Canadian Fintech: Earned Wage Access 💰
A list of Canadian fintech investors. How will Canada get more tech workers. No more credit card fees for merchants.
Morning!
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💰 Funding
Chexy, a “pay rent by card” company raised $1m. Chexy does two things well, but for very different demographics:
Build credit - paying rent by credit card means reporting on-time payments to the credit bureaus. Good for low credit score users (youth, new-to-Canada, underbanked).
Maximise credit card rewards - putting your biggest monthly expense on a rewards card means more points. Good for high credit score users (high income, financially savvy, adequately banked).
I’m curious which of these two user groups Chexy doubles down on.
Passage, raised $40m to provide financial services to Canadian student immigrants (student loans, account opening, cards, etc). The fintech will leverage Canadian unicorn ApplyBoard’s funnel of international students. Both companies are founded by the same team.
The launch coincides with Canadian Immigration Minister Sean Fraser’s “foreign tech talent” announcement, a plan to incentivize skilled workers coming to Canada.
OneVest raised $17m to help other businesses launch wealth management products. The whitelabel tool powers Neo Financial’s Neo Invest product, which lets users with as little as $1 create portfolios in alternative assets typically only available to high net worth individuals.
🤝 M&A
Financeit, Canada’s largest home improvement lender acquired Simply Financial, their biggest competitor.
Lending Loop, Canada’s original p2p lender has sold its loan book to business lender Merchant Growth. This move is part of the company’s pivot away from traditional lending. Last year the company launched Loop, a business banking platform, which is now the focus.
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🚀 Product
Nyble, an earned wage access (EWA) provider, hit $1m in annualised revenue. How does EWA work? A borrower pays a fixed fee (no interest) in return for off-cycle payment of their salary. There are two distribution models:
Direct to borrower - this is typically structured as a credit line ex. Nyble and TryBree
Indirect via employer - the cash advance is distributed through an employer in partnership with an EWA provider ex. ZayZoon and Ceridian Dayforce Wallet
Helcim, a credit card processor, now allows merchants to pass interchange fees on to consumers (averaging 1.5% in Canada).
Canadian merchants have been legally able to pass swipe fees on to consumers since a settlement with Visa & Mastercard last year.
Finchat.io an ai assistant for financial markets crossed 100k users and inked a deal with S&P Global. The fintech launched three months ago.
⚖️ Policy
OSFI is asking banks to take “a more prudent and active account management approach” to deal with negative amortizations on mortgages. What’s that? Negative amortizations occur when a borrower’s monthly payments aren’t enough to cover the interest on their debt. This happens when rates go up, but payment amounts stay the same.
Banks were asked in the last federal budget to extend amortization terms as a lifeline to borrowers.
Canada’s long promised real time rail payment system has been delayed… again.
OSFI has increased capital requirements on big banks to 11.5% of risk weighted assets. Currently all banks are well above that minimum, with CIBC being the closest (see graph).
🎂 Number time!
4x - the increase of extreme weather related insurance claims since 2018, driving premiums way up.
$1.85 - the amount of household debt per $1 of disposable income earned according to StatsCan.
$4.5b - VC raised for fintech globally across 259 deals in May according to FT Partners. That’s a slight uptick.
Have a great week! See ya 👋
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