Mastercard's second quarter results reinforced the lessons from rival Visa's performance reported here last week: card-present spend is roaring back, with e-commerce maintaining the step-change benefit of last year's surge. Fortunately for the bottom line, the recovery at the point of sale is being accompanied by lower credit losses, the result of a credit application recovery that is mostly being driven by prime and near-prime consumers notes the Consumer Financial Protection Bureau in analysis based on anonymised credit bureau data. Using sampled data from Equifax, the NY Fed meanwhile estimated that American household debt rose 2.1 percent in the quarter, with credit card balances up by $17 billion following a decline to the tune of $49 billion in the opening three months of the year. As of the end of June, balances on credit cards are $140 billion lower than at the end of 2019. Consumers "are definitely getting out more, as we're seeing improvement in card-present spending, particularly in the travel, retail and restaurant categories, while e-commerce continues to be strong", commented Mastercard CEO Michael Miebach.
In what is being described as Australia's biggest financial industry deal ever, American fintech Square is to acquire Buy now, pay later specialist Afterpay for $29 billion. According to the purchaser, Afterpay's services are available through 100,000 merchants in its active markets, principally its home country and the United States, where it has been operating for three years now. Some 16 million people are now said to have availed of Afterpay's BNPL services. As Verisk Financial Research's market report for Australia observes, BNPL has emerged there as a mainstream payment method both online and in physical stores – with Afterpay the most popular provider: "the company estimates that it processes more than ten percent of all online retailing in the country, with one tenth of purchasing Australians having transacted with Afterpay". For its part, Square, funded by a revenue windfall during the pandemic, has had a busy year to date, recently announcing Square Banking for small businesses in the US, launching e-money services in its first Eurozone market (Ireland) and significantly enhancing merchant acquiring services in its domestic market through the creation of its own licensed bank.
European consolidation in payments saw another advance this week as Nexi bought a controlling interest in Athens-headquartered Alpha Bank's merchant acquiring business for €157 million. Building on the opportunities afforded by EU-led regulation and cross-border interoperability, a new joint venture in Greece involving the two parties will be created. For Nexi, the deal follows last month's takeover of Nordic payments processor Nets, an acquisition which created the continent's largest payments company by volume, and a merger with domestic rival SIA to intensify its dominance in Italy and extend operations into Austria and Germany. "This company will be much more international three years from now," predicted chief executive Paolo Bertoluzzo last October, a forecast that is swiftly coming to pass.
Links to some other stories of interest this week...
India: New cash withdrawal rule affects ATM interchange
Japan: Four firms to tie up in facial recognition for payment
Singapore: First crypto licence aims to lure digital asset groups
US: Marqeta to fuel virtual Google Pay balance card
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.