Zachary Held

Question for my #payments friends. Let's hypothetically say a vertical #saas platform is running ACH payments through their platform. Let's say they're charging 1% on ACH transactions. They're using a run-of-the-mill ISO platform as their payment partner. Nothing super out of the ordinary. Based on your experience, what is the average cost of an ACH transaction in this scenario? Asking for a friend. 😉 #embeddedfintech #onlinepayments

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Acquiring customers, the old-fashioned way (Part 17b of a series about my fun projects) In the last post we briefly chatted about credit card portfolios, that they are simply a list of customer names with a bunch of data about them (including loan amounts!). Here’s what made my job at PartnersFirst so fun: we got to help analyze any decision we made about our credit card portfolio. One company goal, of course, was to add to that list of customers—to make your company’s reach ever larger. In credit card parlance, this is called acquisitions, and analyzing acquisitions is really interesting. The goal is to bring in as many new good customers (good: they use our card, pay interest and fees, and are a low risk of not paying us back) as possible while maintaining a healthy risk profile (meaning our risk of loss is acceptable and we make money). Interestingly, risky customers can be more profitable, because they use your card more often than less risky ones. High credit score customers may rarely use your card and do not incur interest, while still carrying a lot of “open to buy” credit. We incur the risk, without the profit. You want to make the best use of your outstanding loan dollars. So, we would mail out a significant number of credit card offers each month or so. At Partners First, we had a talented marketing VP, Wendy Cebula, who had all these great ideas for credit card offers—different themes and colors, ties to seasonal events, different teaser rates or balance transfer ideas, and different tones and wording. Like we earlier discussed, credit card companies are always testing the market and we would send out many different types of offers at different times to different segments to see which offers performed best. We would monitor, as best as we could, our competition. On my team, Joseph Walter and Amy Littel-Herrick developed math models to test and analyze prospective customers for: 1.      Statistically, who seems like a great customer? 2.      If we mailed a particular offer, who would likely fill it out and send it back? 3.      Given that we didn’t have perfect information on prospects, if we received a credit application, how likely would their credit change after we received more info with their application? 4.      How much do we think they would use our credit card? Could we influence them into using it more? 5.      What is the probability the applicant is fraudulent? Our budget would determine how many offers we could make and we would use that budget, and all the probabilities we determined above to come up with the list of people across the U.S. that we would send an offer to. We got very good at this and pulled some impressive response rates from our mailings. We also learned a few things. Next: Some things we learned about data and under-served markets #ContactCenterPlanning #WFM #WorkforceManagement #WorkforcePlanning #CallCenter #ContactCenter #RealNumbers

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Just published! Following the #CFPB’s proposal to cap overdraft fees - we know that card issuers are looking for creative ways to find new revenue streams. We’re excited to release Kipp - Authorize More comparative guide of the top 24 US debit card issuers. Key takeaways: ✅ Some banks will hit cardholders with multiple fees a day for trying to spend over their balance ✅ CFPB proposals for 2025 will see overdraft fees capped from approx. $30 to closer to $3 - issuers are about to lose a revenue stream and are seeking ways to replace the revenue ✅ Many of the fintechs have moved away from overdraft fees altogether - with some offering fee-free overdrafts up to $200 Download the guide 👉 : https://lnkd.in/gnhv2Hnf #overdraft #banks #payments #cards #US

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Walmart-backed fintech One introduces buy now, pay later as it prepares bigger push into lending. The move puts One in direct competition with Affirm, the exclusive provider of installment loans for Walmart customers since 2019. There are signs that One is making a deeper push into lending beyond installment loans. "Walmart intends to offer its branded credit cards through One in the future,” Capital One said last year in response to Walmart’s suit. “With One, Walmart is positioning itself to compete directly with Capital One to provide credit and payment products to Walmart customers.” One has obtained lending licenses that allow it to operate in nearly every U.S. state, according to filings and its website. The company’s app tells users that credit building and credit score monitoring services are coming soon. https://lnkd.in/eC-iKjeB #digitalbanking #corebanking #bankingsolutions #payments #fintechsolutions #digitaltransformation #fintech #baas #neobanks #challengerbanks #embeddedfintech #creditunions #communitybanks #embeddedfinance #nichebanking #bnpl

