Jack Ma’s fintech giant tops 1.3 billion users globally

The speculation that Alibaba’s fintech affiliate Ant Group will go public has been swirling around for years. New details came to light recently. Reuters reported last week that the fintech giant could float as soon as this year in an initial public offering that values it at $200 billion. As a private firm, details of the payments and financial services firm remain sparse, but a new filing by Alibaba, which holds a 33% stake in Ant, provides a rare glimpse into its performance.

Alipay, the brand of Ant’s consumer finance app, claims to earmark 1.3 billion annual active users as of March. The majority of its users came from China, while the rest were brought by its nine e-wallet partners in India, Thailand, South Korea, the Philippines, Bangladesh, Hong Kong, Malaysia, Indonesia, and Pakistan.

In recent years Ant has been striving to scale back its reliance on in-house financial products in response to Beijing’s tightening grip on China’s fledgling fintech industry. Tencent, Alibaba’s nemesis, is considered a lot more reserved in the financial space but its WeChat Pay app has been slowly eating away at Alipay’s share of the payments market.

In a symbolic move in May, the Alibaba affiliate changed its name from Ant Financial to Ant Group. Even prior to that, Ant had been actively publicizing itself as a “technology” company that offers payments gateways and sells digital infrastructure to banks, insurance groups, and other traditional financial institutions — rather than being a direct competitor to them. On the Alipay app, users can browse and access a raft of third-party financial services including wealth management, microloans, and insurance.

As of March, Ant’s wealth management unit facilitated 4 trillion yuan ($570 billion) of assets under management for its partners offering money market funds, fixed income products, and equity investment services. During the same period, total insurance premiums facilitated by Ant more than doubled from the year before.

In June, Ant’s new boss Hu Xiaoming set the goal for the firm to generate 80% of total revenues from technology service fees, up from about 50% in 2019. He anticipated the monetary contribution of Ant’s own proprietary financial services to shrink as a result.

Ant grew out of Alipay, the payments service launched by Alibaba as an escrow service to ensure trust between e-commerce buyers and sellers. In 2011, Alibaba spun off Ant, allegedly to comply with local regulations governing third-party payments services. Ant has since taken on several rounds of equity financing. Today, Alibaba founder Jack Ma still controls a majority of Ant’s voting interests.

Extra Crunch support expands into Argentina, Brazil and Mexico

We’re excited to announce that Extra Crunch is now available to readers in Argentina, Brazil and Mexico. That adds to our existing support in the U.S., Canada, UK, and select European countries.

You can sign for Extra Crunch here.

Latin America has always caught the eye of big tech. For companies like Facebook, Amazon, and Uber, Latin America has represented a massive growth opportunity. But it’s not just big tech that’s investing in Latin America. The startup scene is booming. According to Crunchbase, VCs invested billions into Latin America in 2018 and 2019.

In 2018, the TechCrunch team took a trip to Sao Paulo, Brazil to host Startup Battlefield Latin America. We knew about the hot startup scene and massive investments, and wanted to meet the founders fueling the fire in person.

The excitement, wit, creativity, and energy of the entrepreneurs in Latin America was impressive. We were dazzled by the pitches from budding startup teams, and we were enlightened by the investors sharing their wealth of knowledge about the ecosystem. What we saw in person helped us tie the funding to the faces of the teams building the future. The entrepreneurial mentality of Silicon Valley doesn’t have borders; it’s alive and well across Latin America.

We wanted to bring Extra Crunch to Latin America to help support the startups and investors in this market because community has always been our top priority. We hope that Extra Crunch’s deep analysis and company building resources will help the Latin America tech community grow even stronger than it is today.

We’ve been polling our audience about expanded country support for over a year now, and Argentina, Brazil and Mexico have always been near the top of the list. Now, we’re delivering on the promise to bring Extra Crunch to everyone that asked for it.

We’re optimistic that Extra Crunch will be a big hit in Latin America, and we hope entrepreneurs and investors in the region who have not yet heard of TechCrunch will give it a try.

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What is Extra Crunch?

Extra Crunch is a membership program from TechCrunch that features research and reporting, reader utilities, and savings on software services and events. We deliver over 100 exclusive articles per month, with a focus on startup teams and investors.

