OC morning; marine layer’s thick. Notes open.
TL;DR
- Inflation 2.9% YoY; jobs benchmark revised downward ~911k; Fed path uncertain. Card charge‑offs ~4.15%; delinquencies ~2.98%.
- Capital is moving again: Klarna IPO (~$1.37B raise, ~$15B val), Rainforest B ($29M), Mazlo ($4.6M), OnePay adds MVNO via Gigs, Pipe × Uber Eats working capital.
- Policy tape: court blocks attempt to remove Fed Gov. Lisa Cook (for now); Evolve under probe; usury and routing keep surfacing.
- Read‑through for healthcare fintech: price for spread volatility, lean into debit mix and instant settlement where it pays, and keep routing + sponsor diligence front and center.
Macro
Inflation ticked up to 2.9% while employment was revised downward. The Fed is balancing higher‑than‑hoped inflation against softer jobs. Small silver lining: credit card charge‑offs and delinquencies eased.
Constraint: plan for spread volatility and uncertain rate path—don’t anchor to a straight‑line cut cycle.
Deals I’m Watching
- Klarna IPO: ~$1.37B raised; valuation near ~$15B. Public market appetite for payments models is selective but open.
- Rainforest ($29M B): payments‑as‑a‑service for vertical SaaS—platform‑first motion keeps winning.
- Mazlo ($4.6M): nonprofit finance—niche vertical finance continues.
- OnePay × Gigs: MVNO add‑on; bundling communications with finance can add stickiness (distribution + ARPU).
- Pipe × Uber Eats: embedded working capital where operators already live.
Policy / Regulatory Watch
- Fed governance: a federal judge temporarily blocked removal of Gov. Lisa Cook. Near‑term FOMC continuity matters for rate‑path expectations; the medium‑term story is still inflation vs employment.
- Bank program risk: continued scrutiny of sponsor bank programs (e.g., Evolve probe) keeps third‑party oversight and model risk on the exam sheet. If you run vertical programs, expect deeper evidence on monitoring, complaints, and dispute handling.
- Market plumbing: debit routing obligations and dual‑network enablement keep surfacing; distribution pushes for Zelle/Paze expand reach of incumbent rails; usury debates flare in SMB credit.
Builder Notes (mapping to healthcare fintech)
- Vertical payments and platform economics
Focus beats breadth. See Unit Economics and Deposits → Credit. - Sponsor bank diligence > demo slickness
Durbin status and ops muscle define margins and reliability. Background: Durbin Advantage. - Rails choice isn’t a feature list; it’s settlement behavior
Instant rails change operations, not just marketing. Notes: RTP/FedNow Rails. - Compliance is a moat, not a banner
Credit lines, BNPL, wage access—regulatory muscle makes or breaks them. Our view: KYC/KYB and Compliance Costs.
Thoughtful Analysis: Q3 read‑through for dental/healthcare
- Pricing power and deposit beta
At 2.9% inflation with an uncertain rate path, assume stickier spreads and higher deposit beta for sophisticated practices. For vertical banking, that means pricing cards and working capital for volatility, not a smooth normalization. Debit economics matter more when credit re‑prices. - Debit mix and routing discipline
Practices skew to debit for co‑pays and recurring payments. Durbin‑exempt routing and MCC hygiene (8021) remain first‑order variables. Validate dual‑network enablement at the BIN, not in the sales deck. - Instant settlement where it actually pays
ACH + 835 remittance fidelity still wins for reconciliation; use RTP/FedNow for high‑value timing moments (payroll, supplier crunches) where finality offsets cost. Run file‑level tests; measure disputes, not press releases. - Public markets’ message to payments
Klarna’s rebound signals appetite for scaled unit economics over growth slogans. For vertical SaaS, “payments‑as‑a‑feature” now competes with dedicated payments infra designed for platforms (Rainforest). Pick lanes: PM‑native distribution + platform economics vs merchant‑direct breadth. - Program risk and sponsor expectations
With sponsor scrutiny elevated, be exam‑ready: show ERA/EFT‑to‑bank tie‑outs, Reg E flow‑charts, and model validations. Push controls to the edge (MCC gating, tokenization, velocity) and reconcile daily (BTR/IMAD/OMAD).