Commerce

The PYMNTS 2018 Summer Top 10 List

Almost 33 years ago, David Letterman introduced his singular innovation in stand-up comedy: the Top 10 List. It’s a matter of some confusion and debate about who first came up with the concept. Most people credit the idea to Late Night writer Randy Cohen, who claims the inspiration first came care of Cosmopolitan Magazine and an article rating the top 10 sexiest men over 60.

In September of 1985, the world met the Top 10 List as a vehicle for joke-telling. The joke was, admittedly, a little weird at first — the first thing ever ranked was words that almost rhyme with the word “peas.” The bit obviously needed some refining, which it got over the course of the next 30 years while “Late Night” and the “Late Show” were on the air. The Top 10 List retired with David Letterman in May of 2015.

While we would never claim to do a top 10 list with quite the panache of David Letterman, it has been an awfully busy summer in payments and commerce — one where it would have been unusually easy to lose track of the action. Since we would hate for anyone to go into the end of 2018 behind the eight ball, we decided to pay tribute to both a great bit and a great deal of news with our own top 10 list of the biggest news of summer 2018.

10. Theranos Investors Settle

After a long battle and a disturbing series of revelations, investors have decided to settle a lawsuit with Theranos and Founder Elizabeth Holmes, aiming to get whatever they can from the struggling blood testing company. Most agree: It won’t be much.

In June, CNBC reported that Holmes was indicted on criminal wire fraud charges— though she remains chairman of the Theranos board, despite the charges. The charges came three months after a previous legal action, where Holmes was on the receiving end of a civil lawsuit from the Securities and Exchange Commission (SEC), amid allegations of “massive fraud.” The SEC contended Theranos raised more than $700 million from investors over a two-year period by deceiving investors about their diagnostic offerings.

That initial civil suit led to Holmes’ surrendering 19 million shares she’d received from the firm, agreeing to a half-million dollar fine and not to serve as an officer or director of a public company for 10 years.

9. Crypto’s Big Flash Crash

Cryptocurrencies suffered through a rough day in mid-June, when prices plummeted fast during a few hours and wiped out a total of $15 billion in value. That represents a 6 percent crash in over a day, kicked off by bitcoin dropping $300 in just over an hour and 4.5 percent on the day. Since all cryptos are tied together, if a big one falls, they all do — and often harder.

What caused this flash crash? A few things.

The U.S. Commodity Futures Trading Commission had recently subpoenaed several large exchanges — including Coinbase, Kraken and Bitstamp — as it investigated alleged price manipulation.

Meanwhile, the Korean crypto exchange Coinrail lost more than $40 million in altcoins after it was hit by an attack. Though Coinrail is one of its smaller exchanges, the hackers still made off with $19.5 million-worth of NPXS tokens that were issued by payment project Pundi X’s ICO. They also stole $13.8 million from Aston X, an ICO project building a platform to decentralize documents; $5.8 million in tokens for DENT, a mobile data ICO; and over $1.1 million from Tron, a project from China.

8. MoviePass Is Going Under — Or Not

It is not an exaggeration to say that 2018 has been the summer of movie subscription service MoviePass’ discontent. The service started the summer offering a one-movie-a-day pass to subscribers for a flat rate of $9.99 per month — a business model that most experts never thought was sustainable for even a New York minute, despite all the talk that it was flush with cash and building a consumer base for a platform business that would be monetized later.

Throughout the summer, the business model bounced: a retraction of the $9.99 price, a reinstatement with provisions, an increase to $14.95, a reduction to $9.95 and more restrictions. All of this was coincident with reports of widespread app outages, with MoviePass running out of money and taking a short-term, high-interest loan just to fund member purchasing cards.

Then, just last week, Carl Schramm, a member of the board of directors for parent company Helios and Matheson Analytics, resigned due to concerns over the corporate management’s decision process.

“I have objected to the manner in which a number of business decisions have been presented to the Board of Directors by management, without sufficient time for the Board to examine complex documents, to review significant transactions or to discuss how the proposed actions fit into the company’s strategic plan,” Schramm said in a letter.

All the makings of a real cliffhanger.

