PayPal: Black Friday & Cyber Monday broke records with $1B+ in mobile payment volume

Black Friday broke records in terms of sales made from mobile devices, according to reports last week from Adobe. This week, PayPal said it saw a similar trend during the Thanksgiving to Cyber Monday shopping event. PayPal saw a record-breaking $1 billion+ in mobile payment volume for the first time ever on Black Friday – a milestone it hit again on Cyber Monday.

Mobile payment volume on Black Friday was up 42 percent over Black Friday 2017, the company said, and it even outpaced the mobile payment volume on Cyber Monday this year.

However, Cyber Monday saw more total payment volume, likely because much of the shopping that takes place that day comes from office workers back at their desktops, wrapping up a few more purchases.

Worldwide, mobile payment volume from Thanksgiving to Cyber Monday accounted for a significant 43 percent of PayPal’s total payment volume. Between those days, PayPal was processing more than $25,000 per second, with more than $11,000 per second processed on mobile.

The peak hour took place on Black Friday, which shows the sales event has shifted much of its business online. It’s now coming close to topping Cyber Monday in terms of both online and mobile shopping, PayPal noted.

PayPal’s data also pointed to another trend: that of the blurring of the line as to when holiday shopping begins and ends. Many retailers these days are launching their deals on Thanksgiving or even earlier, then allowing them to run for the week of Black Friday or longer.

Amazon, for example, has decided to capitalize on its own Black Friday/Cyber Monday momentum by launching a “12 Days of Deals” event that will feature hundreds of new deals every day from Sunday December 2 through Thursday December 13.

Other times, the shopping starts early, as PayPal’s data shows. Thanksgiving has now become another major shopping day, the company said, having broken into the top 10 shopping days of the year. It also grew 41 percent over last year.

E-commerce spending wasn’t the only thing that’s up year-over-year, PayPal also found. On Giving Tuesday – the event focused on donating to charities and other worthwhile causes – PayPal said over a million customers from 180 markets donated $98 million this year. That’s a 51 percent increase from 2017, it said.

WeChat e-wallet teams up with Line to target Japan’s 7M Chinese tourists

China’s biggest chat app WeChat is set to make its payments service more ubiquitous in Japan, a popular outbound desitnation for Chinese tourists.

On Tuesday, the Tencent-run messenger unveils a partnership with Japan’s Line chat app on mobile payments. The tie-up allows Japanese brick-and-mortar merchants with a Line Pay terminal to process WeChat Pay transactions directly. Instead of going through the hassle of currency swaps, a Chinese customer can simply summon the WeChat app and pay by scanning a QR code the retailer presents.

The fresh alliance is hot on the heels of a similar gesture from Tencent’s most serious rival, Alibaba. In September, the Chinese ecommerce giant’s payments affiliate Alipay teamed up with Yahoo Japan in an effort to grab Chinese outbound travelers.

Tencent did not provide information on the number of potential Japanese retailers reached through the scheme when inquired by TechCrunch . But the firm says its setup with Line Pay allows small and medium-sized businesses to adopt mobile payments at relatively low costs because it doesn’t require merchants to purchase QR code scanners.

Both WeChat Pay and Alipay have already been going it alone in Japan over the past few years. WeChat Pay, for instance, claims that it scored a six-fold increase in the number of transactions in Japan between June 2017 and 2018.

On the other hand, having an ally with an extensive local reach can help Alibaba and Tencent capitalize on a wave of increasingly sophisticated Chinese tourists.

The partnership with Line “significantly boosts WeChat Pay’s penetration among small and medium-sized retailers and its application in more daily scenarios, rather than serving Chinese people only at traditional tourism hotspots,” says a Tencent spokesperson. “This strategy is in line with an upgraded demand from Chinese people to travel like locals.”

Japan’s appeal to Chinese people is on the rise. During China’s weeklong “Golden Week” national holiday in October, Japan leapfrogged Thailand for the first time to become the most popular destination for Chinese tourists, according to a report from Chinese online travel agency Ctrip. In 2017, the Japan National Tourism Organization recorded a total of 7.36 million Chinese tourists, who made up more than a quarter of all visitors to Japan that year.

