Payments News Digest 19 May 2023

US: New data from public and private sources scrutinised for consumer-health vitals

We begin this week in the United States, where household debt nationally has hit $17.05 trillion after increasing by just under a percent in the first quarter according to the New York Fed's Consumer Credit Panel. Before the pandemic, the total stood below 15 trillion dollars. Credit cards over 30 days past due rose by 0.6 percent during that span, drawing closer to its pre-pandemic level.

Cooling consumer enthusiasm for spending was evident in new figures published last week by the Bank of America Institute: during April, household spend on the issuer's cards was 1.2 percent lower than the same month last year. The authors also note "some deterioration at the higher end of the income distribution. Unemployment is rising fastest amongst higher-income households, while their pay growth is weakest. Higher-income spending growth on discretionary items has also fallen below lower- and middle-income households."

However, according to BofA, the household-savings metric has continued its remarkable run, with median balances remaining 40 percent above the 2019 average in all cohorts along the income spectrum.

Brazil: Digital currency enters multi-stage pilot at speed

Ten banks, all yet to be chosen, will participate in a pilot of a digital real for Brazil, the country's central bank has announced, with a further ten to come on stream as the test phase expands. The move is in line with plans already announced to launch the CBDC next year, an ambition that seems increasingly realistic given the mass uptake of P2P app Pix and the progress made towards reducing the unbanked population, especially during the Covid era.

The country may be closer to digital currency than is commonly supposed: quoting a leading figure at the Bank for International Settlements, the Economist noted a year ago that the country was already "80 percent of the way to a CBDC" as a result of Pix's popularity, technical standards and infrastructure.

Australia: As pay-later settles into establishment stack, iPhone acceptance debuts

Nowhere has the funding squeeze in the fintech industry had such a relatively dramatic outcome than in Australian BNPL. One vivid illustration was furnished by a local cards executive this week, noting that BNPL players listed on the country's main exchange once enjoyed a combined market cap of 58 billion Australian dollars ($38.5bn) but had now fallen below two percent of that high-water mark.

The latest to leave the scene is FuPay, currently reinventing itself under new ownership. Last month LatitudePay ceased lending; in the opening quarter of this year OpenPay collapsed and Affirm departed. As a result, the format is now effectively a new option for customers of the traditional banks, with all four major lenders competing for business in the space.

The openness to innovation demonstrated during the BNPL boom among small merchants and customers in this market has not been lost on Apple, which just introduced its payments-acceptance solution, Tap to Pay on iPhone, in conjunction with payment platforms from Westpac and Tyro Payments. The press release promises more partners to come in the near future, citing ANZ Worldline Payment Solutions, Stripe and Zeller as examples. The facility could quickly become ubiquitous: the world's biggest tech company (rapidly becoming a payments and indeed consumer-finance giant too) pointed out that the service would be "available for any payment platform or app developer to enable that is able to meet the technical requirements".

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

South Africa: New authentication systems from networks to reduce CNP friction
South Korea: Samsung explores offline CBDC that works with Galaxy phones
UK: Give customers a fair deal or else, regulator warns finance sector
US, Canada: Sezzle targets higher frequency purchases with Pay-in-two option

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