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Mar 6, 2021
Rob Walker, a Senior writer at Marker on the intersections of design, consumer culture, branding and business, is asking whether Jack Dorsey is playing Jay-Z, or is the billionaire hip-hop artist and entrepreneur playing the Twitter and Square CEO? Walker, a longtime NYT contributor and also the author of The Art of Noticing, recently commented on what he thinks the “surprise” Square ( NYSE:SQ ) acquisition of Tidal is “really about.” Walker claims that this is a deal that almost no one was “anticipating.” As reported , payments company Square announced on March 4, 2021 that it will be acquiring a majority stake in Tidal, the music-streaming platform that’s co-owned by Jay-Z. According to the announcement, $297 million in cash and stock was provided for the acquisition. Square CEO Jack Dorsey confirmed the deal via Twitter — the other company he manages — where he “preemptively” raised the obvious question: “Why would a music streaming company and a financial services company join forces?” Walker pointed out in a blog post that the thread that soon followed provided somewhat vague PR-speak responses and answers to that question: “New ideas are found at the intersections, and we believe there’s a compelling one between music and the economy.” Although that’s likely to be expected at the announcement stage of a “distinctly unexpected” partnership, Walker described the “immediate” market reaction as “tepid,” with Square shares dropping around 6.75% on Thursday (March 4, 2021). However, there could be several reasons — “perhaps not so lofty as those Dorsey suggested — that this deal isn’t as utterly random as it sounds,” Walker claims. He added that “for starters, the motivation for buying Tidal could be as simple as Square making a high-level acqui-hire: Jay-Z, whose rep for street cred and entrepreneurial acumen continues to top itself — luxury giant LVMH just bought into his champagne brand, and he’s a backer of soon-to-IPO Oatly — will join Square’s board.” As noted by Walker, “perhaps this will continue whatever dialogue he and Dorsey may have started while yachting together over the summer.” According to Walker, the “bottom line: There’s no downside to Jay-Z’s counsel and halo effect.” He continued: “And it’s plausible that in a world where the business of being a musician really is more of a business, for indie artists as well as mainstream stars, serving as their Fintech solution of choice (for merch payment processing and other tools similar to those Square has developed for its business customers) could be worth something over time for Tidal. This hardly has to be a game-changing, risk-it-all gambit to pay off: The acquisition price is a sliver of Square’s $100 billion-plus valuation, and even the company’s official announcement said it expected no material impact on revenue or profits this year.” Walker also mentioned that if that “sounds more like a ‘why not?’ than a ‘hell yeah!,’ well, maybe that’s the whole point. And that could be even more true for Tidal, and particularly Jay-Z. As explained by Walker, one of Tidal’s selling points, along with great sound quality, was its “artist-first attitude,” paying a considerably greater royalty than Spotify and Apple Music in the hopes of acquiring exclusive content. However, Tidal has never actually come even close to meaningfully challenging Spotify and Apple Music. By 2018, Tidal reportedly had about 3 million subscribers, and has been sort of mum or quiet on that subject ever since, Walker noted. Meanwhile, Spotify claims over 155 million paid subscribers and Apple Music has over 60 million. Tidal doesn’t disclose its financial results, however, a Billboard report reveals that even though the firm’s revenue surged 13% in 2019, its losses stood at about 52% — from $36 million to $55 million. As mentioned in a blog by Walker, perhaps this deal “bolsters Tidal’s original mission, or maybe it suggests a new game plan in the offing.” Either way, however, the acquisition price is a “nice improvement” over the $56 million that Jay-Z and several other artists had paid for Tidal just around 5 years ago. Walker argues that maybe Jay-Z did not really succeed in making Tidal a “dominant” new streaming-music player. But this latest deal suggests that you cannot really call the enterprise a complete “failure,” Walker acknowledged. He added that it’s just been co-signed by “one of the most successful entrepreneurs alive” and “plugged” into a $100 billion Fintech giant that now has a board seat with Jay-Z’s name on it. Perhaps Dorsey didn’t acqui-hire Jay-Z; maybe “it’s the other way around,” Walker argues. The majority of Goldman Sachs ( NYSE:GS ) clients are bullish on the future performance of decentralized cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH). The giant Wall Street investment bank has shared the results of a client survey revealing that 61% of respondents believe their crypto-asset holdings could increase considerably in the next 12-24 months. Around 40% of respondents claim they currently have some exposure to digital currencies. Approximately 57% of Goldman Sachs’ survey respondents stated that the most important factor that led to a dramatic surge in the BTC price was “institutional