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Hello fintech friends,
The European Central Bank (ECB) plans to fully launch the digital euro in 2029. That means there’s still three years to go and in the meantime there’s plenty of work to do.
Beta testing will begin next year. This week the ECB released the names of the 36 private-sector institutions that have been selected to take part in the pilot, from the 50 that applied.
As well as banks, fintech companies including Revolut (a fintech with a banking license), Stripe, Adyen, Satispay and SumUp are all taking part. Yet could a successful digital euro actually harm some payments businesses?
Major European banks previously highlighted concerns with the digital euro. Retail banks are concerned that deposits will move from bank deposits to digital euro wallets, as least in theory, funds parked in a central bank wallet are risk free, and more so than deposits at a bank.
Photo by Masood Aslami on Unsplash
An FAQ released by the ECB earlier this year stated a theoretical maximum digital euro holding of €3,000 was under discussion, on the basis that “This would prevent excessive outflows of bank deposits and help preserve the stability of our financial system, even in times of crisis.”
Acknowledging the risk that deposits could flow from banks into digital euro wallets is a good thing. However, the cap is on what a user can hold, not what they can spend — the wallet links to a bank account, so larger payments can still flow through.
While in the US stablecoins have become the plat du jour, the Eurozone is proceeding with the digital euro, and in the coming years we may see the central bank digital currency (CBDC) alongside Wero and card payments when checking out online.
Meanwhile the UK is not pursuing a digital currency with vigour so far. Payments sovereignty seems to be a hotter topic in the EU than the UK and in London contactless card payments are still the unbeaten champion.
Please find another week of fintech news below!
— Matt Jones
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The Rundown
🏦 M&A
Mastercard is exploring selling its Vocalink subsidiary. The payments business was acquired from 16 UK lenders in 2016.
Wayflyer acquired Conjura. Wayflyer was originally incubated within Conjura in 2019 before becoming a standalone business.
Banyan software acquired a majority stake in WIZE. WIZE services over 120 financial institutions across 27 countries.
🚀 Product Launches
Satispay launched a debit card in partnership with Mastercard. Italy’s popular account-to-account provider is now taking a superapp approach.
Sticking with debit cards, Kraken launched a crypto debit card. Users can spend their crypto and cash balances directly from their Kraken account.
Float launched its offer of card-based installments for the UK market. Merchants can provide up to 12 monthly instalments via card-based rails.
Monzo launched a debt consolidation product. In co-operation with ClearScore, Monzo will allow users to bring borrowing from various lenders together with a consolidated loan.
💸 Fundraises
Aria raised €7m Series A extension round and launched a €240m debt facility. The round was led by 115K, the venture capital arm of La Banque Postale, with participation from returning investor 13books Capital.
Munich-based Skalar raised €12m in combined pre-seed and seed financing. The round was led by Headline with participation from futurepresent, QED Investors, Repeat, MS&AD, and Foreword.
Kintai raised €10m to expand their SME financing platform. The round was led by Barlon Capital, with Prosegur, TQ Eurocredit, and the Institut Català de Finances (ICF) also taking part.
Kord raised a £6.4m Series A to build a single platform for regulated transactions. The round was led by Guinness Ventures.
🏛️ Policy & Regulation
Coinbase secured a UK investment service license. This will allow the company to add derivatives and equity trading.
The UK Government rolled out a new regulatory regime for cloud providers. Critical Third Parties (CTP) will fall under direct regulatory oversight to “help strengthen the resilience of the UK’s financial system.”
🗂️ Other News
Digital asset provider LO:TECH is partnering with Kalshi. The company will distribute institutional-quality prediction market data to professional clients.
Viva.com and European Dynamics will power the EU’s Carbon Border Adjustment Mechanism (CBAM) payment system. Viva.com will provide the banks accounts and European dynamics the technical integration.
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Fun Stuff
With England vs Argentina taking place tonight here’s three facts about this matchup to help dial up the excitement for the game:
Wednesday’s semi-final is the sixth World Cup meeting between England and Argentina. England have won three of the previous five, Argentina two.
Maradonna’s infamous “Hand of God” goal came in a quarterfinal match in the 1986 World Cup, which was played at the Azteca Stadium in Mexico City.
In 1998, an 18-year-old Michael Owen scored one of the greatest solo goals in World Cup history against Argentina. A game England went on to lose!
Thanks everyone for reading. Have a great day and see you next week.
