Blackbox Weekly

Your dose of fintech news, views and insights

Q: What do cannabis entrepreneurs and adult entertainers have in common with the World Food Program?

A: All parties have a vested interest in reducing the cost of payments they make to financial service firms. Read our exploration on why players from these industries might just be the likeliest to produce the first wave of products created on top of blockchain technology to reach consumers.

Fintech Around the Web

1. Last week, the stock trading app Robinhood announced that it will introduce a new feature giving users the ability to buy and sell cryptocurrencies bitcoin and ethereum at no fee. Called Robinhood Crypto, the feature will be rolled out to users in five states this February. Over one million people have already signed up for early access. For a point of reference, at last report, the popular U.S. cryptocurrency exchange Coinbase had somewhere just north of 13 million users. Being fee-free, the new feature is intended to drive customer acquisition for the app. It will be interesting to see how this new product impacts Coinbase, which currently charges 1.5 to 4 percent fees on each transaction and reportedly takes in nearly three million dollars a day.
2. While one fintech introduced a cryptocurrency-related feature, another took one away. Payment processor Stripe announced the discontinuation of its support of processing payments made in bitcoin, a function it launched across 60 countries back in 2015. In a blog post, the company cited high transaction fees and long wait times that have eaten into customer revenue and decreased demand for the functionality overall. Between this discontinuation and the announcement of Robinhood Crypto, it looks like the market has swung toward recognizing cryptocurrencies as stores of value, rather than as fully functional digital currencies. Stripe, though, did say it would consider supporting other cryptocurrencies in the future.
3. In a move seemingly acknowledging its role as a publisher, Facebook has banned all advertisements promoting cryptocurrencies on its social media platform, citing “financial products and services frequently associated with misleading or deceptive promotional practices.” This follows on the heels of several news stories reporting on the proliferation of ICO scams and pump and dump schemes, many of which drew in potential victims via Facebook advertisements or Twitter blasts.
4. American digital-only bank Chime has banked 750,000 and is picking up pace. Chime’s low-fee checking and savings accounts come with a debit card, a responsive app, and no monthly overdraft fees or minimum balance requirements. While Chime isn’t by any means the first challenger bank stateside — from Qapital, Digit, and Varo — half of its new accounts are reportedly coming from direct customer referrals or word of mouth. This savings account-friendly digital bank’s growth follows as Bank of America recently announced the end of free checking for customers with low balances.
5. Moven, another mobile-first challenger bank stateside, is taking $23 million from the parent company of Japanese telecommunications giant SoftBank. In turn, the fintech will reportedly be using some of that money to purchase a bank itself, rather than wait to be awarded a banking charter itself. Varo Money, another American challenger bank, has applied for a national bank charter and Square for an industrial loan company charter. It will be interesting to watch how these paths play out for each fintech. Simple, the first American challenger bank, was bought by BBVA in 2014.