investing or offering of additional products.” Bitcointreasuries.org, a website that keeps track of Bitcoin purchases by different companies, reveals that there are at least 22 publicly listed firms that presently hold over $7 billion worth of Bitcoin. On March 1, 2021, MicroStrategy’s ( Nasdaq: MSTR ), whose company share prices have dropped 50% in the last 17 days, Bitcoin holdings had reached a total of more than $4.4 billion. The second-largest Bitcoin holder is Elon Musk’s Tesla, which acquired $1.5 billion in BTC last month. PayPal’s 300 million+ retail clients have also been offered the option to purchase Bitcoin, Bitcoin Cash, Litecoin, and Ethereum. Goldman Sachs’ survey has been released shortly after the bank announced that its digital currency trading desk will become active after a 3-year pause. Goldman is reportedly just weeks away from introducing BTC futures trading, and may be looking into providing a bitcoin exchange-traded fund (ETF) along with custody solutions for crypto-assets. Investors’ generally positive future outlook (according to the survey) is supported by recent findings that show 22% of respondents believe the BTC price will be over $100,000 in a year from now. More than half have predicted that the leading crypto will remain in the $40,000-$100,000 price range during the next year or two. Apart from Bitcoin, nearly 30% of survey respondents chose Ethereum as the virtual currency of interest and 13% selected stablecoins , which are digital currencies that are pegged to real-world assets like gold or fiat currencies such as the US dollar or GBP. Another takeaway is the strong investor sentiment around the need for progressive crypto regulations. Around 34% of respondents said it’s one of the biggest challenges for crypto investing and 24% cited a lack of properly regulated investable digital assets to be the most significant barrier right now. The bank’s survey is reportedly based on feedback obtained from 280 respondents that includes asset managers and hedge funds, which represented the majority of surveyed companies, along with banks, pension/sovereign wealth funds and other organizations. Chinese Fintech Companies Need to Meet Capital Adequacy Requirements with a Maximum of Two Years On March 2nd, Guo Shuqing, Chairman of the China Banking and Insurance Regulatory Commission (CBIRC) said at a press conference of the Information Office of the State Council that Chinese Fintech companies are expected to meet capital adequacy requirements with a maximum of two years. Microlenders, consumer finance firms, and banks operated by internet platforms are all included in the plan. In consideration of some historical reasons, the financial regulators have set various grace periods for different platforms. (Source: yicai.com ) CSRC Beijing Branch Opens Applications for Pilot Projects of Fintech Innovation in the Capital Market On March 4th, the Beijing Branch of China Securities Regulatory Commission (CSRC) issued the “Notice on Carrying out the Capital Market Fintech Innovation Pilot (Beijing) Project Application”. According to the document, the plan will focus on the new generation of information technologies such as big data, cloud computing, artificial intelligence, and blockchain. The technological empowerment of various businesses in the capital market is guided by the principle of serving the real economy, improving market efficiency, strengthening compliance and risk control, enhancing regulatory capabilities, and ensuring financial security. (Source: CSRC Beijing Branch ) ByteDance Applies for the Registration of “BYTEPAY” Trademark According to enterprise information platform Qichacha, ByteDance applied for the registration of “BYTEPAY” trademark on February 22nd 2021 under the categories of “advertising sales and finance property management”. In fact, this is not the first time ByteDance has applied for trademarks related to payment business. As early as 2018 and 2019, ByteDance had already started the relevant trademark applications for “Duoshan Zhifu”, “Duoshan Pay” and “Duoshan Wallet”. In addition, it was said that ByteDance had already taken the domain name douyinpay.com last year. (Source: mpaypass ) Hui’an Jinke (Ahi Fintech) Completes 100-Million-Yuan-Level B Round of Financing Recently, Hui’an Jinke (Ahi Fintech) officially announced the completion of a 100-million- yuan-level B round of financing. The investment was led by Chongqing Liangjiang Zhongxin Jialiang Fintech RMB Equity Investment Fund Partnership, followed by existing shareholders Hillhouse Capital and Innovation Works. Huang Ling, founder and CEO of Hui’an Jinke (Ahi Fintech), said that this round of financing will be used for talent recruitment and further development of intelligent risk-control and regtech products, as to accelerate the expansion and large-scale application of international cutting-edge smart technology products in various industries. (Source: WeiyangX ) The above is a weekly synopsis of the biggest stories on Fintech in China provided by WeiyangX, part of Tsinghua University, in partnership with Crowdfund Insider. WeiyangX is the most influential website focusing on Fintech in China. The site covers the latest news, industry data analysis, business practices, and in-depth Fintech cases in