Cross-border fintech startup Instarem raises $20M for global expansion

Instarem, a Singapore-based startup that helps banks transfer money overseas cheaply, has raised a Series C round of over $20 million for global expansion.

The round is led by MDI Ventures — the VC arm of Indonesian telecom operator Telkom — and Beacon — the fund belonging to Thai bank Kasikorn — as well as existing investors Vertex Ventures, GSR Ventures Rocket Internet and the SBI-FMO Fund.

The money takes four-year-old Instarem to nearly $40 million raised to date, although Instarem co-founder and CEO Prajit Nanu told TechCrunch that the startup plans to expand the Series C to $45 million. The extra capital is expected to be closed by January, with Nanu particularly keen to bring on strategic investors that can help the business grow in new emerging markets in Latin America as well as Europe.

“We are a the stage where the color of the money is very important,” he said in an interview. “It is very key to us that we bring people into the round who can add value to our business.”

Nanu added that the company is speaking to large U.S. funds among other potential investors.

Instarem works with banks to reduce their overseas transfer costs, offering a kind of ‘Transferwise for enterprise’ service. Although, unlike Transferwise which uses a global network of banks to send money across the world, Instarem uses mid-size banks that already trade in overseas currencies. As I previously explained, the process is the financial equivalent of putting a few boxes on a UPS freighter that’s about to head out, thus paying just a sliver of the costs you’d incur if you had to find a boat and ship it yourself.

Focused on Southeast Asia primarily, it services over 50 markets with transfers. The company does offer a service for consumers, but financial institutions — which have ongoing demand and higher average spend — are its primary target.

Prajit Nanu founded Instarem in 2014 alongside Michael Bermingham

The company has offices in Singapore, Mumbai and Lithuania and it is opening a presence in Seattle as it begins to look to broaden its business, which already includes three of Southeast Asia’s top ten banks. Nanu said that the company will try to work with banks and financial services such as cross-border services which target users with links to Latin America and Mexico initially. In Asia, it is awaiting payment licenses in Japan and Indonesia which will allow it to offer more services in both countries.

TechCrunch understands that the company is on the cusp of a deal with Visa that will allow its customers to roll out branded prepaid cards, adding another financial service to its offerings. Nanu declined to comment when we asked about a deal with Visa.

TechCrunch has also come to learn that Instarem was subject to an acquisition approach earlier this year from one of Southeast Asia’s unicorns. Nanu declined to name the bidder, but he did tell TechCrunch that the offer “wasn’t the right timing for us.” He is, however, giving increased thought to an exit via IPO.

Last year, when Instarem raised its $13 million Series B, he suggested that it could go public by 2020. Now that target date has shifted back to 2021, with the Instarem CEO telling TechCrunch that the U.S. remained the preferred option for a public listing when the time is right.

Tencent e-wallet is following Alibaba to Hong Kong subways

China’s payments giants have taken their battle to Hong Kong. Less than a week after Ant Financial announced adding QR codes to the city’s MTR public transport network of rail, Tencent’s WeChat Pay unveiled a similar scheme on Wednesday.

Starting mid-2021, commuters in Hong Kong can scan a barcode to enter the subway turnstile through WeChat Pay, the digital wallet linked to Tencent’s popular messaging app. That’s a year behind Alibaba’s payments affiliate Alipay, which claims to enable QR codes for MTR in mid-2020.

Both Alipay and WeChat Pay are making this scan-to-ride option available to visitors from the Chinese mainland and Hong Kong residents.

Hong Kong has become a testing ground for the Chinese e-wallet titans going global due to the city’s geographic adjacency and cosmopolitan population. Its market of 740 million people also offers growth potential as mobile payments adoption is still nascent. In a survey conducted by the Hong Kong Productivity Council, only 30 percent of the respondents said they had paid with mobile devices, while most locals are accustomed to credit cards and cash.

By contrast, 92 percent of China’s 970 million mobile users have paid on smartphones, according to a July report from consulting firm Ipsos.

