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Having launched in the United Kingdom a month ago, Klarna's 'pay now' product is being added to its BNPL-led range in the United States, allowing shoppers to use the fintech's facilities to pay for goods or service in a single payment. With margins tight, instalment lenders are fast building both partnerships (with Stripe, in Klarna's case) and value-added features: three weeks ago, Klarna added a feature in its app allowing consumers to use the solution at any online checkout. Meanwhile, amid growing public recognition and mass market usage, established BNPL provider Affirm is looking for more regulatory oversight of the market. Founder Max Levchin told the Financial Times that "I don't think it's great for consumers to use one of those products and say 'oh, so I tried this BNPL thing, I thought it was zero per cent but it wasn't because I got this origination fee'".
His comments are echoed in an increasing clamour from members of parliament in Britain, who are also demanding faster regulation in the sector, which is surely set for a boom in transactions from Black Friday today through the upcoming Cyber Monday and holiday season to the New Year sales. In Australia, where BNPL has gained the most traction, the sector is running into serious headwinds as expenditure on growth markets takes its toll on balance sheets, credit losses exceed projections and consumer enthusiasm appears to be on the wane.
India seems likely to ban cryptocurrencies alongside the introduction of a central bank digital currency (CBDC), according to legislative drafts that have just reached the public domain. Any such approach would mirror China's approach, whose own CBDC is currently in testing with the help of millions of citizens while bitcoin and its various rivals are now outlawed. In the major Western economies, central bankers seem to be slowly but surely moving towards CBDC issuance even apart from political pressure to match Beijing: in London the consideration process will go into a higher gear next year with a consultation phase, with the number two at the country's central bank airing fears last month that the aggregate transaction value of private crypto is already responsible for a larger share of the global economy than sub-prime lending was just before the crash of 2008 (and thus moving into a position where a value wipe-out could cascade into a wider stability crisis).
Across the Atlantic, the departure of Randal Quarles (a longtime sceptic of CBDCs) from the Fed board and the White House appointment of Lael Brainard as vice chair could prove decisive: Ms Brainard has argued that time is of the essence given China's progress with its digital yuan. Fed chair Jerome Powell, finally nominated for a second term this week, appears open to the idea, though unswayed by appeals for urgent action despite the fact that his organisation, along with fellow regulators at the FDIC and the OCC, is currently in the midst of a 'sprint initiative' towards a policy clarification on crypto-assets next year for both consumers and banks: "It's more important to do this right, than to do it fast," he has said.
As already mentioned above, it's Black Friday today, with retailers fervently hoping that fears of inflation and Covid-related contingencies do not deter shoppers from their now-customary splurge on big ticket items. American cardholders, whose debt plummeted last year but has risen in the last two reported quarters, will be looking to maximise the rewards and benefits they can accrue on their spend – with the industry for its part looking for a return to pre-pandemic levels of holiday season spend. Offers and inducements have been proliferating this year as the American economy has come roaring back to life, with issuers aware that they must impress consumers armed with plenty of competing products at their fingertips and a new scepticism, particularly among the young, about the wisdom of paying higher interest rates for unsecured borrowing: the issue is examined in depth in an Insights article published this week by Argus Advisory Research.
Readers should also be interested in our latest white paper, which draws on cutting-edge intelligence to explain the impacts of the coronavirus pandemic on the UK's credit card market and explores how card issuers can adjust their strategies to respond effectively to the latest trends in that sector.
Other stories of interest this week...
Australia: API platform Basiq announces investment from Visa
EU: Brussels to curb external banks' use of cross-border access
EU: ECB extends oversight of electronic payments to digital wallets and crypto-assets
Nordics: UnionPay agreement with Nets to boost acceptance
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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.
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