Fintech Headlines: April 10 - 16, 2023

Twitter partners with eToro to enable stock and crypto trading, Affirm expands its cooperation with Stripe, VISA chooses PayPal to pilot its person-to-person payments service “VISA+”

This Week in the Markets

On Wednesday, the U.S. Labor Department released inflation data for March. Thus, the Consumer Price Index rose 0.1% MoM and 5.0% YoY, which was below economists’ estimates. This compares to the 0.4% MoM and 6.0% YoY increase in February, and the 0.5% MoM and 6.4% YoY increase in January. On Thursday, the Department reported that the Producer Price Index declined 0.5% MoM and rose 2.7% YoY, compared to the revised increase of 4.9% YoY in February, and 5.9% in January. Inflation in the U.S. is cooling off, but is still well above the Fed’s 2% target.

Federal Reserve released minutes from its latest FOMC meeting that took place on March 21-22, 2023. The minutes suggest that the FOMC members expect “a mild recession starting later this year, with a recovery over the subsequent two years”, but still considered that “additional policy firming [ read “rate increase” ] may be appropriate to attain a sufficiently restrictive policy stance to return inflation to 2 percent over time.” According to the CME FedWatch Tool, the minutes did not change market expectations, and investors still expect rate cuts by the end of the year.

🟢 Shares of Stone (NASDAQ: STNE 0.00%↑), XP Investimentos (NASDAQ: XP 0.00%↑), and PagSeguro (NYSE: PAGS 0.00%↑) advanced 32.29%, 28.07%, and 19.51% respectively, as Brazil’s stock market rallied following the report of inflation reaching its lowest level since January 2021. The Central Bank of Brazil held its benchmark rate unchanged since August 2022.

✔️ Inflation rises just 0.1% in March and 5% from a year ago
✔️ US Producer Prices Fell in March by Most Since Start of Pandemic
✔️ Fed expects banking crisis to cause a recession this year
✔️ Fed Keeps May Interest-Rate Increase on Table Despite Expected Recession
✔️ There Was No Crisis for JPMorgan and Its Big-Bank Peers
✔️ As Bank Earnings Go, So Goes the Stock Market. So Far, So Good
✔️ Brazil’s Ibovespa Surges as Inflation Cools

Twitter Partners with eToro to Enable Stock and Crypto Trading

Twitter has partnered with eToro, a popular trading platform, to allow its users to access stocks and cryptocurrencies directly through the social media platform. The integration will allow users to view real-time stock and crypto prices, as well as make trades without leaving the Twitter app. This move is seen as part of Twitter's push to expand its presence in the finance sector and a step towards the rumored “everything app.” In case you missed it, on April 11, 2022, Twitter changed its name to "X Corp". The name change follows Elon Musk's announcement that he plans to use Twitter as a platform for his "everything app," which would combine messaging, payments, and social media features in one place. In July 2022, eToro abandoned its plans to go public via a merger with a SPAC, FinTech Acquisition Corp, and proceeded to raise $250 million in private markets in May 2023.

Image source: eToro Investor Relations

✔️ Twitter partners with eToro to let users trade stocks, crypto
✔️ eToro partners with Twitter $Cashtags to further financial education
✔️ Twitter Company ‘No Longer Exists,’ Is Now Part of Musk’s X
✔️ Elon Musk Revives Old Banking Dream in Pursuing $250 Billion Twitter Valuation
✔️ Elon Musk is recycling his X.com playbook for Twitter

Affirm Expands Its Cooperation with Stripe

Affirm (NASDAQ: AFRM 0.00%↑), one of the leading "Buy Now Pay Later" lenders globally, has announced that it is expanding its partnership with Stripe, the online payment processing company, to help Canadian merchants grow their businesses. As part of the partnership, Affirm's "Buy Now, Pay Later" solution will be integrated into Stripe's platform, enabling Canadian merchants to offer their customers the option of paying for purchases in installments. The move is expected to provide Canadian merchants with access to a wider range of payment options, which could help to increase sales and improve customer satisfaction. The two companies started cooperating in the United States in May last year. Affirm entered the Canadian market in 2021 by acquiring one of Canada’s leading BNPL providers, PayBright.