Cracking the Hong Kong market isn’t easy. For years, locals have used the stored-value Octopus card to pay for everything from MTR rides to convenient store purchases. The card system, which is 57.4 percent owned by MTR, claims to cover 99 percent of the city’s population.

Time will tell whether the payments newcomers could replicate their success in their neighboring city. On the Mainland side, WeChat Pay took off after a series of marketing campaigns that involved users fighting for cash-filled digital packets on WeChat. Alipay, on the other hand, traced much of its success to its ties with Alibaba’s ecommerce platforms, which don’t accept WeChat Pay.

In Hong Kong, the rivals have introduced redeem programs and shelled out generous subsidies to vie for shoppers. AlipayHK said in June that it crossed 1.5 million users, up from one million in March. WeChat Pay Hong Kong is keeping mum about its user base but a company executive said in November that the wallet scored more than ten times growth in transactions over the past year.

11/11 shows biometrics are the norm for payments in China

Chinese consumers were quick to adopt digital payments, and a recent shopping binge showed they are ready for another leap: biometric payments.

On November 11, Alibaba wrapped up Singles’ Day – the world’s largest shopping event – and hauled in $30.8 billion in total transactions, a staggering amount bigger than Cyber Monday and Black Friday combined.

Instead of frantically inputting payment passwords to grab deals, Chinese users jumped on new technologies to shop in the blink of an eye. This year, 60.3 percent of Singles’ Day customers paid either by scanning their fingerprint or taking a selfie.

That’s according to Alipay as it collected the data for the first time. The Alibaba affiliate digital wallet handles online and offline transactions for 870 million users around the world and its close rival WeChat Pay, the payment method that runs on Tencent’s popular chat app, is on a par at over 800 million.

Both are racing towards a future of seamless payment. Alipay debuted pay-by-fingerprint back in September 2014. In less than a year, WeChat Pay announced its own. Over time Chinese shoppers got themselves familiar with biometric verification, using it to unlock smartphones and enter office buildings. By 2016, around 95 percent of the people surveyed by China’s Payment and Clearing Association said they “knew about” fingerprint recognition.

The more sophisticated selfie-taking method soon followed. Last year, Alipay rolled out a smile-to-pay scheme at a KFC store in Hangzhou, home to Alibaba and Alipay, and has since then launched face recognition verification for a wide range of offline scenarios, including delivery pickup.

alipay alibaba face recognition

Alipay’s parent company Ant Financial lets users scan faces to pick up deliveries. / Source: Alibaba

The government has also been swift to leverage face recognition for other purposes. A well-known example is its alliance with the world’s highest-valued AI company SenseTime to develop China’s national surveillance system that can, for instance, track down criminals on streets.

Chinese people are getting in on unique-to-my-body authentification fast. In 2016, just above 70 percent users were comfortable with paying with their biometric information, according to the CPCA survey. In 2017, the ratio jumped to 85 percent.

This fast adoption also raises issues. In 2016, half of the respondents from the survey expressed security concerns over using biometrics payments. In 2017, 70 percent said they were worried. That same year, 77.1 percent cited privacy as another concern, up from just under 70 percent a year ago.

PayPal shuts down accounts for Proud Boys and founder McInnes as well as antifa groups

PayPal has shut down several accounts, including those for far-right group the Proud Boys and their founder, Gavin McInnes, for the promotion of “hate, violence, or other forms of intolerance.” Several anti-fascist groups were also banned as part of the same wave of policy enforcement.

PayPal confirmed the bans to TechCrunch, which were first reported by BuzzFeed News. The Proud Boys are a right-wing organization that has until recently managed to avoid being labeled a hate group. However, the group’s increasing prominence, involvement in violent altercations and clear ties to white nationalism have earned it that dubious designation on a growing number of venues.

The organization was banned last week from Facebook, on which its many chapters relied for recruitment and propagandizing purposes.

As Gab, Hatreon, Infowars and others have found, it can be quite difficult for sites, companies or organizations that align themselves with hate and intolerance to use popular services online. Although some decry this as censorship or some other infringement of free speech, the terms of service are generally quite clear: groups employing or endorsing hate or violence are simply not welcome on these private platforms.

