Canadian Fintech: FX Fees Suck 💱
CPP invests in Klarna. Banks buying banks. Auto financing gets easier.
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Goeasy, one of Canada’s largest subprime consumer lenders, has invested $40m into online car dealership Canada Drives. Why? The partnership will make Goeasy’s POS financing brand, LendCare, the preferred subprime lender for car buyers on their platform. Goeasy had an incredibly similar funding deal with PayBright, an e-com BNPL that they invested $34m into in 2019.
CIBC Innovation Banking, the tech lending arm of the bank, has pulled together a $1.5b growth fund.
Canadian Schedule 1 bank, VersaBank is expanding into the States by acquiring a small nationally chartered US bank. There must be something in the water at Canoe (or wherever Bay Street bankers eat these days):
Last year BMO acquired Bank of the West
TD is in the process of buying First Horizon.
Rakuten, a rewards shopping platform will give Canadian home-buyers $25 cashback on every $10k in qualifying real estate transactions.
Ever, a platform for Canadians to invest alongside top fund managers (sort of) came out of stealth.
GoToLoans rebranded as Wippy, a BNPL for auto repair that underwrites based on the model and mileage of a car. Fix4 is another competitor in this $21b market.
In partnership with Cypress Hills
Are you an originator looking for financing for your portfolio?
Meet Cypress Hills Partners, one of Canada’s leading funder of lenders:
Financed over $150m of loan receivables
Offering higher advance rate structures that allow lenders to reinvest more retained earnings into growth
Specialized in consumer, corporate trade, and other unique collateral pools
Interested in a custom-structured credit facility? Let’s chat!
Payments Canada officially announced Peoples Trust as a new Direct Clearer on the Automated Clearing Settlement System (ACSS). They are the first new clearer since its launch in 1984. This allows Peoples to settle directly with the Bank of Canada instead of relying on existing members like TD, BMO, CIBC, and other banks. Last year ACSS cleared and settled $8.4 trillion.
FINTRAC, Canada’s money-laundering watchdog, now requires charity fundraising platforms to comply with KYC/AML guidelines. These requirements, which include reporting donations over $10k puts an added compliance cost on platform operators. The regulation was in part a reaction to fundraising on behalf of the trucker convoy earlier this year.
Big Canadian banks are uniting to create a new KYC tool for capital markets, called CanDeal. Sound familiar? Interac and Symcor are past examples of bank-owned ventures that have used their market dominance to establish new networks.
💱 Cross border banking sucks
For the average Canadian small business, cross border banking aint easy.
Why? The double conversion problem.
Let’s take an example:
A Canadian business sells a product to a US customer through a marketplace (Amazon, Etsy, etc.) or their POS (Shopify, Lightspeed, etc.)
The payment gets converted from USD to CAD when it hits the business’ Canadian account.
The Canadian business then spends this revenue on marketing, software, and shipping, which needs to be converted again into USD.
This means lost time (1-7 days to settle) and revenue (6-10% in FX fees).
How do you solve this? A Canadian business with a US domiciled USD account.
Having a US ABA Routing Number and a unique local account number associated with your bank account means you can avoid FX fees completely and get access to revenues right away. But it’s not a feature of most Canadian business banks.
Until this month:
Loop, an e-com banking platform launched USD accounts for Canadian online sellers.
Titan Bank, a full service US bank launched USD accounts for Canadian SMBs.
🎂 Number time!
25% the amount of homeowners who would be forced to sell if rates continue to increase
2023 the year RBC analysts predict Canada will enter into a recession
2/3 the amount of Canadians who own their home (see chart)
👀 Who’s hiring?
Flota, Head of Operations (Remote)
Visa, Payment Ops Strategy Lead (Toronto)
Uplift, Senior Product Manager (Remote)
PwC, Open Banking Payments Director (Toronto)
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