From PayTechs to Consumer Lenders

Payment fintechs will be paying attention to PicPay, the Brazilian digital wallet that is pivoting towards digital credit. "Founded in 2012, PicPay initially ran a digital-wallet business. With the launch of the central bank's Pix payments system in late 2020, the firm's previous business model became outdated, and PicPay started an overhaul aimed at transforming itself into a digital bank," reports Bloomberg. "In the second quarter of this year, 66% of PicPay's revenue came from revenue streams such as credit, compared with 46% a year earlier. The company's return on equity grew 2.7 percentage points from a year earlier, to 20.3% in the second quarter. The fintech is one of the largest in Brazil by clients, with 63.9 million customers in June, making it a direct competitor to Nu Holdings and MercadoLibre's Mercado Pago." The Batista family, which owns PicPay, invested over $100 million this year and will continue to do so until the business becomes self-financing, said chief executive Eduardo Chedid. "The digital bank wants to keep expanding in credit lines such as payroll for private-sector workers, which went through a revamp in March. PicPay disbursed 1.5 billion reais in the product, but adopted a more cautious approach in the last few months because of technical issues."

Rise of the Paytechs

A new Capgemini report suggests that the likes of PicPay is not an outlier, with small and medium businesses tending to look to paytech companies ahead of banks for their payments solutions. "According to Capgemini's World Payments Report 2026, as many as 40% of merchants are considering shifting to Paytech providers, signalling an inflection point in the battle for merchant relationships," says Payments, Cards & Mobile. "The findings point to a growing dissatisfaction with banks' current offerings. Only 15% of small merchants and 22% of mid-sized merchants report being satisfied with their payment providers. At the heart of this discontent lies the friction embedded in onboarding, payment reliability and fraud prevention. For example, merchant onboarding with banks can take up to seven days and cost nearly $500, compared with less than 60 minutes and a cost closer to $200 for many PayTech alternatives. Paytechs have been designed from the ground up for a digital-first environment, enabling them to meet demands for speed, transparency and integration. By comparison, banks have long prioritised card issuing over merchant acquisition, leaving the sector under-invested. The result is that merchants endure up to nine hours of annual downtime due to unreliable systems, with losses from fraud running at about 2% of revenue."

Forbes 30 under 30 strikes again

At a time when many banks are partnering with or considering partnering with fintech, JPMorgan's acquisition of US fintech Frank is a cautionary tale. Frank's founder Charlie Javice had a data scientist manufacture 'synthetic data' to make its customer base look far larger, and JPMorgan's due diligence appeared not to have picked up on the trickery. Charlie Javice, whose fintech Frank was acquired by JPMorgan, has been sentenced in New York to seven years in prison for fraud. "In addition to prison time, (the judge) ordered her to forfeit $22.4 million and to pay $287.5 million in restitution to JPMorgan," reports Bloomberg. "A New York jury convicted Javice in March, finding that the onetime entrepreneur had lied and faked user data to mislead the nation's biggest bank into believing her site had more than 4.25 million users when it actually had fewer than 300,000. Frank, which JPMorgan shut down in early 2023, offered a tool to help students fill out their Free Application for Federal Student Aid, or Fafsa, which is required by most colleges in making financial aid decisions."

HSBC chair to retire

One of the biggest jobs in banking will be left temporarily filled when HSBC chair Mark Tucker retires early next week after eight years in the seat. "The lack of a successor at HSBC, which is worth more than the next four London-listed banks combined and sits at a crucial juncture between eastern and western markets, has been described as 'highly unusual; by both current and former executives of the bank," writes the FT. "The vacuum has unnerved UK regulators who have put pressure on HSBC to name a permanent chair, according to people familiar with the conversations. 'You can't have an interim chair for very long,' one of the people said. 'It's a stick of dynamite underneath everyone'." The job requires someone with experience in Asia (where the bank makes most of its profits) who also understands US politics as it is one of the biggest dollar clearing institutions globally. "If the board fails to find a suitable candidate, there is speculation that senior independent director Ann Godbehere, who is leading the search, could take the role or Nelson -- who is being paid the equivalent of £1.5mn a year to do the job on an interim basis -- could yet be made permanent chair."