PayPal explained its actions in the following statement:

Striking the necessary balance between upholding free expression and open dialogue and protecting principles of tolerance, diversity and respect for all people is a challenge that many companies are grappling with today. We work hard to achieve the right balance and to ensure that our decisions are values-driven and not political. We carefully review accounts and take action as appropriate. We do not allow PayPal services to be used to promote hate, violence, or other forms of intolerance that is discriminatory.

In addition to the Proud Boys and McInnes (and, yesterday, U.K. nationalist Tommy Robinson), PayPal banned a number of anti-fascist, or antifa, groups in Atlanta, Sacramento and other cities. These are generally considered far-left, and although some antifa are known for violent protest or stoking conflict with police during demonstrations, it’s far from a core principle, if such a loosely organized group can even be said to have one.

This doesn’t prevent these groups from doing what they do, of course. But it can make it difficult to support themselves financially, and exclusion from platforms like Facebook complicates communication and organization.

Despite a strong Q3 earnings report, Square’s Q4 forecast disappoints investors

Despite a strong third-quarter earnings report, Square’s forecast for the final quarter of this year gave investors pause, sending its share price down 6 percent in after hours trading before it gradually climbed up again.

Square’s adjusted revenue grew 68 percent year-over-year to $431 million, beating expectations from analysts polled by Refinitiv (formerly the financial and risk arm of Thomson Reuters), who had forecast $413.9 million. It also reported 13 cents in adjusted earnings per share, better than the 11 cents analysts expected.

Total third-quarter revenue was $882.1 million, a 51 percent increase from the same period last year, and Square also marked its first quarterly profit of $20 million, compared to a loss of $16 million last year. In an earnings call, CFO Sarah Friar said this was due largely to Square’s investment in Eventbrite, which held its IPO in October.

Despite beating analysts’ expectations for its third quarter and also raising its adjusted core earnings forecast for 2018 to between $250 million and $255 million, up from $240 million to $250 million, Square’s forecast for the fourth quarter missed expectations. The company expects adjusted earnings of 12 cents to 13 cents a share, lower than the 15 cents forecast by analysts polled by Refinitiv.

Investors were also worried about Square’s transaction-based revenue, which grew 29% to $655 million during the third quarter, compared to 31 percent last year, because even slightly slower growth may signal that competitors like Clover are gaining more traction. Square reported, however, that the important segment of gross payment volume (GPV) it processes from “large sellers,” or merchants who do more than $125,000 a year in GPV, grew to 52 percent, up from 48 percent a year ago.

Friars said in Square’s earnings call that this is because Square has made it easier for large retailers to integrate Square’s platform into their operations, as well as the recent launches of Square Terminal, its credit card machine, and Square Installments, which enables merchants to allow customers to make monthly payments.

Friar, who oversaw Square’s IPO in November 2015 and has served as its CFO since 2012, announced last month that she will leave the company to become the CEO of Nextdoor. CEO and founder Jack Dorsey said that the search for a new CFO is his “number one focus at the company” and will be led by independent director David Viniar and board member Roelof Botha.

Social commerce startup Goxip lands $1.4M investment to add flexible payments

Social e-commerce startup Goxip raised $5 million in January, and now the Hong Kong-based business has brought in more cash with a strategic $1.4 million investment from financial services company Convoy. Existing backers including Chinese photo app company Meitu also took part.

Convoy offers a range of services that include asset management, insurance and other investment options. Hong Kong’s largest financial advisory with over 100,000 customers, Convoy isn’t in great shape now. It has been in crisis over legal action and a corruption investigation that is centered around a former company director.

The company’s shares remain suspended on the Hong Kong Stock Exchange although it recently made appointments aimed at modernizing its business and this deal is likely another part of that strategy. Convoy’s portfolio of strategic investments includes Nutmeg in the UK and Ireland’s Currencyfair, which bought up Convoy’s payments arm.

Goxip said it will use the capital and the new relationship with Convoy to offer more installment-based financing options on its service, which is akin to a ‘shoppable Instagram’ that has a focus on high-end fashion.

