Payments News Digest 14 January 2022

US/Mexico: Wall Street lenders pursue radical changes as the battle for retail custom shifts gear

Bank of America has decided to do away with fees levied for bad cheques, joining the recent trend in the country to deliver consumer-friendly news as Americans contend with increased inflationary pressures on their household budgets. The lending giant, bested only in the United States by JPMorgan Chase for retail bank assets, will also be cutting fees for overdrafts by 71 per cent, down to $10 from $35. Bank of America, by its own estimate, has some 66 million consumer and small business clients.

Rival Citigroup, meanwhile, has augmented its retreat strategy from retail banking markets around the world with the announcement that it will be seeking a buyer for its consumer and SME operations in Mexico. Largely associated with its Banamex unit, Citi is, in fact, the largest issuer in terms of credit card numbers and holds an estimated 22 per cent of overall credit card outstanding, according to the latest report on the Mexican card payments market from Argus Advisory Research (AAR). American Banker has reported that Santander is one of the suitors currently exploring bid possibilities.

Europe: Digital banks vie for an optimal balance of ambition and caution

Courtesy of its licensing set-up in Lithuania, British fintech Revolut has been able to upgrade its offerings to that of a deposit-protected bank across ten markets in the European Union, notably Germany, Netherlands, Spain and Sweden as well as smaller markets including Belgium, Denmark and Finland. Revolut, as a bank was already available in ten countries, ranged across Eastern and Central Europe; now, the focus shifts to the more populous West.

The move comes as the digital banking sector reflects on the dangers of rapid expansion exemplified by the recent experiences of Berlin-headquartered N26, which now admits that it rushed to gain a foothold in too many new markets through the spending of investment money that might have been better used developing its services suite. The high-profile challenger has quit two major markets since the decade began: United States and United Kingdom. Founded in 2013, it has been undergoing a long spell of intense scrutiny from the German regulator, triggered by journalists demonstrating in 2018 that forged documents could be used to open accounts; that attention culminated in a temporary limit, pending the improvement of internal controls, of no more than 70,000 new N26 customers being allowed per month.

Global: BNPL boom continues as regulatory regimes draw closer

The year just begun promises to be a busy one for the BNPL sector but, unlike last year, much of the meaningful news looks set to be generated by regulatory authorities and established lending stalwarts as they make structural adjustments. In our previous issue, we noted signs of consumer credit watchdog CFPB in Washington taking a more vigorous approach, but the most influential development in 2022 is expected from London, where new rules moved a step closer last week as the consultation baton passed into the hands of the Financial Conduct Authority (FCA), which will ultimately implement a new regime whose precedents could influence jurisdictions as far afield as New Zealand.

Meanwhile, the commercial pace continues to pick up: in Australia, BNPL's value is set to rise by almost half in 2022, according to the latest report. But pay-later fever should not be taken as a mortal wounding of credit cards there: as a revealing Cards & Payments Industry Insights article points out, the aggregate transaction values of credit and debit formats combined "still dwarf BNPL's total transactions value, which stands at an estimated $9.5bn as of the year just ended".

Other stories of interest this week...

Canada/US: How Starbucks' mobile app became a winner
Netherlands: New contactless OVpay to replace public transport chipcard
UK: Checkout.com becomes most valuable fintech in country
US: GM launches new credit card with Goldman Sachs

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