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Wendy Xiao, Molly Alter, Aaron Liu, and I recently hosted a dinner with CMIO / CIOs from top NY health systems and execs from startups who are building solutions across the care delivery and back-office billing stack. A few takeaways: - Delivering value-based care at scale changes the incentives for health systems in such a way that they require unique point solutions that can help them triage and manage at-risk patients. - While scribing platforms are certainly powerful in the administrative burden they can take off of doctors, their full value may not be unleashed until they can convert notes into the appropriate fields / codes for billing. - More attention needs to be paid to social determinants of health. For example, certain types of new addiction treatment, like gambling, may soon be covered by insurance if data continues to show that there are serious negative health implications for people affected. Treatments like Ozempic are also showing promise in the field of addiction. In the coming years there will an increasing acknowledgment of how interconnected social factors and medical health are across all patient populations. If you’re a healthcare exec looking to learn more about what the next generation of healthcare IT startups are building, or a healthcare startup looking to get involved, please reach out. cc Northzone

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When I first read Jevgenijs Kazanins's very excellent fintech take on why Cash App Pay could be the next major driver of Block’s growth, I was floored by his initially compelling case that if Cash App can incentivize more payments payments volume to go through Cash App Pay, they can drive massive gross profit uplift, because Cash App Pay’s take rate is substantially higher than Cash Card’s take rate on purchase volume (2-3x). But if it were true, why hasn’t Cash App taken advantage? Whereas Jevgenijs is more optimistic about the ~$2.5bn in GPV that Cash App Pay has generated in its first ~2.5 years of existence, I find it downright embarrassing. That’s less than 1% of Square’s GPV after two years in the wild? And that’s despite it being essentially pre-installed on every terminal with no change in hardware required. I started to have a sinking feeling that maybe something was missing in the calculus. And as I dove deeper, it became clear that the “magic” take rate uptick we thought we’d found was more of a magic trick, relying on some deception. The seeming increase in take rate comes about like this. Normally, when a Cash App user makes a purchase, Cash App acts as the Issuer which means there are several intermediaries between what the merchant is charged and what Block earns on the transaction, meaning its ultimate take rate is relatively low. But in the case of Cash App Pay, there’s potentially a few magic tricks at work. The first is that in this case, Block is facilitating the Square merchant’s acquiring POS AND it’s issuing the Cash App user’s debit card, thereby cutting the intermediaries down in the typical payments flow and seemingly increasing Cash App take rates by 35-50% (instead of just interchange, you’re now getting interchange and markup). But then gets even better with the second trick, because if you’re both the acquirer and the issuer, *you don’t even need the payment network at all*. You can simply move money by book transfer between your merchant’s bank account and your user’s bank account in a perfectly closed loop payment network. Suddenly, Cash App Pay has a magical 2.9% take rate with no money movement costs at all. The problem with these magic tricks, like the ones in life, is that they are actually using some deception to hide what’s truly happening. Let’s play it out. In the status quo, without Cash App Pay, Square would earn ~1.85% in acquirer markup and Cash App would earn 0.90% in interchange for a total of 2.75% in take rate. In the Cash App Pay case, Square and Cash App would split the 2.90% Merchant Discount rate they artfully charged without having any money movement. So instead of the 2-3x markup, the uptick is more like +15bps (+5%). So maybe there isn’t a massive take rate arbitrage, but Block should still be focusing on its closed loop payment network because it represents huge opportunity for other reasons. Read the full post at https://lnkd.in/d93nkn29.

