The Monday Roundup: what we are watching this week | March 20th

By Puja Sharma

The Monday Roundup sets the scene for the week’s biggest news stories, industry deals, and upcoming events. For Prime subscribers only.

Money Laundering probe

A money laundering probe linked to Chinese loan apps allegedly cheating numerous people has led the Enforcement Directorate to file a charge sheet against Razorpay, three FinTech companies controlled by Chinese nationals, as well as as many NBFCs.

“The money-lending business was being illegally run by these fintech companies actually and these NBFCs knowingly let these firms use their names for the sake of getting commission without being careful about their conduct. The same is also a violation of the fair practices code of the Reserve Bank of India,” the agency said.

Razorpay Software is also named in the charge sheet as one of the accused FinTechs. According to the ED, the probe found that fintech companies had “agreement with respective NBFCs for disbursement of loans through digital lending apps”.

“The money-lending business was being illegally run by these FinTech companies actually and these NBFCs knowingly let these firms use their names for the sake of getting commission without being careful about their conduct. The same is also a violation of the fair practices code of the Reserve Bank of India,” the agency said.

FinTech platform PhonePe has raised an additional $200 million in primary capital from Walmart, which continues as a majority investor of the Bengaluru-based company.

With this tranche, the company has raised $650 million from several global investors, including Ribbit Capital, Tiger Global, and TVS Capital Funds since January. The latest funding comes as a part of PhonePe’s ongoing fundraising up to $1 billion in the capital, following its domicile shift to India last year. The company expects further investments, which will be announced in due course.

Like previous tranches, PhonePe has raised the new money at a pre-money valuation of $12 billion. PhonePe plans to deploy these funds to build and scale new businesses like insurance, wealth management, lending, stockbroking, ONDC-based shopping, and account aggregators, the company said in a press release.

Fresh Capital

JPMorgan-backed Tilia, a Linden Labs spin-off that is building a payments platform for virtual economies, has secured fresh capital from new backer Seoul-based fintech Dunamu.

Tilia has now raised a total of $22 million in funding to scale its platform for providing KYC-compliant micro payments and minted tokens for online games, creator platforms, social commerce, and other digital social worlds.

With funding in place, the firm has lured Catherine Porter from Meta as its first chief business officer. Porter led global partnerships and fintech innovation at Meta, including building the Diem ecosystem and the traditional payments ecosystem for all Meta products worldwide.

Speaking in October last year after JPMorgan’s investment in Tilia, Drew Soinski, senior payments executive, and managing director, said: “We believe that contextualised commerce – such as virtual economies within games and virtual worlds – is an area perfectly positioned for innovative payments solutions to play a critical role in the coming years.”

 Flat6Labs, MENA’s leading seed investor, has announced the launch of a new $95 million Seed Fund to nurture the growth and development of early-stage tech startups on the African continent. Flat6Labs has a proven track record in carefully vetting out and investing in promising startups in North Africa since it was founded 12 years ago, with more than $16 million invested in startups, and over $191 million raised in follow-on funding while creating more than 2,500 direct jobs and 80,000 indirect jobs through its first two funds in Egypt and Tunisia.

The significant influx of capital from the ASF has the potential to create more than 14,000 jobs, provide support to more than 1,200 founders with 20% female participation, and generate revenue of more than $700 million.

Ramez El-Serafy, General Partner for ASF, said, “We are extremely excited about the launch of the Africa Seed Fund. Africa is one of the most exciting regions to invest in tech and innovation, with huge untapped potential and unique business opportunities. We will leverage our experience and knowledge to guide the startup founders to create truly scalable, investment-ready, Africa-based companies.”

What is the buzz

Sift, the leader in Digital Trust & Safety, today released its Q1 2023 Digital Trust & Safety Index, which found that nearly one in five (16%) consumers admit to committing, or know of someone who has taken part in, payment fraud. Likewise, 17% of consumers have encountered online offers to commit payment fraud, a symptom of fraud’s accessibility and democratization among everyday internet users. Consumer data was collected via a survey of over 1,000 U.S. adults.

Additionally, the report includes fraud data findings from Sift’s global network of over 34,000 sites and apps. These combined insights have revealed the latest techniques fraudsters are adapting to turn stolen data and proven attack methods into profitable—and marketable—products and services amid shaky economic conditions.

Payment Fraud Rises in FinTech

According to Juniper Research, payment fraud cost online businesses $41B globally in 2022. Those losses are expected to jump to 17% in 2023, hitting $48B by the end of this year. With attacks on the rise, it’s no longer a matter of if a business will face a payment fraud attack, but when and at what scale.