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 /  18 December 2020

Weekly News Digest 18 December 2020

18 December 2020
city-of-london

UK: Big banks mull BNPL crackdown

Banks in the United Kingdom are reportedly considering whether to follow Capital One's lead and ban Buy now, pay later (BNPL): speaking to the Daily Telegraph, an unnamed executive at one of the major lenders pointed out that BNPL debts are not being seen by the banks as they are currently unrecorded by the credit reference agencies. The BNPL sector is unregulated in Britain. The fear is that a hidden credit bubble is rapidly growing, with signs that struggling debtors are paying off instalment-purchase fees rather than attending to overdraft balances or loan repayments. "We urgently need a way of seeing how much debt customers have," the source told the newspaper, which noted that BNPL providers are waiting for a review by the country's financial conduct regulator, with a decision said to be on its way early next year. Klarna, a pioneer in the space which has already lent to more than one in six adults in the UK, says it is planning to report any accounts experiencing difficulties to credit agencies.

Europe: Open Banking fintechs attracting big investments as reach extends

Open Banking, propelled by the European Union's revised Payment Services Directive (PSD2), has provided fintechs in that region with a royal road into consumers' financial affairs, granting roles to these third-party payment service providers as either an AISP (Account Information Service Provider) or PISP (Payment Initiation Service Provider). Stockholm-headquartered Tink is an example of the latter, which means that it has the ability, once appropriately permissioned by the customer, to move funds around between accounts and make transfers or payments. This week it raised $103m in a funding round on the strength of its API, now up and running with 3,400 banks, covering most of Western Europe. Partners include NatWest, BNP Paribas and PayPal. Britain's GoCardless, which is also exploiting the opportunities presented by Open Banking, raised a slightly smaller amount in its just-completed funding round, which was led by Bain. As the name suggests, it has plans to use the $95m raised to disintermediate traditional card arrangements through API-powered direct debit.

Australia: Worldline breaks new ground on acquiring venture with ANZ

A new acquiring joint venture between rapidly expanding payments business Worldline and ANZ Bank Australia was announced this week. The European company is paying 485 million Australian dollars ($366m) to ANZ for a 51 percent stake in the joint venture. Three months ago, Worldline made another expansionist move, addressing the online payments market in Eastern Europe through completing a majority stake purchase in GoPay, part of an ongoing appetite for mergers and acquisitions in its home continent which has seen it snap up the likes of SIX Payment Services, First Data subsidiaries in the Baltic States and French payments group Ingenico. Worldline set up a new Merchant Services-Financial Institutions division in the wake of the Ingenico deal, with the Australian JV the new unit's first major move. "As similarity breeds connection, Australia is a wise choice for a first foray into the Asia-Pacific region", commented Lorna Baek of Verisk Financial Research. "The latest acquisitions are evidence of Worldline's intention to not only firmly cement its position as a payments leader across all of Europe but also to extend its influence within Asia and the world of e-commerce. In an industry where sheer scale can win the race, Worldline is making a strong claim for being a major contender."

Global: Tokenisation tie-ups to smooth away cardholder frictions

As e-commerce takes on more value in a world changed forever by the events of 2020, maintaining payment card security has not only become critical but, without tokenisation, can present offputting obstacles for consumers. To turn this potential difficulty into an opportunity, the token management service of Worldpay from FIS is now going to include Visa's 'Click to Pay' feature, which not only helps Visa cardholders but also those using Mastercard, Discover and American Express cards. Tokenisation keeps payment data secure, helps merchants more easily meet regulatory compliance requirements and saves consumers the bother of re-entering card and delivery details, which in turn sees checkout-completion rates rise for merchants. In a separate development, European payments processor Adyen has teamed up with Microsoft to launch Adyen Network Tokenisation Optimisation, another solution designed to increase authorisation rates and generate more revenue for merchants such as Microsoft.

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

Europe: Revolut launches merchant acquiring service
UK: Subprime lenders face funding squeeze as pandemic fuels demand
US: Covid nudges bank customers into digital era
US, Global: Visa has quietly warmed to cryptocurrency

The Weekly News Digest will now take a short break and return in January. We wish all of our readers happy holidays and a prosperous New Year.

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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