The 2020 Fintech Developments That Will Transform the Industry
Looking back on all the fintech news from 2020, here are five stories that will make a mark on the industry heading into 2021.
Visa’s Acquisition of Plaid
Visa acquired Plaid in January of 2020 in a $5.3B deal, almost doubling its most recent valuation. Plaid is a financial data network that gives fintech companies like Coinbase and Venmo the plumbing to connect to users’ bank accounts. The acquisition was primarily made to take advantage of the growing use of fintech apps and non-card payments to manage money.
The deal was going smoothly until, in early November, the DOJ sued to block Visa’s purchase, citing that “Plaid...is developing a payments platform that would challenge Visa’s monopoly.” Things are still up in the air.
For an insightful analysis on this acquisition and what it means for fintech, read Visa, Plaid, Networks, and Jobs by Ben Thompson, a technology analyst at Stratechery.
The Shift to Digital Payments
COVID-19 accelerated the shift to digital payments across the world. In Q1 of 2020, Visa saw more than 13 million customers in Latin America make their first-ever online transactions. PayPal and Stripe, two primarily digital platforms, saw huge growth in 2020. Mastercard reported a >40% growth in contactless transactions. The shift toward e-commerce accelerated by roughly five years.
This shift also happened in B2B payments, as more business spend moved through virtual cards. According to Deloitte, global virtual card spend is expected to triple to $5 trillion by 2025, with B2B payments making up 80% of that spend.
Michael Sindicich, GM of TripActions Liquid, puts it this way: "As companies went to a distributed workforce, finance teams needed to have central visibility and control for all of their business spend, and using virtual cards provided that.” He goes on to talk about fraud risk as well. “Especially in this environment, physical cards or even shared physical card numbers floating around all over the world between employees posed a huge fraud risk and a lack of visibility.”
For more on virtual cards and the shift to digital payments, check out How Virtual Cards are Transforming Corporate Travel and Spend Management.
Stripe’s Record Year
Stripe, which provides a core product that businesses use to accept payments and issue cards, was wildly busy this year. It raised money at a $36B valuation (with rumors of another round at a valuation of up to $100B) and carried out multiple major product launches, including Stripe Treasury and Stripe Capital. COVID-19 accelerated the move to cashless and digital payments, and Stripe reaped the benefits of this transition.
Stripe’s upward trajectory has many implications for the future of fintech. Robin Gandhi, the VP of Payments for TripActions Liquid, suggests that "Stripe’s growth is a clear example of the trend in which fintechs help provide infrastructure to improve customer experience in a way that was simply not possible before. The year it’s had is a great symbol of how fintech is transforming so many aspects of finance, and how COVID has accelerated that transformation."
2020 was an incredible year for cryptocurrencies. Bitcoin’s price increased by over 300%, while Ethereum was up almost 450%. The story of Bitcoin and crypto’s run this year, though, is very different from the earlier bull run. Large, sophisticated investors and mainstream companies publicly announced Bitcoin investments. Plus, with COVID accelerating the rise of digital payments, cryptocurrencies gained more credibility, and their use cases became more obvious. Some of the year’s biggest news in the crypto space:
- Paypal launched a service that allows account holders to trade cryptocurrency and pay using Bitcoin directly within Paypal and Venmo.
- Square announced a $50 million Bitcoin purchase
- MassMutual (yes, the 169-year-old insurance company) invested $100M in Bitcoin
- Major Wall Street names softened their stances on crypto; some even announced their own investment in Bitcoin.
TripActions Liquid Ends Expense Management
Last year also brought big changes to the world of expense management – an industry long in need of disruption. Expense management has always been painful for all parties involved. Employees have to fill out expense reports. Managers have to approve the reports. Finance has to chase down information, reconcile expenses, and much more.
In October of 2020, TripActions revolutionized this space by launching a future with no expenses. TripActions Liquid, the corporate card and spend management platform, completely automates expense management. This was a massive step forward in B2B fintech, and it will forever change the way companies manage their business spend.
Keep an eye on this space to find out what exciting developments 2021 will bring!