7. MoneyGram And Visa’s Global P2P Project

MoneyGram and Visa announced in late-July that they will deliver real-time digital disbursements to MoneyGram’s remittance customers using Visa push payments platform, Visa Direct, this fall. Mexico and the Philippines — two of the world’s top remittance corridors — are the first two markets out of the gate. This solution will make it easier for receivers in those markets to receive and use funds instantly (via their bank-issued Visa-branded debit card or Visa-branded prepaid card), and senders may choose the option by which to send those funds.

“When we look at P2P on the domestic front, for example, what we see is that it has taken off because people want to be able to have the money put right [into] their bank account,” said Cecilia Frew, senior vice president and head of Visa’s North America Push Payments, in an interview with PYMNTS. “They aren’t looking for an extra step where they have to take cash and go make a deposit to get it into their bank account where it is safe.”

Using the Visa Direct rails, MoneyGram customers can still go to a cash location if that is their first choice. However, MoneyGram CEO Alex Holmes noted that they can also send that cash to a bank account associated with their Visa-branded debit card or load it onto a Visa-branded prepaid card. All of those transactions will happen in near real time, he explained.

“The point isn’t just to offer cash, but to start thinking about the sending and receiving options that are the most convenient, and to simplify the ways in which consumers can receive money in various markets around the world,” Holmes said.

6. Grubhub Buys LevelUp

In July, Grubhub announced it would be buying up LevelUp for $390 million in cash to expedite integration with restaurants and “create a seamless diner experience in-app, online and in-store,” said the 423,000 daily average grubs, up 35 percent year over year.

The news came during an earnings call, where the company also revealed its active diner count jumped 69 percent year over year to 15.6 million users, up from 9.2 million, and that its revenue was up 51 percent on an annual basis. CEO Matt Maloney stated that June was the best month in the quarter.

CFO Adam DeWitt noted that the seven-year-old, Boston-based LevelUp serves 200 regional and national brands, with a point-of-sale (POS) approach that seeks to replicate each brand’s experience online. The CFO said it is “not a demand-generating” tool like Grubhub, but is focused instead on POS integration. LevelUp processes about 100,000 orders a day, as noted on the call, while Maloney noted that LevelUp has “the best white-label products in the business.”

5. Walmart And Even Give Employees Payroll Flexibility

In December of 2017, Even went live and online for 1.4 million Walmart employees (15 percent of the Walmart workforce). This summer, Even shared a little data about its results — six months in for the more than 200,000 workers of whom signed on with the program. Of those users, 75 percent check in with the app weekly, 44 percent use it daily and, on average, employees are checking in with their “okay to spend” balance twice a week — with almost equal use between hourly and salaried workers.

“This is a product that helps employees with the problem they have. When people are living paycheck to paycheck, you don’t have room for error, and what we have seen is people really want to make good decisions,” CEO Jon Schlossberg told PYMNTS in an interview, adding that they aren’t incapable of deciding — they just need good information to make the decisions.

The app also allows workers to tap a portion of their upcoming paycheck (they are allowed to do this for free eight times each year; after that, they must pay a small fee). Even has no official data just yet on how many Walmart employees have used the Instapay feature, but 56 percent of Even users in general had tapped that feature — and its usage is extremely consistent across demographic levels.

It was a strong summer for Even, which also announced $40 million in Series B funding, a round led by Keith Rabois of Khosla Ventures, with participation from Valar Ventures, Allen & Company, Harrison Metal, SV Angel, Silicon Valley Bank, Bull City Venture Partners (BCVP) and others.

4. Adyen’s Big IPO

Dutch payment processing firm Adyen raised 947 million euros ($1.1 billion) for its investors in the biggest technology IPO Europe has seen as of this summer.

Investors, including General Atlantic and Index Ventures, sold 13.4 percent of the outstanding shares at 240 euros apiece. The company won’t receive any proceeds from the IPO, which implies a market capitalization of 7.1 billion euros.

“I’m very proud to be building this company with such a great team,” said CEO and Co-founder Pieter van der Does in a statement. “This listing will only help us to continue to do what we are doing now: helping our merchants grow and reshaping the payments industry.”

Adyen’s IPO came as other companies in the region have struggled this year to sell shares, due to a volatile stock market and political uncertainty.

3. Amazon’s Prime Day

It was another good year for Amazon with its annual summer shopping holiday Prime Day. According to estimates Amazon raked in $4.2 billion during the event — a 33 percent increase from last year’s Prime Day.