Our weekly Extra Crunch investor surveys will help members find out where startup investors plan to write their next checks. Extra Crunch subscribers will be able to build a company better with how-tos and interviews from experts on fundraising, growth, monetization and other key work topics. Readers can also learn about the best startups through our IPO analysis, late-stage deep dives and other exclusive reporting delivered daily.

Here’s a taste of the articles you can expect to see in Extra Crunch:

Beyond articles, Extra Crunch also features a series of reader utilities and discounts to help save time and money. This includes an exclusive newsletter, no banner ads on TechCrunch.com, Rapid Read mode, List Builder tool and more. Committing to an annual or two-year Extra Crunch membership will unlock discounts on TechCrunch events and access to Partner Perks. Our Partner Perks can help you save on services like AWS, Brex, Canva, DocSend, Zendesk and more.

Thanks to all of our readers who voted on where to expand support for Extra Crunch, and thanks to all that participated in the Extra Crunch Beta in Latin America. If you haven’t voted and you want to see Extra Crunch in your local country, let us know here. We’re actively working on expanding support to more countries, and input from readers is greatly appreciated.

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Extra Crunch is now available in Greece, Ireland and Portugal

We’re excited to announce that we’ve added Extra Crunch support in Ireland, Portugal and Greece. That adds to our existing support in Europe as we are already in Austria, Belgium, France, Germany, Italy, the Netherlands, Poland, Romania, Spain and the U.K.

Portugal’s 10 million citizens are no strangers to startup investment, with the country totting up 813 to date, according to Crunchbase. Notably, of that total, 113 have been announced in 2020 thus far.

That means that in 2020, despite COVID-19 and its ensuing economic impacts, Portugal is on track to best its 2019 startup round total of 206. And it’s not just small companies that Portugal is building. OutSystems, now based in Boston and worth north of $1 billion, was founded in the country, for example. As Europe recovers from COVID-19, perhaps Portugal can take a larger share of the continent’s startup activity. It appears to have the momentum it would need to do so.

There’s been data from the last few years to indicate that the Greek startup scene is also growing nicely. With larger seed deals and more deal volume, Greece has seen its startups raise more money, more quickly in recent years. It appears that 2020 is no exception to the trend. With 43 known startup rounds in the country so far in 2020, Greece is set to storm its 2019 total of 59. Indeed, the country could nearly double the number of startup deals it saw in 2019 during a pandemic-disrupted year.

In the past 18 months, the country has seen around 38% of its all-time total known startup deals. Surely that means the country is at a local maxima when it comes to startup activity.

Ireland is a startup powerhouse. Crunchbase has 2,327 known rounds for companies based in the country, including 539 in 2019 and 335 so far this year. So like our other two countries, we can spot acceleration in deal volume. Irish startups raised over $5 billion in 2020 so far, according to Crunchbase. There are going to be more names bubbling up from the island that are worth getting to know.

As a nation, Ireland has a history of startup successes. Software company FINEOS was founded in Ireland back in 1993, and today it’s a public company worth more than a billion dollars. Havok, another software company from the country sold to Microsoft in 2015. And Ireland has other neat tech startups that are still coming up, like Farmflo, to pick one from the list we made this morning.

We’re excited to welcome readers from Greece, Portugal and Ireland to our growing community of startups, investors and entrepreneurs.

You can sign up for Extra Crunch here.

What is Extra Crunch?

Extra Crunch is a membership program from TechCrunch featuring market analysis, weekly investor surveys and interviews on growth, fundraising, monetization and other work topics. Members can save time with access to an exclusive newsletter, no banner ads or video pre-rolls on TechCrunch.com, Rapid Read mode and our List Builder tool.

Committing to an annual and two-year plan will save you a few bucks on the membership price and unlock access to TechCrunch event discounts and Partner Perks. The Partner Perks program features discounts and savings on services from AWS, DocSend, Crunchbase and more.

Thanks to everyone who voted on where to expand next. If you haven’t voted and you want to see Extra Crunch in your local country, let us know here.