The company already counts major retailers like Net-a-Porter, Harrods, and ASOS and brands that include like Nike, Alexander McQueen and Topshop. To date, Goxip has helped customers find outfits and buy them but now, with Convoy, it wants to offer payment plans using a virtual credit card, Goxip co-founder and CEO Juliette Gimenez told TechCrunch.

With 600,000 monthly users and average orders of $300, Goxip is getting close to breaking even, Gimenez said, but she is hopeful that offering staggered payment options over varying periods such as 6-12 months will serve Goxip well as it expands in Southeast Asia where typical consumers spend less. That’ll happen soon after the company opened an office in Bangkok ahead of an imminent launch in Thailand, its second expansion after Malaysia.

Goxip has just opened an office in Bangkok ahead of an upcoming launch in Thailand

Beyond geographical additions, Goxip has also branched out into influencer marking this year with its soon-to-launch RewardSnap service. Similar to Rewardstyle in the U.S, it will enable internet influencers — and particularly those on Instagram — to partner with brands and make money through referrals to their audience. Gimenez said that 150 influencers have signed up, including Elly Lam who has 14 million followers across all platforms.

Instagram is beefing up its commerce focus — with the addition of a shopping tab and new management at the wheel — but Gimenez said she isn’t phased. She points to the fact that Facebook, which owns Instagram, hasn’t been able to make e-commerce work in Asia, while the simplicity of Rewardsnap and its connection to the Goxip service, makes it highly defensible even as Instagram ups its shopping game.

Hong Kong’s Neat raises $3M to offer easy banking for startups and SMEs

Neat, a Hong Kong-based startup that gives startups and SMEs access to credit cards and banking services has pulled in $3 million in fresh funding.

The new round is led by China-based VC Linear Capital with participation from Hong Kong’s Sagamore investments and existing backers Dymon Asia Ventures and Portag3 Ventures . Neat previously landed a $2 million seed round earlier this year.

In a nutshell, the company offers quick access to prepaid Mastercard-based cards and basic banking services. Cards are charged at around $7.50 per month, with varying prices on incoming, outgoing and international payments. There is also a consumer option, which is much like European startups Monzo, Starling and Revolut, but Neat is more focused on business users.

We profiled the company in August and since then U.S-based Brex — a two-year-old startup that offers similar services — has gone on to reach a billion-dollar valuation. That shows that there’s plenty of validity in the model… at least in the eyes of the investors who write those all-important checks.

Neat is in a much earlier stage of development and it is serving a more fragmented market in Asia via Hong Kong. When we talked to CEO David Rosa earlier this year, he said that “a large portion” of its customers were either based in Hong Kong or associated with the market, but Neat does offer services globally with a focus on Asia. In particular, the company has introduced international payments — which allow users to pay out overseas without incurring exorbitant fees — while Rosa said it is working on other multi-currency solutions and integrations with third-party services such as accountancy and more.

Neat already claims to have customers in 100 countries, but with Linear Capital’s backing, it is aiming to zone in on Chinese businesses that are looking for banking options in Hong Kong. Given the considerable control on moving capital out of Mainland China, Neat may be an easy option for Chinese startups that are looking to go global but don’t want the hassle of dealing with traditional banks to set up their Hong Kong entity. But of course, there is plenty of incumbent competition.

How the 22-year-old founders of Brex built a billion-dollar business in less than 2 years

When Brazilian-born Henrique Dubugras and Pedro Franceschi met at 16 years old, they bonded over a love of coding and mutual frustrations with their strict mothers, who didn’t understand their Mark Zuckerberg-esque ambitions. 

To be fair, their moms’ fear of their hacking habits only escalated after their pre-teen sons received legal notices of patent infringements in the mail. A legal threat from Apple, which Franceschi received after discovering the first jailbreak to the iPhone, is enough to warrant a grounding, at the very least.

Their parents implored them to quit the hacking and stop messing around online.

They didn’t listen.

