JPMorgan Chase is planning to take a close to three-quarters stake in the dedicated payments unit of German carmaker Volkswagen. Although less than five years old, Volkswagen Payments enjoys a presence in more than 30 markets, offering "car purchase and leasing, in-vehicle payments, fuelling and electric vehicle charging and subscription services such as insurance and in-vehicle entertainment", according to Reuters. The manufacturer is reportedly going to include tech in its vehicles for automatic payment of tolls and fuel stations, while Chase, for its part, is looking at how to extend the business' relevance to arenas beyond the motor car. That could just be the beginning of the payments possibilities in an age where touchscreen-equipped automobiles become commonplace that allow, for example, food ordering without leaving the driver's seat. The e-commerce portal on wheels is set to become a lucrative profit centre for companies who get on board early.
Amazon's Australian store has announced that it is taking concrete steps to discourage Visa-branded credit card usage through the imposition of a 0.5 percent surcharge on transactions using that method at its website. As well as the stick, there is a carrot: Amazon.com.au customers who replace their Visa-branded credit card with a new default payment method will receive a gift card to the value of twenty Australian dollars ($14.80). The surcharging policy now being extended is no surprise as it is already coming into effect in the Singaporean market next week, preceded by a statement from the e-commerce giant noting that it sees interchange rates as a global issue. "This looks like a shot across the bows of Visa, but also of the other networks and card interchange fees more generally", commented Patrick Houlihan of Verisk Financial Research. "Given Amazon's centrality in the e-commerce universe, the retailer must feel confident in its ability to influence interchange fees. This may well also be an attempt to accelerate the migration of payments on the platform from card to non-card methods." Amazon's strategic efforts to dislodge Visa will remind seasoned observers of Walmart's failed attempts over the years to sap the cards networks' power at the point of sale. This round of targeted surcharging may in time be coming to the United States also, though two states (Connecticut and Massachusetts) currently ban the practice.
Furniture and meatball retailer Ikea too is manoeuvring its way further into the payment options arena: like Amazon (which announced a partnership with Affirm for fee-free instalment-purchase services late last month), it is deepening its involvement in Buy now, pay later methods, with the investment vehicle of its owner, Ingka Group, taking a minority stake in BNPL fintech Jifiti in return for $22.5m. Ikea had already been using the Ohio-headquartered company's instalments-based solution in partnership with banks in several European countries, including France and Spain. Although some argue that BNPL as it stands is too limited to represent a threat to full-fledged credit card offerings in a developed market, it is undoubtedly attracting big retailers whose store card business has been languishing in a time of high-profile rewards cards and co-branded products.
Some other stories of interest this week...
Canada: CIBC to take over Costco's card business from Capital One
Europe: Mastercard expands Open Banking reach with acquisition of Aiia
Japan: PayPal to acquire BNPL pioneer Paidy for $2.7bn
Singapore: StanChart and NTUC to open digital bank
UK, Europe: Revolut developing BNPL product
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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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