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U.S. challenger bank Chime launches Credit Builder, a credit card that works more like debit

U.S. challenger bank Chime, now valued at $5.8 billion, is entering the credit card market with today’s launch of a new card designed to help consumers build their credit history by way of everyday transactions. With the Chime Credit Builder Visa Credit Card, users can control how much they want to spend by transferring funds to a “Spending Account” and can then charge up to this amount wherever Visa is accepted.

This makes the card feel more like a debit card, as it’s tied to how much cash is in a user’s bank account — rather than a traditional credit card which can allow for overspending.

Chime wanted to develop a new kind of credit card experience due the growing popularity of debit cards in the U.S. In 2018, the U.S. Federal Reserve said debit cards represent 50% of all non-cash transactions, the company noted. And younger consumers, in particular, prefer debit over credit, Chime had reported in the past. In a 2015 survey, Chime found that 67% of millennials prefered debit cards, which they feel are more secure and less likely to get them into debt.

However, relying on debit cards alone means younger consumers aren’t building up their credit history — a decision that will come to matter when it’s time to finance a larger purchase, like a house.

“Americans have embraced debit cards for greater control but this limits their ability to establish or build their credit score,” noted Chime CEO Chris Britt, in a launch announcement. “We created Credit Builder to help our members stay in control and safely build their credit with their everyday purchases,” he said.

Chime’s credit card aims to straddle both worlds, debit and credit, by working to establish good credit while also preventing users from overspending.

To make this work, Chime users first add money to their Chime Spending Account and then charge their everyday purchases — like gas, groceries or subscriptions — using the credit card. At the end of the month, Chime’s Safer Credit Builder feature will automatically pay off the credit card balance from the secured account on time. It then reports the credit card payment to the major credit bureaus, including TransUnion, Experian, and Equifax.

The card also has the appeal of a debit card for its lack of fees. It doesn’t include an annual fee, interest or a minimum security deposit, like many of the secured credit cards it competes with.

The company has been thinking about how to better address the credit building needs of its users for some time. In fall 2018, Chime acquired the credit score improvement service Pinch which had focused on helping young adults build better credit. The startup was best known for a service called PinchRent, which reported on-time rent payments to credit bureaus to help its users increase credit scores.

Chime says it took learnings from Pinch and tapped into the team’s expertise in its creation of Credit Builder.

Chime has been beta testing Credit Builder since June 2019 and the service has grown to reach over 200,000 enrollees. During the test period Credit Builder has helped users increase their credit score by an average of 30 points, Chime says, citing data from Transunion. In addition, it helped 95% of members with no credit history establish a credit score for the first time. Anecdotal reports from its users, like these discussions on Reddit, also appear to support Chime’s statements about the card’s ability to improve their credit.

Today, Chime is opening up access to the waitlist for Credit Builder to all its Chime banking customers and it will roll out the service to more members every week over the summer.

Chime’s mobile banking app is now one of many challenger banks in the U.S. aiming to  address a younger generation’s shift away from big banks with physical branches to modern, mobile and digital banking experiences. Chime, however, is not a bank itself. Instead, banking services provided by The Bancorp Bank or Stride Bank, N.A., Members FDIC. The Credit Builder card is also issued by Stride Bank.

Like many of its rivals, Chime offers free checking accounts, with no overdraft fees, early access to direct deposit paychecks, automatic savings, and more. But Chime has outpaced much of its competition, having raised a $500 million round in late 2019 to value its business at $5.8 billion — a sizable increase from the $1.5 billion valuation it had earlier in 2019. It’s now growing at 4x year-over-year, the company says, and reached 8 million FDIC-insured accounts as of February 2020 according to Bloomberg.

Chime’s Credit Builder launch follows yesterday’s debut of the Apple Card “Path” program, which also helps to tackle the issue of young people who can’t quality for credit. In its case, the program alerts users to ways to improve their creditworthiness, like making payments to secured cards or resolving past due balances. This program, is more educational in nature, however, whereas Chime’s Credit Builder is about actual credit-building through transactions and payments.

 

Extra Crunch expands into Romania

Extra Crunch is now live in Romania. That adds to our existing support in Europe in Austria, Belgium, France, Germany, Italy, the Netherlands, Poland, Spain, and U.K..

There’s been reason to be bullish on Romania’s technology sector for some time. A TechCrunch op-ed called the country the “Silicon Valley of Transylvania” in 2016, noting that the number of startups in the country had grown by 20% from 250 to 300 in a year. 

