Payment apps could use new tax rule to their advantage

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January 15, 2022

The IRS' updated tax rule could open new revenue opportunities for payment providers

Effective January 1, 2022, payment apps like PayPal, Venmo, and Cash App are required to report users' business payments that exceed $600 in a calendar year to the Internal Revenue Service (IRS), per NBC News.

The updated rule won't affect payment apps from a profitability standpoint—it just makes them provide tax documentation for more business users.

Players like PayPal and Cash App could use the new tax rule to their advantage by creating payment-adjacent tax services that help limit the friction some small businesses face during tax season—like Stripe's tax offering.

The new tax rule underscores one of the biggest advantages that governments see with digital payments: traceability. Unlike cash payments, digital transactions can easily be tracked—and, in turn, easily taxed. By updating digital payment tax rules, governments can mitigate tax evasion.

Insider Intelligence's Adriana Nunez has the full story.

BRIEFING HIGHLIGHTS

Citibank shores up its core offerings with plan to shrink its Mexico footprint

Citibank plans to divest its consumer, small business and middle-market banking businesses in Mexico.

PayPal mulling proprietary stablecoin to help drive platform growth

PayPal confirmed that it's exploring a stablecoin backed by the US dollar after developer Steve Moser discovered code and images referencing "PayPal Coin" inside the PayPal iPhone app, per Bloomberg.

Goldman Sachs ties up with GM for second co-brand card

Goldman Sachs partnered with General Motors (GM) to launch the new My GM Rewards Card, according to Bloomberg.

Starling's global BaaS plans for 2022 could overtake the rest of its business

Starling Founder and CEO Anne Boden gave an overview of the company's plans to offer banking-as-a-service (BaaS) across the world in the new year.

Fintech funding hit record levels in 2021—but 2022 could be even bigger

CB Insights' 2021 State of Venture Report confirms fintech funding smashed several records last year, with $132 billion raised. Fintechs captured $1 in every $5 from venture capital firms.

Twig and Responsible fundraise on the appeal of the circular economy

Two recommerce fintechs based in the British Isles impressed investors with pitches that promoted their circularity and sustainability.

Apple's payments business enhancements position it for a prosperous 2022

Apple released a roundup of the updates to its payments business and other service upgrades in 2021.

UK fintechs smashed funding records in 2021: Why they'll do it again this year

UK fintechs raised a record of more than $11.6 billion in funds across 713 deals last year—a 217% increase from 2020, per Innovate Finance, an industry body representing UK fintechs, using data from PitchBook.

SMB-focused fintech Koinworks scores mega-round to plug financing gap

Indonesia-based small and medium-sized business (SMBs) financial platform Koinworks raised a $108 million Series C round comprising $43 million in equity and $65 million in debt capital to supply loans.

Transparency is vital for earning digital trust of banking consumers

Companies are more optimistic about consumers' level of trust in their technology than consumers themselves are, per data published by PYMNTS—and this mismatch in perception has significant implications for digital-banking relationships.

RESEARCH IN FOCUS

How High-Net-Worth Individuals Invest

With $68 trillion in assets set to transfer to younger generations over the next 30 years, wealth managers who target high-net-worth individuals (HNWIs) must adapt by using digital solutions to enhance their existing white-glove services—not replace them. This report examines the key characteristics of high-net-worth consumers in the US—which is home to the highest number of HNWIs worldwide—and their financial services needs. It looks at how the HNW investor-wealth manager relationship has changed in recent years and how it will evolve amid a massive generational wealth transfer. And it identifies three major trends that will dictate how providers serve HNWIs going forward.

Get the full report →

CIBC Mobile App Spotlight 2021

Slowing smartphone banking user growth this year is forcing Canadian financial institutions (FIs) to double down on enhancing their mobile offerings. This report shines a light on the features CIBC could add to strengthen its mobile banking app to win new users and better service its existing customer base. This report focuses on the findings from our inaugural Canada Mobile Banking Emerging Features Benchmark Study, which scores the seven largest FIs based on their support of 42 advanced mobile banking emerging features. Our report highlights the in-demand features that CIBC could add to its mobile app to make it more competitive.

Get the full report →

AI in Wealth Management

Evolving client expectations for more personalized services are threatening wealth managers' ability to retain existing clients and snap up new ones. But incumbents can face these changes head on by tapping AI to hyper-personalize their offerings across the customer journey. This report dives into the challenges facing wealth managers and how AI can help incumbents overcome them; an outline of what wealth managers must put in place to enable successful AI implementations; and the key AI front-office use cases that will boost acquisition and retention.

Get the full report →