Verse, Bizum's main competitor in Spain, has been seen forced to close its doors due to a variety of factors. After 8 years, a road with many obstacles, large financing rounds and an acquisition valued at around 40 million euros, the company has been forced to cease operations after "an exhaustive evaluation process" in which the team communicated "no having been able to identify a sustainable route that allows us to continue growing and in turn provide the desired level of service and innovation”. For this reason, they entrust their clients to withdraw money from your accounts before the September 13th.
However, despite the reasons for said closure seem convincing, in this article we will delve a little deeper to better understand what some of the possible reasons have been that have led to the closure. verse closure and what is the context behind this harsh decision.
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Reasons for closing Verse
Only a few months after closing its first big round of financing of almost 8 million euros and where there was still hardly a functional product, the new shareholders were forced to replace the 3 founders to take over the reins of the project, after various rumors. of incorrect management and due to failure to meet growth targets that sounded very ambitious. It is true that this change led Verse to its golden age, where the company tried to evolve from a simple payment platform between individuals, to a Neobank with a variety of services for its customers, but it already seemed a harbinger of what was to come. come.
Bank of Lithuania fine
After several years of stability having conquered a good part of the youth in Catalonia, Verse was acquired by Block (financial entity that belongs to Twitter) for an approximate value of 40 million. This allowed to convey the vision of Jack Dorsey, co-founder of Twitter to take this startup to the next level. Even so, the company recently encountered a major obstacle in its path, since the Bank of Lithuania (where the Verse Payments Lithuania UAB subsidiary with a financial license to operate in Europe is located), He imposed a sanction on Verse of around 280,000 euros for "serious and systematic violations of prevention of money laundering and financing of terrorism."
In addition to this, Verse was also accused of not complying with the “KYC” requirements. Therefore, the regulator in Lithuania gave it a margin until October 1 to resolve the deficiencies of its operations. Coincidentally, Verse's final shutdown will take place on September 13, giving customers a lot to think about the legitimacy and legality of the company's operations.
However, it does not seem that a fine of €280,000 to an entity that was acquired for €40 million is the definitive reason for the closure of Verse. Therefore, the coincidence between the two dates may not be more than a mere coincidence or simply an argument that can be communicated behind the scenes.
Change of Strategy?
To better understand what may have happened, it is important to understand that Verse is no longer a company with the vision of its founders to conquer Spain and later other European markets by being able to operate throughout the EEA (European Economic Area) with the same license. After being acquired by Block, Verse became part of a business group with a common strategy in which there are brands and entities such as Square, Cash App, Spiral, TIDAL or TBD among others. If we look at the second, Cash App, we will realize that it is the American version of Verse and we could now better understand that the purchase of Verse was perhaps nothing more than a mere strategy of the Block directive to "enter" in the European market from Spain to later grow... under the Verse brand or under the Cash App brand? We may not know anymore. What we could therefore deduce is that after its sale to an American group, Verse's closing it is nothing more than collateral damage in a growth strategy that has apparently changed in the group.
It seems that with the change in management, Cash App has defined a less aggressive growth strategy and more focused on other markets such as the US, Canada and Australia. It seems that Europe is not in their plans, at least for now, and therefore allocating large resources to the growth of a brand that the group's executives in the US hardly know about, does not have much of a chance.
Likewise, the closure is taking place during a time of cuts in the technology sector, which has affected Fintech companies above all, thus being a trend that has recently arrived in our country and has affected several startups. This combination of factors has led the company to be forced to close the accounts of its clients and that they have to migrate their balances to other platforms.
From Fazil Neobank we want to make your life easier in relation to your money and if you are one of the affected by having a Verse account, we leave you more information about how to migrate verse balance so that you can withdraw the money from your account before the deadline.