The country’s rich pool of developer talent (bullish notes on that matter here) has also led to rising investor interest. Crunchbase data, for example, said that known venture round counts rose by 26% in the country in 2019, compared to 2018. And from a 2015-era trough, the country’s GDP has risen sharply, along with its GDP per-capita

It’s no surprise, then, that Romania has been one of the most requested countries for Extra Crunch support in recent months. We’re happy to add the country to the list.

You can sign up here.

Extra Crunch is a membership program from TechCrunch that features market analysis, weekly investor surveys and how-tos and interviews on growth, fundraising, monetization and other work topics. Members can save time with access to an exclusive newsletter, no banner ads or video pre-rolls on TechCrunch.com, Rapid Read mode and our List Builder tool.

Committing to an annual and two-year plan will save you a few bucks on the membership price and unlock access to TechCrunch event discounts and Partner Perks. The Partner Perks program features discounts and savings on services from AWS, DocSend, Typeform, Zoom and more.

Thanks to everyone that voted on where to expand next. If you haven’t voted and you want to see Extra Crunch in your local country, let us know here.

You can sign up or learn more about Extra Crunch here.

Amazon launches ‘Smart Stores’ in India to win mom and pop

For Amazon, it’s never too late to try something in India. The e-commerce giant is exploring ways to further spread its tentacles in the largely offline, technology-free neighborhood stores in one of its key overseas markets.

The American firm’s latest attempt is called “Smart Stores.” For this India-specific program, Amazon is providing physical stores with software to maintain a digital log of the inventory they have in the shop, and supplying them with a QR code.

When consumers walk to the store and scan this QR code with the Amazon app, they see everything the shop has to offer, as well as any discounts and past reviews from customers. They can select the items and pay for it using Amazon Pay. Amazon Pay in India supports a range of payments services including the popular UPI, and debit and credit cards.

Amazon told TechCrunch that it piloted this project two months ago and is formally launching it now after seeing the early feedback. More than 10,000 shops, ranging from mom and pop stores to big retail chains including Big Bazaar, MedPlus and More Supermarkets have deployed the company’s system, it said.

The company said these “digital storefronts” are a win-win for both consumers and shop owners. Consumers do not need to stay inside the store and worry about handling plastic cards or cash — that is, to maintain social distance  — and they will also get rewards for using Amazon Pay.

Amazon’s QR code at display at a store. Photo: Amazon

Customers also get the ability to use Amazon’s Pay Later feature that enables them to pay for their purchases in installments. All of this means that merchants, most of whom shut stores until recent weeks to comply with New Delhi’s lockdown order in late March, are seeing increased footfalls and improving their sales. Amazon said it is not taking any cut from merchants or customers.

The company has been aggressively engaging with physical stores in India in recent quarters, using their vast presence in the nation to expand its delivery network and warehouses and even just relying on their inventory to drive sales.

The company’s push in the physical retails, which accounts for the vast majority of sales in India, comes as Facebook, Flipkart, Google, and Reliance Jio Platforms, which recently raised $15.2 billion, also race to capture this market. On Thursday, Google said it plans to offer loans to merchants in India by the end of this year.

These mom-and-pop stores offer all kinds of items, are family-run and pay low wages and little to no rent. Since they are ubiquitous — there are more than 30 million neighborhood stores in India, according to industry estimates — no retail giant can offer a faster delivery. And on top of that, their economics are often better than most of their digital counterparts.

“Amazon Pay is already accepted at millions of local shops, we are trying to make customers’ buying experience at local shops even more convenient and safe through Smart Stores. Further, through EMIs, bank offers and rewards, we seek to make these purchases more affordable and rewarding for customers, and help increase sales for merchants.” said Mahendra Nerurkar, chief executive of Amazon Pay, in a statement.

Amazon’s tardy but increasingly growing interest in the Indian physical retails market is not surprising. The company has often taken longer than most firms in India to study the market and then adds its own spin to tackle those challenges. Another recent case in point: Its foray into food delivery market in India.

Despite ubiquitous interest in the physical retails market, one thing that that no company is talking about yet is just how they plan to commercially incentivize these merchants.

