Weekly News Digest 23 October 2020

US: JPM squares up to fintechs at SMB point of sale

Fintechs such as PayPal and Square have been making steady inroads servicing the evolving acceptance needs of small and medium-sized businesses (SMBs): now the merchant services arm of JPMorgan Chase has responded to the challenge with QuickAccept, a new service that includes a contactless-enabled card reader for the point of sale, alongside a mobile app, either of which can be used to make a sale. The QuickAccept hardware allows for payments that are tapped, dipped or swiped, giving flexibility for the range of payment forms common in the American market. The acquirer plans to move what it describes as a "large portion" of its over three million SMB customers to the new platform in the near future. Also of great interest to merchants will be the fact that the funds land in their Chase accounts within the same day: Square, by contrast, charges a percentage fee for such rapid settlement.

US: PayPal opening up to cryptocurrencies

PayPal may have been around for over two decades now, but it remains one to watch: having launched a sector-shaking Buy now, pay later (BNPL) solution last month, it has now announced that it is crossing the payments Rubicon to soon begin handling bitcoin and other cryptocurrencies, starting in the United States. Once rolled out worldwide, the feature will allow the company's 346 million account holders globally to spend and receive virtual coins. The move is being made with an eye to the potential of soon-to-be-issued central bank digital currencies, of which China is currently leading a pack at various stages of development around the world. "We are working with central banks and thinking of all forms of digital currencies and how PayPal can play a role," revealed the firm's chief executive, Dan Schulman. Venmo users can expect the facility to roll over into their apps by the middle of next year.

Latin America: Race is on for regional payments leader

When it comes to cards and payments, "several years' worth of change has occurred in the space of a few months," notes our new Merchant Acquiring Latin America report, published this week. "Many of the previously unbanked have hastened to open a bank account, along with procuring the associated payment card." The historic shift from paper-based instruments to electronic and digital methods has been especially beneficial to lead players such as Argentina's Mercado Pago, profiled this week in a Reuters piece, which is now intent on becoming a regional giant. With transactions having more than doubled in the second quarter, now seems the right time to expand the reach of a platform that began life as a payments solution for the Mercado Libre e-commerce marketplace but currently offers a wide array of services from QR Codes and digital wallets to debit and prepaid cards.

India: Paytm plans issuing partnerships through boosted app

Finally, Paytm, once India's most popular payments app, has indicated that it will be unveiling partnerships with different credit card issuers over the next four to six quarters, having already launched the Visa-branded Paytm First Credit Card with Citigroup just under 18 months ago. Central to the strategy is the firm's digital app, which has been upgraded to allow for credit card applications. Paytm has enjoyed substantial investment from Alibaba that has left the Chinese payments giant with a reported 30 percent stake in the Indian company. As noted in our most recent market update for the country, "credit cards have not been traditionally popular in India, and uptake remains low at around five percent of adults. This could be set to change with banks now able to better assess risk via Aadhaar [personal identification] numbers and better integration with credit bureau data."

To end, links to some other stories of interest this week...

Australia: Westpac hitches a ride on Afterpay's juggernaut
Italy: Klarna launches Pay in 3 BNPL
UK: Visa invests in neobank fintech processor GPS
US: Synchrony's 3Q20 earnings show improvement amid pandemic