The Buy Now, Pay Later (BNPL) alternative payment method is the hottest trend in payments right now. Amazon announced a major partnership with Affirm, Square will acquire Australian BNPL provider AfterPay, and now PayPal will acquire Paidy for $2.7 billion. All of this activity occurred in about a 40 day span.
Klarna, a payment company offering micro credit for online transactions like PayPal Credit, serves consumers and merchants in Europe and the United States while preparing to launch in Australia and New Zealand. They recently announced an equity funding round raising $460 million, valuing the credit terms alternative payment provider at $5.5 billion.
The number of Klarna users in the U.S. is growing by 6 million per year.
PayPal completes their fifth acquisition in the past 12 months, this time purchasing machine learning fraud prevention provider Simility for $120 million. PayPal COO Bill Ready says each of these five recent acquisitions are part of the company’s effort to strengthen the services they provide to merchants.
Simility was founded in 2014, they are based in Palo Alto and provide advanced risk analytic and modeling solutions for fraud prevention in the Customer Not Present (CNP) channel. Major clients include eBay/StubHub, Dick’s Sporting Goods and OfferUp. The fraud prevention provider had previously raised $25 million, including PayPal as one of their early investors.
Amazon Cash is the latest payment method and feature supported by Amazon and was designed for the under- and unbanked. Consumers can request a barcode that is linked to their Amazon account, and when checking-out at a partner retail store location the customer can add between $15 and $500, using cash, which will become stored credit on their Amazon account. Amazon Cash was announced on April 3rd and is now available in the United States.
This new payment method immediately becomes a new option for U.S. Amazon customers. According to the FDIC, 7 percent of U.S. households were unbanked in 2015, while an additional 20 percent were considered underbanked. Amazon Cash provides a more direct way for these consumers, 27 percent of U.S. households, to make purchases with the online retailer.
The popular person-to-person payment service Venmo has continued to grow in terms of its user base and total payment volume, but with transaction fees waived for bank account and debit card based payments the company likely hasn’t yielded much profit. Intent on changing that, parent company PayPal recently announced plans that will enable merchants accepting PayPal to begin accepting Venmo for business-to-consumer transactions online and via mobile apps. PayPal CEO Dan Schulman said Venmo will be “fully monetized” by the end of 2016.
The company will start by targeting existing PayPal merchants. Tests will start by the end of this year where merchants will be able to accept Venmo and pay the same rates they do to accept PayPal, typically 30 cents per transaction plus 2.9 percent.
In late September eBay announced their acquisition of Braintree, a payment service provider and gateway focusing on payments within mobile apps and websites. eBay is purchasing Braintree for $800 million in cash and the deal is expected to close before the end of 2013.
During the first six months of 2013 720 different brands were targeted by phishing attacks, an increase of 18 percent from the last six months of 2012, according the latest report from the Anti-Phishing Working Group (APWG). The two most targeted brands during the first half of 2013 were PayPal and Taobao.com.
A recent survey finds that many consumers want more opportunities to use mobile wallets in-store while online mobile commerce transactions continue to grow as well. Meanwhile several industry and investment analysts are predicting strong years for companies well positioned in the mobile payments market, along with large growth for mobile payments in general.
More mobile payment methods and wallets are testing and preparing for commercial launch with mobile joint venture Isis starting trials in two pilot U.S markets, Visa testing NFC (Near Field Communication) payments at the London Olympic Games, and PayPal trialing their mobile payment method with McDonald’s fast food restaurants in France.
The four major wireless carriers in the U.S. along with financial institutions, card associations and mobile wallet providers have formed and joined the Mobile Payments Committee with the Electronic Transactions Association (ETA). The purpose of the committee is to define best practices for mobile payment solutions while educating legislators, merchants and consumers to foster and grow the mobile payment experience at the point-of-sale.