The Surprising Truth About Peer-To-Peer Lending
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'HEY BIG LENDER' - P2P LENDING ATTRACTS MORE THAN JUST PEERS: Earlier this week, VCs were rushing into P2P lending. Two companies - Prosper and Kabbage - separately announced funding rounds totaling $120 million. There's nothing new about peer-lending platforms, which allow individuals to issue small loans or "microloans," at lower rates than typically available. What is new is the downpour of institutional money - in the form of venture capital, but also, the New York Times reports, in the form of investor money flowing through the platforms themselves.
The P2P lending model has seen explosive recent volume growth. Last year, Prosper and Lending Club (another U.S.-based platform) issued loans totaling $2.42 billion - a 177% jump from 2012. Much of that loan volume originated from pension funds, asset managers, and even sovereign wealth funds. The U.S. consumer arm of Spanish bank Santander has a deal to buy up to 25% of Lending Club's loans, according to Amy Cortese's NYT piece. "The original P2P investors - the dentists, dabblers and stay-at-home moms who helped establish the market - are finding themselves outgunned by the cash-rich, algorithm-wielding arrivistes," Cortese writes. The appeal to big investors makes sense - unlike Bitcoin, many of the regulatory kinks have been ironed out.
'UNPRECEDENTED' - PUTIN DEMANDS $3.8B FROM VISA, MASTERCARD: As was widely anticipated, Russian President Vladimir Putin this week signed a law establishing a national payments network and demanding, among other things, massive "security deposits" from Visa and MasterCard totaling $3.8 billion dollars. The law, effective July 1, comes in response to U.S. economic sanctions over Russia's military actions in Ukraine. Both companies told the Moscow Times that they would work with the Russian government to continue doing business, but Visa had harsh words for the new law in a statement. "Several provisions in the law are unprecedented and will have a severe impact on the payments market in Russia - particularly cardholders, financial institutions and merchants."
BOKU'S CARRIER BILLING EXPANDS ACROSS EUROPE: Carrier billing platform Boku announced early this morning that it had sealed a deal with Deutsche Telekom to expand into 14 new European markets with the mobile carrier. In addition to an existing partnership in Germany, the expansion gives the San Francisco-based Boku access to 140 million DT subscribers. Carrier billing, which enables payment by adding charges onto a user's phone bill, is one of the oldest forms of mobile payment.
But in an interview with us yesterday, Boku's vice president of marketing Ray Ramillosa said the DT deal was a sign of carrier billing's continuing relevance for mobile payments. "It's an indicator that carriers are still investing heavily in carrier billing," he says of the DT deal. In recent months, Boku has also announced that it will power parking payment apps in both Europe and the United States. "We're on the journey of taking carrier billing from virtual goods to digital goods to physical goods," Ramillosa added.
Deutsche Telekom is also bringing a near-field communications (NFC) mobile wallet to market. Called MyWallet, it was hailed by the company as "an important cornerstone for the promising payments market" in a release yesterday. Unlike the telecom consortium backing Isis in the U.S., European carriers are in an arms race to bring their own separate NFC wallets to market, with entries in recent months from Orange and Vodafone.
LEGACY PAYMENT GIANTS SCRUTINIZE BITCOIN'S POTENTIAL: FIS and Fiserv, two giants of payment processing and settlement, are both "examining" Bitcoin's potential to help existing payments networks ensure secure fund transfers, Bloomberg reports. "Most of the larger banks are investigating it," Steve Kenneally, a VP at the American Bankers Association, told Bloomberg. "The larger the banks, the further along they are." The moves could signal long-term potential for the technology as part of the global payments ecosystem - which BI Intelligence analyst John Heggestuen's report on Bitcoin predicted would be Bitcoin's "greatest potential."
TWO VERIFONE BOARD MEMBERS TO STEP DOWN: Verifone, the number two terminal provider globally, announced yesterday that two board members will not stand for reelection. Dr. Leslie Denend, current board chairman, and Jeff Stiefler, will not stand for re-election at the June 17 shareholders meeting. Former Sun Microsystems CEO Jonathan I. Schwartz has been nominated for election to the board.
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