Fintech. WeiyangX is incubated by Fintech Lab. Founded by Tsinghua University’s People’s Bank of China (PBC) School of Finance in 2012, the Fintech Lab is the first and leading research entity dedicated to leading best practices, promoting interdisciplinary innovation, and encouraging entrepreneurship in the field of fintech through scientific research and innovative project incubation. Checkout PrimeXBT Current, one of the leading digital banks in the US, reveals that it’s been a busy few weeks at the company as they began receiving tax refunds for thousands of clients five working days faster than regular banks. Current claims that most of the money is being used for paying back friends and family members and for settling bills, which is “consistent with spending patterns” that the banking challenger saw from the second US government stimulus payments in December of last year. Current’s management also mentioned that the tax refund season was delayed a bit this year because of stimulus payments. But even though the IRS was not accepting returns until February 12, 2021, Current says this did not impact its ability to receive and credit refunds for its members “five days faster than traditional banks.” Current further revealed that the spending patterns they’ve seen are “similar to those of the second stimulus payments in December,” when they were the first Fintech challenger to credit payments, and this “reinforces just how many Americans are hurting for cash and still playing catch up nearly a year after the COVID-19 pandemic led to a shift in the workforce and uncertain economic times.” In just a few weeks into the tax refunds, the majority of the money has reportedly been spent on paying back friends or family members and settling bills, and Current reveals that it has seen “shifting consumer spending patterns”: Spending on “paying back friends, family and paying bills have seen a total 15% increase vs. pre-refund spending for members’ who have received their tax refunds on Current”; In particular, “sending money with Current Pay has increased nearly 10%”; Average tax refund we have seen is “just over $2,000”; Current’s management added: “Much like we saw in December, Americans are still hurting for money and refunds and stimulus are stop gap measures helping people make ends meet. We’ll expect to see similar spending patterns with the next round of stimulus payments.” As reported in January 2021, Current had noted that 2020 was “certainly not the year anyone was expecting,” however, for all the tribulations (not to mention “being in the epicenter of a pandemic” – above all), the company is quite proud that they were able to fulfill their promises or commitments to get their members “faster and better” access to their funds, especially at a time when they may have needed these services the most. Current claims that it has helped members save over $100 million in overdraft fees in just the past 8 months (as reported in January 2021). The digital bank now claims more than 2 million members. It noted that “A LOT more people joined Current.” Current members have also been able to earn points at more than 20,000 merchants. Additionally, there are over 30,000 locations where the bank’s members deposited cash. There are now reportedly over 55,000 in-network free ATMs available to Current members. Nick Catino, who is responsible for Policy, Campaigns, and Regulatory Strategy at Wise (formerly TransferWise), notes that payments are the part of finance that consumers experience “most on a day-to-day basis.” Catino also mentioned that there are certain important initiatives that will help “ensure the financial success” of Canadian consumers and businesses. Payments Canada, which offers the payments infrastructure that allows Canadian residents, their businesses and their institutions to exchange value, notes that with the introduction of advanced payments methods “comes a need for modernizing existing payments regulations and infrastructure.” Catino told Payments Canada that while “modernizing payments regulations and infrastructure” might “sound technical,” it is really one of the most “important” financial policy initiatives the Canadian government can lead. He explained that payments are the part of finance that consumers “engage with most” on nearly an everyday basis. Catino added: “Much like our mission at Wise, governments should strive to make payments instant, convenient, transparent, and as low cost as possible. Payments modernization will help meet those goals and ultimately help ensure the financial health of Canadians and keep more money in their pockets.” Responding to a question about how Canadians can take advantage of the benefits of modern payments, and what legislative and regulatory changes are required, Catino revealed that Finance Canada is “leading three initiatives that will have outsized benefits for Canadians.” He continued: “There’s the proposed Retail Payments Oversight Framework, which will result in new registration and market conduct requirements for payments companies. Subsequently, these newly regulated companies will be eligible for direct access to the payments system via amendments to the Canadian Payments Act.” And then on a “parallel” track is “consumer-directed finance* that is commonly