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Back home  /  Payments News: 18 June 2021

Payments News Digest 18 June 2021

18 June 2021
dinner table with wine glass

US/UK: Spend trends shift as supply chains waver and preferences evolve

New figures from the Commerce Department in Washington DC showed a 1.3 percent fall in retail sales last month, as post-lockdown consumer behaviour and market conditions moved into a new phase. The major swing has been towards the kind of service-based experiences (dining out being the prime example) that were impossible for much of last year in the United States. While consumers' passion for home improvement has waned as people get out and about more, the fact that Starbucks has been running out of ingredients such as guava and peach, not to mention some of the cups it needs to serve its beverages, reflects the scale of demand involved and consequent supply chain restoration issues. Shortages are also affecting the vehicle manufacturing and games console industries, which are having trouble getting hold of the silicon chips at the heart of their products, affecting big-ticket expenditure.

Meanwhile, a report from UK Finance analysing British payments in 2020 lays bare the extraordinary shifts that took place at the point of sale last year: total consumer payments fell by around an eighth, with contactless responsible for over a quarter of the transactions that did occur, while cash payments fell by over a third. Debit cards are still top of wallet for Britons, with banknotes and coins second at 17 percent of all payments. As shown in Argus Advisory Research's new report on the UK market, credit cards are now embarked on a two- or three-year recovery period after the initial Covid lockdowns, debit cards having steadily risen to dominate purchase volume.

Europe: Nexi set to become continent's biggest payments group

As noted in this newsletter two weeks ago, the European acquiring market is once more consolidating at a steady clip, resolving itself down inexorably to a handful of key players. Worldline, having just built up its position through a series of acquisitions in smaller markets, a $9.2 billion merger deal signed this week between Milan-headquartered Nexi and Nordic processor Nets will see the former become the largest payments group in Europe by volume. Nexi's lead on this measure is set to be increased further through an expected takeover of Italian government-controlled SIA, a protracted undertaking yet to be finalised but which, when concluded, will see over two-thirds of its domestic market in Nexi's hands. As noted in our Merchant Acquiring Western Europe report, "the first wave of pan-European acquiring was led by [First Data, Elavon and Global Payments], big American processors eager to expand and diversify beyond their home market". Now it is the turn of indigenous players to reap the benefits of increasingly interoperable regional infrastructure and regulation.

US: Shopify and Affirm combine in seamless BNPL offering

One of the big winners from a 2020 of extended lockdowns and the rush by small bricks-and-mortar businesses to sell online was Shopify, which has been availing of a neglected long tail through simple and intuitive onboarding tools: by the third quarter of last year, its year-on-year revenue haul had almost doubled. Having concluded a successful early access period together, the Canadian all-in-one e-commerce solution is partnering with Affirm to offer Buy now, pay later (BNPL) as a payment method on Shopify sites run by eligible American merchants. A valuable feature is that consumers are not bounced to another site to conclude their purchase journey: consumers understandably baulk if they are at the checkout of one site and suddenly find themselves transported elsewhere unexpectedly, especially when it comes to a new payment method.

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

Australia: Major banks hit by website outage on Cloud failure
UK: JPM Chase to buy roboadviser Nutmeg for upcoming neobank
US: Adyen granted American branch licence
US: Williams-Sonoma to partner with Capital One

The Weekly News Digest from Argus Advisory Research highlights significant developments in payment cards, digital payments, acquiring, processing, retail banking and consumer credit. Our writers and researchers frame these items in contexts such as historical, sectoral and regional trends, adding a layer of value often missing from the rolling news cycle.

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