Revolut to suspend Canadian operations
Revolut, the London-based challenger bank that was founded in 2015, has announced it is suspending its Canadian operations after 18 months of service.
The challenger bank has been attempting to launch a Canadian service to customers since November 2019, when the company began providing early access to accounts for Canadian users ahead of an official launch within the country.
According to reports from , Canada’s leading tech innovation and startup media outlet, Revolut announced the news on Twitter and also sent an email to users, saying, “This has been a difficult decision, but we’ll do everything we can to make this process as smooth as possible for you. We really appreciate your support and trust as we work on our global expansion and we hope to be able to return to Canada in the future.”
Currently, Revolut serves over 15 million customers across 30 countries through its banking services that include currency and cryptocurrency exchange, stock trading, and debit cards.
The challenger bank operates throughout the US, Australia, Europe and Japan and has grown exponentially since the COVID-19 pandemic has resulted in a sharper uptake of online banking services.
Revolut has also been in the process of acquiring a UK banking license as part of a strategy to launch a new, “financial super app”. However, according to BetaKit, the Canadian banking system is a much more challenging environment to navigate, with a core “oligarchy” of six banks that do not favour financial newcomers - especially if they rival local startups. Revolut was a direct challenger to the Toronto-based Koho.
Revolut said it had, “hoped to be able to bring Canada the full Revolut service but that is not possible at the moment. We think it’s in the best interests of our customers to pause for now and we hope in the future we’ll be able to return to Canada when we can offer the full suite of Revolut services.”
Marqeta’s IPO shines a light on fintech fees
Marqeta, a fintech company, raised $1.2 billion with an initial public offering that priced high and exceeded expectations. The company priced its shares at $27, above the expected range of $20 to $24, and giving it a market valuation near $15 billion. Marqeta stock jumped 13%, closing at 30.52 on the stock market today.
This IPO adds to a number of recent fintech listings from companies such as the online lender SoFi and the no-fee brokerage Robinhood.
Founded in 2010 and based in Oakland, California, Marqeta sells payment technology that’s designed to detect potential fraud and ensure that money is properly routed. The company also creates customised branded debit cards and prepaid cards for corporate customers that include the delivery group DoorDash and Swedish fintech Klarna, as well as Square.
A large amount of Marqeta’s revenue comes from interchange fees, which is the transaction fee that merchants pay whenever a customer uses a credit/debit card to make a purchase. Due to the Durbin Amendment in the 2010 Dodd Frank Act, banks that have under $10bn in assets receive higher interchange fees than larger lenders from the transactions.
This has allowed fintech start-ups, such as Marqeta and Chime, which is a personal finance app in the US, to take advantage of this by partnering with small banks and taking a cut of the fees.
An increase in profits
Marqeta’s business has drastically increased during the pandemic as people in lockdown have turned to digital financial services such as Square’s Cash App and ecommerce companies such as DoorDash. The company more than doubled net revenues to $290m last year while narrowing losses to $48m. Business from Square made up 73% of Marqeta’s net revenue in the first quarter, which was an increase from the previous year. Marqeta’s agreements with Square last until 2024, according to the company.
Ian Johnson, SVP, Managing Director, Europe, Marqeta: “As the world becomes increasingly interconnected, more people are relying on digital payments to move through each day. Companies throughout Europe are looking for ways to offer better payment solutions for their customers. Marqeta is proud to be a publicly traded company and looks forward to bringing an even greater focus to scaling our products and delivering modern card issuing that launches cards quickly and provides greater flexibility than traditional card programmes. We’re pleased to support European businesses with ambition and purpose who use our platform to help write the future of payments.”