Sept. 3, 2021

153: Money Talks #41: Amazon-Affirm BNPL | USDC and Stablecoins | Visa, CryptoPunks and the World of NFTs

Eoin Fitzgerald and Pete Townsend walk through Amazon’s new partnership with BNPL (buy-now-pay-later) player Affirm and what this means for the Amazon flywheel, and then answer the question ‘what’s a stablecoin?’ in the context of USD Coin and the Centre Consortium, before diving into the world of NFTs through Visa’s $150,000 purchase of a CryptoPunk NFT and the big opportunity for monetizing the metaverse.

Show Notes
Guest Profile

MAIN STORIES COVERED:

Amazon-Affirm BNPL (buy-now-pay-later)

Affirm shares soar nearly 47% after Amazon partnership that lets consumers buy expensive things in installments (CNBC, 30-Aug-21)

Is Affirm's Amazon Deal Better Than Walmart? (Fintech Business Weekly/Jason Mikuda, 29-Aug-21)

How does Affirm make money? (Finty, 21-Jun-21)

Pete Townsend on the Amazon-Affirm BNPL partnership: “Affirm have 6.2 million shoppers that they refer to as loyal, regular users. They have this marketing machine in place to motivate these shoppers and mobilize them to go buy from the merchants that are integrated with Affirm’s BNPL.”

“This partnership puts the Affirm shopper-focused marketing machine to work for Amazon. The volume of sales that Affirm were enabling for merchants via BNPL wasn't going through Amazon, but now it can for those Affirm-integrated merchants that also have third-party seller relationships with Amazon.”

“Amazon obviously didn’t buy Affirm, they’re just partnering with them, but there has to be a good crossover point for them to do this deal. Amazon wouldn’t do the deal just to get more buyers, they want to get more sellers onto their platform as well. That is the key part of Amazon’s flywheel; having both buyers and sellers driving that momentum.”

Eoin Fitzgerald questioning the alternative, i.e., just buy Affirm: “Amazon could easily acquire Affirm, but why would you put that much cash on the table for something that you may not know how much value it's going to add to your business down the line?”

Pete’s final thoughts: “Affirm as a standalone with their own competitive drive to keep delivering value will be bringing more flow to Amazon naturally, just through that partnership. If it’s working, don’t let the gorilla sit on that bunny.”

USDC and Stablecoins

Centre Consortium announces new team to create 'global network of stablecoins' (the Block (via Coindesk), 30-Aug-21)

AID:Tech utilises Circle and USD Coin to provide fraud resistant disaster relief (Finextra, 30-Aug-21)

Visa is now supporting settlement of card transactions with USDC (Techcrunch, 29-Mar-21)

Pete on the usages of stablecoins: “A stablecoin is a cryptocurrency that is pegged one for one to a specific currency, which for the stablecoin USDC is the US Dollar. Professional traders can use it as a safe haven to park assets overnight, or as collateral.”

Eoin on the difference between stablecoins and other cryptocurrencies: “We've talked about Bitcoin and the argument that it's a speculative asset you’d include as a percentage of your asset allocation. With stablecoins, on the face of it, it sounds like it has a lot of value and I can use it to pay for things. I know that because it's pegged to a fiat currency, I’ll have an idea of what it will be worth tomorrow.”

Pete on the consumer-level use of USDC: “That's already happening - Visa is now supporting the settlement of card transactions with USDC and you can spend USDC with your Coinbase debit card in the US. It's not quite what we had been talking about with Amazon being able to reduce their dependence on paying Visa or MasterCard 3% on each transaction though.”

“Amazon would be able to do just that through stablecoins when you get to the checkout if you could pay with your crypto wallet and just directly move USDC to Amazon. I'm sure someone's going to apply a small percentage there that's going to be less than 3%, but it's not going to be zero.”

Visa gets into NFT space

Visa buys a CryptoPunk as it takes first steps into 'NFT commerce' (The Block, 23-Aug-21)

Nifty Corporates (Not Boring by Packy McCormick, 30-Aug-21)

Eoin piecing things together on the opportunity with NFTs in gaming: “What you could potentially do is bring these NFTs linked to your 'skins' into other types of metaverse scenarios?”

Pete’s response on the possibilities: “Imagine that if Fortnite was being run on the Solana blockchain and Roblox was being run on the Ethereum blockchain and you bought an NFT of a Marvel superhero skin. You could wear that in Roblox and then jump right into that character in Fortnite, and exist in these multiple different games as the same unique individual, which is pretty damn cool.

Eoin brings it all together: “You can see why then Visa would be prepared to spend what ultimately is a drop in the ocean from a branding point of view. Roblox, for example, has 32 million daily active users spending a significant amount of money within their ecosystem. To be the business that has access to that user base in some shape or form is a potential gold mine.”

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