Canadian Fintech: Interac Gets Grilled 🔍
Wealth One Bank acquisition. Loop Financial & EQ Bank launch credit card.
Good morning!
Welcome back to the Canadian Fintech Newsletter, an industry roundup for founders, operators and investors.
Every Monday we break down the hottest topics in the industry in under 3 minutes.
Later today the Liberal’s will be dropping their long awaited Fall Economic Statement (FES)... so long, that people are referring to it as the Winter Economic Statement 😂.
The FES, also sometimes called “Canada’s mini-budget”, gives Canadians a look into economic priorities for the year. As always, I’ll put together a deep dive on its impacts on Canadian fintech later this week.
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💰 Funding
Cyder, a Toronto based loyalty platform for credit unions, raised $1.5m led by MaRS IAF.
This is Cyder’s second product in market. Their first was a white-label browser extension that allowed FIs to track customer behaviour in order to make personalized offers.
Flare, a Montreal based cyber security threat monitoring startup raised $42m from Base10 in SF, and Canadian firms Inovia, White Star & Fonds FTQ.
🤝 M&A
The Competition Bureau has approved Globalive’s acquisition of Wealth One, a schedule 1 Canadian bank established in 2016, which caters to Chinese-Canadian clients.
Anthony Lacavera, the owner of Globalive, wants to convert the small bank into a challenger brand, similar to what he did with his previous company Freedom Mobile (fka Wind Mobile) in the telecom market.
The bank is up for sale because its three owners have alleged ties to the Chinese government.
The deal is still pending further regulatory approvals.
Paystone, a London based payment processor acquired Akroo, a Hamilton based publicly traded competitor.
Both companies have pursued a rollup strategy to fuel their growth.
A MESSAGE FROM FINANCE EVENTS
🏎️ Automotive Finance is back in the drivers seat…
Early bird tickets for Canada’s largest automotive finance conference are on sale now!
Join hundreds of banks and fintechs for a full day conference in partnership with the Canadian Auto Show.
🚀 Product
Loop Financial, launched a multi-currency small business credit card issued by EQ Bank. This is a first for EQ.
LottoLend, a prize-linked consumer loan launched in Alberta.
Borrowers are entered into a weekly lottery when loans are paid back on time.
Ceedar, a Vancouver based bookkeeping automation startup launched.
Motiv, a Calgary based venture studio launched Advisor Desk, a financial planning tool that connects wealth advisors with clients.
This is a joint venture with WealthCo, a Calgary based wealth management software company.
Motiv is also behind CanTax, a free tax advisory service.
⚖️ Policy
Interac, Canada’s debit payment and interbank money-transfer system announced that it is moving to a “flat-fee model”.
The current “volume based model” heavily favours big banks, who aggregate much of Canada’s payment volumes because they are on a short list of institutions that have direct access to the system.
Interac charges participants between 6 and 43 cents for every e-transfer based on the volume they send.
Interac is owned cooperatively by several of the banks.
This pricing switch comes amidst the competition commissioner as well as various members of parliament grilling Interac over its lack of transparency.
Exchange Bank of Canada was fined over $2 million by FINTRAC over AML concerns.
A Florida based TD employee has been charged by the US Department of Justice with bribery connected to the bank’s drug money-laundering scandal. This is the 3rd employee to be charged.
Circle, the issuer of USDC, the world’s 2nd largest US-dollar backed stablecoin registered with Canada’s securities regulator.
Unlike in the US, Europe and Australia, Canada’s approach to regulating stablecoins has been to treat them like a security, meaning they are viewed more like mutual funds than they are like systems of near-free money movement.
Some experts believe that stablecoins would be better regulated under the Bank of Canada’s new Retail Payments Oversight Framework, a system designed to provide guardrails to Canadian payment service providers.
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Have a great week! See ya 👋