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| Happy Monday, Fintech Takers! I hope you had a stupendous weekend. The highlight for me was seeing The Odyssey in IMAX. Wow. I am completely staggered by the film, and I think the enormous success that it has already had tells us something important about the enduring commercial value of master craftsmen crafting masterful things. I cannot recommend it more strongly. And I want to say thank you to my family, who matched, step for step, my commitment to and enthusiasm for seeing the film in IMAX, despite the long drive, the heat, and a slow-moving line. - Alex Was this email forwarded to you? Sponsored by Persona Agentic channels could redirect trillions in retail spend over the next few years. Someone is going to own the trust layer every one of those agents has to pass through. It could be whoever gets there first. Whoever sets the standard now writes tomorrow's rulebook. Meanwhile the downsides are already live: AI agents have failed CAPTCHAs built to stop them, and prompt injection has tricked agents into payments nobody approved. When that happens, who eats the cost? On July 29, that's the conversation.  The First Book of Urizen, Plate 8 by William Blake. 3 FINTECH NEWS STORIES#1: What’s the endgame for OnePay?What happened?OnePay is launching a new personal loan offering, in partnership with Upgrade:
So what?For the most part, I like what OnePay has been building. However, I’ll admit to being a little confused about what the endgame is. Not for Walmart. Walmart already seems to have gotten a great deal of what it wanted out of this arrangement. According to this Bloomberg article, OnePay has 6 million monthly active users and $50 billion in annualized payment volume (both double from what they were a year ago). According to Bloomberg, roughly 90% of new users come from Walmart — in-store sign-ups for customers, particularly for OnePay’s digital wallet, and new Walmart employees signing up during onboarding are, I’m guessing, the most common sources — and among OnePay users signed up via Walmart, two-thirds go on to add at least one more financial product offered in the app. But what does Ribbit Capital — Walmart’s partner in this joint venture — get out of it? According to Bloomberg, the venture was Ribbit’s idea. Micky Malka, the founder of Ribbit, pitched the idea to Walmart during a trip to the company’s headquarters in 2019. Ribbit participated in the company’s $300M raise in 2024 (at a $2.5 billion valuation) and was, I’m guessing, heavily involved in recruiting the company’s current leadership team (headed by Omer Ismail) away from Goldman Sachs. The company has since grown to roughly 600 employees and, at the beginning of this year, bought back employee shares at a $4B valuation. According to Bloomberg, Ismail wants OnePay to grow into a financial super app:
And Malka believes that this is possible because of the efficiency with which OnePay has grown, relative to other scaled-up neobanks like Chime:
Right … but I feel like that statement is missing an obvious caveat. You’ve had Walmart as your distribution partner! You’ve assembled a great product, but let’s be honest, your success isn’t the result of product-led growth. The product — digital wallet, checking, high-yield savings, credit building, stock market and crypto investing, a credit card, BNPL via a partnership with Klarna, and now personal loans via a partnership with Upgrade — is expansive, but not highly differentiated. It’s the standard neobank bundle, supercharged through one of the world’s best distribution partnerships. If Ribbit is looking to maximize its return on its investment in this joint venture, it will need OnePay to both grow its user base and to find ways to generate more profit per user. On growth, OnePay is already exploring options outside Walmart. Here’s Bloomberg again:
This is an interesting idea, and a common one in consumer fintech. Chime acquired Salt Labs back in 2024 and used the company as a springboard to launch its Chime Enterprise business, which targets employers. The challenge for OnePay in the employer channel is going to be twofold. First, it doesn’t have the brand awareness that Chime has. The benefit of spending all of that time and money to inefficiently grow a consumer neobank directly is that, if you do it well, you accumulate a lot of brand equity over time. Jason Lee, the head of Chime Enterprise, told me in a podcast that consumer brand awareness is essential to success in the employer channel because, as a general rule, employees don’t trust their HR teams’ financial product recommendations. The product being recommended has to have its own brand cachet. Second, large employers, which would be the most obvious fit for growth for OnePay outside of Walmart, may not be totally comfortable signing up to integrate OnePay into their employee financial product stack given that Walmart is the majority owner of OnePay and also (likely) a competitor for the same employees that those large employers are trying to attract and retain. This second concern — competition — is also what will make it difficult for OnePay to generate more profit per user. One of the most obvious opportunities for OnePay to improve the unit economics of its core products would be to cut out its banking partners (Coastal, Lead, Synchrony) by getting a bank charter. But, again, the