FinTech Finds Favor With Visa, Gains Traction In Mexico

fintech-FI-philippines

Paidy linked up with Visa via strategic investment this week, while Mexico’s government wants to see greater financial inclusion with joint efforts from FIs and FinTechs. In the meantime, RBS is poised to ladle out cash to competitors traditional and digital.

Collaboration is increasing across traditional financial services and payments giants and tech-nimble upstarts.

To that end, news came this past week that Visa made a strategic investment in Paidy, which offers instantly issued post-pay credit services for eCommerce consumers based in Japan.

Paidy said on Friday that it has more than 1.5 million users.

Terms of the strategic investment were not disclosed. The investment was part of a Series C financing for Paidy that came in July, which had been announced at $55 million. The round was led by ITOCHU Corp., with participation from Goldman Sachs.

Upon announcing the deal, Visa and Paidy said that they are working together on “new digital experiences” that will also give more options to consumers based in Japan, as they may opt to transact in store or online.

In terms of mechanics, Paidy consumers complete transactions using a mobile phone and email address (with verification established through SMS). Paidy, as has been noted by the company, does not require pre-registration or a card; purchases are settled through a monthly bill.

The market is a sizable one, according to data touted by the companies on Friday. In 2017, Japan’s eCommerce market grew by 9.1 percent year over year to 16.5 trillion yen, though there still remains a reliance on cash.

Russell Cummer, founder and executive chairman of Paidy, said that “through this tie-up, we expect to deliver Paidy’s frictionless and intuitive transactional credit to a much broader audience.” The CEO stated in an interview to PYMNTS that the company intends to see its user count hit 11 million by 2020.

FinTech and FIs Collaborate to Get Govt. Backing in Mexico

Separately, Reuters reported that Mexico’s incoming government is targeting FinTech firms and large corporate banks to help push financial inclusion.

That push comes against a backdrop where only one third of adults in that country have a bank account, said the newswire, citing government officials. One incoming future deputy finance minister, Arturo Herrera, told the newswire that financial inclusion’s shortfall in the country has led to obstacles in the fight against poverty and slow economic growth. The new administration under president-elect Andres Manuel Lopez Obrador is slated to take office on Dec. 1.  Spreading the wealth, said Reuters, is among the priorities of the administration.

Herrera said that efforts from FinTechs and traditional financial services firms are needed to bolster financial inclusion.

“We will still have to create, or help create, a basic infrastructure that enables transactions between people or between people and financial institutions in some of the most rural, most disconnected areas of the country,” he said, according to Reuters. Herrera said he and others in the administration have been looking at how to develop digital banking services, and that state-owned development banks must seek to “become more efficient, more dynamic.”

RBS to Boost Competitors

Separately, Royal Bank of Scotland (RBS) is awaiting applications for funds the bank has been mandated to give to its competitors in the industry – to the tune of $1 billion. The Evening Express has reported that the funds are earmarked to come out of the bank’s Capability and Innovation Fund and the Incentivized Switching Scheme. The funds were established in order to satisfy an RBS agreement with the Treasury and the European Commission in order to keep RBS from divesting a subsidiary known as Williams & Glyn.

The funds are to be dispersed through the independent Banking Competition Remedies body, which will help allocate the funds next month, said the Express. Firms have been invited across eligible bodies, including lenders and FinTechs, to help them boost their product and service offerings. In one example, Metro Bank has stated that it has spent $760,000 on its own application prep.