Fintech in 5 - Visa Acquires Pismo for $1B

Pismo has been acquired by Visa for US$1 billion, Robinhood is launching in the UK and cheaters are using Revolut to secretly text their lovers.

Author

Benjamin Schroeder
December 07, 2023

Hey 👋,

I hope you're having a great week.

We’re into week 49 of 2023 already and Bitcoin has had an impressive rally and is now above 40 000 euros. Also, the fintech Pismo has been acquired by Visa for US$1 billion, Robinhood is launching in the UK and cheaters are using Revolut to secretly text their lovers.

Let's dive in 👇

This Week’s Highlights

💰 Fundraising

📰 Must Knows

⭐ Bonus Story

This Week's Highlights

💰 Fundraising

8 deals were reported in Europe in the past week, raising a total of €122 million. France and the UK had two deals each, while the Netherlands, Sweden, Finland and Germany had one deal each.

👑 This week, Paysend, the London-based payments platform, takes the crown after raising $65 million from Mastercard as well as additional participations from existing investors.

I mentioned it in passing last week, but Paysend is betting on a strategic partnership with TelevisaUnion, a major Spanish-language media company, to target the USA-Latin America money-transferring corridor. Paysend has signed a three-year advertising company with Televisa to boost their visibility among the Hispanic community in the USA.

📰 Must-Know :

🇧🇷 The FinTech Pismo Officially Acquired by Visa for US$1B in Brazil

  • Although the acquisition was announced on the 28th of June 2023, this week Brazil’s General Superintendence of the Administrative Council for Economic Defense (Cade) has given the green light for the acquisition to go through.

  • Visa has acquired Pismo, a Brazilian payments infrastructure startup, for $1 billion in cash. This positions Visa to provide core banking and issuer processing capabilities across various card types and across borders, as well as bolster its support for emerging payment rails like Pix in Brazil.

  • Pismo was founded in 2016 and processes almost 50 billion API calls and $40 billion in transaction volumes annually, and powers almost 80 million accounts and over 40 million issued cards.

💡My Insight

Visa’s acquisition of Pismo is not their first infrastructure play. In March 2022 Visa also acquired Tink, a leading European open-banking platform for $2.15 billion, and between 2020 and 2021, Visa attempted to acquire Plaid, another open-banking platform, for $5.3 billion before being blocked by the SEC.

Why ? Well, over the last decade Visa and its primary competitor, Mastercard, have seen their networks process an ever-increasing number of transactions and making their networks increasingly efficient (read profitable). However, this growth has an inherent upper limit.

To continue growing, Visa has opted to offer adjacent services. Their data security unit has been a good source of growth and it seems that they are betting heavily on core banking services and card issuing services as their new source of growth (see acquisitions above).

Is this a good bet ?

Only time will tell, however, Visa has historically had an excellent ROIC (return on invested capital), remaining high during good times and bad times. Even though WACC (Weighted Average Cost of Capital) has skyrocketed over the last year, Visa has kept its ROIC at 26.30% (calculated using TTM income statement data) with a WACC at 9,59%.

In short, Visa has historically been pretty good at obtain returns from the capital they invest, so they will likely get a healthy return from their investment into Pismo. Of course, take this information with a grain of salt 🧂.

🇺🇸 Robinhood Launches in the UK

  • After aborting its UK launch three years ago, Robinhood has officially opened its stock-trading platform in the UK, marking its first international investment.

  • The neobroker, who has 23 million users in the US, aims to learn from past experiences and offer 24/7 support, in-app guides, and market news for UK users to avoid repeating the mistakes it made on the US market that cost them a $70 million fine by the SEC.

  • Questions arise regarding how they plan to operate their business model in the UK. Robinhood’s business model, which is to sell customer’s order flow (a process called PFOF, or Payment for Order Flow) in exchange for commission-free trades, is banned in the UK. There is no clear plan yet as to how they will generate revenue in the UK except that the Robinhood U.K. president said they plan “add products over time”, likely Robinhood Retirement and Robinhood Gold.

🇳🇱 Bunk Plots Return to UK

  • European neobank Bunq, the second-largest in the EU, is considering a return to the UK after halting new accounts in 2020 due to Brexit-related challenges.

  • The Amsterdam-based bank has incorporated a new UK subsidiary, signaling its interest in the UK market. its recognition of London as a fintech hub. According to Bunq’s CEO, Alik Nikman, they consider the UK to be a key market for them because of the country’s attractiveness for digital nomads and the number of Brits pursuing the digital nomad lifestyle.

🇪🇺 Swift Connects Instant Payment Systems to Bring 24/7 International Processing

  • Swift, the banking cooperative that enables financial transactions and payments between certain banks, connected domestic payment schemes across Europe to provide full transparency and traceability for instant cross-borders transfers destined for the EU.

  • The European Payment Council’s OCT Inst scheme, now live, allows continuous processing of payments to and from Europe, operating 24/7, 7 days a week.

🇦🇺 Australian BNPL Regulations Delayed Until 2024

  • The Australian government has postponed regulations for Buy Now, Pay Later (BNPL) providers until 2024 due to resourcing challenges in legislative drafting teams.

  • The delayed laws aim to bring BNPL under credit regulations, imposing responsible lending obligations on short-term loans. Similar legislation is being prepared in the EU.

  • New Zealand is moving ahead with BNPL laws, planning to provide charges under its Consumer Finance Act by September 2024, while Australia's regulations face delays amid competing priorities.

⭐ Bonus Story

🇬🇧 Cheaters Are Using Revolut to Secretly Text Their Lovers

  • An article in the Times of Malta has revealed that some people are using Revolut to secretly text their lovers behind their partner’s backs. Why ? Simply because nobody thinks to check a banking app for messages…

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Have a great rest of your week,

Benjamin