Payments News Digest 10 February 2023

US: Consumer morale robust as credit-card numbers maintain upward swing

The American economy continues to confound expectations, underpinned by unemployment figures this month showing that joblessness now stands at its lowest level in over half a century. Hospitality in particular is picking up workers just as tech and fintech are trimming headcounts – the latest example of the latter being BNPL provider Affirm's 500-employee reduction communicated by chief executive Max Levchin on Wednesday.

How will 2023 go for issuers? TransUnion figures showed credit-card debt up by 18.5 percent in the fourth quarter to reach an aggregate of $930.6 billion borrowed. Just over 200 million new accounts were added in that same period. The Fed's latest loan-officer survey reveals that 30 percent of banks expect demand for credit cards to soften this year, not only because of rising interest rates but also, among other things, because resolution of supply-chain issues should ease and consumer sentiment is such that cash and liquidity will be less sought after. As we know from the series of unexpected events so far this decade, much remains to be seen as we approach the mid-point of Q1.

Australia: Curtain falls on BNPL's opening act

The collapse of pay-later trailblazer Openpay in Melbourne bears out the truth of manifold predictions that this would be a tough year for pioneers in the BNPL sector, even in a market such as Australia where the format is relatively well established and a staple recourse at checkouts and points of sale for younger consumers.

The failure marks the end of a six-month phase when Openpay, having abruptly quit the US market, promised a sharp refocus on its domestic operations. A few weeks ago, it was revealed that the company had more than 347,000 individual users serviced by way of just over four thousand merchants as the year began.

UK: Commercial forces gather as BNPL legislation awaited

London-headquartered neobank Zopa recently raised new funds despite the slowing fintech-fundraising background and is now said to be planning to use part of that money to acquire BNPL provider DivideBuy, perhaps a sign of an incoming wave of consolidation that could see smaller players leave a difficult market.

There is still no sign of regulation for the sector, although the government has now had the insights and data needed for decisive action since 2021. With last week's second anniversary of the sector-definitive Woolard Review and the expected date for draft legislation having passed in December without official explanation, unsecured instalment lending remains in supervisory limbo here, with consumer watchdog FCA having to resort to strong rhetoric in the absence of hard and fast rules for BNPL. In the meantime usage rose year on year by over ten percent last month, according to Adobe Analytics findings.

Japan: E-commerce boost and cashless push bode well for credit cards in mature market

Less than two months from now, pedestrians and drivers in Japan will begin to share space with a fleet of slow-moving, four-wheeled robots. The move is not just a gimmick: with an aging population, logistics are booming to the point that human resources can no longer cope with the workload.

The rising e-commerce usage is also providing a lift for credit cards in a country where cash, though popular for everyday transactions, may finally be encountering a perfect storm of change that it can no longer resist: an Insights article published yesterday by Argus Advisory Research draws on new data and analysis to pick out a clear and impressive growth path emerging for billed volume on credit cards.

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

Africa: Google is continent's fintech-loan regulator
Egypt: MNT-Halan scores unicorn status on funding round
India: Government blocks 94 loan apps in fresh crackdown
UAE, Singapore: Indian travellers using PhonePe can now pay via UPI

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