Payments News Digest 17 February 2023

Global: FIS announces Worldpay spinoff plan

Having seen its performance disappoint on both growth and profit margins in its merchant-acquiring activities, FIS is now planning to hive off its merchant-solutions vertical : just under a third of overall revenue comes from that activity, with the business centred on Worldpay, which it took over in 2019. In November it was announced that thousands of jobs would go at FIS; a month later a hard look was promised at why the company was failing to create the necessary value to compete with JPMorgan Chase, Fiserv and other rivals. (Fiserv, for example, reported a five percent rise in processing volume last year, with its key Clover offering enjoying a rise by nine percent in its merchant base. Another fast-expanding rival, Adyen, has bucked the current trend to take on more staff.)

"Although Worldpay's global e-commerce subdivision is performing very well, revenue from traditional acquiring in the US and UK was down overall in the fourth quarter compared to 2021", commented David Hickey of Argus Advisory Research, "The UK business has been hardest hit with a struggling economy and weak sterling creating a difficult environment but the numbers suggest that they are also losing market share". A slimmed down FIS could focus on its existing involvement in banking and capital-market solutions, while the spun-off entity, again known as Worldpay, can build on its estimated transactions payload of two trillion dollars annually.

UK: BNPL regulation moves forward

The Financial Conduct Authority (FCA) in London came a step closer to gaining long-expected powers to regulate Buy Now Pay Later lending as details emerged on Tuesday of the proposed legal changes to empower its rulemaking. All going to plan, the FCA will require higher loan-terms transparency and communication standards and will ban lenders failing to carry out the correct credit checks from any more involvement in consumer lending. Consumers for their part would be enabled to escalate complaints via the Financial Ombudsman Service.

"People should be able to access affordable credit, but with clear protections in place. That is why these proposed regulations are so important," said a lawmaker involved in the process. The government is taking care to avoid unintended consequences such as the possibility of scuppering instalment initiatives used in appropriately registered social landlord-tenant agreements.

UK: Risks aired as CBDC possibility becomes probability by 2030

The news that a so-called 'Britcoin' is more than likely by the end of the decade, according to an official announcement last week, continues to reverberate in British financial, political and consumer-advocacy circles: although there may be geopolitically strategic benefits, at least one influential figure is concerned about the several material risks involved, including a capital flight to a sterling CBDC in the event that currently solid high-street banks are ever perceived as unstable.

In any event, preparations are well underway with a consultation period underway to seek the input of private participants that would, should the coin come to pass, be involved as service providers for everyday transactions and money management. A public-private partnership of this sort will also allow the ringfencing of consumer data from surveillance by state bodies. Central bankers and politicians are being driven to action by the evaporation of cash from everyday life, the rise of private digital money (with the interoperability barriers that often follow) and the progress of the digital yuan among many other CBDCs now underway worldwide. Not only can the UK not be left behind, there is an unspoken fear of sovereignty being impacted, especially if digital fiat backed by other nations enter popular use.

Other stories of interest this week...

Australia: Westpac launches instalment program
Global: 4Q22 PayPal payments volume misses analyst expectations
UAE: CBDC and card scheme coming as part of payments overhaul
UK: Fintech investment fell 56 percent in 2022
US: Durbin promises reintroduction of CCCA bill in near future

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