✔️ Affirm and Stripe Expand Partnership to Help Merchants in Canada Grow Revenue
✔️ Stripe Offers Affirm's Adaptive Checkout to Canadian Users
✔️ Affirm Launches Adaptive Checkout for Canadian Stripe Users

VISA is Partnering with PayPal to Pilot Its Person-to-Person Payments Service “VISA+”

Visa (NYSE: V 0.00%↑) has revealed a strategic partnership with PayPal (NASDAQ: PYPL 0.00%↑) and Venmo to test Visa+, a service that seeks to facilitate fast and secure money transfers across various person-to-person digital payment applications. As part of the pilot, Venmo and PayPal customers based in the United States will be able to easily transfer funds between the two platforms. Users will not need a Visa card to access Visa+'s features. Instead, they can establish a unique payment address linked to their Venmo or PayPal account, which will enable them to exchange payments safely and efficiently between the two platforms. The collaboration is expected to enhance the convenience and accessibility of digital payments for users. General availability of the Visa+ service is planned for mid-2024.

✔️ Visa and Partners Bring Interoperability to Digital Person-to-Person Payments
✔️ Visa partners with PayPal and Venmo to power interoperable digital payments
✔️ Visa forges new tie to PayPal

Last year I wrote about the rivalry between VISA and Mastercard during the last 10 years. Here is the link in case you missed it 👉🏻 “VISA vs. Mastercard: visualizing the might of the payment giants”

In Other News

✔️ CFPB director wants some payments firms labeled systemically important
The U.S. Consumer Financial Protection Bureau Director, Rohit Chopra, has signaled that his agency will increase regulation of digital wallets, such as Cash App, Venmo, and PayPal. In a letter to lawmakers, Chopra emphasized the need for a level playing field in the financial industry, stating that digital wallets must comply with the same consumer protection regulations as traditional banks.

✔️ US Credit and Debit Card Spending Slows to Weakest Pace in Two Year
U.S. card spending has slowed down to its weakest pace in two years, according to data from Bank of America. The decrease in spending could signal a decline in consumer confidence amid rising inflation and economic uncertainty. The report shows a notable drop in spending on travel, entertainment, and dining out, while e-commerce sales remained strong.

✔️ Meta Brings WhatsApp Payments to Businesses to Brazil
Meta, formerly known as Facebook, has launched WhatsApp Payments for businesses in Brazil. The new feature enables businesses to receive payments from customers directly through the messaging app. With this move, Meta aims to expand its payment services in the Latin American market.

✔️ Mercado Pago Accelerates Growth Strategy to Offer Vehicle Financing
Mercado Pago, the payment and fintech arm of Mercado Libre, is expanding its growth strategy by launching a vehicle financing service in Sao Paulo, Brazil. The new offering will allow consumers to finance the purchase of cars and motorcycles through Mercado Pago's digital platform.

✔️ Ethereum’s Shanghai Upgrade Is Complete
Ethereum's much-anticipated Shanghai upgrade has been activated, ushering in a new era of staking withdrawals for users. With the activation of the upgrade, users of the Ethereum network can now withdraw their staked tokens without having to wait for an extended period. The move is expected to bring greater liquidity to the Ethereum ecosystem, making it more attractive to investors and developers alike.

✔️ SEC’s Gensler Takes on Crypto DeFi Exchanges With Refreshed Rule Plan
SEC Chairman, Gary Gensler, has unveiled a new plan aimed at regulating the booming decentralized finance (DeFi) markets. The proposed rules seek to bring the oversight of decentralized finance platforms under the SEC's purview, subjecting them to similar rules as traditional financial institutions.

Cover image: Microsoft Bing Image Creator, Powered by DALL·E, prompt “a man spends all his money buying shares, looks anxious, in cubism style”

Disclaimer: Information contained in this newsletter is intended for educational and informational purposes only and should not be considered financial advice. You should do your own research or seek professional advice before making any investment decisions.