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🚨 Payments geek out alert.  Michele Alt and I are having Bryan Derman and Christopher Uriarte on Radically Clear tomorrow (Friday) at 3 ET/ 12 PT to discuss the future of payments.  Specifically, reactions to recent developments around faster payments, regulation of card network economics, and open banking. The idea came to us after we had a blast on the Glenbrook Partners Payments on Fire podcast.  There’s nothing better than geeking out with people who are super deep in adjacent areas to your own expertise. The link to the podcast and transcript is also in the comments, but if you don’t have time to click through three of my key takeaways from the discussion were: 1️⃣ Everyone loves community banks (almost as much as dogs!), but increasing returns to scale is making it harder for them to compete.  The key to a healthy community bank sector going forward? Making sure community banks have the flexibility to open complementary digital businesses and grow in order to continue serving their communities well. 2️⃣ The key trade off between working with a partner bank and getting your own licenses?  Working with a partner bank can help you get to market cheaper, faster, and with oversight from experienced hands to help you get it right.  By contrast, getting your own licenses gives you greater control and flexibility as you develop your products and services. 3️⃣ We think about the CFPB’s proposed 1033 rule as mainly about consumer access to data.  But it has the potential to upend payments too, potentially allowing service providers permissioned by the consumer to initiate push payments to consumer accounts.  Watch for how that turns out in the final rule. Hope you can join us tomorrow for part 2 of this awesome discussion.  Everything you need to join is in the comments.

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The #CFPB's proposed 2025 cap on overdraft fees is a game-changer. Slashing them from a hefty $30 to a mere $3 creates a significant revenue gap for issuers. Excited to share Kipp - Authorize More's new guide where we looked closely at the top 24 debit card issuers in the US. Worth a read! 💫 #overdrafts #creditcards #Payments #banks

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One perspective shared at our Annual Summit last month was that the era of BaaS as we knew it is over. There was a time when Banking as a Service (BaaS) providers were the go-to for startups. They offered a quick market entry with the enticing promise, "you do you, we will take care of everything else." This approach meant FinTechs could abstract away the challenges of compliance and operations. But that era is now behind us. Today, whether you're a bank, a BaaS player, or a FinTech, compliance is becoming a core business focus—and it should have been all along. This shift means launching a program in the future will likely require more resources—dollars, employees, and expertise—than before. This will inevitably impact growth rates, funding rounds, and the scale we've come to expect from FinTech programs. While the landscape will look different, it will be for the better. The future of FinTech will be more sustainable, grounded in solid compliance and operational foundations. Tune in to the latest episode of Commerce Conversations to hear more about this topic and others! https://lnkd.in/gAG-7trY #FinTech #BaaS #Compliance #Sustainability #Growth #Innovation

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It is no secret that fundraising has been incredibly challenging for founders at all stages. According to Carta’s Q1 2024 State of Private Markets report, Seed stage deal count fell 33% from Q4 2023 and Series A deal count fell 36%. Additionally, total cash raised in the same period was 30% less at each stage suggesting rounds sizes are also getting smaller. In this next edition of Collaborative Fund's Founder Support Series, I get into the details of how to prepare to fundraise in a challenging environment. Have a read and let me know what you think: https://lnkd.in/gJjqhsCd

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Understandable FDIC insurance is getting some “fair” share of blame on this. But the problem is not the insurance itself and how the insurance work, because: The inolvancy and bankcrupt of a nonbank company SHOULD NOT jeopardize customer deposit - if it is done the COMPLIANT WAY while in this case it obviously did not. Not a systematic problem to a point that consumer should not trust their money with a fintech company sponsored by a bank - but a compliance problem how the bank should do it right. And what responsibility the bank should holds if it’s not done right. #Braid #bankcontrol

