Online payments services such as PayPal have made themselves indispensable for many freelancers and small merchants around the world but, historically, balances have been tricky to transfer into more traditional instruments to spend offline. That pain point, sharper now with intensified cashflow pressures, has led PayPal and Visa to expand to global users their Instant Transfers service, which has been operational in the United States since early last year. The move means that users will be able to get electronic funds faster from PayPal (and its Venmo or Xoom stablemates) by way of Visa Direct, the global scheme's real-time push payments platform. The latter has seen a significant uptick in transactions as cheques and cash became problematic on health grounds this year. The tie-up continues a trend of agreements between the high-profile fintech and the leading networks to pre-empt a systemic bypass of card rails via bank-centred funds transfer, a pattern noted in our recently published North America Merchant Acquiring report.
In another instance of minimising pain points for users, Tesco Bank, leveraging Mastercard's Open Banking Connect service, is making it possible for its credit cardholders to pay their credit card balance directly from their bank account without recourse to a debit card. The facility, 'Pay by Bank', also allows consumers to see their bank balances before and after the transaction. Around 2.6 million people in the United Kingdom have a Tesco Bank credit card: holders can collect a Tesco Clubcard rewards point for every £4 ($5.15) spent in a Tesco store or every £8 spent elsewhere. The move reportedly makes Tesco Bank the first in the country to use Open Banking innovations for credit card payment purposes.
In other news from London, the Payment Systems Regulator has just released its interim report from an ongoing review of card-acquiring services in Britain. Notably, there is a provisional finding that the supply of such services is not working well for merchants with annual card turnover below £50 million ($64.4m). The difficulty appears to lie in the fact that these merchants often fail to shop around for better deals or negotiate with their providers. Among the remedies currently being recommended are:
A consultation period is now going to take place, with the final report to be published in 2021.
Elsewhere in Europe, there were two telling stories from the north of the continent this week: in the first, retail lender Handelsbanken, widely admired for a customer-centric culture rooted in long-term relationships at the local level, has decided to almost halve its domestic branch network. Despite that sharp drop however, from 380 to 200, the bank will still lead its competitors in Sweden in terms of branch numbers. With neobanking apps increasingly popular in the region, the move has been a long time coming, but surely accelerated by the general popularity of online channels this year. The other item comes from mall operator Citycon, whose chief executive has revealed that the company plans to roll out a click-and-collect service that, effectively, treats each shopping centre as a single inventory source and offers convenient locations for buyers to take possession of their purchases. The firm is responsible for 40 malls across Scandinavia, the Baltic States, Finland and Denmark.
To end, links to some other stories of interest this week...
Australia: Millennial wallets in sights as CBA promotes no-interest card
Europe: Klarna now region's biggest fintech unicorn at $10bn+ value
Global: Mastercard launches digital currency sandbox for CBDCs
Spain: CaixaBank announces Bankia acquisition
US: 2Checkout acquired by Verifone
The Weekly News Digest from Verisk Financial Research highlights significant developments that have recently occurred 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 that is often missing from the rolling news cycle.
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