The onward march of Buy now, pay later (BNPL) has met with stiff resistance from one of the biggest American card issuers: Capital One has told a major news outlet that it is now stopping any BNPL credit card transactions, deeming the instalments model as "risky" for both issuers and consumers. The news comes as the BNPL wave, which has become one of the banner stories of this unprecedented year in payments, is shaping up to deliver its first major IPO through Affirm, which has reported a 98 percent year-on-year increase in revenue for the latest quarter. So far, Capital One stands apart from its peer group of financial institutions; by contrast, JPMorgan Chase launched the My Chase Plan last month offering interest-free instalment plans with a monthly fee. A Capital One spokeswoman told Reuters in an email that "transactions identified as point of sale loans charged on its credit cards, regardless of the point of sale lender" would now be banned, on the grounds that "these kinds of transactions can be risky for customers and the banks that serve them".
New figures from credit reference agency Experian have revealed that this year's credit card balances in the US have recorded the sharpest fall for eight years, bringing to an end a long streak of continuous growth: balances on credit cards fell by nine percent in the past year. The trend is echoed in the latest monthly release of consumer credit data from the Federal Reserve: preliminary analysis for the month of October shows that outstandings on revolving instruments, mostly credit cards, fell by 6.7 percent in October, a sharp swing from September's revised estimate of a 3.2 percent rise. Total outstandings stood at an estimated $979.6 billion, down from $985.1 the month before. Overall consumer credit rose by two percent; all figures are on a seasonally adjusted basis.
WhatsApp, used regularly by two billion people worldwide, has been steadily adding e-commerce features. With the latest one, buyers will be able to add any desired item for sale to a new shopping cart then, in the form of a message to the business in question, place their order. Such is the nature of digital globalism that the messaging giant is able to add any new feature to all users worldwide rather than proceeding on a market-by-market basis. The move is part of WhatsApp's broader strategy to steadily deck out its messaging apparatus, having already added the likes of QR codes, catalogue-item linking in chat streams and a dedicated button for shopping. In time, the goal is to emulate the roaring success of WeChat Pay in China, the innovative super-app which has built a complex commercial superstructure around a near-frictionless messaging proposition. However, WhatsApp owner Facebook's grand plan may be undone by regulators in the United States: slowly building antitrust efforts by state and federal authorities have now culminated in a lawsuit remarkable in the current American political climate for its strong bipartisan support.
In Singapore, the much-anticipated awarding of neobank licences took place earlier this week. For digital retail banking, two have been assigned: a Grab/Singtel consortium (with a 60 percent stake for the ridehailer) gets one and e-commerce/gaming group Sea (owner of SeaMoney and Shopee) the other; wholesale-related licences went to Ant Group and another consortium, this one featuring Greenland, the Chinese real-estate behemoth that has been diversifying into financial services in recent years. As noted in Verisk Financial Research's latest market report for Singapore, "the licensed digital banks – virtual banks that operate entirely online with no physical infrastructure – will be expected to commence business within a year. This will induce a much healthier level of competition in an economy that has been dominated by a big three [DBS, UOB and OCBC] for so long." Meanwhile, the governor of the Philippines' central bank announced new guidelines for digital banking, targeting the large unbanked population in particular and opening up the possibility for existing bricks-and-mortar banks to become fully digital if they wish.
To end, links to some other stories of interest this week...
Africa: Covid accelerating a quiet tech revolution
Australia: Qantas Loyalty pushes back earnings growth target by two years
Australia: TransferWise granted banking licence
France: SocGen closing 600 branches in profitability push
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.