Payments News Digest 1 July 2022

US: Wells launch aims to rightsize cardholder base

Announced this week, the Wells Fargo Autograph card joins a busy rewards-card arena in the United States with a view to catching the eye of mass-market and affluent-mass-market segments. Launching in the middle of this month, the new offering comes with three rewards points for every dollar spent on categories ranging from streaming platforms to restaurants and the burgeoning travel category, currently flying high on the back of unleashed demand as pandemic restrictions have largely eased.

The appointment of one-time Visa chief executive Charlie Scharf as Wells boss not long before Covid arrived made it likely that, sooner or later, credit cards would become more central to the bank's recovery from the troubles that began in 2016. An understanding of credit card profit pools does not seem to have been widespread in the San Francisco headquarters of America's largest bank by number of branches in the past as, despite its massive depositor custom, Wells seemed to leave money on the table for other issuers such as JPMorgan Chase to take for themselves. Mr Scharf himself said as much in the past, describing Wells' credit card offerings as "not competitive".

UK: Regulator lays down the law for card acquirers on POS contracts

Across the Atlantic, Britain's Payment Systems Regulator (PSR) has set out its provisional remedies for what it has deemed a lack of transparency around fees and to tackle the issue of indefinite contracts in the United Kingdom's card-acquiring market. If and when the measures are implemented (upon completion of a consultation phase), standardised information will be required that is laid out in prominently displayed summary boxes showing key information on pricing and terms: formats will be mandated in such a way as to allow easier competitor comparisons for merchants. The PSR is also planning to impose a limit on POS terminal leasing or rental of 18 months.

During its market review, the regulators noted that "the supply of card-acquiring services does not work well for small and medium-sized merchants and large merchants with annual card turnover up to £50 million. Merchants with annual card turnover between £15,000 and £50 million served by the five largest acquirers got little or no pass-through of [interchange-cap] savings".

Meanwhile, the same statutory body is conducting two other reviews: of card scheme and processing fees; and of cross-border interchange that has quintupled since Brexit. In the latter case, the chief executive of the PSR told lawmakers in May that "a good explanation as to why costs have changed" had yet to be provided. "I am frustrated about this as well," he added, noting that the investigation might not conclude before 2026.

Australia: New era for direct debit makes modest start, but with much promise

The Australian instant payments platform saw an important new feature switched on yesterday: PayTo, which aims to replace traditional direct-debit methods with a more sophisticated and consumer-friendly approach that can be used to pay bills, transfer salaries and handle online checkout payments.

Of the Big Four banks, Commonwealth Bank (CBA) has promised to offer the service to customers soon, with National Australia Bank, Westpac and ANZ planning to join CBA before a central bank deadline of April 2023 to do so. In addition to more powerful controls, the system should reduce fraud and dishonoured payments by checking beforehand if funds are available.

A new breed of third-party players such as Monoova, Azupay and Zepto will take the role of initiators for merchants and billers. According to the Australian Financial Review, "Payment processors like Stripe are also likely to add PayTo as a bank account payment option alongside PayPal or card payments".

Other stories of interest this week...

Canada: Retail banks team up on KYC solution by CanDeal
Global: Warnings of ongoing card chip shortages throughout 2023
India: Why the central bank is no fan of BNPL
US: Openpay to pause American operations, refocus on Australia
US: Pandemic made contactless payments mainstream

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