Consumer Confidence Drops; Regulators Withdraw Lawsuits; Sezzle Revenue Doubles

Consumer confidence drops. Financial regulators withdraw Biden-era lawsuits. Virginia bill would extend rate caps. Taktile’s Series B. Toast expands into retail. Cash App begins rolling out BNPL. Sezzle revenue doubles.

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Consumer Confidence Drops

The U.S. economy is on a path back to 2% inflation, Atlanta Fed President Bostic said in remarks he gave last week. But that doesn’t mean there won’t be bumps along the way. The Fed’s current policy stance, which Bostic views as restrictive, needs to stay where it is for now, he argued. But Bostic added it will be necessary to ease rates before hitting the 2% target to minimize the risk of pushing the economy into recession or driving up the unemployment rate. Meanwhile, consumer confidence is dropping. The Conference Board’s gauge of consumer sentiment dropped to 98.3, making it the third month of declines. Consumer inflation expectations rose, hitting the highest level since May 2023.

Regulators Move to Drop Suits

As President Trump’s staffing choices and regulatory agenda continues to come into focus, various financial regulators have withdrawn suits that had been previously filed under the Biden administration. The CFPB moved to dismiss a case it had filed against small-dollar lending platform SoLo Funds. The CFPB’s acting director, Russ Vought, described the suit as an example of the “weaponization” of consumer protection. The suit had alleged SoLo Funds deceived borrowers about the true cost of credit, by marketing its loans as “0% interest” while collecting “tips” and “donations.” Nearly all borrowers paid a tip, donation, or both, with APR equivalents in the triple digits, given the short durations and small amounts of the loans.

Meanwhile, the SEC has backed away from the aggressive posture towards crypto it had adopted under former SEC Chair Gary Genslar. Fresh on the heels of dropping its case against Coinbase, the SEC has now dropped an investigation and potential enforcement action against Robinhood, the company said in a blog post. Robinhood had received a Wells notice last May. Robinhood’s chief legal and compliance officer Dan Gallagher said, “Let me be crystal clear—this investigation never should have been opened. Robinhood Crypto always has and will always respect federal securities laws and never allowed transactions in securities.” The SEC also dropped an investigation into decentralized crypto exchange Uniswap labs. The investigation, which had been ongoing for more than a year, stemmed from the SEC’s position that Uniswap was operating an unregistered exchange and issuing unregistered securities. Uniswap CEO Hayden Adams said, “This is a huge win—not just for Uniswap Labs but for DeFi as a whole.”

Virginia Bill Would Extend Rate Caps

A new measure proposed in Virginia would severely constrain fintech lending in the state, if it becomes law. The bill, SB 1252, would require fintech companies and the banks they work with to adhere to the state’s 12% rate cap. Virginia’s current usury legislation has numerous carveouts that exempt both in- and out-of-state lenders from the 12% ceiling. SB 1252 would add “anti-evasion” measures to the cap, making it apply to any person or company “making, offering, assisting, or arranging a debtor to obtain a loan with a greater rate of interest, consideration, or charge than permitted under (the General Rule) through any method, including mail, telephone, Internet, or any electronic means, regardless of whether the person has a physical location in the state.” The anti-evasion provisions are designed to prohibit firms that partner with banks to “export” the rates of those banks’ home states that exceed the Virginia usury limit. The American Fintech Council urged Virginia Governor Glenn Youngkin to veto the measure. AFC CEO Phil Goldfeder said of the proposed law, “Responsible fintech companies and innovative banks have worked collaboratively with regulators to expand financial access in Virginia, but this bill would undo that progress and harm consumers without providing any clear consumer protection benefits.”

Taktile Raises $54Mn Series B

Decision engine platform Taktile announced last week that it has raised a $54Mn Series B. The round was led by Balderton Capital, with participation from existing investors that include Y Combinator, Index Ventures, Tiger Global, and former Treasury Secretary Larry Summers. The company said it had quadrupled its customer base in 2024 and grown annual recurring revenue by more than three times. Taktile’s decision engine and data marketplace enable its clients to easily access new data sources, like credit bureaus and open banking data, for use in decision workflows. Clients include business neobank Mercury, Mexican online lender Kueski, and European insurance firm Allianz.

Toast Expands into Retail

Restaurant point of sale system Toast is eyeing an expansion into retail establishments, the team said on its earnings call last week. Specifically, Toast is targeting food and beverage retailers, such as convenience and grocery stores. Toast’s CFO said the company will expand its “retail-specific” sales team this year. The company already serves about 134,000 businesses and is looking to add 10,000 customers in new segments, including retail and international businesses. The firm hit profitability last year, reporting about $33Mn in net income.

Cash App Starts Offering BNPL

After paying $29Bn to acquire buy now, pay later firm Afterpay, Block is beginning to roll out the service to Cash App users in some markets. Eligible users in 20 states who have a Cash App debit card will have the option of using the service. About 25Mn users have signed up for the P2P payment app’s debit card. The company’s chief financial officer, Amrita Ahuja, commented, “We are rolling it out to new customers after a year of strong testing. We see this product as another way for customers to manage their money and to drive increased spending through the Cash App card.”

Sezzle Revenue Doubles

In other BNPL news, Sezzle reported that its fourth quarter revenue doubled vs. the year prior on strong holiday demand. The company posted $98.2Mn in revenue in Q4 on the back of gross merchandise volume of $855.4Mn. Active customers ticked up about 5% to 2.7Mn. Sezzle CEO Charlie Youakim commented on an analyst call that it’s still “early innings,” though the relatively slow pace of customer growth and fiercely competitive market for BNPL run somewhat counter to that claim. Youakim commented on the appeal of BNPL, saying, “The BNPL product can give users greater flexibility in payments and match their payments to their budgeting needs. And in a worst-case scenario, it can help users avoid the cycle of debt — because if they can’t make a payment, then they aren’t allowed to make another purchase. The same can’t be said for some other payment methods.”