff ,a San Francisco based credit building platform,raised $30m in Series B funding.
  • XCLAIM,a California based bankruptcy claims marketplace,raised $6.6m in seed funding.
  • Orun,a New York based data platform for real time payments,raised $56m in Series B funding.
  • InsureTech,a San Francisco based excess and surplus insurance platform raised $30m in Series A funding.
  • Daylight,a California based neobank targeted towards LGBTQ+ community,raised $5m in seed funding.

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