TransUnion Completes Acquisition of Verisk Financial Services
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Further developing its bid to contest a regional market long dominated by the US payments giants, the newly formed European Payments Initiative (EPI) unveiled a timeline in Brussels this week for its proposed offerings. The key date, for now, is September – at which time backers of the consortium, which includes the likes of BBVA, BNP Paribas, Deutsche Bank, ING, Santander and UniCredit – will be deciding if the draft set of proposals is worth pursuing. Crucially, merchant acquirers such as Worldline and Nets are also on board. If investors are satisfied with the plan's commercial viability, the forthcoming investment monies should produce a real-time payments solution for consumers to be launched in early 2022, followed by a broader offering later in the year. The aim is not just to tackle the traditional cards behemoths, but also comparatively newer players in the field such as PayPal, Google and Apple, none of which were threats the last time, a decade ago, European banks made a move on this scale. Another big change since then is the introduction of the Single Euro Payments Area (SEPA). If EPI's plans come to fruition, European consumers and merchants will have a new physical/digital card for payments and ATM withdrawals as well as a P2P payments solution using the SEPA-based instant transfer system, SCT Inst.
Last summer WhatsApp Pay was briefly launched in Brazil before the authorities unexpectedly suspended the operation, saying that official scrutiny had been insufficient. Now the app is back and free of charge for individuals to transfer funds to each other, though as yet unavailable for businesses. Key to success for WhatsApp is extending the service to businesses for money transfers, a use-case that would attract a percentage-based charge. In its fleeting market presence last June, companies receiving funds were liable for a processing fee of 3.99 percent. Currently, P2P incumbent and central bank-backed rival Pix (using which both consumers and businesses can transfer money via smartphones, online banking and cash machines) is servicing company transactions free of charge. As noted in Verisk Financial Research's latest market report for Brazil, WhatsApp has over 120 million users in the country, though with over a quarter of the adult population currently unbanked, funding will be an issue for many. In time, WhatsApp may be required by US antitrust actions to develop a standalone model without recourse to Facebook's prodigious advertising revenues, intensifying the need to have paying customers for its payments services. Mexico and Indonesia are reportedly the next target markets for WhatsApp Pay.
Finally, there were two revealing developments this week involving global banking giant Barclays. In the first, its American consumer banking division announced a white-label POS financing tie-up with Chicago-based fintech Amount. Although the financial press is never short of Buy now, pay later (BNPL) news, this one is significant as it marks out Barclays as one of the few traditional lenders so far to embrace BNPL. In this case, the partners plan to provide merchants with an option for instalment financing that can be branded by them, reducing friction for consumers put off by dealing with a third party. Meanwhile, back in its London headquarters, the bank's chief executive, Jes Staley, is shooting for an additional £900 million in revenue through payments, including BNPL, over the next three years. In November, for example, the lender had partnered with Amazon Germany to begin providing the latter's customers with an ongoing credit line; now that arrangement is being brought to the United Kingdom. Some eight percent of the bank's total income now come from payments, Mr Staley told analysts in the latest quarterly earnings call.
To end, here are links to some other stories of interest this week...
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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