Payments News Digest 5 August 2022

Global: PayPal sets new course with an eye on shareholder returns

PayPal has become a much more important player in the Buy now, pay later sector than many might realise: its latest round of quarterly results revealed this week that the company's market share has soared, with BNPL volumes up by 226 percent year over year. Chief executive Dan Schulman should be pleased to see active accounts up by six percent over that period to now stand at 429 million: a drive for more active accounts was set out as a key priority earlier in the year.

However its overall performance has faltered, with PayPal's stock value a third of what it was a year ago, leading one of its major investors, Elliott Investment Management, to pressure senior leadership into making deeper cuts in operating expenses and intensify the focus on its services for the likes of Uber and GrubHub; digital wallet and checkout activities are also set for prioritisation. Mr Schulman told analysts on this quarter's earnings call that PayPal is also preparing a "debit card reboot" that will involve a rewards component.

Global: EVO Payments acquired as Global Payments seeks to deepen presence

The world of merchant acquiring continues to throw up big M&A developments: this week Global Payments snapped up EVO Payments for four billion dollars. EVO, also an American company, offers merchant acquiring and payments processing services. Through the acquisition, the buyer will deepen its already considerable presence in Europe as well as make further inroads in markets such as Canada, Mexico and Chile and the several other dozen markets (many in Europe) where EVO has a presence. Almost three years ago, Global Payments merged with TSYS in a $21.5 billion deal that created one of the largest payments firms in the world.

Patrick Houlihan, senior researcher at Argus Advisory Research, commented: "It is likely that part of the motivation for this acquisition, and others of this nature witnessed in recent years, is to ensure that peers do not steal a march via acquisition of smaller players. Industry consolidation has become so frequent that if Global Payments had not gone ahead with this deal, another sizeable player, given time, would have probably swooped in instead. Another consideration is the markets where EVO operate: many of these remain relatively cash-intensive, thereby presenting relatively high future growth prospects, compared to markets which are relatively cash-lite."

India: Credit cards set for boost in coming years

India's payments overhaul over the last decade has deservedly caught the world's attention: July saw six billion transactions taking place on the Unified Payments Interface (UPI), according to the latest batch of statistics for the service, used now by half a billion people. However, the credit cards offering in the country is distinct enough that a sharp rise in volumes is projected by Argus Advisory Research (AAR). "With a savvy populace keen to improve its creditworthiness and a seasoned industry that is increasingly adept at co-branding with tech and electronics brands," notes a new AAR Insights article on the India payments market published this week, "this market seems set fair for a period of profitable expansion".

Some other stories of interest this week...

Global: Mastercard turns to quantum computing for loyalty
Poland: Mortgage holiday for households threatens bank profits
UK: Central bank raises rate and predicts recession
US: Credit card debt surges as inflation drives up costs

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