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Weekly News Digest 15 November 2019

15 November 2019
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The biggest news this week broke in the Wall Street Journal on Wednesday, with a scoop by that newspaper revealing Google's planned launch next year of what it describes a, with few other details forthcoming. A Google executive told the newspaper that "our approach is going to be to partner deeply with banks and the financial system. It may be the slightly longer path, but it's more sustainable". Cleverly branded, at least for this phase, as 'Cache', the tech giant is currently partnering with Citigroup and Stanford Federal Credit Union to develop the account. The latter, though tiny, is not your average credit union: a quarter of a century ago, it was the first financial institution in the world to offer online banking. Consumer-friendly features should be to the fore in the new account, but it has yet to be decided whether there will be service fees or not. "Tech companies such as Google can benefit greatly from banking collaborations, creating new customer relationships and obtaining valuable information along the way", commented Gary Brennan of Verisk Financial Research. "It will be interesting to see what regulatory scrutiny will be brought to bear in this case, and there may be implications for competition legislation, especially if tech giants proceed to bring their financial services into the European Union."

Facebook meanwhile launched a new service, Facebook Pay, in the United States this week. Compatible with major credit and debit cards as well as PayPal, Facebook Pay can be used to save and continuously reuse payment methods. It will, in time, be interoperable on all of the company's platforms (including WhatsApp, Messenger, Facebook Marketplace and Instagram) as well as in other countries. But, with the likes of WeChat Pay already half a decade old, the Seeking Alpha website raises a valid question: is the firm too late entering an already packed global marketplace for digital wallets? In its drive to reinvent money itself through Libra, did Facebook make the mistake of overlooking the profit potential of online payments as they are currently and actually configured?

However, both Facebook and Google were outdone by Apple in the headline-capture stakes this week, courtesy of an angry tweet. A complaint posted on Twitter by a high-profile coder noted that his wife's Apple Card credit limit was twenty times lower than his own, despite the fact that, on paper, they share one and the same financial position. Steve Wozniak, co-founder of Apple, then reported a similar experience. Now a New York State regulator is investigating, on the grounds that "any algorithm that intentionally or not results in discriminatory treatment of women or any other protected class violates New York law". As the resulting social media clamour grew, the issuer, Goldman Sachs, announced that members of the same household will in future be able to avail of the same credit line: this was not previously the case for the Apple Card.

As detailed in Verisk Financial Research's 2019 report on cards and digital payments in Saudi Arabia, the authorities in Riyadh are determined to change the cash-centric nature of retail commerce. The latest move involves the creation of a new entity: the Saudi Payments Company, a wholly owned subsidiary of the kingdom's central bank that will function as an independent body mandated "to develop secure, interoperable national payment infrastructure, serving banks and fintechs equally, and providing the required standardisation to ensure all providers have a level playing field".

A story from the cutting edge of digital payments in China completes our round-up this week: super-apps WeChat Pay and Alipay have been removing obstacles that have hitherto stymied overseas users lacking the necessary local bank account. In the case of WeChat Pay, foreign credit cards can now be linked to the service. Arch-rival Ant Financial meanwhile has launched a prepaid method, 'Tour Pass', which allows foreigners to register for an Alipay-compatible prepaid card from the Bank of Shanghai that can then be topped up using an international debit or credit card.

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

Brazil: Banco Inter launches app linking clients to stores
Indonesia: Visa in talks to bring a Pay Later service to Gojek
Netherlands: Adyen launches card issuing service
Nigeria: Visa to snap up stake in fintech unicorn Interswitch
UK: HSBC and RBS set to launch new digital banking platforms
UK: P2P lender Zopa makes banking debut as pressure mounts on sector
US: Federal inquiry over Visa and Mastercard debit card trx

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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