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The American unit of Santander is doing away with some of its overdraft fees through a new initiative branded as Santander Safety Net. Customers will not be charged any fee if they go into the red by up to $100 and will no longer be charged for triggering overdraft protection transfers, previously costing them $12 each time. The daily overdraft fee, where it still applies, has also been halved. Although one of the world's biggest banks, Santander is a relatively small player in the American retail market, though one with ambitious plans to break the grip of household-name consumer lenders.
The question of whether traditional overdraft practices are good or bad for customers has become a vexed one in today's United States, where there has been much political (and politicised) debate on the topic. The State of New York recently curbed certain fee-taking practices in institutions relying on its charter, with federal agencies now also taking a look. The banks have certainly been helping their cause, with several doing away with fees and penalties, and this year digital bank Ally decided to eliminate such fees altogether. "Overdraft fee income was de minimis to Ally's overall revenue profile, so there wasn't that much to forgo", Diane Morais, the president of consumer and commercial banking, told readers of American Banker this week. "But it means a lot to our most vulnerable customers, and we think that what is good for our customers is going to be good for our business. "
In the ASEAN trading bloc of ten countries (including Indonesia, the Philippines, Singapore, Malaysia, Thailand and Vietnam ), digital payments have been booming thanks to the ubiquitous smartphone, and the sector is now projected, according to a Google-led report, to reach a value of one trillion dollars by the end of the decade. Underpinning that conclusion is the sharp rise in new arrivals online, now up to 350 million within ASEAN, with the incoming cohort of 40 million in the most recent year now mainly drawn from rural areas. Internet penetration across ASEAN has reached 75 percent, with four in five of the most recent year's crop of new users buying something online.
The most exciting developments to date in the wider region, as detailed in Argus Advisory Research's reports on Asia-Pacific's digital and retail payments markets, have been happening in China, home of Alipay and WeChat Pay. Although their wings have been clipped by a political crackdown in recent years, the governor of the central bank revealed in a Helsinki speech this week that it is Beijing's intention to actually strengthen the links between the digital yuan (currently being tested with the help of 140 million citizens) and the leading superapps. As things stand, participants in the ongoing pilot phase can access or top up their e-CNY funds through the Alipay app.
The European Union's most valuable fintech, BNPL specialist Klarna, is entering Ireland with a Pay-in-3 offering that will allow Irish consumers to avail of instalment financing at the point of sale of certain merchants as well as, thanks to the virtual card solution of Klarna's app, at almost any online retailer. Although some smaller BNPL players are present, this could mark a sea change in consumer behaviour here. The banking and payments sector in the country presents a marked contrast to the lively payments scene in its neighbouring market, Britain: in Ireland, no indigenous challenger bank has emerged. However, a popular appetite for digital financial solutions is undoubtedly present as N26 and Revolut are in widespread use for cross-border purposes.
Smaller rivals to the Big Two, Bank of Ireland (BoI) and Allied Irish Banks (AIB), have announced they are leaving the republic in recent years. The most recent of these, KBC Bank, announced the sale of its loanbook, pending regulatory approval, to BoI last month. However, both online and offline commerce have been faring well, with a significant cards usage upswing in the late summer as the main Covid restrictions tapered off following a successful vaccination campaign. The authorities in Dublin are currently considering new instalment-lending rules in an area of consumer finance that has yet to be regulated and thus depends on self-regulation to protect consumer interest.
Other stories of interest this week...
Africa: Fintechs vie for apex as nations cooperate on settlement
India: Central bank lifts ban on new business for Diners Club
Italy: Nexi launches pay-by-account service
US: PayPal's Venmo coming to Amazon checkout next year
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