The Monday Roundup: what we are watching this week | May 29th

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.

Regulating BNPL

Founder Anne Boden is to step down from her role as CEO of UK challenger Starling Bank on 30 June. According to Boden, the move was made because as the bank grows, it makes sense to separate the leader from a major shareholder.

Boden will remain on the board as a non-executive director. Starling’s COO, John Mountain, will take over as interim CEO, while the challenger bank commences its global search for a permanent CEO.

“I have spent nearly a decade here as both the founder and CEO, a dual role which is unique in U.K. banking. It’s been all-consuming and I’ve loved every minute of it,” she said.

The news follows Starling recording pre-tax profits of £195 million for the year to 31 March 2023, a six-fold increase on the previous year’s figure of £32 million – its second year of profitability. Additionally, Starling more than doubled its revenue to £453 million, from last year’s £216 million.

“When I started Starling in 2014, I was told no one ever starts a bank, nobody wins market share and you’ll never make a profit. Today’s results prove them wrong,” Boden added.

⚖️A new Australian government regulation will require the Buy Now, Pay Later (BNPL) industry to be treated as a credit product.

Australian financial services minister Stephen Jones announced the decision at the Responsible Borrowing and Lending Summit in Sydney this week. Jones said the government reached its conclusion after consulting extensively on options for regulating BNPL last year.

The review raised “significant” concerns in the BNPL industry, including “unacceptable levels” of unaffordable lending, largely concentrated among low‑income borrowers, including those on social security. Additionally, it highlighted concerns about the quality of dispute resolution and hardship processes, excessive fees, poor disclosure practices, problematic marketing practices, and unsolicited credit increases.

As per the government’s plan, BNPL providers will now be regulated under the Credit Act and will be required to hold Australian credit licences, meet statutory hardship and resolution requirements, and comply with minimum standards of conduct.

VC investment

As part of its efforts to raise $1 billion in funding, Indian payment giant PhonePe has secured an additional $100 million from existing backer General Atlantic. After raising $850 million in the current round, PhonePe is closer to reaching its target amount. Of that, General Atlantic has contributed a total of $550 million.

PhonePe kicked off its latest funding round in January, with General Atlantic investing $350 million in the paytech firm at a pre-money valuation of $12 billion. In the second round held in February, PhonePe bagged an additional $100 million from Ribbit Capital, Tiger Global, and TVS Capital Funds.

The payments giant capped off March with a $200 million investment from majority investor Walmart, and April saw another $100 million coming in from General Atlantic.

With the funding, PhonePe plans to launch new businesses such as insurance, wealth management, lending, stockbroking, shopping, and account aggregators. It also intends to grow UPI payments in India by introducing new products.

In an undisclosed deal, Plastiq, a US-based B2B payments and banking platform, has entered into a stalking horse agreement to sell its assets to Priority Technology Holdings.

In 2022, Plastiq was to go public through a special purpose acquisition company (SPAC) merger that would have valued it at $480 million, a deal that did not materialise.

A San Francisco-based company founded in 2012, Plastiq provides small businesses with bill pay and working capital access. As a result of Silicon Valley Bank’s failure to process Plastiq’s payment transactions, the company voluntarily filed for bankruptcy on 24 May.

Thomas Priore, chairman, and CEO of Priority, said the decision to agree with Plastiq was “simple” – with Plastiq’s B2B product suite being a “natural complement” to Priority’s automated payables offering.

“Since we are already partners for payment processing, we are well positioned to help support the restructuring and Plastiq’s customers as the company emerges stronger from the process.”

What is the buzz

The LGBTQ+ banking platform Daylight is closing down. Rob Curtis, the company’s embattled cofounder, and CEO, said it would cease operations on June 30.

It comes months after NY Magazine published an explosive feature about the neobank. An article by TechCrunch focused on Daylight’s seed and Series A fundraises. Curtis was accused of fabricating and engaging in inappropriate behavior in NY Mag’s piece detailing a lawsuit brought by three former employees.

“Now is the right time to exit this market,” Curtis told customers in a blog post. “Your money is safe and will be fully accessible up until 30 June.”

He added, “Daylight had a great run paving the way for US LGBTQ+ customers — we opened thousands of trans-inclusive debit accounts and supported thousands of prospective LGBTQ+ parents’ plans for their families. Ultimately, though, we couldn’t provide these services in a way that covered our costs — this is likely a job for big banks and I hope they pick up the torch and carry forward our legacy.”