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PayPal has launched a new app, bundling together so many solutions into one place that the term 'financial superapp' seems an appropriate description: besides helping users with everyday financial matters such as payments (in-app, at the POS or via P2P transfer), settlement of bills (issued by any one of 17,000 companies) and savings (thanks to a tie-up with Synchrony Bank) the app also facilitates cryptocurrency transactions, and, in the company's own words, the ability to earn rewards "redeemable for cashback or PayPal shopping credit and...deals with hundreds of merchants". The development comes just as the Chinese superapps are having their wings sharply clipped by Beijing as the credit exposures of their lending activities hit alarming levels. Meanwhile, Western providers are building up their range of payment services as fast as possible to emulate the all-embracing solutions pioneered by the likes of WeChat Pay and Alipay.
In its review, the Verge website observes that PayPal's app is "jam-packed with features, to the point that there's a good chance that not everyone is going to use or even be aware of all of them. A more focused approach would probably be better for the average user, but the new PayPal app seems just as focused on making casual users reliant on more PayPal features as it is pleasing power users." However, that judgment may miss the point: PayPal's ambitions go far beyond providing a 'focused' app. That said, WeChat goes far beyond even what PayPal now offers, given that its users can, for example, order lunch, check-in for flights, track fitness stats or book an appointment at the vet: PayPal, on this measure, has some way to go.
On Capitol Hill, the influential House Financial Services Committee has been examining the issue of consumer rights when it comes to financial services data access. As in other markets, the early running has been made by aggregators who, starting with screen scraping and then via API, have found a niche serving the needs of consumers, financial institutions and fintechs. But, as is so often the case with banking in America, the regulatory situation is fractured and now finds itself in need of overarching guidance and legal enshrinement. There is also the imperative, newly intensified by the changing of party control from Republican to Democrat this year, to carry out the injunction of Section 1033 of the Dodd-Frank Act to "facilitate the portability of consumer financial transaction data so consumers can more easily switch financial institutions and use new, innovative financial products". In other words: Open Banking.
A detailed memorandum setting out the current situation is available on the Congressional website. Lawmakers from both sides of the aisle are agreed that consumers need empowerment in this area; with President Biden having recently instructed the CFPB (Consumer Financial Protection Bureau) to get going on a rulemaking effort to this end, it seems likely that US Open Banking is finally set on a path to catch up to its European and Australian counterparts.
Local media in India is reporting that Facebook-owned WhatsApp has begun trialling a cashback rewards feature for consumers there that are using WhatsApp Payments. WhatsApp Payments is currently live in only two countries, Brazil and India, though the prize for success in each is enormous. Launched in India last November, WhatsApp Payments failed to gain immediate traction in an already hotly contested market, which explains why a strategy of cashback rewards seems to be on the cards.
Like Mastercard, Visa, Google, Amazon and others, Facebook has thrown its hat in the ring as one of the bidders for a New Umbrella Entity (or NUE) licence: this is intended as a digital payments platform that would work in parallel with the country's Unified Payments Interface (UPI) system, the current primary infrastructure for mobile payments. However, last month the government put the licensing plan on hold, with unnamed sources citing data-security concerns. As Argus Advisory Research's payments market reporton India points out, India's "massive population, coupled with a governmental determination to reduce cash use, has created a fascinating arms race between banks, networks and technology companies among others, attracting investment from many of the world's most recognised brands in the process."
Links to other stories of interest ...
Germany: Deutsche Bank acquires Better Payment
UK: Cards account for more than four in every five pounds spent
UK: Fraud at a level where it 'poses national security threat'
US: Cash payment kiosks rise despite digital age
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