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Payments News Digest 4 June 2021

04 June 2021
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US: Overdrafts in the spotlight as Ally and fintechs do away with penalties

Online-only lender Ally Bank has announced that it is eliminating overdraft fees for all its customers. Fintech challengers such as Chime and Google's Plex, as well as Square (through its reportedly forthcoming current accounts), have also seen the opportunity presented by doing away with a revenue source that customers heartily dislike. Among the big incumbents, Wells Fargo and Citi have both enjoyed enthusiastic take-up of basic accounts without overdraft fees. This week the issue made the headlines in America as an influential lawmaker, in a congressional committee hearing, publicly criticised the chief executives of the four leading banks for the fees, which some argue profits from a suboptimal interbank payments infrastructure: JPMorgan Chase, at the top of the table in this respect, took in $1.46 billion on the back of overdrafts in 2020. "Those customers who are disproportionately impacted are typically on the lower end of the socio-economic scale," noted Ally's chief executive. With corporate social responsibility on the rise, could the days of the overdraft fee be numbered?

Europe: Digital wallet in works as instant payments push seems imminent

Where the United States tends to leave as much as possible to the market to solve, regulators in Europe are much more interventionist; one reason why Open Banking, for example, is so much further ahead there than in the country that gave birth to much of its technical underpinning. The European Union is now planning a digital wallet that could be used throughout the 27-country bloc in the second half of next year. Unnamed sources told the Financial Times that it would offer a home both for access to state services such as social welfare and taxation, as well as a safe repository for driving licences and the like. The designers also envision Europeans being able to pay their utility bills using the app, which will be protected biometrically. But, with tight restrictions on data and profit-making baked in, will the private sector, envisioned as integral to the surrounding payments ecosystem, be inclined to support it? On a different front, the European Central Bank (ECB) is unhappy that the continent's banks are failing to pass on the benefits of the Eurozone's instant payments system in "attractive and transparent conditions", according to a prominent ECB board member. Fabio Panetta told an audience in Helsinki that "prices should be neither excessive nor hidden to consumers. While the cost for service providers of using [the infrastructure] is €0.002 per instant payment transaction, instant payments are sometimes offered to consumers for €1 per transaction. This must change."

Europe: Worldline continues to grow as consolidation wave rolls on

Paris-based payments behemoth Worldline has a long history of building up a market position in smaller markets. Its merger with Equens five years ago took it into the big league of pan-European payment services. Since then, it has picked up operations in the Baltics, Nordics and Eastern Europe. Now, fortified further through the purchase of SIX Payments and French company Ingenico, it is continuing its hopscotch progress about the continent to buy up a majority stake in Greek merchant acquirer Cardlink, which leads the field in that country by a comfortable margin for acquiring both debit and credit cards. "The European acquiring market is consolidating rapidly", commented David Hickey of Verisk Financial Research. "Worldline's string of acquisitions places it in prime position to be one of the small handful of players who will eventually dominate the market". Worldline's ambitions are not confined to its home continent: in December, it struck a deal with ANZ Bank to create an acquiring alliance in Australia, with the European player taking a 51 percent stake in the venture.

To end, here are links to some other stories of interest this week...

Australia: Woolworths takes on banks with new payments business WPay
Spain: CaixaBank to provide digital banking services on its ATMs
US: Americans trust banks over fintechs and Big Tech with personal data
US: How Open Banking will quietly edge out credit cards

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.

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