American Express is experiencing a strong fourth quarter, according to its chief financial officer, with spend so far up by almost a third on the equivalent 2019 levels. The response from cardholders is leading the company to look at spending more on marketing as, in CFO Jeff Campbell's words, "We see a real opportunity that we're taking advantage of here". It appears that that opportunity is being driven by younger consumers who, most encouragingly for Amex, have been flocking to its gold and platinum cards for small-business customers and consumers. According to a report in American Banker, Mr Campbell told listeners in New York at Goldman Sachs' annual Financial Services Conference that three-quarters of new customers were below 40.
The firm, hit hard last year by pandemic impacts, has been building impressive card acquisition, adding 2.1 million proprietary cards in the first quarter of this year alone. In the current conditions and facing competition not only from the new crop of rewards cards but also eye-catching new methods, American Express' performance at both ends of a choppy 2021 is impressive indeed.
From London comes the announcement of a new expectation of payments players from the independent regulatory agency the Financial Conduct Authority (FCA), in effect requiring them to positively and pre-emptively act in the best interests of consumers. In the absence of any clear detail as the implementation process moves into a consultation phase, there is no way to say what the planned ' Consumer Duty ' will cost the average financial company. However, some have mentioned a total cost for the industry as high as £2.4bn ($3.2bn) altogether.
One asset manager quoted by Insider.co.uk pointed to "a missed opportunity when considering the benefits of greater personalisation in communications. The power of data hasn't yet been fully harnessed here – more could be done to support consumer understanding". For its part, the FCA is seeking to change how the industry sees its customer base, shifting to easily comprehensible language and calculations as products and their financial meanings for borrowers are properly explained.
Although only launched in November last year, Brazil's Pix instant payments system is now being used by almost two-thirds of the population. In its first year, the mobile-centred solution has picked up over a hundred million registered users, a body of transactors somewhat skewed towards the young but embracing all age cohorts according to the central bank. The effects on the payments landscape have been remarkable: almost three-quarters of all the country's transactions (1.2 billion operations) were processed by Pix in October alone. As noted in Verisk Financial Research's latest market report for Brazil, "this payments market is evolving rapidly with the emergence of digital banks, a new instant payments platform and burgeoning competition in the acquiring sector".
Unfortunately, all new technologies tend to attract the attention of organised crime. Pix has been no exception, leading the central bank to set caps on transferrable values outside weekdays between 6 am and 8 pm. Transactions are also subject to a 72-hour block if fraud is suspected. A lawmaker's bill tabled in recent weeks is intended to force the authorities into stricter curbs on fraudsters : if successful, it might cause some disruption to law-abiding users as structural fixes are sought, but, whatever happens in the short term, Pix has already embedded itself as an everyday resource for Brazilians and seems destined to remain so.
Other stories of interest this week...
Canada: Walmart adds Interac debit options for app shoppers
Greece: Worldline takes 80% stake in Eurobank Merchant Acquiring
Japan: Stablecoins to face new restrictions
UK: Black Friday pushes card spending to new pandemic-era high
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.
About Verisk Financial Research The market-leading online, interactive database and data dashboards covering the global cards and payments industry in detail, plus a range of data-packed country and regional reports. Leveraging financial cards data going back to 2010 – and forecasts up to 2022 – our unique datasets cover 72 countries around the world and feature more than 250 metrics per market.