Weekly News Digest 14 August 2020

US: Issuers bid for connected car contract

As drive-thrus and takeaway food continue to be less problematic than sit-down restaurants, there is renewed interest in the automobile as an "e-commerce portal". This makes carmaker GM an appealing prospect for issuing partnerships. As our latest market report for the United States points out, Capital One holds a healthy position in the private-label credit card issuing sector through almost a fifth of both cards issued and billed volume: with GM reportedly contributing $3 billion in outstandings, it is not a client to lose. However, according to newspaper reports, both Barclays and Goldman Sachs are now pitching intensely to take on that business once GM's contract with Capital One expires next year. The manufacturer having already rolled out touchscreens for drivers to carry out transactions such as snack and fast-food ordering from the driver's seat, a digitally savvy card partner should be especially attractive. Goldman Sachs is well placed in this regard through its neobank Marcus and its involvement with the high-profile Apple Card.

US: Apple and Square eye acceptance revenue streams

Apple has bought mPOS facilitator Mobeewave, increasing its potential presence in mobile payments. The most notable consequence is that, since the startup's patented tech can make secure contactless acceptance possible on a smart device, a merchant's iPhone could be turned into a mobile point of sale without any need for additional hardware. Such a move will bring Apple into direct competition with the likes of Square, whose results for the second quarter revealed that gross profit at its POS business serving bricks-and-mortar merchants had fallen nine percent year-on-year thanks to the lockdown. However, online payment volume was up by half and its Venmo-like Cash App saw gross profits up by 167 percent over the same period last year.

US: Amex extends BNPL features

The evolution of American Express over recent years has brought with it a succession of decisive moves, most notably a radically sharpened focus on its domestic market. Having announced at the start of this year virtual parity in terms of acceptance with its rivals at the US point of sale, the start of this month brought another historic shift: not all holders of its charge cards will be obliged to pay in full by the end of the month. Holders of platinum, green and gold cards now enjoy new Buy now, pay later (BNPL) options in the form of freshly expanded Pay It Plan It and Pay Over Time features. In essence, the choices amount to PayIt (pay for purchases under $100 when desired, rather than at month-end), PlanIt (split up purchases over $100 into equal interest-free payments for a fixed fee) or Pay Over Time (like PlanIt but with interest rather than a monthly fee). "We're bringing Buy now, pay later to these cards because we know our customers want to be in control of how they pay," noted Rachel Stocks, executive vice president of global premium products and benefits at the company.

Australia: Revolut a step closer to challenging lenders

The week began with good news for Australians who had been waiting for Revolut to move beyond the beta phase. That day finally came on Monday, with everyone in the country (and the 30,000 people on the waiting list) now able to download and use the financial management app. Revolut's currency transfer deals make it an especially attractive service for a society so prone to travelling and living abroad for long periods. However, the London-headquartered firm is also bringing a cardholding model that is reportedly new to the country: for 29.99 Australian dollars per month, Revolut Metal subscribers can use a Visa card offering 0.1 percent cashback domestically and one percent for purchases made outside the country. Although not yet a bank, the fintech was granted an AFSL (Australian Financial Services Licence) three months ago and its chief executive has made no secret of his wish to offer bank accounts in the future. Mastercard has in recent years been the card brand more associated with fintechs and challengers in this market; as a result, the deal with Revolut is something of a coup for Visa.

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

UK: Borrowers paid off £2k of debt each in lockdown
UK: Overdraft charges soar up to as high as 49.9 percent
US: Amex reportedly in advanced talks to buy Kabbage
US: First decline in household debt since 2014 per NY Fed