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🎉 ANNOUNCEMENT 🎉 Today, I am thrilled to announce the launch of my new fintech venture Swaystack alongside my CTO, co-founder Simran S.. 🚀 For those of you who know me well, you know that this is not a decision that I take lightly as my wife is currently 33 weeks pregnant with a boy. Embarking on the entrepreneurial path as our family prepares to expand weighs heavily on me but I know in my heart that it is the right time and place for my 2nd fintech venture. I want to be my most authentic self as our boy comes to this earth and entrepreneurship lights up my soul. ❤️🙏🏽 When visualizing the ideal conditions to begin my next chapter, having the right technical co-founder was imperative to me. Simran and I hit it off from our first encounter as we share the Sikh cultural background, a passion for innovation, and the desire to be change agents in the fintech ecosystem for the right reasons. 📲💬 In our discussions with financial institutions, we heard a common theme that banks and credit unions are influential members of their communities, yet their "high touch" approach to fueling growth has proven difficult to translate to a digital-first world. ✍🏽🖨 With consumer expectations heightened by Big Tech and e-commerce — 72% of consumers expect personalized interactions across platforms — 60% or more of bankers are behind the curve and are struggling to meet the rising consumer demand for a personal touch in a digital world. ⌚️🏦 Swaystack’s mission is to help banks and credit unions tackle this challenge and compete with megabanks and neobanks through personalized digital engagement. We are laser focused on understanding the consumer’s needs paired with the right message and channel at the right time. 👩🏽‍🎓⏳ We believe data-driven financial institutions will be able to punch above their weight and set themselves apart from the competition with omnichannel messaging orchestration. Swaystack is being meticulously designed to enhance digital banking and customer relationship management (CRM) systems, allowing financial institutions to: - Reduce churn - Increase account balances - Grow interchange revenue - Drive loan applications To learn more about our vision to personalize digital banking and CRMs with a single consumer engagement platform, please check out our Hello World 👋🏽 post: https://lnkd.in/dHRs-Vtg Thank you for your support and encouragement on this journey. Here’s to new beginnings and innovative breakthroughs in the fintech space! 🚀🎉 #personalization #fintech #memberengagementplatform #customerengagementplatform #digitalengagementplatform #mobileengagementplatform #engagementplatform #customerengagement #digitalbanking #onlinebanking #crm #miamitech #startup #stealthmode #communitybanks #creditunions #financialinstitution #technology #startups #banking #jackhenry #fiserv #FIS

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"Buy Now, Pay Later" (BNPL) services such as Affirm, Klarna, and Afterpay have gained significant traction, offering consumers the convenience of splitting purchases into manageable installments. However, this terrific Bloomberg article by Paulina Cachero and Paige Smith sheds light on a concerning issue: these BNPL transactions are not reported to credit agencies, resulting in what can be termed as "phantom debt" – debt that goes untracked. In my view, this lack of transparency presents a grave problem. BNPL platforms facilitate and even incentivize consumers to take on debt that doesn't feature in official records. This can lead to individuals overspending and finding themselves in precarious financial situations, with lenders and credit bureaus lacking crucial information. This scenario could potentially destabilize our economy. The proliferation of 'phantom debt' underscores the urgency of addressing the unchecked growth of BNPL services. While they may appear innocuous as a means to spread out payments, I am convinced that these platforms harbor genuine risks to financial stability and individual wellbeing. Consumers must exercise caution and fully grasp the potential drawbacks before engaging with these services. I have been a very vocal critic of BNPL and I am glad to see them being exposed. Perhaps government regulation may be needed here, which is saying a lot as I am not in favor of too much government regulation in general.

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Stripe Co-Founders Say They’re Building ‘Software-Defined Financial Services’ "...Today’s customers of the FinTech industry are no longer asking just for ways to accept online payments; they’re asking for “software-defined financial services.” So said Stripe co-founders Patrick Collison and John Collison Wednesday (April 24) during the opening keynote of the company’s annual user conference held in San Francisco. While they founded Stripe in 2009 to enable the acceptance of online payments, they soon got requests for additional, unexpected features, Patrick Collison said. For example, over the years, the requests included features for automating driver payouts, building spending accounts and issuing corporate cards for merchants, and lending to doctors’ clinics..." #softwaredefined #financialservices #sessions PYMNTS _____________________________________________________ If you want to immediately see new content that I curate 👉🏻 Ring my bell (🔔) and follow #informationbanker or if you want to get the posts that got noticed in my weekly What’d I miss newsletter, subscribe here: "https://lnkd.in/d5_KvWwu"

