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Retail investors can buy into Robinhood IPO stock

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Robinhood Markets Inc. announced Wednesday its latest alteration to its share distribution, allowing firms issuing shares via the IPO Access platform to reserve stock for certain associates to the company, according to Reuters. 

The trading platform’s Directed Share Programs (DSP), also referred to as “friends and family” offer, delivers workers, consumers, vendors, and various other members with a direct relationship with the trading company the chance to obtain shares at the initial public offering (IPO) valuation.

This shift in tactics for the FinTech company, DSPs, will deliver members of the public familiar with Robinhood with the possibility of buying any share at IPO price, valued at $2.06 per share. And, since the company works in synchronization with Wall-Street level banks to obtain allocations for retail investors. This tactic will permit investors to carve up their interest with the trading company.

Any investor who receives an IPO allocation will have the utmost ability to obtain a share at an IPO valuation that is typically below the market price when trading on an exchange market begins.

The strategy helps raise demand on Robinhood IPO stock instead of the sum of shares offered by the company before the public offering.

Robinhood Markets Inc. revealed that it has already partnered up with 12 firms, making IPOs accessible to users, exhibiting that its most recent share offering is made accessible to a large sum of retail investors.

In parallel, the financial firm listed an additional 660,000 funded accounts in its third-quarter (Q3), payment writes, resulting in a total sum of funded accounts of 22.4 million, signaling a 97 percent rise in a fiscal year. Also, its customer base heightened its horizon by almost doubling its monthly active users Year-over-Year (YoY).

Formerly, renowned institutional investors and funds were the first in line to access IPO allocations. As the main controllers of share allocations, investment banks prioritized affluent Wall Street clients, leaving investors with hardly any alternatives to buy in a stock of a newly listed firm. This situation can only happen once the company’s shares initiate trading and end up with a higher valuation.

Last week, Robinhood endured a heavy share drop below its IPO, mirroring the fall of famous cryptocurrencies, such as meme coin, Dogecoin. This halted investors’ efforts from further investing in the online brokerage led by the plunge in its user growth.

Daryn is a technical writer with thorough history and experience in both academic and digital writing fields.

FinTech

FinTech Companies to Uplift Africa’s Offline and Digital Payments

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The Covid-19 pandemic paved the way for a comprehensive technological adoption to push digital payments platforms to reach thousands, if not millions, of users in Africa, with the adoption of contactless means to conduct transactions.

What was once perceived as a luxury for making payments now has become a necessity for the sustainability of Africa’s financial sector, more specifically, the continent’s technological, financial sector (FinTech)

Since 2010, Africa has always been at the lead in the payments space mobilized by digital money services. Now, while the pandemic did indeed change digital innovations’ tides, one factor that was significantly affected by Covid-19 was the adoption of digital payments.

Africa’s embrace of digital payments in many industries, demographics, and payment services, and some companies are seeking to drive the continent’s innovations, spreading growth across more than 35 African countries. 

African power is accelerating the modernization of digital payments on a global, regional, and local scale to develop a much more incorporated connection in the continent’s countries, such as South Africa, Senegal, Cote D’Ivoire, Cameroon, Ethiopia, and much more. 

Earlier this year, the GSMA Association released a report demonstrating how mobile money accounts increased by 43 percent, growing to hit 1.2 billion users, all from African regions. The Year-over-Year (YoY) growth rate highlights the market’s capacity in obtaining offline payments is much more monumental than that of online payments.

This will structure the path for upcoming plans to empower the continent’s offline payments while synchronizing focus on emboldening online payment services. 

In parallel, the report also showed that in the sub-Saharan Africa region alone, almost 44 million enterprises of all sizes and influence are investing their power to provide jobs that could play a fundamental role in serving Africa’s economy and growth. Most of these firms offer to provide services or hire employees to work on offline or cash payments.

And who better to steer Africa’s digital payments ecosystem than fintech companies.

These firms are seeking out new ventures in the continent by leveraging collaborations with the various companies in the sector, be it with banks, telecom operators, and well-known enterprises, to pilot the accession of the FinTech sector in Africa.

Given that digital payment’s popularity is on an exponential rise in the region, from paying bills and accessing critical services to peer-to-peer transactions to conducting certain purchases, it will set the first stones to build the needed infrastructure for retailers and enterprises to extend their digital capacities, to accommodate people’s shift in becoming less independent on cash.

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‘Buy now, pay later’ catches on just in time for holidays

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'Buy now, pay later' catches on just in time for holidays

As Americans shop for the holidays, they will likely see a swarm of offers to get their gifts now but pay for them later in fixed monthly installments.

