The costly journey of Vipps mobile subscription service

Also this week:

  • ⛓️ Stripe Fiat-to-crypto-onramp

  • 💳 The 2022 McKinsey Global Payments Report

  • 🦯 The importance of accessibility

Ice, ice, baby

You know the feeling when you win an argument published in one of the largest newspapers in Norway about the most well-known brand in Norway? I didn’t either until last week. 😉

After two years and millions of money lost, Vipps closes down its mobile subscription service and sells its customers to Ice. “There is no hiding that we believed in development in line with other growth cases in Vipps. We haven't had the exponential growth we expected,” said Rune Garborg the Vipps CEO to Shifter in July. In total Vipps has lost at least 70 Million NOK on their mobile venture.

Two years ago I, together with Leonard Kongshavn from Google, wrote a critique on Vipps mobile subscription service asserting that they didn’t have a good Product Market Fit and questioned if Vipps Mobile would be a service people would miss if it disappeared. The answer is apparently no.

I’m glad it didn’t work out because I root for Nordic Fintech companies’ success! Vipps can be an important export product outside of Norway, and it’s a much harder job for them when they don't focus on their core product: payments. I believe much more in their solution for Buy Now Pay Later where the payment will automatically be paid on the due date, and the customer must actively cancel the payment in order for it not to take place.

If you find this topic interesting I would recommend listening to Shifters podcast where they interview Rune Garborg on Vipps' learnings on this topic and their impressive culture for failing and learning.

⛓️ Stripe Fiat-to-crypto-onramp

Amidst the turmoils in crypto at the moment, Stripe goes ahead and launches a fiat-to-crypto onramp. The onramp is a customizable widget that developers can embed directly into their DEX, NFT platform, wallet, or dApp. Stripe handles all the KYC, payments, fraud, and compliance, removing the need to integrate multiple third-party services. 

As usual Stripe's products are well polished and even included an easter-egg game. (While we’re on the topic of crypto I had to mention the Onion donating $8.3 Trillion In NFTs 😂)

💳 The 2022 McKinsey Global Payments Report

Rein Undheim from our payments team has read the McKinsey Global Payments Report for 2022 so you and I don't have to. Here are his key takeaways with a focus on Norway:

  • Unsurprisingly, digital payment methods are widely used in Norway, with physical currency only used in 3% of overall payment transactions. 2/3 of these digital payments are made with debit cards, only being beaten by Russia.

  • Embedded finance is expected to be a fast-growing market where there are still shares to be claimed. McKinsey points to payment products being some of the first embedded finance products distributors reach to, as they represent substantial revenue pools, but they are also powerful tools for building customer relationships and gathering data that can be used in the future for higher-margin lending products. Vipps in Norway can be seen as an example of this by first offering a payment service to send money between friends and pay for products online and in-store. As written about earlier, They are now waiting for a financial license on a BNPL solution, which will both help round out their product offering to online merchants that are well used to BNPL now and offer Vipps a product with higher margins.

  • McKinsey claims that 90% of the world’s banks are pursuing Central Bank Digital Currencies (CBDC). CBDCs are digital currencies that in opposite to other digital coins, are directly backed by central bank deposits and therefore offer a stable value. Central banks are interested in CBDCs as they see their positions being threatened with cash being at an all-time low all over the world, a growing interest in privately issued digital assets, and a wish to establish greater local control over increasingly global payment systems. McKinsey means that CBDCs will need to gain substantial usage and to some parts displace other payment methods to be successful. A partnership with commercial banks is seen as a key to achieving this with them having knowledge of user needs and behaviors.

🦯 The importance of accessibility

A couple of weeks ago I attended Volumkonferansen. One of the speakers were a blind person from The Norwegian Association of the Blind and Partially Sighted. In the talk he described the life changing moment it was for him the first time he got an iPhone. This video shows the importance of considering accessibility in everything we build – maybe especially when we’re dealing with money:

That's it for this week 👋

Remember, if you’re enjoying this content, please tell all your (fintech) friends to hit the subscribe button! If you have some feedback, you can always just hit reply!

Marius Hauken, partner Stacc X