referred to as Open Banking , which will allow users to have greater control over their financial information, Catino added, while noting that these reforms will “require legislation from parliament and the implementation of new regulations.” In response to a question about who would ultimately benefit from these regulatory changes, Catino noted: “Everyone benefits from payments modernization. Real-time payments help consumers avoid hefty fees from overdraft and cheque cashing, while small businesses unlock working capital that would otherwise take days to access. The Retail Payments Oversight Framework will help Canadians better understand the costs and terms of payments, inducing more competition and resulting in lower costs.” Catino further noted that the amendments or changes to the Canadian Payments Act will “expand membership and access to the payments system” to Wise and Canadian payments technology firms. This could result in improved services, lower overall costs, and “increased innovation,” Catino claims. He also mentioned that consumer-directed finance will “allow consumers to efficiently manage their finances, take advantage of tailored financial products and services, and make more sound financial decisions, while small businesses gain access to capital based on cash flow data.” Catino added that the potential benefits of these initiatives are “overwhelming” for consumers and small businesses. While commenting on the current “pain points” in the cross-border or international payments market for Canadians, Catino remarked: “Wise was started because cross-border payments are broken – they’re slow, expensive, inconvenient, and riddled with hidden fees. We’re trying to change that. More than 10 million people and businesses globally now use Wise to move six billion dollars every month, but that’s a tiny sliver of the overall market.” Catino also mentioned that migrant workers based in Canada are sending remittance payments abroad and are dealing with average fees of 6% according to Statistics Canada. Similarly, small businesses “struggle with high costs and delays when making international payroll or paying and getting paid for goods and services,” Catino confirmed. He explained that this is why the international community – led by the United Nations International Fund for Agricultural Development and the World Bank – recently published an extensive report with global remittance policy recommendations. Catino pointed out that in the “Blueprint for Action,” they “highlighted real-time payments systems, non-bank direct access to payments systems, and transparent pricing (the elimination of hidden exchange rate margins) as critical to spur lower cost and more accessible consumer cross-border payments.” Catino also noted the Committee on Payments and Market Infrastructures (CPMI), which is part of the Bank for International Settlements (BIS), has published several reports on cross-border or international retail payments “in support of faster, cheaper, more transparent and inclusive services.” The recommendations are “in strong support of payments modernization, including non-bank access to payments systems,” Catino added. He continued: “Collectively, these reforms, along with Payments Canada’s forthcoming Real-time Rail payments system, will dramatically modernize and improve the way consumers engage with payments on a day-to-day basis. The initiatives will enable access to innovative financial services and lead to a more competitive marketplace.” Notably, Payments Canada’s Real-Time Rail (RTR) should launch at some point in 2022. When questioned about how RTR could help address cross-border issues and what about ISO 20022, Catino noted: “In 2021, moving money should be like sending an email – instant. The first step to making payments instant globally is to make them instant domestically. For example, Wise has built a cross-border payments infrastructure by integrating – directly where possible – to local payments systems around the world.” Catino explained that if we are “directly originating” payments with “real-time rails” on both sides, then we are able to transfer funds “instantly and as low cost as possible.” He added that direct payments access “means no middleman taking a cut and adding friction to the process.” He also mentioned that this is how Wise makes 34% of transfers “instantly” and 53% “within an hour, with an average cost of .69 per cent.” He further noted: “Canadians will quickly benefit from faster cross-border payments and lower costs with the implementation of a real-time payments system that allows direct access for payments technology companies.” He also mentioned that the ISO 20022 standard is “being used in the development of faster payments systems around the world.” He pointed out that the standardization of message formats and information sharing will help “achieve the goal of instantaneous and lower cost cross-border payments in a global economy.” After it has been fully adopted, it will be “a boon for economic growth, technological innovation, and operational efficiency,” Catino claims. (Note: you can check out the complete conversation between Payments Canada and Catino here .)
3 Team Members
Marker has 3 team members, including current Founder, Managing Partner, Ohad Finkelstein.