Fueled by several hot Silicon Valley startups as well as a push by the big credit card companies, “buy now, pay later” is now available for purchasing a $1,500 Peloton exercise bicycle as well as a $60 floral bouquet. Thousands of retailers, big and small, often have an option on their websites to pay for a purchase in installments at checkout. In the case of credit cards, customers are being allowed to create fixed payment plans days or even a few weeks after the purchase.

Americans seem to be champing at the bit to try this financial option, which has been common outside the U.S. for some time. One major credit card company says roughly six out of every 10 of its U.S. customers started a buy now, pay later program for the first time this year, and the Silicon Valley-backed companies who offer these plans are seeing tens of thousands of new customers every week.

“My shopping habits can be a bit impulsive, so I like the ability to break it up over several payments,” said Shahin Rafikian, 26, who lives in Los Angeles and has used several buy now, pay later services to purchase concert tickets, vinyl records and other items.

Rafikian said he would have likely purchased fewer large-ticket items if the cost had just gone onto a credit card that never got paid off.

Industry advocates say buy now, pay later programs are preferable to credit cards because there are fixed monthly payments and any interest is clearly stated upfront. Consumer advocates, typically skeptical about any new financial product, also have been relatively more positive about buy now, pay later since any plan would have a beginning and end date. Most of their worries concern any fees that might be associated with late payments.

“These products do encourage people to pay purchases off quicker and usually with less interest, but if people are using them to simply buy more than they should and getting over their heads, paying late fees, etc., are they really helping manage people’s expenses?” Lauren Saunders, associate director for the National Consumer Law Center, said.

Adobe Digital Economy Index, which analyzes direct consumer transactions online. said revenue on Cyber Monday from buy now, pay later plans rose 21% from a year ago.

Buy now, pay later is not a new product — services or products such as layaway, monthly payments on large purchases and even retail credit cards have existed for decades. What’s different is how it’s being offered, and who is offering the service.

Instead of telling a customer to apply for a store-branded credit card, which often can only be used at that one retailer, companies have added financing options provided through third-party companies such as Affirm, Afterpay or PayPal at their online checkout.

There are typically two different types of buy now, pay later services: the short-term payment plans that break a purchase up into four or six bi-weekly payments, and the longer-term installment loan-like products that Affirm offers.

PayPal co-founder Max Levchin started Affirm in 2012. The $32 billion company went public this year and effectively made Levchin the latest PayPal alumnus to become a billionaire.

With its buy now, pay later widget on many retailers’ websites, the company has seen extreme growth in the past few years. Affirm said in November that 8.7 million Americans are using its buy now, pay later services, more than double from a year ago. The company signed up 1.6 million new customers in the U.S. and Canada just in the last 90 days.

Tens of thousands of Americans became familiar with Affirm and the buy now, pay later option through its partnership with exercise equipment company Peloton.

One of them is Fallon Oeser a 26-year-old content strategist who lives in Ohio. She bought a Peloton bicycle in the summer last year, when the lockdown attracted many Americans to at-home exercise equipment.

“I’ve got student loans, so I knew I was taking on some responsibility here by taking out a loan. But it made the purchase more accessible and it worked for my budget,” she said.

Levchin, 46, said he started Affirm partly because when he was younger credit cards ruined his credit and buried him in interest and fees. He said he wanted to create a financially healthier product that would allow people to buy things on credit.

“We knew it was going to be gigantic a long time ago. It’s just at the kind of scale now where it’s basically impossible to ignore,” Levchin said in an interview in San Francisco.

The option to spread more routine purchases over time is going to be even more widespread in the coming months. At a café, Levchin paid for a $22 lunch by splitting the payments into four biweekly payments of $5.50. The company is testing a debit card that will allow customers to decide whether to pay any purchase in total or spread it over time.

The cost of doing pay-over-time can vary with Affirm and other buy now, pay later providers. A six-to-eight-week purchase may carry no interest at all like the $22 lunch. In some cases, the merchant has decided to pay the interest for the customer. But other consumers could pay as much as 30% annual interest on these large purchases with Affirm.

Afterpay does not charge interest on its purchases, but does charge borrowers a late fee if they miss a payment, up to 25% of the loan’s value. Affirm does not charge late fees on any purchases, but typically is willing to lend larger amounts and charge interest on longer-term loans .

The interest in buy now, pay later does not seem to be slowing.

A September study written by consulting firm Accenture, but commissioned by AfterPay, estimates that roughly 6% of all dollars spent online will be on buy now, pay later programs by year end. That figure is forecast to be 13% of all spending by 2025. That figure was basically zero a few years ago. Two major retailers — Wal-Mart and Target — have partnered with buy now, pay later companies like Affirm. Wal-Mart got rid of its layaway program in favor of buy now, pay later..