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Lots of fintech news to start your week off right ... 1.) Capital One acts a bit more like a network and less like a bank that thinks it's smarter than everyone else. 2.) Plaid launches its first CRA product, and it's not all built by Plaid! 3.) LoanPro integrates with Visa DPS to make it easier to launch credit cards. You can find it right here: https://lnkd.in/gfT8Cd9e

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Looking to securely onboard a user in under 10 seconds? Full KYC and account linking all in one. Plaid Layer is revolutionary! Take a look 👇🏼👀

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That was a blast! Thanks Dave Wallace & Dharmesh Mistry to have me on your amazing Demystify podcast / FinTech Futures. It was truly enlightening discussing the current upheaval in Banking as a Service (BaaS) in the US, highlighting what sets the US apart in the realm of BaaS and embedded fintech. We focused on the future of BaaS/embedded fintech, emphasizing its role in empowering community banks and credit unions. Rather than merely enabling fintech companies, the real opportunity is to power local institutions with next-generation modular banking technology for their digital journey. Now, local financial institutions have the capability to enhance their core offerings, harness modular banking technology to tailor essential features, access prebuilt banking solutions (such as offerings for teens/parents, small to medium businesses, the elderly, and migrants), launch specialized digital services, or tap into Agora's cutting-edge core banking technology. The future is Embedded Fintech! Listen to the episode here: https://lnkd.in/eVhvwTmJ #digitalbanking #corebanking #bankingsolutions #payments #fintechsolutions #digitaltransformation #fintech #baas #neobanks #challengerbanks #embeddedfintech #creditunions #communitybanks #embeddedfinance #nichebanking #ai #apis #modularbanking

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Valentine's Day 2024 was expensive [again] this year. It cost most of us cardholders an estimated $578 million according to a Merchant Payments Coalition study. And it's true--we (the consumers) don't pay interchange/swipe fees ... directly. But rest assured, those swipe fees get passed along. ALL the objections come flooding in: → "That's the cost of convenience." → "Nobody's forcing you to use a card." → "It pays for rewards." The truth is, higher prices and surcharges end up costing us around $1000/year. Most of us don't think about it all the time, if at all. But look how complex "the transaction" has become. I shop around, find the lowest price (or not, most of the time), and make the purchase. Sounds simple. But the: 💲 Card brands get a cut. 💲 Card-issuing bank gets a cut. 💲 Merchant's bank gets a cut. 💲 Merchant's processor gets a cut. 👎🛑 STOP 🛑👎 Imagine how much easier and cheaper the transaction COULD be. ✅ I pay the merchant/seller directly from my bank account ✅ The merchant/seller receives payment directly into their bank account It could drive costs WAY down. #Merchants benefit, consumers benefit. Oversimplified? Yes. But it's a different way of thinking about #payments and #paymentacceptance. ♻ Pass it on! Would YOU use "pay by bank" if it was widely accepted at the places you shop? Why or why not?

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I am looking to help early startups that need Product help but are not ready for a full-time Head of Product or Director of Product. Companies that are in my sweet spot: 1) Have some funding & initial customers/revenue 2) Looking to implement a cohesive Product strategy and internal infrastructure to support it. 3) Good founding team with a shared purpose/goal, even if you're still unsure what that means. Why me: 1) Experienced Product and Operations founder 2) Strong understanding of difference between initial product development, systematic product development and how to balance the two. 3) My stupid pet trick is simplifying complex systems and tasks into easy-to-understand bites. If your team loses the context of what they are building, your customers have no shot. If you are interested or know of a team that could use help, please reach out either in comments or DM. If you cold DM, please start by telling me your favorite animal and why.

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