\nClair raises, Deel defends allegations and Mercury shares post-SVB growth figures<\/br>
\n2023-07-09 21:38:05<\/br><\/p>\n
It was a short week and that was reflected in the amount of news we covered in fintech land last week. But there was still plenty to talk about, including Clair\u2019s raise, some allegations against Deel and exclusive post-SVB growth numbers shared by banking services startup Mercury.<\/p>\n
On-demand pay gets a boost<\/h2>\n
Some 82% of people are considered frontline workers<\/a> who work on shifts and are likely paid hourly. The global pandemic shed a light on these workers when their fatigue and burnout resulted in \u201cThe Great Resignation<\/a>\u201d of hundreds of thousands of workers who left their jobs after feeling disrespected by employers and customers, as well as feeling they weren\u2019t making enough money, according to a Pew Research study<\/a>.<\/p>\n This ignited the tech sector \u2014 and subsequently the venture capital market \u2014 to build modern solutions to help employers give their employees the best experience possible and improve retention.<\/p>\n Much of the early solutions focused on productivity and communication \u2014 consider Flip<\/a>, Blink<\/a>, AskNicely<\/a>, Salt Labs<\/a> and Snapshift<\/a>. More recently, we\u2019ve seen startups attracting some solid VC funding for on-demand pay offerings for workers: Rain<\/a>, DailyPay and Minu<\/a> to name a few.<\/p>\n The latest is Clair<\/strong>, which raised $25 million<\/a> in equity funding for its approach to helping workers get paid after completing a shift. The company also announced $150 million as part of a new consumer lending program from partner bank Pathward, which holds the FDIC-insured accounts for Clair and provides the wage advances to frontline workers.<\/p>\n What makes Clair more compelling than its competitors, explains co-founder and CEO Nico Simko, is that rather than take on the wage advance risk itself, Pathward does that.<\/p>\n \u201cWe\u2019re the first provider that went to a bank and convinced the bank to do those advances, basically as micro loans, $50 loans,\u201d Simko said. \u201cMost early-stage, on-demand pay companies are the ones advancing the funds. By convincing a bank to do this, it gives regulatory certainty to our partners and consumers because there is a national bank backing it.\u201d<\/p>\n Clair is already working with 10,000 employers; however, the U.S. Chamber of Commerce recently reported<\/a> that industries, including healthcare, accommodation and food, continue to have a high number of job openings, so we\u2019re likely to see the need for employee benefits like these also grow. \u2014 Christine<\/p>\n On June 28, I wrote about Maza<\/strong><\/a>, a fintech company claiming to help undocumented immigrants gain access to the U.S. financial system by providing them with an individual tax identification number (ITIN) and banking services. A few days after that article went live, fellow fintech enthusiast Jason Mikula published a newsletter<\/a> challenging some of Maza\u2019s claims. We reached out to a couple of immigrant-focused organizations but unfortunately did not hear back. But we did <\/em>hear back from Maza regarding Mikula\u2019s allegations. Here is what Maza co-founder and CEO Luciano Arango wrote via email:<\/p>\n We apologize that our website included some unclear and outdated language, all of which has been corrected. In fact, our bank previously notified us of this, but unfortunately we did not make the changes immediately due to an internal Maza communications issue. All of the updates have now been made, and we have since put in place new procedures to ensure oversights like this do not happen again.<\/p>\n<\/blockquote>\n In addition, he added that Maza updated its website and app for further clarity around eligibility and compliance:<\/p>\n Arango also said he wanted to address a few topics raised in Mikula\u2019s newsletter, which Maza viewed as \u201cincorrect or incomplete\u201d:<\/p>\n To be clear, Maza said that it offers the banking portion (checking account, debit card) of its services for free with no monthly charge. There is a separate service for ITINs, where Maza charges $150 a year to help obtain the ITIN and then renew. Arango emphasized that \u201c[o]ne can be a banking customer their whole lives and *never* decide to get an ITIN. He\/she, in that case, will *never* pay a $150 annual fee. Conversely, one can register for Maza\u2019s ITIN service and have no interest in the banking component. He\/she would pay the $150 annual fee and engage with the free banking product if they like (just like a non-ITIN user).