According to chief financial officer Jennifer Piepszak, JPMorgan Chase is now seeing payment card-based spending by consumers back to levels last seen before pandemic lockdowns began just over a year ago: a remarkable performance considering that both the travel and entertainment categories remain so beleaguered. Her boss, chief executive Jamie Dimon, sees a bright future for consumer spend with deposits held by his firm now at $2.28 trillion, just about a quarter higher year on year: in his words, people are "coiled [and] ready to go" now that there are opportunities emerging to resume a more normal lifestyle. Almost a third of government stimulus funds received by Chase customers over the last year has gone into savings and debt repayment. Loan demand remains constricted, down four percent from the first quarter of 2020. New consumer credit figures from the Fed bear out the news from Wall Street: demand for revolving credit has been increasing, jumping by almost eight percent month-on-month in February. However, outstanding revolving credit, mostly a matter of credit card borrowing, came to just below a trillion dollars in total in that month, down over 11 percent from a year before.
The Federal Reserve has also been busily improving the FedNow service, this month announcing that ISO 20022 messaging is now incorporated into the real-time payments system, which is currently in a pilot phase. The latest ISO (International Organization for Standardization) interchange protocol for financial data is already in place or being introduced across instant payments systems around the world: one important outcome is that Request-to-pay (sometimes known as Request-for-payment) services will become a normal part of payments, allowing businesses to push a request (to a customer's phone in the most obvious example) for, say, an overdue or forgotten payment. Across the Atlantic, Mastercard announced that it had introduced the framework necessary for business in the UK to create their own apps for corporate customers to deploy Request-to-pay communications and interactions: the offering sits within Pay.UK's own framework, made possible by the rollout of the capability on the British operator's real-time payments system last summer.
More detail is emerging about China's new central bank digital currency (CBDC), as the People's Bank of China continues to expand and extend its ongoing trial of the so-called e-yuan to more consumers in more regions around the country, including Hong Kong. Users can count on their privacy being guarded as far as other individuals are concerned, the director of the project recently revealed, though anonymity to the issuer itself will diminish as transferred amounts increase. For small amounts, users need only provide a mobile phone number. Another important feature, especially in more remote areas, will be the fact that the money can be used even when an internet or cellular connection is absent. China is the furthest ahead when it comes to major CBDCs, and central banks certainly cannot afford to hang about as mainstream interest in and enthusiasm for cryptocurrency grows: just this week, bitcoin hit a record value of $62,741 in advance of Coinbase's listing on the Nasdaq. In India, the government is reportedly planning to ban all such currencies, bar its own forthcoming CBDC.
To end, links to some other stories of interest this week...
Asia-Pacific: Citigroup to exit most of its consumer businesses
China: Ant to restructure following $2.75b fine
UAE: First Abu Dhabi Bank unveils payments subsidiary Magnati
UK: Card spending rises to highest since Christmas
US: Facebook confirms test of Venmo-like QR codes for P2P payments
US: Gap splits with Synchrony, signs with Barclays and Mastercard
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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