Data Dive

Independence Edition: Square, Amazon And LendUp

Data Dive: Intuit, Zillow And Amazon

With just a day left ‘til the fireworks officially start in celebration of the 4th of July here in the U.S., we thought we’d offer a preview.  Amazon has redefined time, LendUp has a new Pal, Square wants its customers to get a little more credit. Lots of data, time to dive in.

The Fourth of July is nearly upon us. In the United States, the grillables have been purchased, the fireworks staged and there’s a precious few hours left to stock up on patriotic swag, such as American flags and red, white and blue hats.

Payments and commerce is a bit short on BBQs and lapel pins, but we do have our share of pyrotechnics and fireworks to look forward to this summer. And what better way to celebrate the unofficial beginning of summer in the U.S. than with diving into the latest in data.

This week in our hopper for the Independence edition, Amazon has declared independence from the normal rules of time and space and turned a day into a week; Square is declaring independence from only offering merchants credit and LendUp continues to give more Americans freedom from living at the financial margins (with a big assist: its new Pal).

Ready to get refreshed with knowledge?

Prime’s Power to Bend Time

Amazon has been up to a lot this summer — they bought Whole Foods, Alexa-powered the Dash wand, turned the apparel segment upside down with a partnership with Nike and the launch of its Stitch Fix-killer, Wardrobe, gave Echo a screen and transformed it into a home security center — and that’s just the short list. But, our favorite Amazon accomplishment is their decision to free Prime members from the constraints of a day by announcing that Prime “Day” is will now be a week long.

Prime Day will take place on July 11 — it’s just that July 11 will unofficially start on July 9, according to affiliates that have been told to prepare for a 30-hour event that’s slated to be part of a week-long sale taking place the second week of July.

Prime Day was introduced in 2015 to celebrate the 20th anniversary of the company’s founding on July 16, 1995. In 2016, it was the biggest sales day of the year for Amazon (though they have not disclosed the official numbers). Numbers that were released include the million-plus people who tried Amazon for the first time, the 398 items ordered per second and Amazon’s biggest day ever in terms of sales.

Critics have suggested that the numbers may be less impressive than they appear, because, based on affiliate data, customers may have been holding off on purchases in the days leading up to the big sale. Industry observers note that expanding Prime Day will alleviate the high pressure single-day-ever claims and smooth out some logistical points delivering all those deals to customers.

Square Moves on Consumer Credit

According to reports out this week, Square CEO and Co-Founder Jack Dorsey has begun quietly circulating word among its SMB customers that it is willing to provide credit to their customer bases.

The move follows the release of Square’s prepaid debit card last month — and a new stab at more direct competition with the likes of PayPal, Affirm and Synchrony Financial.

As designed at present, Square reportedly intends to carry the loans on its balance sheet initially, which will leave them on the hook for any consumer defaults. That is a non-trivial concern, since those have been on the rise of late. Some of that liability could be deferred in the future if loan volume grows sufficiently enough that the debt can be bonded and sold to outside money managers. Square already securitizes its SMB lending debt that way.

“Our first eight years were really focused on sellers,” said Dorsey in an interview earlier this year. “I think a big part of our future is applying that same sort of mindset and approach to individuals as well.”

Consumer lending with Square will be getting a test drive in six U.S. states: California, Colorado, Florida, New Jersey, New York and Virginia — and will be on offer to sellers who use Square Invoices. Consumers who opt in to the program will be given an option to finance invoices over a period of three, six, or 12 months.

“You will not see us doing car loans and mortgage loans,” said Jacqueline Reses, the executive in charge of Square Capital, the company’s lending arm. “We want to do things that are relevant to Square sellers.”

Approved borrowers will face an across-the-board annual percentage rate of 9.99 percent for loans ranging from $250 to $10,000.

LendUp Gets a New (Pay)Pal

LendUp exists to offer personal loans to the underserved in the hopes of helping them build the credit they need to move them into the financial mainstream. And this week it got a big boost in the form of strategic funding from PayPal and an expansion of its executive ranks.

LendUp, according to reports, wants to widen the rage of its credit cards and other services for a group that LendUp likes to call “the emerging middle class” — a demographic that banks either charge heavily for services or just ignore entirely.

The vision of better inclusion for all is one it shares with PayPal, according to LendUp CEO Sasha Orloff.

“We liken this a lot to what Amex did for the wealthy business traveler, [LendUp] could do for a different customer,” said Orloff.

In addition to the funding, LendUp announced that Carrie Dolan, CFO of Metromile and former CFO of Lending Club, is joining LendUp as a board advisor. Dolan previously served as treasurer of Charles Schwab Corp. and as CFO of Schwab Bank, which she helped launch in 2003. LendUp has also promoted Vijesh Iyer to its COO position after 15 years at PayPal and Capital One. Former PayPal executive Mandeep Walia will serve as LendUp’s new chief compliance officer.

How did LendUp recruit so much mainstream talent to a financial services startup that serves the underserved?

“I think the common theme amongst everybody is … when you’ve built a career in financial services, you realize the change that software can do,” Orloff told TechCrunch.

He also noted it helps to be mission-driven, since LendUp is an unusual organization.

“We pay more than a non-profit and much less than a bank, so it takes the right type of person.”

So what did we learn this week?

Amazon can do anything — literally anything, including changing the space-time continuum. Square is giving their SMB customers one more reason to stay sticky by extending credit to their customers. LendUp is making friends — and influencing people to help give the “emerging middle class” a future.

Happy 4th of July!


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. The September 2019 AML/KYC Tracker Report provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

Click to comment


To Top