\u201d<\/p>\n The company also claimed that it does not market specifically to customers based on their documentation status, noting that \u201call U.S. residents are eligible to apply, including those that need an ITIN because they cannot obtain a SSN.\u201d \u2014 Mary Ann<\/p>\n As reported by Mary Ann: \u201cLast week, Senator Steve Padilla (D-San Diego) sent a letter to Stewart Knox, California Secretary of Labor, alleging that fintech-turned HR decacorn Deel <\/strong>has hired hundreds of employees but classified them as independent contractors. By doing so, Senator Padilla charged, Deel is \u201ceffectively denying them the full suite of employment and social safety net benefits and labor protections they are entitled to, including healthcare, retirement, unemployment insurance, worker\u2019s compensation, collective bargaining, and overtime pay.\u201d Further, Senator Padilla claimed that Deel \u201cappears\u201d to be advising its own customers (which include the likes of Nike, Subway, Reebok, Forever 21 and Klarna) \u201cto misclassify their own employees and evade taxes in California,\u201d as well as avoid paying employee benefits. Deel denied the allegations, saying they were \u201ccompletely made up and regurgitated from old news, most likely based on competitor hearsay.\u201d Knox responded that his office would look into the information that Padilla provided and \u201cfollow up\u201d with their findings. More here<\/a>.<\/p>\n As reported by Rita Liao: \u201cThe regulatory crackdown that has shaken up China\u2019s fintech industry since late 2020 appears to be coming to a close with the imposition of hefty fines on the country\u2019s two digital payments giants: Tencent <\/strong>and Alibaba<\/strong>.\u201d More here<\/a>.<\/p>\n Mary Ann interviewed Mercury<\/strong> CEO and co-founder Immad Akhund about the fintech company\u2019s recent surge in customers (he shared new customer growth figures exclusively) following the collapse of SVB, which you can read about here<\/a>. You can also hear more about that growth as well as Immad\u2019s advice on how startups can avoid \u201cfalling into a startup death spiral\u201d in the podcast below. Did you know that Immad has backed over 300 startups, including Airtable, Rappi, Substack, Deel and Jasper.AI, as an angel investor?? We didn\u2019t either!<\/p>\n As reported by Harri Weber, ICYMI: \u201cFour years after partnering with Apple<\/b> on the launch of the Apple Card<\/a>, Goldman Sachs<\/b> may be eyeing the exits. The Wall Street Journal<\/a> reported that Goldman is \u201clooking for a way out\u201d of its high-profile deal with Apple, which recently expanded to include savings accounts<\/a> for Apple Card holders.\u00a0 The investment banking firm is apparently in talks to offload the partnership to American Express, the WSJ report added, but so far nothing seems to be set in stone, nor is it clear whether Apple would support the handoff.\u201d More here<\/a>.<\/p>\n Other headlines<\/em><\/p>\n Challenger bank N26 finally adds French IBANs<\/i><\/a><\/p>\n The checking account war is over \u2014 and the fintechs have won<\/i><\/a><\/p>\n Compliance chief at Chinese fintech company stole girlfriend\u2019s insider info to trade VMware, tech stocks<\/i><\/a><\/p>\n Sproutfi starts charging brokerage fees<\/i><\/a><\/p>\n Adyen launches tool for merchants to deliver better client services<\/i><\/a><\/p>\n FIS sells majority stake in Worldpay to buyout group at $18.5 billion valuation<\/i><\/a><\/p>\n Swiss National Bank confirms wholesale CBDC pilot<\/i><\/a><\/p>\n Seen on TechCrunch<\/i><\/p>\n After bootstrapping for 8 years, accounting startup Dougs raises $27 million<\/i><\/a><\/p>\n And elsewhere<\/i><\/p>\n Papara hits unicorn status amid deal for neobank Rebellion<\/i><\/a><\/p>\n Steadily Insurance raises $28.5 million Series B funding round<\/i><\/a><\/p>\n Insurtech scaleup Qover raises $30 million to drive growth and profitability<\/i><\/a><\/p>\n Join us at TechCrunch Disrupt 2023 in San Francisco this September as we explore the impact of fintech on our world today. New this year, we will have a whole day dedicated to all things fintech, featuring some of today\u2019s leading fintech figures. Save up to $600 when you buy your pass now through August 11, and save 15% on top of that with promo code INTERCHANGE. Learn more<\/a>.<\/em><\/p>\nMaza update<\/h2>\n
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Weekly News<\/h2>\n
Fundings and M&A<\/h2>\n
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