Today, the now 22-year-olds are announcing a $125 million Series C for their second successful payments business, called Brex, at a $1.1 billion valuation. Greenoaks Capital, DST Global and IVP led the round, which brings their total raised to date to about $200 million.

San Francisco-based Brex provides startup founders access to corporate credit cards without a personal guarantee or deposit. It’s also supported by the likes of PayPal founders Peter Thiel and Max Levchin, the former chief executive officer of Visa Carl Pascarella and a handful of leading venture capital firms. 

Brex is off to one of the most exciting starts we’ve ever seen,” IVP’s Somesh Dash said in a statement.

The financing makes them some of the youngest unicorn founders in history and puts them in a rare class of startups that have galloped into unicorn territory at such a fast clip. Brex was founded in the winter of 2017. It only launched publicly in June 2018.

How’d they do it?

“I’ve had two failed attempts, one successful attempt and one on the way to being a successful attempt,” Brex CEO Dubugras told TechCrunch while reciting a lengthy resume.

At 14, when most of us were worrying about what the first year of high school would bring us, Dubugras was more concerned about what his next business attempt would be. He had already built a successful online game but was forced to shut it down after receiving those patent infringement notices.

Naturally, he used the cash he earned from the game to start a company — an education startup meant to help Brazilian students apply to American schools. He himself was hoping to get into Stanford and had learned quickly how little Brazilian students understood of the U.S. college application process.

In some respects, the company was a success. It garnered 800,000 users but failed to make any money. His small fortune wasn’t enough to scale the business.

“There aren’t a lot of VCs in Brazil that are willing to fund 15-year-olds,” Dubugras told TechCrunch.

Shortly after folding the edtech, he met Franceschi, a Brazilian teen from Rio — Dubugras is from São Paulo — who understood his appetite for innovation and was just as hungry for success. The pair got to talking and because of Franceschi’s interest in payments, they started Pagar.me, the “Stripe of Brazil.”

Pagar.me raised $30 million, amassed a staff of 100 and was processing up to $1.5 billion in transactions when it sold. Finally, they had a real success under their belt. Now it was time to relocate. 

“We wanted to come to Silicon Valley to build stuff because everything here seemed so big and so cool,” Dubugras said.

And come to Silicon Valley they did. In the fall of 2016, the pair enrolled at Stanford. Shortly after that, they entered Y Combinator with big dreams for a virtual reality startup called Beyond. 

“I think three weeks in we gave it up,” Dubugras said. “We realized we aren’t the right founders to start this business.”

He credits Y Combinator with helping him realize what they were good at — payments.

As founders themselves, Dubugras and Franceschi were hyper-aware of a huge problem entrepreneurs face: access to credit. Big banks see small businesses as a risk they aren’t willing to take, so founders are often left at a dead-end. Dubugras and Franceschi not only had a big network of startup entrepreneurs in their Rolodex, but they had the fintech acumen necessary to build a credit card business designed specifically for founders.

So, they scrapped Beyond and in April 2017, Brex was born. The startup picked up momentum quickly, so much so that the pair decided to drop out of Stanford and pursue the business full time.

Simplifying financial access

Brex doesn’t require any kind of personal guarantee or security deposit and it doesn’t use third-party legacy technology; its software platform is built from scratch.

It simplifies a lot of the frustrating parts of corporate expenses by providing companies with a consolidated look at their spending. At the end of each month, for example, a CEO can easily see how much the entire company spent on Uber or Amazon. 

Plus, Brex can give entrepreneurs a credit limit that’s as much as 10 times higher than what they’d receive elsewhere and they can issue cards, virtual cards at least, moments after the online application is complete.

“We have a very similar effect of what Stripe had in the beginning, but much faster because Silicon Valley companies are very good at spending money but making money is harder,” Dubugras explained.

As part of their funding announcement, Brex said it will launch a rewards program built with the needs and spending patterns of founders in mind. Beyond that, they plan to use the capital to hire engineers and figure out how to grow the business’s client base beyond only tech startups.

“We want to dominate corporate credit cards,” Dubugras said. “We want every single company in the world, whenever they do businesses expenses, to do it on a Brex card.”