Fed Cuts Rates; PayPal & OpenAI Team Up; Zelle Teases Remittances

Fed cuts rates by quarter point. BMG Money scores $360MM forward flow deal. Ava announces seed round. Barclays acquires Best Egg. PayPal and OpenAI team up. Revolut considering U.S. charter. Citi, Coinbase partner. Zelle teases remittances.

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Fed Cuts Rates, But Future Outlook Uncertain

The Federal Reserve cut rates for its second meeting in a row, but Fed Chair Powell is tempering expectations for further reductions. The latest 0.25% point cut puts the Fed’s benchmark short-term rate between 3.75% and 4%, the lowest it has been in three years. The FOMC voted for the cut 10-2. Kansas City Fed President Jeffrey Schmid dissented, preferring to keep rates where they are, and recently appointed Fed Governor Stephen Miran voted for a larger half-point cut.

Powell’s remarks, which are always watched closely by markets, were particularly pointed regarding the prospect for another rate cut at the Fed’s December meeting, with Powell saying it was “far” from a foregone conclusion. The Fed’s decision-making has been complicated by a government shutdown that has limited its access to key economic data, including Bureau of Labor Statistics unemployment data.

BMG Money Announces $360MM Forward Flow Deal

Specialty lender BMG Money announced it has inked a deal with Hudson Cove for a $360MM debt facility. The company offers financial wellness tools and loans via employers to thin-file employees. Through the forward flow agreement Hudson Cove will purchase up to $360MM of loans originated by WebBank. BMG Money’s CFO Dan Seguine commented on the deal to Fintech Futures, saying the new facility will allow the company to “efficiently deploy additional capital to more overlooked consumers across the U.S.”

Ava Announces $15.5MM Seed Round

Credit building app Ava announced that it has raised $15.5MM in seed funding. Investors that include Sure Ventures, Twine Ventures, Firebolt, Transform VC, Greylock, and Burst Capital participated in the round. The company, founded by veterans of Stripe and Credit Karma, aims to help users simplify their finances through AI-powered personal financial management. The app works on a subscription model, charging users $10 per month. The company plans to use the funding to expand its product and engineering teams and develop a “one-click” loan origination flow. Ava cofounder and CEO Omar Sinno commented on the fundraise, saying, “In a world where financial products are becoming commodities, people shouldn’t have to settle for subpar credit scores they don’t deserve and waste hours reapplying or renegotiating loans. Our goal is to eliminate complexity by using AI to provide personalized recommendations and to execute them on behalf of the user.”

Barclays Acquires Best Egg

U.K. bank Barclays is shelling out some $800MM to acquire personal lender Best Egg. The deal is designed to complement Barclays’ existing consumer credit card and investment banking franchises in the U.S. by allowing the bank to deepen its relationships with asset managers. The deal will be funded by the sale of receivables from Barclays’ American Airlines cobrand program, which will be purchased by the airline’s new cobrand partner, Citibank. Best Egg services approximately $11Bn in outstanding personal loans and expects to originate another $7Bn this year.

PayPal and OpenAI Team Up for Agentic Commerce

PayPal is teaming up with OpenAI to power instant checkout and agentic commerce within ChatGPT. The deal will help the tens of millions of merchants that offer PayPal as a checkout option to be more easily discovered within ChatGPT. PayPal will adopt the “Agentic Commerce Protocol” as part of the effort to expand merchant discovery and payments within ChatGPT. Commenting on the partnership, PayPal President and CEO Alex Chriss said, “Hundreds of millions of people turn to ChatGPT each week for help with everyday tasks, including finding products they love, and over 400 million use PayPal to shop. By partnering with OpenAI and adopting the Agentic Commerce Protocol, PayPal will power payments and commerce experiences that help people go from chat to checkout in just a few taps for our joint customer bases.”

Revolut “Considering” U.S. Charter

Revolut’s U.S. CEO, Sid Jajodia, said the fintech is considering pursuing an American bank charter to ensure it has a “seat at the table” with regulators. Jajodia made the comments at last week’s fintech industry confab, Money20/20. Revolut currently partners with Lead Bank and previously worked with Metropolitan Commercial Bank as its sponsor. Jajodia argued that obtaining its own charter would allow it greater freedom to innovate more quickly, more control over its approach to compliance, and the benefit of its own balance sheet and deposits. During the conference, Jajodia commented, “Any time you’re working with a partner bank, there’s another layer of compliance, there’s another layer of rules that you have to work through. If you truly want control of your destiny and you want all of that speed, you should be able to launch as quickly as you can.”

Citibank, Coinbase Partner on Stablecoins; Zelle Teases Remittance Plan

Citibank and Coinbase are teaming up in what the bank is describing as a logical extension of its “network of networks” approach. The partnership aims to further develop payment capabilities for Citi’s institutional clients. The starting point will be a focus on streamlining on- and off-ramping between stablecoins and traditional fiat currencies. Brian Foster, Coinbase’s head of crypto-as-a-service, commented on the announcement to Banking Dive, saying, “Coinbase’s strategy on our partnership with financial institutions is to provide infrastructure which requires lots of specialized expertise that we’ve built over the years, and we hold out our infrastructure across trading, custody, payments, stablecoins, data, et cetera, to help those firms build great products for their clients. The partnership with Citi is a great example of this.”

Meanwhile, Zelle parent Early Warning Services said last week that it plans to let consumers use stablecoins to more easily make cross-border peer-to-peer payments. The announcement was light on details, however, and didn’t specify which stablecoin(s) Zelle plans to use or a timeline for when the capability may go live. Early Warning Services CEO Cameron Fowler commented on the initiative, saying, “Zelle transformed how Americans send money at home. Now, we're beginning the work to bring that same level of speed and reliability to Zelle consumers sending money to and from the United States, building on what we have learned from the market, our users and our network banks and credit unions.”