How many of you have heard of Tink? No, I’m not talking about the American rapper. How many have heard of Tink, the Swedish fintech startup? It is a cloud-based open banking platform that provides infrastructure products to enable the future of financial services. Their goal is to offer tools to allow anyone from big banks and fintech to startups to build the future of financial services across Europe.
There’s a rule in Europe that requires banks to allow access to customer data by registered third-party providers, with users’ consent. It’s open banking and more personalized to the user, and Tink’s API allows customers to access aggregated data, verify ownership, and build risk-assessment models.
Ok, by now you may be asking, what the heck does that mean or where is this story going?
Well, this one company bought Tink for over $2 billion dollars, which will bring more than 250 million customers across more than 3,400 banks and financial institutions in Europe under their corporate umbrella. This expansion into Europe is only part of their plans to grow into different regions and different types of business.
This one company just posted strong earnings at the end of April and has less exposure to interest-rate risk.
Who just bought Tink, you ask? Keep reading below.
Today’s trade idea is in the financial sector…
Visa (V) is making moves into digital payments and has made quite a number of moves in the last couple of months as it expands into other areas outside of credit card payments.
Last August Visa partnered with PayNearby, India’s leading branchless banking and digital payments network.
On Dec 8th, 2021 Visa launched Visa Consulting & Analytics to help clients navigate through cryptocurrency.
In January they announced a new platform called Visa Acceptance Cloud (VAC) that allows almost any device to be transformed into a cloud-connected payment terminal.
In March, Visa became the first major payments network to settle transactions in USD Coin, a stablecoin back by the U.S. dollar, over the Ethereum network. The pilot program is with Crypto.com, a Visa partner and one of the largest crypto platforms. This is just the beginning of their journey into crypto, and even the Metaverse.
The purchase of Tink should be complete by June 24th.
I also mentioned that Visa has less risk associated with interest rates and that’s because they don’t earn revenue tied to interest or fees paid by the cardholders. They receive their revenue from client services, data processing, over-the-border transactions and licensing fees in over 200 countries.
This past April Visa posted strong Q2 earnings amid a rebound in global travel (I think we’ve mentioned a rebound in travel once or twice in this newsletter). Revenue climbed 25% year-over-year, which beat estimates.
Oh, and if that wasn’t enough, e-commerce is still on the rise after the pandemic and did I mention that travel is seeing an uptick this summer? Transactions of travelers have long been moving away from cash, checks, or any other form in favor of digital transactions.
I know we’ve had a couple of up days in the market, so I don’t want to go crazy with too many bullish ideas here, especially since this chart staring at a resistance line around $215, but I like the story behind Visa right now.
For the aggressive types, it’s bouncing off the lower line and could march up from $204 to $215 or even $220.
For the conservative types, you’d want to see a break above $230 or even $250.
I like the expansion and summer travel story with Visa and I’m certainly keeping my eye out to see if Visa will be a future player in the Metaverse.
If you have any questions, comments, or anything we can help with, reach us at any time.
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