TransUnion Completes Acquisition of Verisk Financial Services
TransUnion completed its acquisition of Verisk Financial Services. Together, our combined capabilities will help us better serve customers through enhanced insights into customer behaviour. Read More.
Travel spend cannot come back fast enough for the cards industry. As lockdowns ease, it remains the biggest part of normal life still absent for many on either side of the North Atlantic. That is particularly challenging for American Express: on the commercial cards' side, while its billed business for the first quarter was down by 12 percent year on year, the firm's Travel and Expense segment was hit by a 64 percent drop. On the consumer side, a similar challenge means that a fresh approach is called for to help business take off: enter Buy now, pay later (BNPL), which is now available to cardholders using AmexTravel. This will, for a fee, allow monthly repayment instalments once more than $100 is spent on flights. BNPL specialist Affirm, in its latest quarterly results, can see a rush back to travel spend already underway, with gross merchandise volume under that head almost trebling the level of the previous quarter. The bigger question on everyone's minds is: will credit card spend and revolve patterns recover to pre-pandemic levels once travel and entertainment come back on stream?
In London this week, the Financial Conduct Authority wrote a stern letter to the chief executives of all e-money licensees under its watch, warning them en masse not to mislead customers about the nature of their accounts and promising a follow-up shortly to check if customers have been correctly informed. One particular feature may come as a surprise to some of these customers, the regulator feels: their money is not protected by the Financial Services Compensation Scheme, a safety net for bank customers in the UK. Across the continent in Lithuania, Europe's most fintech-friendly central bank is taking some heat from Brussels, where EU policymakers are finding fault with its light-touch approach to a start-up linked to Wirecard's misdeeds. Meanwhile, digital bank N26 has been told to tighten controls on money laundering by German regulatory body BaFin, around whom questions continue to swirl over its own failure to spot Wirecard's large-scale fraud. That embarrassing collapse, both commercially and supervisionally, of one of the country's most high-profile companies may seem like ancient history now to financial commentators preoccupied with bitcoin's rise and the ongoing SPAC boom. Still, authorities throughout Europe are evidently worried about the damage that an insufficiently supervised fintech can wreak.
Two years ago this month, public representatives in Washington DC outlawed cashless stores through the CASH (Cash Always Should Be Honored) Act, which requires retail outlets to accept physical currency. However, the guaranteed cash option is not stopping a trend that the pandemic has only accelerated. Consider the recent observation made by Visa's chief financial officer, Vasant Prabhu, about the boom in debit card spend summarised in the company's most recent set of quarterly results: speaking to the Marketwatch website, he noted that "debit is clearly the gateway to cash digitization. [We are] seeing people develop digital payments habits" – including, it is reported, people in emerging markets that relied more on cash before the Covid crisis began. The point dovetails with a comment made by Mr Prabhu during the latest earnings call: "It is important to note that credit has improved without debit slowing, pointing to accelerated cash displacement". Last month, Anne Boden, founder of British neobank Starling, put it even more bluntly, telling the Financial Times that "cash will disappear".
To end, here are links to some other stories of interest this week...
Australia: BNPL player Afterpay considering lending to small merchants
China: Digital yuan fails to impress early users in Shenzhen
Ireland: Square launches, marking first push into Eurozone
Japan: Adyen takes on the cash-centric market with local card processing
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.
About Argus Advisory Research The market-leading online, interactive database and data dashboards covering the global cards and payments industry in detail, plus a range of data-packed country and regional reports. Leveraging financial cards data going back to 2010 – and forecasts up to 2025 – our unique datasets cover countries around the world and feature more than 250 metrics per market.