Payments News Digest 30 April 2021

US/Global: Networks and issuers find plenty of bright spots in quarterly results

Visa's results for the quarter just ended are being warmly welcomed for the fact that payment volume and credit transactions are up just over a sixth on their 2019 equivalents; with 2020 being such an aberration, even in the first quarter, the customary year-on-year comparisons lose their usefulness so the year before is the best benchmark. Debit and e-commerce transactions "stayed at very healthy levels", according to the network's chief executive. This is good news on both counts as it signals their performance held up despite card-present venues returning to life (which might well have undercut online spend) and the reluctance to use credit cards showing signs of fading (a potential threat to debit). Profit for the network was lower, as some headline writers chose to stress, but that is hardly a surprise given the ongoing recreational and business travel situation. American Express meanwhile focused on the addition of more than 14 million merchants to its network in China, courtesy of its joint venture there. The card schemes' news came in the wake of results for the same period from the major banks: Bank of America deposits continue to be very high, but there has been a rise in applications for credit cards – and profits for the company doubled; JPMorgan Chase reported a rise in both credit and debit card spend this year, with profits for the relevant division surging on bad debt reserve releases; while Citigroup, another bank whose customers have been saving money as much as possible, is planning to draw back from over a dozen markets, mainly in Asia, as its global consumer revenue saw a fall.

UK/Global: Bankers see return to lending as results buoyed by writebacks

The volley of results from London-headquartered banks told a similar story: bad debt provision releases are brightening up bottom-line numbers for market leaders. NatWest came close to doubling its profit, though customer deposits kept climbing; Barclays, Standard Chartered, Santander UK and Lloyds too all saw profits soar, but, to take but one example of consumer caution, credit card loans fell by close to a fifth for the latter firm. Two factors in particular are proving decisive as far as both American and British banks are concerned: governmental stimulus and financial support programmes on the one hand have mitigated economic impacts on households, while the so-far successful vaccination drives in both countries are beginning to encourage both borrowers and lenders on the other. The most reassuring words come from Noel Quinn, new CEO of global giant HSBC, whose profits rose by nearly 80 percent on provision reversals: "I think we'll see a pickup in activity on consumer lending, unsecured lending, credit card activity in the second half of the year, not just in the UK, but across the world".

US: Mastercard-branded offering to come with cryptocurrency rewards

Finally, Mastercard and Gemini, a digital currency exchange, have announced the launch of a credit card, issued by Utah-based WebBank, that offers cryptocurrency rewards to the tune of up to three percent in bitcoin, among other digital forms: the funds would be directed into the holder's account with Gemini. The evaporation of travel-based rewards as restrictions worldwide continue to cycle through unpredictable easing/tightening periods is leading major players to look hard at what new avenues might be opening up for cards usage incentivisation. Lorna Baek, senior research analyst at Argus Advisory Research, commented: "This won't interest those who worry about the effect of potential value fluctuations but appears to be a step towards increasing and improving crypto accessibility and ease of use, which may appeal to those who are already open to crypto but frustrated at the slow usage rollout: currently one can hold cryptocurrency but spending it is another matter entirely."

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

Global: Facebook-backed cryptocurrency aims for pilot launch this year
India: Google Pay to support UPI payments over NFC in India
UK: GoCardless launches Open Banking payments
UK: TSB returns to abandoned high streets via pop-up branches