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TrueLayer Joins ‘Unicorn Club’ as Fresh Funding Chases Open Banking Opps in Europe

Global open banking platform TrueLayer joined the unicorn club this week, as its new $1 billion valuation points to both the opportunity and enthusiasm surrounding open banking in Europe.

Read more: TrueLayer Notches $130M at $1B Value Backed by Tiger, Stripe

The $130 million funding round, which was led by Tiger Management with participation from payments giant Stripe, will allow the U.K.-based FinTech to scale its open banking technology to enable open payments banking, as well as instant and recurring direct-to-bank account payments to people and businesses globally.

As PYMNTS reported, 2021 has been a year of hypergrowth for the firm, with monthly payment volume up 400% and monthly payment value up 800%. The company said it has processed billions in payments, expanded across Europe and doubled its user base.

Related: TrueLayer CEO: Merchants Will Lead Open Banking Payments to Ubiquity

In April of this year, TrueLayer CEO Francesco Simoneschi told PYMNTS’ Karen Webster that the open banking revolution will be led by merchants, with TrueLayer projecting that 60% of individuals in the U.K. will have tried open banking by September 2023.

He added that improving payments capability and functionality will lead to more verticals will gravitating toward open banking, and while there may not be a “big bang” moment, there will be a revolution involving development cycles that expand outward from tech-savvy, digital-first FinTechs to far-flung corners of commerce.

“This is a very young technology and there’s a self-reinforcing dynamic, where we are moving from the early adopters to the more mainstream and mature parts of the ecosystem,” Simoneschi said of open banking.

The company’s U.K. home base was an early adopter of the financial practice in January 2018, when open banking became a regulatory requirement in the country. Since then, application programming interface (API) call volume has increased from 66.8 million to close to six billion between 2018 and 2020.

In August, the firm announced that it had received authorization from the Central Bank of Ireland (CBI) as a payments institution and had established its new European headquarters in Dublin, IBS Intelligence reported.

Making Instant Bank Refunds Possible

In a June interview with PYMNTS, Ossama Soliman, chief product officer at TrueLayer, said that even though EU and U.K. regulations don’t necessarily mandate instant bank refunds as part of open banking, TrueLayer has found value in enabling that functionality.

“Refunds have been the missing piece of the puzzle to make sure that open banking really works,” he said, adding that “for the vast number of merchants, the higher conversion rate of open banking payments, combined with the ability to instantly process refunds and payouts, [result] in an improved end-to-end payment experience.”

TrueLayer recently announced a partnership with British online car retailer Cazoo, with the retailer’s new payment system powered by TrueLayer’s open banking payment method. Cazoo can now enable direct-to-bank account payments and faster refunds for consumers using its platform.

Expanding Open Banking Reach Beyond the UK

And as TrueLayer continues to make its mark in the U.K., global payment giants Visa and Mastercard have accelerated their own moves in the EU open banking space.

Read more: Visa Acquiring Swedish Open Banking Platform Tink for $2.1B

In June, Visa announced its intent to buy Swedish open banking platform Tink for $2.1 billion “to foster innovation and empower consumers in support of Europe’s open banking goals,” according to Visa’s CEO and Chairman Al Kelly.

Founded in 2012, the Stockholm-based FinTech operates an open banking platform that allows users to connect to over 3,400 European banks and institutions through a single API. The platform also gives banks, FinTechs and merchants access to custom financial data and products — which, when combined with Visa’s infrastructure and fraud prevention, the companies expect to advance open banking in Europe. 

See also: Mastercard to Buy Denmark’s Open Banking Tech Firm Aiia

Related news: Mastercard’s Jess Turner: Pandemic Aside, Consumers Call the Shots

Earlier this month, Mastercard agreed to acquire one of Europe’s top banking tech providers, Aiia, following its $825 million acquisition of U.S.-based open banking platform Finicity last year.

See also: Finicity CEO Sees Open Banking, Consumer Permission at Core of Lending’s Future

The Danish open banking technology company has over 400,000 users. Similar to Tink, it bridges the connection to banks and financial institutions (FIs) via a single API, onboarding hundreds of banks and FinTechs onto its open banking rails since launching in 2010.

In an interview with PYMNTS, Mastercard’s Executive Vice President of North America Products and Innovation Jess Turner said the increasing prevalence of instant payments and consumers’ desire to move and control their own financial data and information has led the firm to actively seek solutions to help people have more choices and take advantage of faster payments.

“I think we’ll continue to expand on those use cases […] and we’ll continue to see how we can innovate and augment for different experiences, Turner said, adding that “things like enabling easier account acquisitions, and making it easier for consumers to move data, open a new account and send and receive funds — these are things that are really meaningful for consumers.”

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