One standout in PayPal's expectation-beating results for the third quarter was the performance of its P2P payments app Venmo, processing volumes for which rose by 61 percent year on year, even better than last quarter's year-on-year rise of just over a half. PayPal has been busily extending the spectrum of its offerings: adding Buy now, pay later (BNPL) facilities, opening up the handling of cryptocurrency in customer accounts and launching the Visa-branded Venmo Credit Card, issued by Synchrony. These recent moves tell of a company that is not content to simply ride the wave of the ongoing shift to e-commerce but also quick to adapt to emerging marketplace preferences and form new partnerships with established companies. Accompanying the earnings statement, president and chief executive Dan Schulman noted that "we are investing to create the most compelling and expansive digital wallet that embraces all forms of digital currencies and payments, and operates seamlessly in both the physical and online worlds".
Third-quarter results from leading e-commerce player Shopify, now Canada's most valuable firm, dramatically depict the shift to online commerce precipitated by the lockdowns. The firm, which provides the online tools needed to set up as an online seller, saw its revenue from subscriptions and fees for the period up by 96 percent year on year. With over a million merchants using its platform, the company makes its money not only from subscriptions but also from fees for processing payments and transactions. Its move during the spring lockdown to extend trial periods appears to have borne fruit, with monthly recurring revenue up by almost half.
Understandably, recent quarters have been a harder slog for companies that originated in the offline rather than online world. Global Payments for example saw adjusted revenues for its merchant solutions down 6.2 percent year over year, alongside a 2.5 percent fall for issuer solutions, but has beaten expectations on overall revenues and has been focused on keeping costs down while the economic recovery restores volumes. Rival Fiserv too needs the entertainment, travel and hospitality sectors to come back to life, but innovative moves such as a QR Code-driven scan-to-order feature in its Clover solution are being singled out as a way to rebuild volumes. Finally, FIS saw improvement in both its merchant and banking solutions segments: the pair are suffering the effects of reduced payment processing volumes but are going in the right direction as official lockdowns have loosened and bricks-and-mortar businesses adapt operations to cope with restrictions.
Nexi and Nets have been proceeding with merger discussions as the former, a major player in Italian payments, considers taking over the latter, the market's most important acquirer across Denmark and Scandinavia: the negotiations between the two are now described as "exclusive". Nets is no small fry, especially following its merger last year with Concardis, a PSP with business in Germany, Switzerland and Austria, in a deal that produced a company with combined net revenues of $1.5 billion. In the Nordic markets, Nets is a key player, dominating merchant acquiring in Denmark, Finland and Norway, while also being one of the leading players in Sweden. It is moreover a leading online acquirer in Northern Europe and, according to Verisk Financial Research's latest edition of Merchant Acquiring Western Europe, provides processing services for over 240 banks in the region. According to that same report, Nexi, for its part, is the "largest acquirer in the Italian market, accounting for the acquisition of approximately 45 percent of billed volume on payment cards. When processing and licensing arrangements are included, its share is over 70 percent" even before its recent merger with SIA is taken into account.
To end, links to some other stories of interest this week...
Canada: Capital One ending Costco and Hudson's Bay contracts
Global: Citigroup names new head of consumer banking
UK: Plan to help consumers defer credit card and loans debt again
UK: Sainsbury's plots sale of banking arm as near-zero rates bite
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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