Nubank to go for US charter

Brazilian lender Nubank said on Tuesday it has applied for a national bank charter in the United States, as it works to expand its regional offering into a global model. "In the statement, Chief Executive David Velez said that the lender's core focus remains on delivering growth in its existing markets. At the same time, he said, the application could help Nubank to serve customers already based in the U.S. and, 'in the future, connect with those who share similar financial needs and could benefit from our products and services'." Nubank started out as a credit card offering in Brazil, which has a long history of credit offerings including credit cards and instalment payment options. "Nubank, which is listed in the U.S. through Nu Holdings, said the charter would support it to efficiently scale in the U.S. market, 'eventually offering deposit accounts, credit card, lending and digital asset custody'. Since the start of its operations in Sao Paulo more than a decade ago, Nubank has grown past 120 million customers in Brazil, Mexico and Colombia, making it one of the world's largest digital challenger banks," reports Reuters. "Nu's shares reached all-time highs last week, once again making it Latin America's largest lender by market capitalization as the digital bank has been neck-and-neck with traditional firm Itau Unibanco in recent years." Nubank's vice-chairman Roberto Campos Neto, former governor of the Bank of Brazil, said recently the company was looking at how to integrate stablecoin deposits to allow customers to spend them on credit cards. In countries with high inflation, US-backed stablecoins are popular: the challenge is for banks to accept and hold them, and then let customers spend them.

SumUp lines up EU bank licence application

Payment fintechs have become a source of credit information so it's no surprise to see now that payment terminal business SumUp is going to apply for a banking licence in the EU and become a consumer bank, The Banker reports. (SumUp applied for a banking licence in Brazil earlier this year.) Chief Commercial Officer Luke Griffiths said the fintech will target the EU first before looking to the very competitive UK market. The moves comes "as challenger and specialist banks in the UK accounted for two-thirds of all lending to small and medium-sized businesses last year, exceeding that of the five largest banks for the fourth consecutive year". SumUp serves over 4mn merchants globally and provides services such as payment acceptance and business accounts to small and microbusinesses in 36 markets. "Traditional lenders have failed to sufficiently invest in SME business banking over the years, Griffiths said. "We actually see a big opportunity for us to disrupt SME banking by providing more of those products and services such as lending, and we see that as becoming a core product offering that sits at the heart of other merchants' relationship with SumUp," he added. "There is a big opportunity for us to leverage insights from SumUp's payments processing to make more informed lending decisions and to give faster access to lending." Common to both developed and emerging markets, many sole traders or microbusinesses use SumUp as they can't get business banking accounts.

Mastercard goes marketing

Can card networks crack one of marketing's biggest challenges? While banks are selling airtime, telcos are selling loans, and advertising companies such as Google and Meta have moved into payments, Mastercard getting into advertising by betting that it can use its vast data reach to better link and measure the influence of an ad on a consumer purchase – including well-timed incentives. "Mastercard is making a bigger grab for advertisers' dollars with its new digital media network, which leverages complementary capabilities from across the payment firm's portfolio, such as card-linking technology, personalization from Dynamic Yield and media optimization from its marketing services division," reports Marketing Dive. "While investments in commerce media have steadily accelerated, measurement and attribution are widely regarded as pain points." (Famously, it's said that half of advertising works, it's just hard to know which half.) Mastercard says the goal is to help advertisers "meet consumers" while they are in a purchasing cycle – and when we're online, we're never far from a digital ad, are we? But Mastercard is clearly paying attention to the shift to use of digital wallets. "Mastercard is touting its view into permissioned data linked to 160 billion annual transactions as a way to improve precision and personalization for brands. That data lets the network identify the right audience for an advertiser's offer, with Mastercard able to attribute any purchases made directly to the content." While it has the ring of Do Androids Dream of Electric Sheep, we wonder: do AI Agents on their way to make a purchase get distracted by digital advertising?