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Payments News Digest 14 January 2022

14 January 2022
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US/Mexico: Wall Street lenders pursue radical changes as battle for retail custom shifts gear

Bank of America has decided to do away with fees levied for bad cheques, joining the recent trend in the country to deliver consumer-friendly news as Americans contend with increased inflationary pressures on their household budgets. The lending giant, bested only in the United States by JPMorgan Chase for retail bank assets, will also be cutting fees for overdrafts by 71 percent, down to $10 from $35. Bank of America, by its own estimate, has some 66 million consumer and small business clients.

Rival Citigroup meanwhile has augmented its retreat strategy from retail banking markets around the world with the announcement that it will be seeking a buyer for its consumer and SME operations in Mexico. Largely associated with its Banamex unit, Citi is in fact the largest issuer in terms of credit card numbers and holds an estimated 22 percent of overall credit card outstandings according to the latest report on the Mexican market from Verisk Financial Research (VFR). American Banker has reported that Santander is one of the suitors currently exploring bid possibilities.

Europe: Digital banks vie for optimal balance of ambition and caution

Courtesy of its licensing set-up in Lithuania, British fintech Revolut has been able to upgrade its offerings to that of a deposit-protected bank across ten markets in the European Union, notably Germany, Netherlands, Spain and Sweden as well as smaller markets including Belgium, Denmark and Finland. Revolut as a bank was already available in ten countries ranged across Eastern and Central Europe; now the focus shifts to the more populous West.

The move comes as the digital banking sector reflects on the dangers of rapid expansion exemplified by the recent experiences of Berlin-headquartered N26, which now admits that it rushed to gain a foothold in too many new markets through the spending of investment money that might have been better used developing its services suite. The high-profile challenger has quit two major markets since the decade began: the United States and the United Kingdom. Founded in 2013, it has been undergoing a long spell of intense scrutiny from the German regulator, triggered by journalists demonstrating in 2018 that forged documents could be used to open accounts; that attention culminated in a temporary limit, pending the improvement of internal controls, of no more than 70,000 new N26 customers being allowed per month.

Global: BNPL boom continues as regulatory regimes draw closer

The year just begun promises to be a busy one for the BNPL sector but, unlike last year, much of the meaningful news looks set to be generated by regulatory authorities and established lending stalwarts as they make structural adjustments. In our previous issue, we noted signs of consumer credit watchdog CFPB in Washington taking a more vigorous approach, but the most influential development in 2022 is expected from London, where new rules moved a step closer last week as the consultation baton passed into the hands of the Financial Conduct Authority (FCA), which will ultimately implement a new regime whose precedents could influence jurisdictions as far afield as New Zealand.

Meanwhile, the commercial pace continues to pick up: in Australia, BNPL's value is set to rise by almost half in 2022, according to the latest VFR report. But pay-later fever should not be taken as a mortal wounding of credit cards there: as a revealing Cards & Payments Industry Insights article points out, the aggregate transaction values of credit and debit formats combined "still dwarf BNPL's total transactions value, which stands at an estimated $9.5bn as of the year just ended".

Other stories of interest this week...

Canada/US: How Starbucks' mobile app became a winner
Netherlands: New contactless OVpay to replace public transport chipcard
UK: Checkout.com becomes most valuable fintech in country
US: GM launches new credit card with Goldman Sachs

Published here weekly, the Payments News Digest from Verisk Financial Research is also distributed by email: sign up here.

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.

Find out more: contact us at research_enquiries@verisk.com.