Fintech Revolut leans in to Visa, away from Mastercard in market expansion

Dive Brief:

British digital bank Revolut is partnering with Visa to expand into 24 new markets, the companies said in a press release Monday.
The partnership is not exclusive. The startup also works with Mastercard in Europe and is set to launch in the U.S. with Mastercard by the end of the year, according to Quartz. But Visa will issue at least 75% of the bank's payment cards in new markets, said Jeni Mundy, Visa’s managing director for the U.K. and Ireland, adding that she expects Visa to be Revolut's majority partner eventually.
Revolut is also set to more than triple its staff — to 5,000 from its current 1,500, Reuters reported. The bank boasts 8 million customers, but its founder and chief executive, Nikolay Storonsky, told Reuters he thinks the bank could triple its customer base in the next year.

Dive Insight:

Revolut is using the Visa deal to expand into Australia, Brazil, Canada, Japan, New Zealand, Russia and Singapore, according to the release, followed by further reach into South America and Asia to ultimately give it a presence in 56 countries.

There's no timetable for the expansion because the bank must apply for regulatory approval in each region.

The fintech drew fire in February for switching off an automated system designed to stop payments that were flagged as suspicious, The Telegraph reported.

Visa and Mastercard, meanwhile, are vying for more penetration in a payment card market worth $33 trillion, according to Quartz.

Visa CEO Al Kelly said his company was "slow out of the chute" to work with Europe's financial startups but has ramped up recently. "Over the last five quarters or so, we’ve been very, very focused on fintechs and making sure that we are easy to do business with, easy to integrate with, easy to get on-boarded," Kelly said in a July conference call, according to Quartz.

"We were a little late to the party, but we are at the party now," Mundy said.

Mastercard, meanwhile, has signed exclusive partnerships with other European startups such as TransferWise and Monzo, and in the past two years has doubled (to 60) the number of Europe-based digital financial companies with which it works, according to a press release.

When Revolut broaches the U.S. market, it will face competition from American challenger banks such as Chime and Varo, as well as its European cohorts Monzo and N26.