Amazon reportedly shipped 100 million products during the 36-hour event and small and medium-sized business (SMBs) sold more than $1 billion of products on the platform. The strong sales came even as Amazon faced some glitches in the early hours of the promotion.

In addition, Amazon noted that sales for this year’s Prime Day surpassed Cyber Monday, Black Friday and the Prime Day 2017 in terms of sales, making it the biggest shopping event in Amazon’s history. This year marked the first time Prime members could get deals during the event at Whole Foods Market — where organic strawberries led the pack as one of the most purchased sale food item.

“Prime Day offers us a unique opportunity to thank Prime members with our best deals,” said Jeff Wilke, CEO Worldwide Consumer at Amazon in a press release. “Extending Prime Day to a day and a half this year allowed us to further reward members with unbeatable deals, access to exclusive new products and unforgettable experiences that highlight the many benefits of a Prime membership. All of this was made possible because of our many valued associates — the global team that continues to make Prime Day bigger and better.”

Amazon wasn’t only firm boosted by Prime Day — Walmart, Target and Best Buy were among other retailers that ran sales. Target noted that Prime Day was also its strongest shopping day of the year so far.

2. Zelle Gains Ground On Venmo

In mid-July, eMarketer officially predicted that bank-backed peer-to-peer (P2P) service Zelle was on track to overtake PayPal-owned Venmo by the end of 2018. Zelle is projected to grow 73 percent this year and hit 27.4 million users in the U.S. — more than Venmo’s 22.9 million users, according to reports.

“One of the main hurdles new apps face is building trust and a sizable audience,” said eMarketer Forecasting Analyst Cindy Liu. “But Zelle has leapfrogged the early stages of adoption by having the benefit of being embedded into the already existing apps of participating banks.”

The good news for both firms, according to eMarketer, is that P2P mobile payment products will, on the whole, be on the rise — up 30 percent in 2018 to encompass 82.5 million people. The report also forecasts that the transaction volume of P2P payments will increase by 37 percent in 2018 to reach just over $167 billion this year.

1. PayPal’s Shopping Spree

PayPal President and CEO Dan Schulman said that PayPal would strongly pursue acquisitions in 2018 and made good on his promises this summer. In mid-May, PayPal announced its plans to purchase Swedish payments company iZettle for $2.2 billion in cash. iZettle Co-founder and CEO, Jacob de Geer, will continue on with iZettle.

“iZettle and PayPal are a strategic fit, with a shared mission, values and culture — and complementary product offerings and geographies,” said Schulman in a statement following the purchase. “In today’s digital world, consumers want to be able to buy when, where and how they want. With nearly half a million merchants on their platform, Jacob de Geer and his team add best-in-class capabilities and talent that will expand PayPal’s market opportunity to be a global one-stop solution for omnichannel commerce.”

A month or so later, in early July, PayPal announced its intention to acquire Hyperwallet for $400 million to add mega horsepower to its mass payout capability for marketplaces and gig workers globally.

“We’ve worked with PayPal, and we respected the Swiss Army knife of capabilities that they have,” CEO Brent Warrington told PYMNTS in an interview, adding that a positive culture fit also contributed to the decision. “We set out on a mission three years ago to ‘pay the planet,’ and we just made a giant leap to get closer to our end goal.”

A few days later, PayPal announced plans to purchase fraud prevention and risk management platform Simility.

According to CEO Dan Schulman, we can expect to see more acquisitions coming down the pipe. PayPal, he said, will set aside up to $3 billion a year for future deals.

“We have a healthy balance sheet and we are ready to put it to work to buy more companies,” Schulman told Germany’s Handelsblatt business daily in an interview, according to Reuters. He added that the company is ready to invest up to $3 billion a year on acquisitions that enable it to acquire specific capabilities.

“I wouldn’t rule out that we take on a bigger deal if there’s a good fit for us,” he said.

The summer is coming to an end, as it tends to every year. However, just glancing at this top 10 list, it doesn’t seem things will get less interesting any time soon.

——————————–

Latest Insights:

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. In the November 2019 Mobile Order-Ahead Report, PYMNTS talks with Dan Wheeler, Wahlburgers’ SVP, on how the QSR balances security and seamlessness to secure its recently launched WahlClub loyalty program.

TRENDING RIGHT NOW