problem is Walmart. It’s been a couple of decades since Walmart last tried to get a bank charter, but the banking lobby and banking regulators have long memories and an attempt by OnePay to get a bank charter would almost certainly trigger a similarly severe allergic reaction. This likely explains why OnePay, despite the window being open to acquire a bank charter, reportedly isn’t planning to pursue one. Put simply, the same thing that helped OnePay grow quickly and efficiently may be what ultimately limits its growth and profitability. #2: Liability for thee, not for me.What happened?House Committee on Financial Services Chairman French Hill and Oversight & Investigations Subcommittee Chairman Dan Meuser released a staff report titled “Fighting Back: A Policy Framework for Combating the Rise of Financial Fraud & Scams”:
Coincidentally, the Bank Policy Institute (the trade association for big banks) published a blog post, based on a survey of banks, on the same topic:
So what?I used the word “coincidentally,” but, of course, it’s not really a coincidence. Tara Payne, a co-author of the BPI survey post, is also the source the House report footnotes for its distinction between “fraud” (unauthorized transactions where Reg E assigns the liability to the bank) and “scams” (transactions authorized by the customer, which banks are not liable for under Reg E). The report goes on to make the exact argument that the banks make about this distinction: That it is important for defending against the moral hazard that would result if consumers had less accountability for their payment authorization decisions. I think there is some logic to this argument, but I, by no means, think that it’s ironclad. It’s a hypothesis — if we removed or reduced liability for consumers on authorized payment scams, they would abuse the privilege and we would see an overall increase in scam volume — and we should test it! What’s funny is that the Bank Policy Institute includes member banks from other countries that have substantial commercial and retail banking operations within the U.S. Among these non-U.S. members are two banks from the UK: Barclays and HSBC. If the U.S. bank members of BPI had asked Barclays and HSBC about this, they might have discovered something interesting: The UK has already been testing this hypothesis! In October 2024, the UK’s Payment Systems Regulator made reimbursement mandatory for authorized push payment scams, where the customer is deceived into sending the money themselves. Banks and payment firms now have to make victims whole within five business days, up to £85,000, a cap that covers roughly 99.8% of cases. Banks and payment firms can withhold a £100 excess, so the customer still has skin in the game. There's an exception for gross negligence, drawn deliberately narrowly. And the cost is split 50/50 between the institution that sent the payment and the institution that received it. This new policy replaced a voluntary code that had produced wildly inconsistent outcomes, and, as you might expect, it generated a lot of pushback from banks and payment firms. In fact, they made every argument this House report makes. Moral hazard. Careless consumers. A wave of people faking scam claims for free money. Well, we are now 21 months into the experiment and this month, the Payment Systems Regulator published an independent evaluation by Frontier Economics, which tried to isolate the effect of the policy from the underlying trend. Its estimate: The reimbursement rule itself is responsible for roughly £73 million a year less in scam losses — a 21% reduction — and about 35,000 fewer scam payments annually. Losses went down. Meanwhile the share of losses returned to victims rose from 54% to 65%. And the predicted catastrophe? Claims denied because the customer ignored a warning came to about 3% of scam value. Confirmed cases of customers faking it — the first-party fraud that anchors the banks’ entire moral hazard argument — came to 0.5% of value and 0.2% by volume. These results actually make sense when you put them into a slightly wider context: 71% of victims were unaware of this enhanced scam protection, and roughly half never filed a claim. Would a system like this work in the U.S.? Perhaps not, but I find it telling that neither BPI nor the majority’s staff on the House Committee on Financial Services chose to mention these UK data points in their writings on this subject. The reason that they didn’t is because the banks don’t want the liability for scams. Full stop. This doesn’t mean they don’t care about the issue or don’t have ideas for how to solve it. For example, the House report endorses the STOP Payments Fraud Act, which would amend the Expedited Funds Availability Act to let institutions slow funds availability when they suspect fraud. Interestingly, the UK did that too — legislation that became effective October 2024 letting PSPs delay a payment up to four business days on reasonable suspicion. The difference is that the UK paired that flexibility — letting the sending institution slow a payment down — with liability for scams, split between the sending and receiving institution. Without the liability, I'm not convinced banks in the U.S. will ever be properly incentivized to use the friction. Now, none of this is to say that I don’t agree with the problems that BPI and the House report on scams have chosen to highlight. One of their big arguments, which I agree with, is that scams originate upstream with the telco companies and social media platforms like Meta and that those companies benefit, financially, from the scammers using their products and services. BPI’s bank survey has some really alarming findings on this front, including:
