PayPal has announced the upcoming launch of its new 'Pay in 4' product, allowing for four interest-free instalment payments over the course of six weeks following a purchase. With this move, the San Jose-headquartered fintech becomes a direct competitor in the burgeoning Buy now, pay later (BNPL) market. American consumers should be able to avail of the service in the fourth quarter. Australian companies such as Afterpay and Flexipay have pioneered BNPL, meeting with huge success in their domestic region and also encouraging take-up in Europe and the United States, with the latter market seen as a vast opportunity in itself. With PayPal's announcement, stocks fell for the sector's incumbents: PayPal has many years of merchant-relationship building. Later in the week, Mastercard announced a partnership with Global Payments' TSYS in North America that will see flexible instalment offerings coming to checkouts for holders of Mastercard-branded cards. According to the network's own research, three in four Americans that have tried paying by instalment during the pandemic intend to avail of the facility again when the crisis subsides, indicating yet another seismic shift in payments preferences among consumers this year.
A trend of lower limits on new credit cards is being suggested as the reason behind a slight rise in dissatisfaction among surveyed cardholders in the United States. The annual credit-card satisfaction ranking from J.D. Power shows that American Express has retained its top spot in consumers' affections, but finds much has changed in a transformed lending landscape since the previous results were published. For a start, while now more risk-averse issuers are lowering credit limits, consumers are looking to go the other direction, even as the unemployment picture remains volatile and the future of the economy less certain than it has been in many years. As the Wall Street Journal notes, "the [satisfaction rate] drop [of one percent] appears small, but in the years before 2020, the industry performance [per this survey] had been trending up by 0.5 percent annually for some time".
Major banks in Britain looking to optimise staff safety and comfort may repurpose parts of their high-street branch network. It is hoped that putting office staff in the increasingly under-utilised spaces could mitigate concerns over commuting risks and working conditions in city-centre skyscrapers. Media reports mention Lloyds, Santander, Virgin Money and Metro Bank as all looking at the possibility of converting branches, whose only newsworthiness in recent years has been as part of the industry's drive to reduce branch-centric banking as customers flock to digital channels and chief executives look to cut costs in a perennially low interest-rate environment. The total number of bank branches has been falling sharply in the country over the last decade: 2017 and 2018 both saw a fall of over five percent. Could that trend be about to stall or even go into reverse? With backroom staff keeping the lights on, there might also be a renewed opportunity for customer-facing advisory roles to reemerge.
China may be going full-steam ahead with its Central bank digital currency (CBDC), but it is taking care not to upset the applecart for traditional banks while preparations for a digital yuan intensify. As noted by astute industry observer, David Birch, offsetting the systemic shock potential has been a concern at the People's Bank of China for some years now: in 2017, a tech specialist in the central bank observed that it should be possible to "incorporate digital currency wallet attributes into the existing commercial bank account system". This double-decker approach is one that Mr Birch feels will be mirrored by the Federal Reserve in Washington when the time comes, as it surely will, for a digital dollar to be introduced.
To end, links to some other stories of interest this week...
Europe: Visa and Vipps team up for mobile payments
India: Amazon's new offerings make the country centre of fintech push
Spain: Bankia and CaixaBank in merger talks
UK: Half of ATMs remain closed despite restrictions easing
US: Capital One cuts credit limits as millions struggle with income cliff
US: JPMorgan Chase to launch first Mastercard-branded card in five years
The Weekly News Digest from Argus Advisory Research highlights significant developments in payment cards, digital payments, acquiring, processing, retail banking and consumer credit. Our writers and researchers frame these items in contexts such as historical, sectoral and regional trends, adding a layer of value often missing from the rolling news cycle.
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