Rate Cut Looks Likely; CFPB’s BNPL Reprieve; Is Bolt Back?

Job market cools. A September rate cut looks likely. CFPB gives BNPL providers reprieve on enforcement. Amount, Chariot announce new funding. Is Bolt back? Klarna launches “Balance.” Zip and Stripe partner.

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A Rate Cut Looks More Likely

Signs of a cooling job market continue to grow. Per a new Fed survey, workers’ expectations of being unemployed in the next four months hit a record high in data that dates back to 2014. But, there’s also a rising number who expect to receive a job offer in the near future compared to a year ago. Meanwhile, revised jobs data show significantly less robust growth than previously thought. Payroll numbers for the 12-month period through March 2024, are likely to be revised downward by more than 800,000. That marks the largest downward revision to the metric since 2009.

Finally, minutes of last month’s FOMC meeting suggest that the “vast majority” of participants believe that, if data continue to come in as expected, a rate cut at the Fed’s next meeting in September would be appropriate. Minneapolis Fed President Kashkari says it is “appropriate” to discuss a rate cut in September, while Fed Governor Bowman indicated she isn’t quite ready to vote for a cut.

CFPB Gives BNPL Providers Reprieve On Interpretive Rule

CFPB Director Chopra struck an unusually accommodating tone in a recent blog post. Chopra indicated that the bureau wouldn’t seek to fine buy now, pay later companies that are working in “good faith” to comply with the recent interpretive rule that some requirements of TILA should apply to their products. The interpretive rule, released earlier this year, make clear the CFPB’s position is that certain protections and requirements of TILA, like regular billing statements and dispute protections, should apply to increasingly popular pay-in-four BNPL plans. Director Chopra wrote in last week’s post, “All of this is part of CFPB’s work to ensure consumers can file disputes and have payments paused while those disputes are being investigated, receive refunds when they return products or cancel services, and benefit from helpful periodic billing statements.” However, not all in industry were thrilled with the announcement. Chopra’s post neither clarified what constitutes a “good faith” effort, nor did it provide a deadline when the bureau would undertake enforcement action.

Amount Raises $30Mn

Account origination platform Amount, which spun off from online lender Avant several years back, has announced it raised an additional $30Mn in funding. Curql, an association of credit unions, participated in the round as a strategic investor. Existing backers QED, Goldman Sachs, WestCap, and Hanaco Ventures also participated in the round. Amount plans to use the new funding to continue developing its technology platform and to focus on growing its market share in the credit union segment. Since 2022, the company has partnered with Velera, the largest credit union service organization. On the investment in Amount, Nick Evens, CEO of Curql, said, “At Curql, we are committed to identifying and supporting fintech companies that can transform the CU member experience – driving relevancy and competitiveness. Our investment in Amount underscores this commitment.”

Chariot Announces $11Mn in Funding

Chariot, which facilitates payment processing for Donor Advised Fund charities, announced it has raised a $11Mn in funding. The round was led by Maveron, with participation from SV Angel, Y Combinator, Spark Capital, and notable angels that include Adam Grant, Angela Duckworth, and Michael Massaro. Chariot’s core offering, DAFpay, enables donors to give with their DAF anywhere they choose to online, thus unlocking more donations with better information. Chariot enables DAF giving for some of the largest charities, including the American Cancer Society, Michael J. Fox Foundation, and Memorial Sloan Kettering Cancer Center.

Is Bolt Really Back?

One-click checkout startup Bolt, a pandemic-era darling seemingly turned cautionary tale, is back – or is it? Bolt’s contentious cofounder and original CEO, Ryan Breslow, left the company in 2022. But now, current CEO Justin Grooms told investors in a letter that Bolt is negotiating a $450Mn Series F that would see Breslow return as CEO. Industry observers immediately seized on the highly unusual deal terms, which, according to initial reporting from The Information, purportedly include a $200Mn investment from an obscure firm, Silverbear Capital, and $250Mn in “marketing credits” from a U.K.-based venture fund, The London Fund.

However, over the course of last week, more details emerged, with Silverbear Capital disavowing involvement in the deal and, instead, an Abu Dhabi-based fund being said to be the one putting up around $200Mn in cash in the deal. Getting existing investors’ approval is likely to be an uphill battle, as the structure of the deal, known as “pay to play,” would require existing investors to buy into the new round in a proportion that is double their existing stake – or see the value of their shares substantially diminished.

Klarna Launches “Balance” Feature

Klarna made news last week, with many outlets reporting the BNPL provider was poised to take on startups like Revolut and Monzo and incumbent banks with the launch of its Klarna “Balance” feature. While that might be more accurate in the European Union, as Klarna holds a bank license in its home country of Sweden, it isn’t an accurate framing for the U.S. market. An examination of the terms and conditions of Klarna Balance in the U.S. shows that it uses a stored value structure, basically a gift card, rather than a prepaid or deposit account structure. Once users put funds into “Balance,” they cannot be redeemed or withdrawn as cash. Rather, they can only be spent with merchants or used to pay an outstanding Klarna debt.

Zip Partners With Stripe

BNPL firm Zip has struck a partnership with Stripe that will see the payment processor make Zip available as a payment method for U.S. merchants later this year. Sellers will be able to enable Zip’s BNPL plans with a single click in their Stripe dashboards, the companies said. Zip’s Chief Commercial Officer said of the partnership, “Our goal at Zip is to provide customers transparent and flexible credit solutions that enhance their financial autonomy while providing merchants access to a new and motivated customer base.” BNPL services can help merchants reduce cart abandonment and increase average order value, though they typically charge a higher merchant discount rate than typical credit or debit cards.