The return of spending by more affluent cohorts and a resurgence in travel, entertainment and restaurant spend are being cited as drivers for Visa's latest quarterly results, which saw card-not-present volume, not counting travel spend, up almost 60 percent from the same period in 2019. "Habits that people formed during the pandemic are sticking," noted Vasant Prabhu, the company's CFO. "We're essentially seeing that even as the economy reopens, e-commerce spending is sustaining." Following last month's purchase of Open Banking specialist Tink, the network has continued its strategy to build up strength in the burgeoning fintech ecosystem with the purchase last week of Currencycloud in a deal valuing that start-up at some £700 million ($977m). With 500 clients across 180+ countries, Currencycloud has become a vital cog in digital banking and payments apps such as Revolut. "Mastercard has been perceived as being ahead of Visa when it comes to fintech and alternative payments", commented David Hickey of Verisk Financial Research, "but with these recent acquisitions Visa is catching up fast. It will be interesting to see how the strategies of both networks develop in the coming years as they integrate fintech businesses into their companies."
Other cards industry heavyweights are also benefitting from a rebound in consumer spending: second-quarter results from American Express, for example, saw restaurant spend only a tenth below 2019 levels. However, airlines remain down by almost two-thirds and lodging by a half. Nonetheless, breaking a streak of five declining quarters, the firm's revenues have returned to an upward trajectory. Issuers, however, are not seeing a big enough return in lending for some investors, with cardholders holding off on purchases and continuing to pay down outstandings: in Canada, where the markets await the latest volley of new financial results next month, balances at the Big Six issuers are down by a fifth since Covid hit. Across the Atlantic, Deutsche Bank enjoyed a much healthier quarter than has been seen for a decade, with once-rampant investment banking in fact the poorest revenue performer. In London, Barclays executives too were relieved as profits trebled on income up by one percent and consumer credit demand returning to life as Britain's vaccination programme ramped up successfully.
Another European giant, Santander, has been steadily building its PagoNxt business: under Getnet branding, it now plans to offer merchant acquiring services in some 30 markets across Europe, having already established a presence in the continent in both Spain and Portugal to add to Getnet's original market of Brazil and operations elsewhere in Latin America (Chile, Mexico and Argentina). Readers may recall that PagoNxt has been created as a home for Santander's disruptive efforts on three fronts in payments: merchant acquiring (through Getnet), cross-border SME solutions (in association with fintech Ebury) and consumer-facing digital products and services. For its latest quarter, Santander's profits were boosted by demand for mortgages in Britain and car loans in America, though deposits from customers are piling up and demand for credit in the UK has been weak so far this year.
To end, here are links to some other stories of interest this week...
China: WeChat suspends new user registration
France: BNP Paribas buying FLOA in €258m deal
UK: Barclaycard announces cashback scheme with Visa
UK: Lloyds and Mastercard aim to take A2A payments mainstream
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.