This is a huge problem. And BPI argues in its blog post that the government should do more to hold tech and social media firms accountable for scams. I agree! Accountability is important. Liability is important. It’s just funny (though not surprising) to see the banks (and the staff for the majority on the House Committee on Financial Services) argue for liability for others, but not for banks. #3: To compete with Apple, Samsung first has to go through Google.What happened?Samsung is launching a credit card:
So what?Every writeup I've seen frames this as Samsung's answer to the Apple Card. I think that’s true, but not in the way you might assume. The first thing we should make clear is that the foundation of smartphone manufacturers’ financial services ambitions is always the digital wallet. For these companies, the co-brand credit card is an add-on, a thing built on top of that digital wallet foundation and designed to reinforce its dominance. Look at Apple. Apple Card pays 3% on purchases from Apple and select partners via Apple Pay, 2% on everything else via Apple Pay, and 1% on the physical titanium card. The 2% and 3% reward tiers require users to pay with the card through Apple’s digital wallet. That is a design choice intended to encourage and reinforce a specific behavior: Pull out your iPhone at checkout and double-click the side button. The structure of Samsung’s rewards is similar, but the differences are quite telling. Apple pays 100 basis points for choosing Apple Pay over the physical card (2% instead of 1%). Samsung pays 200 (3% instead of 1%). Put simply, Samsung is bidding twice as much for the identical behavior. Why would it do that? The economics don't obviously support it. Interchange on the card is well under 3%, and Samsung doesn't collect the 15bp Apple charges issuers. Some of it comes out of a portfolio priced to revolve — 23.49% to 32.24% APR — but a co-brand partner typically funds rewards above what interchange supports, and 200bp uncapped on general spend is a lot of funding. So, why? I think it’s because Apple isn’t actually Samsung’s most-pressing competitor, when it comes to financial services. Indeed, on a digital wallet level, Apple and Samsung literally can’t compete because their digital wallets are not available on each other’s devices. You know who Samsung does compete with on this level? Google, which controls the operating system that all Samsung smartphones run on. According to eMarketer, Apple Pay is projected to have roughly 71.6 million U.S. proximity payment users in 2026, Google Pay will have 42.6 million, and only 15 million for Samsung. Furthermore, eMarketer expects Samsung's share to slide from 12% to 10.3% by 2030. Samsung isn't just running third in mobile payments. It's losing ground in the segment it should own, to a Google product that is compatible with (and sometimes pre-installed on) the phones Samsung manufactures. The org chart is the last tell. The quotes in the announcement come from Woncheol Chai, EVP and Head of the Digital Wallet Team at Samsung's Mobile eXperience business. Not a payments executive. Not a financial services executive. The guy whose job is the digital wallet. He wants to catch up to Apple Pay, but he first needs to overtake Google Wallet. That’s what this new credit card was built to do. Sponsored by Rain A payments company doesn't earn trust once. It earns trust with every transaction, and loses it even more easily. That's true whether a card's funded by stablecoins or a checking account. As Chief Compliance Officer Kevin Carr writes, not everything should resolve in automation. Activity that trips the monitoring goes to human review. Stablecoin cards don't skip the scrutiny; they sit inside it.  2 READING RECOMMENDATIONS#1: A Brief History of Modern Secured Credit (by Matthew Goldman, CardsFTW) 📚Good history lesson here from Matt, plus his take on the Samsung card. #2: It’s the Best Time Ever to Become a Millionaire by Working Alone (by Derek Thompson) 📚I enjoyed this one from Derek Thompson, though I will admit I found it a bit depressing. 1 QUESTION FROM FINITYThere are a TON of interesting questions being asked in Finity (our digital community for fintech and banking nerds). I’ll share one question, sourced from the community, each week. However, if you’d like to join the conversation, please apply to join! What’s a problem that a bank-owned consortium like Early Warning or The Clearing House should try to tackle?I’m tired of writing about why Paze was a mistake or why the stuff they’re contemplating in stablecoins and tokenized deposits probably won’t work. What are some good ideas for problems that bank-owned consortiums should try to solve? Let’s crowdsource this! If you have any thoughts on this question, reply to this email or DM me in Finity! (In Finity ... Infinity ... get it? ... OK, sorry, I'll show myself out!) Thanks for the read! Let me know what you thought by replying back to this email. — Alex | |||||||||
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