Credit card companies, seeing the potential impact of buy now, pay later on their business model, have tried to adapt. American Express, JPMorgan Chase and Citigroup all now offer similar payment plans for items purchased on their cards. A report by consulting firm McKinsey found that buy now pay, later startups diverted between $8 billion and $10 billion in revenue from traditional banks that would have likely financed these purchases a few years ago.

AmEx said 58% of its customers have set up a purchase plan for the first time this year, and more than $5 billion worth of purchases have been put on “Pay It, Plan It” agreements.

The rapid growth of buy now, pay later has also caught the attention of politicians and regulators. The House Financial Services Committee held a hearing on buy now, pay later programs earlier this month, where politicians asked for the Consumer Financial Protection Bureau to put more emphasis on monitoring the growth of this type of financing.

“These products raise important questions about the use of consumer data, the exploitation of spending patterns, the application of lending laws and the potential for unsustainable levels of consumer debt,” said Rep. Steven Lynch, D-Massachusetts.

The concern about overspending with these programs is real, Rafikian said.

“At first it was fun to have access to items typically out of my price range, but sometimes you get surprised and a little miserable that you have all these new payments due,” he said.


SAN FRANCISCO (AP)

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Millennial Money: Sustain generosity beyond the holidays

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2020 asked a lot from us. We faced new challenges and reckoned with old ones, and often the world’s problems collided with our own individual needs. Help — whether in donations or even just attention — might’ve been hard to give when you required some yourself.

If your finances are in better shape this giving season, you can be more strategic with your dollars. The same issues you felt strongly about last year may not be on your priority list now. Perhaps the reverse is true — you’re more determined than ever to support the causes you care about.

Here are tips on prioritizing causes, supporting them effectively and making room in your wallet for sustained giving.

YOUR PRIORITIES CAN SHAPE YOUR PLAN

Write down the two or three causes that matter most to you, whether it’s a global issue like slowing down climate change or something closer to home, like supporting your local animal shelter. This is the start of your giving plan. If you’re anything like me, a giving plan may serve as a guidepost for your dollars when tragic news events clamor for your attention or injured puppy photos on your social media feed play on your emotions. I end up making impulsive donations, which are helpful and feel good at the moment, but they’re easy to forget and don’t make a lasting impact.

You might also go bigger and really focus on your values in the giving plan, using them as fuel to be more intentional and proactive with your efforts beyond the holidays.

Think about the kind of philanthropist you want to be in 2022 and then plan for it, says Holly Belkot, manager of strategic giving at GlobalGiving, a nonprofit based in Washington, D.C., that supports other nonprofits by connecting them to donors and companies.

Planning doesn’t just apply to monetary donations or time spent volunteering. Say you care about climate change. Belkot suggests setting yourself a goal of learning something new about the effects of environmental damage in January, watching a documentary about deforestation in February and so on.

A SMALL, REGULAR DONATION CAN MAKE A BIG IMPACT

One powerful way to champion your favorite cause is through small, recurring donations.

“Recurring donations are the lifeblood of nonprofits,” says Soraya Alexander, chief operating officer at Classy, a digital fundraising platform for nonprofits based in San Diego, California. Alexander says the majority of one-time donors do not come back to support a nonprofit, and it’s a resource-intensive process for the organization to find new ones.

For millennials, she says, who are both passionate about sustained giving and already used to Netflix-style subscription payments, recurring donations are an easy way to make a big impact. “Ten dollars a month is going to have higher payoff for the organization and should make it easier for you to give a greater amount than you might normally feel comfortable with.”

Just as a monthly budget allows you to plan your spending, these donations allow nonprofits to plan operations for the year. Since many organizations automatically sign up regular donors to receive newsletters or project updates, recurring donations also allow you to stay engaged with the group.

HOW TO CHOOSE WHICH ORGANIZATION TO SUPPORT

You’ve got your giving plan in hand and know the importance of recurring donations. Now how do you actually choose where to send your money?

“It can be really overwhelming when you care about something but you don’t know what the ‘right’ nonprofit is to support,” Belkot says.

To solve this conundrum, GlobalGiving selects a handful of nonprofits working on the same issue and groups them together into a “fund” that individuals can donate to. Examples include a Girl Fund, aimed at improving the lives of girls around the world, or a Climate Action Fund. Donations are divided equally among the nonprofits, she says.

Another way to stay engaged and support causes you care about is through socially responsible investing, where you back companies making an impact on your chosen issue.