The technology solutions built by these companies is unarguably driving sales for them, but a significant number of these small businesses take cash and under report their revenues to pay less tax. That incentive is multifold of any other incentive for many of them. 

Google to offer loans to merchants in India

Google said on Thursday it plans to offer credit to millions of merchants in India through its Google Pay app starting later this year as the American technology group looks to help small businesses in the country steer through the pandemic and also find a business model for its mobile payments service.

The company said it is working with financial institutions to offer loans to merchants from within Google Pay for Business app. The Google Pay’s business app, which the Android giant launched late last year, has already amassed 3 million merchants, it said.

Google’s announcement today comes as part of its effort to share its broader initiatives for small and micro-businesses in India.

The company said Google My Business, an app it launched in India in the second half of 2017 to help mom and pop stores and other small merchants build online presence, has been used by more than 26 million businesses in the country to list themselves on Google search and Maps. India has about 60 million small and micro-sized businesses in the nation, according to government estimates.

“Every month we drive over 150 million direct connections between these businesses and customers including calls, online reservations and direction requests,” company executives said.

New Delhi ordered a nationwide lockdown in late March in a bid to contain the spread of Covid-19. The move forced most businesses to suspend their operations. In recent weeks, the Indian government has rushed to relax some of its restrictions and many stores have resumed their businesses.

Last year Google launched Spot feature in India that allows businesses to easily create their own branded commercial fronts that are accessible to customers through Google Pay app.

In May, Google introduced Nearby Stores as a Spot feature on Google Pay app that allowed local businesses in select part of the country get discovered by customers in their neighborhood. The company said it is expanding this offering across India starting today.

Thursday’s announcement also outlines the grip Google assumes on small businesses in India, and how its scale — and resources — could pose additional challenges for scores of local startups that are already attempting to serve businesses.

SoftBank -backed Paytm, Walmart’s PhonePe, and New Delhi-based BharatPe have in recent years onboarded millions of merchants and offer them a range of services including loans.

Paytm, which works with over 16 million merchants, earlier this year launched a range of gadgets, including a device that displays QR check-out codes that comes with a calculator and USB charger, a jukebox that provides voice confirmations of transactions and services to streamline inventory management for merchants.

For some of these players, Google’s increasingly growing interest in targeting merchants means that they will be facing off the search giant on two fronts. TechCrunch reported earlier this month that Google Pay had about 75 million transacting users in India, more than any of its competitors. But despite the scale, Google Pay, and most other payments services in India are struggling to find a business model for their services.

Facebook, Google’s global rival, has courted more than 1 million merchants in India on its WhatsApp’s business app. WhatsApp, which is the most popular app in India, is informally used by countless of additional merchants in the country.

Brazil suspends WhatsApp’s payments service

Brazil, the second largest market for WhatsApp, has suspended the instant messaging app’s mobile payments service in the country a week after its rollout in what is the latest setback for Facebook.

In a statement, Brazil’s central bank said it was taking the decision to “preserve an adequate competitive environment” in the mobile payments space and to ensure “functioning of a payment system that’s interchangeable, fast, secure, transparent, open and cheap.”

Banks in the nation have asked Mastercard and Visa, who are among the payments partners for WhatsApp in Brazil, to suspend money transfer on WhatsApp app. Failure to comply with the order would subject the payments companies to fines and administrative sanctions.

In its statement, Brazil’s central bank suggested it hadn’t had the opportunity to analyze WhatsApp’s payment service prior to its rollout.

Tuesday’s announcement is the latest setback for Facebook, which began testing WhatsApp Pay in India two years ago and has yet to receive the regulatory approval to expand the payments service nationwide.

Other than India, which is WhatsApp’s largest market, WhatsApp has also been testing Pay in Mexico.

A WhatsApp spokesperson told TechCrunch that the service’s goal is to use an “open model” and it is continuing to engage with “local partners and the Central Bank to make this possible.”

“In addition, we support the Central Bank’s PIX project on digital payments and together with our partners are committed to work with the Central Bank to integrate our systems when PIX becomes available,” the spokesperson added.

PIX is the central bank’s own payments service, for which it has secured partnerships with nearly 1,000 industry players. The central bank has said previously that it plans to launch PIX in  November this year.

