Payments News Digest 18 November 2022

US: Consumer debt rose in third quarter, but delinquency remains low

A fresh round of figures from the Federal Reserve Bank of New York shows that balances on credit cards shot up by the most seen in over two decades, although that spike is widely understood as par for the course in a time of high prices and strong demand. The aggregate jumped by $38 billion in the third quarter and was responsible for just over a tenth of the overall growth in debt for American households.

The all-important delinquency rate however remained during the quarter at a level described by the NY Fed as "low". With the United States in the midst of a pronounced monetary squeeze, APRs have hit levels not seen in the market for many years – again no surprise, but one that cardholders will be aware of as revolving debt becomes more consequential.

Global: Crypto contagion triggering traditional-finance safeguards

It appears that over a million investors who trusted the collapsed FTX exchange may be out of pocket, and the net result for the industry is certain to be tightened regulations to tackle the growing problem of crypto speculation with real-world consequences. Somewhat overshadowed by news of the billion dollars and counting that Sam Bankman-Fried cannot seem to account for, creditor BlockFi too, among others, is reportedly in trouble. Admitting "significant exposure", negotiations have commenced for its portfolio of 87,000 credit-card customers with a view to moving them over to cards-consolidation specialist Curve.

BlockFi's cards come with monthly cryptocurrency cashback for trading in virtual assets. Understandably, banks are reconsidering their policies concerning flows from fiat into crypto, with an increasing number of British lenders imposing limits on how much, if anything, can be transferred by customers into exchanges. The first to ban such payments outright was TSB, in 2021. "It's just a paradise for scammers," an unnamed banker told the Financial Times, which estimates that more than 20 percent of payments to some exchanges are the product of fraudsters. "We need to regulate crypto and we haven't."

Asia-Pacific: QR acceptance multiplies with multilateral MoU

A long-flagged memorandum of understanding was signed in Jakarta earlier this week paving the way for everyday-payments connectivity among five economies that together contain almost half a billion people, a majority of whom now have smartphones: Indonesia, Malaysia, Thailand, Philippines and Singapore. Expanded transactional usage is among the benefits now being reaped thanks to the work done in recent years across many southeast Asian countries to standardise their national QR codes, with interoperability a constant consideration.

QR is on fire in the region: as noted in Argus Advisory Research's new report on Indonesia, the annual transaction value for QR payments is forecast to more than treble by the end of this year. Although retail payment systems across the collaborating quintet are the first order of business, it is planned to extend the cooperation to also embrace central bank digital currencies (CBDCs) and wholesale transactions.

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

Global: BIS working on prototype CBDC
Greece: JPMorgan expansion to include new payments dev team
UK: Banks say consumer safeguard could backfire in cost-of-living crisis
UK: Government slashes bank-profit surcharge

Published here weekly, the Payments News Digest from Argus Advisory Research is also distributed by email: sign up for your newsletter here.