Sometimes the innovations that Big Tech brings have less to do with software engineering and more to do with fresh thinking: this certainly seems to be the case with the new Path to Apple Card programme. In partnership with issuing partner Goldman Sachs, Path to Apple Card addresses the needs of people who have found their creditworthiness insufficient to be granted the card. With this initiative, participants first learn why they might have been turned down and are then offered ways to overcome the hurdles before reapplication after four months. Although success is not guaranteed in terms of being accepted for an Apple Card, the benefits in terms of empowering consumers certainly seem undeniable.
Another innovative approach has emerged worldwide in recent years in the shape of Buy now, pay later (BNPL) loans at the point of sale. Already on the rise in the United States and Europe before the pandemic, having originally impressed young Australians and New Zealanders, the method reportedly became especially attractive to shoppers during lockdown. Baulking at the ticket price of discretionary items online, these customers appear to find an instalment-based approach more appealing. Klarna, one of the biggest names in the sector, noted that partnership-seeking enquiries jumped by a fifth during March. According to Reuters, competitor Afterpay has taken on over a million new customers in the United States between March and early May, a rise in its base there of more than ten per cent in that period alone.
American consumer lending watchdog CFPB (Consumer Financial Protection Bureau) has decided that a borrower's ability to repay does not necessarily have to be considered by payday lenders. There is some debate in the United States over the benefits of payday lending, with advocates seeing it as a vital link in the financing chain for many Americans who find themselves struggling to make it to their next income infusion. Critics maintain that the APRs involved are excessive for those borrowers who fail to repay on the expected date, reaching annualised rates far beyond those of credit cards or traditional lending. As with so many areas of public policy in the country, opinions differ sharply depending on which side of the political aisle one is on, and there is every chance that coming years could see this rule and many of the CFPB's positions since 2017 rolled back by a new administration.
Having been delayed for six months, Open Banking has come to Australia, with the Big Four banks now sharing transaction-level data about payment cards and traditional consumer bank accounts with approved third-party fintechs. So far, there are only two of the latter as the ongoing emergency has been (understandably) challenging for smaller firms. However, a further three dozen such players are currently in the midst of the accreditation process. Data on personal loans and mortgages enters the system on the first day of November. Open Banking in South Korea, formally launched last December, shows what can be achieved once a consumer-centric ecosystem takes shape: almost three-quarters of the 28.2 million "economically active" individuals in that country now subscribe to Open Banking, according to the regulator.
To end, links to some other stories of interest this week...
China: Ridehailer DiDi to trial central bank's digital yuan
Germany: Wirecard's core business lossmaking for years
Global: Card schemes to take Click-to-Pay standard worldwide
Global: Cash-free future is getting closer
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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