WhatsApp rolled out its mobile payments service in Brazil last week. It was the first time WhatsApp had been able to conduct a nation-wide rollout of its payments service in any market.

The service enables users to exchange money with one another and also pay businesses. The Facebook-owned service said at the time that it was not levying any fee to users for sending or receiving money but businesses were parting with a 3.99% processing fee to receive payments.

“The over 10 million small and micro businesses are the heartbeat of Brazil’s communities. It’s become second nature to send a zap to a business to get questions answered. Now in addition to viewing a store’s catalog, customers will be able to send payments for products as well,” the company wrote in a blog post published last week.

It’s unclear whether WhatsApp, Mastercard, and Visa have already complied with the central bank’s notice.

Plaid’s Zach Perret: ‘Every company is a fintech company’

The fintech revolution is just getting started.

At least that’s the impression we got after a conversation with Plaid co-founder Zach Perret. He appeared on Extra Crunch Live last week to talk about his company’s announced exit to Visa and the larger fintech landscape.

Perret and Plaid announced a deal to sell the company to Visa earlier this year for $5.3 billion, a transaction that highlighted the company’s central position in the fintech world. Plaid provides APIs that link consumer bank accounts to apps and other financial services, making it the connective tissue of the fintech boom.

It’s probably no surprise, then, that Perret is bullish: “You’ve heard it a million times, but the quote of software eating the world [is true], and my corollary to that is [that] every company is a fintech company. And certainly every financial services company should be a fintech company.”

He said there’s lots of room left for fintech and finservices companies to create new products, which is not a bad view of the future if you want to be cheered up. Perret also noted that there are widespread opportunities for fintech companies to help underbanked people in the U.S. and abroad, which indicates a massive, untapped total addressable market.

To make sure you can take your own notes, we’ve included the full session below and excerpted a few passages from the transcript. (You can sign up for Extra Crunch here if you need access.)

Zach Perret

First up, here’s the full call:

How Reliance Jio Platforms became India’s biggest telecom network

It’s raised $5.7 billion from Facebook. It’s taken $1.5 billion from KKR, another $1.5 billion from Vista Equity Partners, $1.5 billion from Saudi Arabia’s Public Investment Fund$1.35 billion from Silver Lake, $1.2 billion from Mubadala, $870 million from General Atlantic, $750 million from Abu Dhabi Investment Authority, $600 million from TPG, and $250 million from L Catterton.

And it’s done all that in just nine weeks.

India’s Reliance Jio Platforms is the world’s most ambitious tech company. Founder Mukesh Ambani has made it his dream to provide every Indian with access to affordable and comprehensive telecommunications services, and Jio has so far proven successful, attracting nearly 400 million subscribers in just a few years.

The unparalleled growth of Reliance Jio Platforms, a subsidiary of India’s most-valued firm (Reliance Industries), has shocked rivals and spooked foreign tech companies such as Google and Amazon, both of which are now reportedly eyeing a slice of one of the world’s largest telecom markets.

What can we learn from Reliance Jio Platforms’s growth? What does the future hold for Jio and for India’s tech startup ecosystem in general?

Through a series of reports, Extra Crunch is going to investigate those questions. We previously profiled Mukesh Ambani himself, and in today’s installment, we are going to look at how Reliance Jio went from a telco upstart to the dominant tech company in four years.

The birth of a new empire

Months after India’s richest man, Mukesh Ambani, launched his telecom network Reliance Jio, Sunil Mittal of Airtel — his chief rival — was struggling in public to contain his frustration.

That Ambani would try to win over subscribers by offering them free voice calling wasn’t a surprise, Mittal said at the World Economic Forum in January 2017. But making voice calls and the bulk of 4G mobile data completely free for seven months clearly “meant that they have not gotten the attention they wanted,” he said, hopeful the local regulator would soon intervene.

This wasn’t the first time Ambani and Mittal were competing directly against each other: in 2002, Ambani had launched a telecommunications company and sought to win the market by distributing free handsets.

In India, carrier lock-in is not popular as people prefer pay-as-you-go voice and data plans. But luckily for Mittal in their first go around, Ambani’s journey was cut short due to a family feud with his brother — read more about that here.