Payments News Digest 23 April 2021

US/UK: Point of sale revives as lockdowns ease

The combination of a fresh round of stimulus cheques for American taxpayers together with steadily loosening lockdown restrictions has jolted the US point of sale back to life : retail sales last month were up by almost a tenth over February, according to the Commerce Department. As noted by CNBC, the report is "another sign that consumers overall are willing to spend, even though increasing amounts of stimulus checks are going towards savings rather than spending". Besides the $1400 payments, the government plan signed into law last month mandated weekly unemployment benefits to rise by $300 until mid-September for millions of households stricken by joblessness. Britain too has seen its cash registers newly energised as it enjoys the fruits of an increasingly efficacious vaccination effort: payment card purchases at furniture and clothes retailers rose by over a quarter between the end of the first and second full weeks of April, with spending on credit or debit cards in these categories up to 89 percent of the pre-pandemic aggregate.

US/UK: Goldman Sachs invests in digital bank Starling

In the form of its neobank offering Marcus, the consumer banking arm of Goldman Sachs has met with a lot of enthusiasm from British savers since entering the market in September 2018. No surprise, given that the interest rate on offer easily topped competitors' offerings. So popular was Marcus, in fact, that it had to close its doors to fresh accounts for over six months lest it cross a regulatory threshold that would have necessitated ringfencing measures. To date, the British version of the neobank does not offer current accounts; however, fellow digital bank Starling does, and that high-profile start-up is now enjoying a £50 million ($69m) investment from the Wall Street giant. Often compared to fellow challengers Monzo and Revolut, London-headquartered Starling has made a point of serving the needs of SMEs: over one in six of its two million or so customers are such firms, meaning that it has captured a six percent share of the British small business banking market, according to its own numbers. In other news from Britain, Stripe has launched its issuing service there and in 19 other European countries. Stripe Issuing provisions the creation, management and distribution of both physical and virtual cards by its business clients.

US/Canada: Stage set for a new regulatory era

With the swing towards electronic and digital payment methods over the past year, regulators and industry executives worldwide have been thinking hard about outcomes. In an interview with Quartz on the explosive growth of Buy now, pay later (BNPL) as the American economy opens up. That regulation does seem likely to include proper reporting of BNPL arrangements to avoid overextension. As things stand, it can be unclear if a borrower has multiple repayment commitments on the go simultaneously. A recent overview on the subject of BNPL by a payments risk expert at the Federal Reserve Bank of Atlanta makes the point that "for those products with four or fewer payments, the product is largely unregulated": as readers will be aware, there has been a distinct change in the regulatory weather in the United States since President Biden's inauguration, with BNPL certainly a topic of concern for regulatory bodies, including the newly reinvigorated Consumer Financial Protection Bureau (CFPB). Meanwhile, in Canada, the government's latest Budget has set out the steps in a payments regulation overhaul and interchange reform drive. In the latter case, the goal is to reduce the burden on merchants while removing scale-driven economies that bigger retailers currently enjoy. Following a consultation period, the applicable law will be amended if necessary to bring down swipe fees while, in a concurrent effort, revamping payments' regulatory framework to maximise the benefits of digitalisation.

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

China: PayPal to launch wallet focused on cross-border payments
Saudi Arabia: Instant payments system switched on
UK: Barclaycard defends wave of credit limit decreases
US: Amazon to let Whole Foods shoppers pay with a swipe of their palm