Payments News Digest 16 June 2023

US: Consumer spend levels off as revolving credit slows

Several data releases this week afforded insights into the financial position of the American consumer: according to the Commerce Department, combined online and offline sales showed signs last month of cooling, with shoppers sobered by higher rates and sticker prices. Consumer credit meanwhile, according to the Fed this week, was up by 5.7 percent in the latest statistically complete month of April. Month-on-month, uptake of revolving credit eased: in March it had reached 14.6 percent; in April it dipped to 13.1 percent.

These numbers, in conjunction with other signals such as the comparatively moderate rise in the latest Consumer Price Index (0.1 percent in May, month on month; four percent year over year), were enough for the Fed to finally pause its rate-rise assault on consumer demand, at least until July: the ratesetting committee made a point of writing that the central bank remains "strongly committed to returning inflation to its two percent objective". Although inflation is less than half what it reached at its peak, the level is still more than double the target, and that might mean more pressure on demand is necessary as the year wears on.

US: Open Banking plans set out by consumer-protection watchdog

America's market-driven approach to Open Banking seems set to be replaced by a formal regulatory structure with CFPB director Rohit Chopra's announcement that his agency will rule on the matter. The move revives an ambition of the 2010 Dodd-Frank law to grant unfettered personal-data control to consumers of financial services.

The new Open Banking system that may come into being will be largely regulated by other bodies, with the Consumer Financial Protection Bureau confining itself to particular resolutions necessitated by market deadlocks or consumer disempowerment.

"Fair standards developed by the market to leverage our rule will be critical to the creation and maintenance of an Open Banking system in which consumers can vote with their feet," wrote Mr Chopra in a post on the bureau's blog. Individuals, he continued, should be able to "exercise their data rights without being trapped by powerful incumbents and without losing control of their data".

Global: FIS plots online course for Worldpay

FIS may have decided that Worldpay would be better off spun out as a separate entity but it is keen to stress that it sees great potential value in its e-commerce business, currently responsible for about a third of revenues but, according to FIS chief executive Stephanie Ferris, capable of reaching half of the business by the middle of 2025 or 2026. That strategy could be accompanied by targeted acquisitions to build out its solution stack. Ms Ferris was speaking to an online audience of investors.

E-commerce may have failed to maintain the soaring trendline that was unleashed by worldwide lockdowns but that should not be taken to mean that a historic online shift is not underway. Besides the increasingly tight embrace of consumers by the digital environment, urban bricks-and-mortar stores and shopping centres are struggling to cope with reduced footfall: in San Francisco this week, the largest downtown mall announced that it could no longer afford its mortgage payments.

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

Australia: Government releases strategic plan for payments system
Global: Klarna plans for AI making e-commerce more emotional
Global: New web standard for online payments announced
Netherlands first to launch contactless payments on nationwide public transport

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