Technology can also play a role in helping you decide where to donate, says Wale Mafolasire, CEO of Givelify, a mobile app that facilitates donations to churches and nonprofits, based in Indianapolis, Indiana.

Givelify’s approach is similar to GlobalGiving’s funds. The company uses artificial intelligence to group nonprofit organizations into causes within the app, says Mafolasire. Givelify also highlights “trending causes” for users to choose from.

Resources like Charity Navigator, Candid (formerly GuideStar) and your local Community Foundation website also are good ways to vet nonprofits and pick ones that resonate with you.

Don’t overthink it and stress yourself out looking for the “right” organization, Alexander says. “Don’t let perfection be the enemy of the good. Your dollars will do good.”

2020 asked a lot from us. We faced new challenges and reckoned with old ones, and often the world’s problems collided with our own individual needs. Help — whether in donations or even just attention — might’ve been hard to give when you required some yourself.

If your finances are in better shape this giving season, you can be more strategic with your dollars. The same issues you felt strongly about last year may not be on your priority list now. Perhaps the reverse is true — you’re more determined than ever to support the causes you care about.

Here are tips on prioritizing causes, supporting them effectively and making room in your wallet for sustained giving.

YOUR PRIORITIES CAN SHAPE YOUR PLAN

Write down the two or three causes that matter most to you, whether it’s a global issue like slowing down climate change or something closer to home, like supporting your local animal shelter. This is the start of your giving plan. If you’re anything like me, a giving plan may serve as a guidepost for your dollars when tragic news events clamor for your attention or injured puppy photos on your social media feed play on your emotions. I end up making impulsive donations, which are helpful and feel good at the moment, but they’re easy to forget and don’t make a lasting impact.

You might also go bigger and really focus on your values in the giving plan, using them as fuel to be more intentional and proactive with your efforts beyond the holidays.

Think about the kind of philanthropist you want to be in 2022 and then plan for it, says Holly Belkot, manager of strategic giving at GlobalGiving, a nonprofit based in Washington, D.C., that supports other nonprofits by connecting them to donors and companies.

Planning doesn’t just apply to monetary donations or time spent volunteering. Say you care about climate change. Belkot suggests setting yourself a goal of learning something new about the effects of environmental damage in January, watching a documentary about deforestation in February and so on.

A SMALL, REGULAR DONATION CAN MAKE A BIG IMPACT

One powerful way to champion your favorite cause is through small, recurring donations.

“Recurring donations are the lifeblood of nonprofits,” says Soraya Alexander, chief operating officer at Classy, a digital fundraising platform for nonprofits based in San Diego, California. Alexander says the majority of one-time donors do not come back to support a nonprofit, and it’s a resource-intensive process for the organization to find new ones.

For millennials, she says, who are both passionate about sustained giving and already used to Netflix-style subscription payments, recurring donations are an easy way to make a big impact. “Ten dollars a month is going to have higher payoff for the organization and should make it easier for you to give a greater amount than you might normally feel comfortable with.”

Just as a monthly budget allows you to plan your spending, these donations allow nonprofits to plan operations for the year. Since many organizations automatically sign up regular donors to receive newsletters or project updates, recurring donations also allow you to stay engaged with the group.

HOW TO CHOOSE WHICH ORGANIZATION TO SUPPORT

You’ve got your giving plan in hand and know the importance of recurring donations. Now how do you actually choose where to send your money?

“It can be really overwhelming when you care about something but you don’t know what the ‘right’ nonprofit is to support,” Belkot says.

To solve this conundrum, GlobalGiving selects a handful of nonprofits working on the same issue and groups them together into a “fund” that individuals can donate to. Examples include a Girl Fund, aimed at improving the lives of girls around the world, or a Climate Action Fund. Donations are divided equally among the nonprofits, she says.

Another way to stay engaged and support causes you care about is through socially responsible investing, where you back companies making an impact on your chosen issue.

Technology can also play a role in helping you decide where to donate, says Wale Mafolasire, CEO of Givelify, a mobile app that facilitates donations to churches and nonprofits, based in Indianapolis, Indiana.

Givelify’s approach is similar to GlobalGiving’s funds. The company uses artificial intelligence to group nonprofit organizations into causes within the app, says Mafolasire. Givelify also highlights “trending causes” for users to choose from.

Resources like Charity Navigator, Candid (formerly GuideStar) and your local Community Foundation website also are good ways to vet nonprofits and pick ones that resonate with you.

Don’t overthink it and stress yourself out looking for the “right” organization, Alexander says. “Don’t let perfection be the enemy of the good. Your dollars will do good.”

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