Ah, December. A time of pine-scented candles, Secret Santa gift exchanges and “looking back at 2020” listicles.
To state the obvious, this holiday season looks a little different than in years past. Instead of shopping for outfits that strike the right balance of professionalism and pizzazz for office holiday parties, employees are busy searching for the perfect Zoom background. And instead of the standard “best of” round-ups, journalists are reflecting on an anomalous year—and giving thanks for its silver linings, no matter how faint.
There are at least a few things to be thankful for, after all. While millions have suffered personal and professional upheaval as a direct result of the Covid-19 pandemic, 2020 has also seen individuals, NGOs, governments and the corporate world collaborating to keep the gears of the economy churning—however jerkily—throughout the crisis.
Notably, the financial technology sector has emerged as a lifeline for many. By teaming up with big banks, third-party corporations and small businesses, fintechs played an integral role in offering aid to their customers this year.
Players both big and small took their turn at bat. In April, heavy hitters like Square and Stripe successfully lobbied to help provide Covid-19 assistance. Scrappier startups, too, scrambled to distribute stimulus checks, disseminate unemployment benefits and develop relief programs.
Below are seven ways in which fintech companies went above and beyond in response to the many challenges of 2020.
1. Direct Cash Payments to Consumers
In times of crisis, few things are as helpful as cold, hard cash. To get money into the wallets of consumers—and fast—several organizations devised inventive ways to distribute stimulus funds, while others dug into their own pockets to offer advances.
In April, Project 100 launched with the goal of sending direct cash transfers to 100,000 American families impacted by Covid-19. The project outpaced its initial objective to provide $100 million in relief, ultimately leading to a rebrand as “Project 100+.” Fintech companies including Propel, which provides services to improve the financial health of low-income communities, and nonprofit GiveDirectly helped spearhead the program.
Other fintech companies launched their own efforts to help people in need get cash quickly. Chime, a popular fintech provider of banking services, offered its members early access to stimulus money through its SpotMe feature, which lets users overdraft their accounts without paying any fees. The organization reportedly used its own capital to front the funds to 1,000 customers.
2. Serving Restaurants
Toast, a supplier of payment processing hardware and cloud-based software for restaurants, launched the Rally for Restaurants initiative in March to help the floundering sector stay afloat amid mandated closures and stay-at-home orders.
To further bolster the industry, Toast released several products well ahead of schedule—up to 18 months before the planned launch—including flat-fee delivery services and contactless payments. The company also debuted Toast Now, which allows any restauranteur to tap into Toast’s suite of digital tools without needing to invest in comprehensive point-of-sale hardware and software. The service is free for the first three months and never charges commissions.
Toast plans to extend its aid efforts into the new year: In December, they began offering a one-month software credit to all current users, as well as launching Toast Capital, which provides funding for restaurants to help them navigate and survive the winter months.
3. Deferred Payment and Debt Management Programs
Tally, a credit card consolidation app, sprang into action to offer support to users during the early days of the pandemic. In early April, the company unveiled its COVID-19 Relief Program, which is still available as of December 2020.
The program enables customers who have been affected by Covid-19 to postpone monthly credit card payments or create custom payment plans. A spokesperson for the company says that the efforts have helped about 20% of Tally’s user base avoid any negative outcomes caused by the pandemic.
4. Support for Small Businesses
It’s not hyperbolic to say that small businesses—especially in certain sectors of the economy—have been clobbered by Covid-19. Yelp reports that nearly 60% of businesses that temporarily closed in March made those closures permanent by September.
To help small businesses weather the storm, a number of fintechs rolled out products, partnerships and aid programs, many of which were focused on the Paycheck Protection Program (PPP).
A few notable organizations offering loan assistance—and often collaborating with each other to better serve customers—include Bench, Fundera and BlueVine. In some instances, business owners were able to secure funds from these fintechs after their traditional banks’ application process proved clunky or slow.
MX, which helps financial institutions with digital transformation, is another fintech that made PPP loan applications easier for small business owners to navigate. Working directly with the Small Business Administration, MX developed an Easy SBA Portal to help banks and credit unions process PPP loans significantly faster. They supplied the platform to financial institutions for free.
5. Rapid Launch of New Services
Other companies came to the rescue in the form of new services. Gusto, a fintech that helps companies manage payroll, built more than 50 new products and features directed toward helping small businesses this year.
Releases included customizable payroll reports, a simplified PPP Loan Forgiveness tracker and a streamlined PPP application report that’s been downloaded more than 80,000 times to date. Nationwide, Gusto enabled more than $2.5 billion worth of approved PPP loans.
The company also created a suite of new services targeted toward small business employees: Gusto Cashout offers fee-free and early access to paychecks; Gusto Cash Accounts provides interest rates eight times higher than the national average; and new, flexible health reimbursement benefits utilizing QSEHRAs (providers of qualified small employer health reimbursement arrangements) help small businesses provide insurance to employees, even when revenue is down.
6. $20 Million Worth of Waived Fees to Find a Cure
TransferWise took a different approach to combat Covid-19, homing in on finding a long-term cure instead of issuing a temporary economic band-aid.
In October, the London-based organization announced it would waive up to $20 million in fees on donations to three nonprofits working to develop and distribute a vaccine: the United Nations Foundation (UNF), the Coalition for Epidemic Preparedness Innovations (CEPI) and Gavi, the Vaccine Alliance.
7. A Small Bank Making a Big Impact
One underdog story to emerge in 2020 is that of Cross River, a one-branch bank based in New Jersey that issued PPP loans to more than 100,000 small businesses. The bank has become a partner for fintech platforms like Affirm, a popular “buy now, pay later” platform, and Upstart, an AI-powered, peer-to-peer lending platform.
As of June 2020, Cross River had lent $4.7 billion to small businesses—about double the amount of assets that the company had on its books just three months prior. Based on the number of loans issued, the tiny community bank landed on lists alongside major names like Bank of America, JPMorgan Chase and Wells Fargo.
In This Together
Reflecting upon these programs and gestures may seem like holding a magnifying glass to a drop in the bucket. Certainly, there’s more work to be done to combat the collective toll of the pandemic in the months and years to come. But underpinning the efforts outlined above is a message that’s worth remembering, particularly during the holidays: We’re all in this together.
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