BNPL Regulation Grabs Headlines as FinTech IPO Index Loses 2.7%

FinTech IPO Index May 23 2024

The FinTech IPO Index lost 2.6% as earnings trickled in.

The buy now pay later (BNPL) space, arguably, held sway — dominating headlines as the Consumer Financial Protection Bureau (CFPB) weighed in with new oversight over providers.

The CFPB Weighs In 

As PYMNTS reported Wednesday (May 22), The CFPB ruled that BNPL vendors are credit card providers and must provide some key legal protections and rights delivered by conventional credit cards. That includes, for example, the consumer’s right to dispute charges and demand a refund from the lender, the agency said.

The interpretive rule released Wednesday by the CFPB said BNPL lenders must investigate disputes initiated by consumers, pause payment requirements during the investigation, credit refunds to consumers’ accounts when they return products or cancel services, and provide periodic billing statements like those traditionally delivered by conventional credit card accounts.

Shares in Affirm lost 5.2% through the past five sessions. Shares in Sezzle were down by 0.7%.

XP Earnings Results Pull Index Down

XP shares slid 15.8%. The company reported results this past week that detailed that client assets totaled $1.1 trillion reais ($213.82 billion) in the first quarter of 2024, up 20% year over year and 2% sequentially. Active clients grew 16% from the last year and 1% from the fourth quarter of 2024 totaling 4.6 million in the most recent period. Total advisors totaled 17,700, an increase of 16% year on year.

Retail daily average trades totaled 2.2 million the latest quarter, down 9% from last year. Total active cards were 1.2 million in the first quarter, a growth rate of 49% from last year.

Robinhood’s latest news on rates tied to its brokerage products sent the shares 7.5% higher.

As PYMNTS reported here, Robinhood has introduced new lower margin rates that it said are the lowest among leading brokerages. The rates vary based on the customer’s total margin balance and range from 5.7% to 6.75%, the online brokerage said this week. Six rates are offered in this tiered margin structure, ranging from 5.7% on margin balances of $50 million or more to 6.75% on margin balances of up to $50,000.

Flywire said earlier this month that it expanded availability of its third-party invoicing solution, which streamlines the payment experience for third-party sponsors paying a student’s tuition and fees. The company said that institutions can reduce their administrative burden, ease reconciliation and increase their revenue by creating, issuing and tracking invoices to engage sponsors and encourage timely payments.

Flywire shares gained 5.8%.

FinWise Bank said that it had launched a new strategic lending program with Plannery, a financial wellness platform that hospital systems can offer their employees to become and stay debt free.

The FinWise loan product allows hospital systems to offer their employees ways to consolidate and reduce interest rates on credit card and personal loans. Linking to payrolls for the transactions, the companies said, helps reduce missed payments and late fees and accelerates employees’ path to financial stability. Plannery and FinWise will offer this innovative product through business sponsorships such as hospitals and strategic partners. The product will be an unsecured, fixed rate loan available nationwide.

FinWise shares lost 0.8%.

SoFi announced the placement of a $350 million personal loan securitization exclusively with funds and accounts managed by PGIM Fixed Income, a Prudential Financial company. To date, SoFi said in the release, it has sold over $15 billion and securitized over $14.5 billion of personal loan collateral. SoFi shares lost 4.1%.

FinTech IPO Index May 23 2024