Payments News Digest 21 October 2022

US: Apple's financial ambitions produce another brainchild from GS alliance

Wall Street titan Goldman Sachs followed its launch of neobank Marcus in 2016 with a surprising jump into card issuing through the high-profile Apple Card. Now, despite pulling back from mass-market retail banking, it is deepening that relationship to support a no-fee and high-yield savings account for Apple Card holders in the US. The product will be offered to target segments "in the coming months" according to Apple.

That tech giant is resolutely joining the dots in its strategic pivot into a more coherent payments-industry presence: one tell-tale sign noticed by the Financial Times is the fact that it is referring to an 'Apple wallet, payments and commerce' unit in its job ads, reflecting an internal unification of disparate teams that has been reported by the media, citing unnamed sources, over recent months. With iPhone growth tapering off, financial services would seem a more sustainable sector to operate in, especially for a company with a history of understanding consumer needs and a cash reserve that would put most lenders in the shade.

US: Cost-of-living pressures showing up in product offerings – and missed BNPL deadlines

With American households coping with a year-on-year rise of 13 percent in supermarket-food prices, financial-services providers are looking at any marginal improvements that can be made to help people make ends meet. JPMorgan Chase this week unveiled one such aid in a new feature for its Secure Banking customers: regular deposits such as pension payments, salaries and government benefits can now be accessed up to two days before the money actually hits the account.

Persistent inflationary pressures in the United States are being reflected in an uptick of delinquencies being recorded by some of the biggest pay-later players : Affirm, for example, recorded one percent of its borrowers being 60 or more days late in June 2021: a year later that figure was two percent. The rise in charge-offs is even more precipitous: it rose by 3.5 times over the same span. Afterpay, meanwhile, is estimated to have over four percent of its outstandings now 60 or more days late. As noted by USA Today, using Federal Reserve data, credit card delinquencies were not even at two percent in the second quarter, having reached 1.8 percent.

The biggest BNPL lender in this market, though not perceived as such, is PayPal: continuing the extension of its features array, it is launching cashback rewards within its app, using the expertise and tech of Honey, a startup known for its shopping-discount and rewards solutions, which PayPal acquired for $4 billion at the turn of the decade.

Ireland: Revolut tries out cashback service in an enthusiastic market

An eye-catching cashback scheme is also now on offer in the small but lucrative European market of Ireland: the new Revolut Shop service offers three percent instant cashback via over a thousand brands, from local stalwarts such as toy-store chain Smyths to global brands Nike and Adidas. Revolut's penetration here is extraordinary: as noted in Argus Advisory Research's dedicated cards and digital-payments market report on Ireland, "in a country of only four million adults, Revolut had over 1.7 million Irish customers at the end of 2021". Many of them will be rerouting their Christmas spend so that it begins in the Revolut app and ends with payment using the Revolut Card, thus ensuring cashback qualification.

Despite its high profile in what is now the European Union's only English-speaking country, London-headquartered Revolut has decided not to locate its regional base in Dublin, citing regulatory delays. However, it has pushed ahead on other fronts as its Business unit brought a handheld card reader capable of NFC and contactless acceptance to both the British and Irish markets three months ago, with a more heavy-duty point-of-sale solution being promised for integration with existing POS equipment.

Other stories of interest this week...

Canada: RTP launch pushed from mid-23 to TBA
China: Digital Yuan has topped $14bn in transaction volume
China: Alipay transfers test via WeChat breaches 'walled garden'
US: Visa, Mastercard in fresh probe over debit card routing

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