Goldman Sachs is set to pay $2.5 billion for GM's credit card unit, according to the Wall Street Journal, having outbid Barclays for the business. The acquisition would be a coup for the Wall Street titan, which is keen to broaden the spectrum of its activities. To this end, it has already set up digital bank Marcus and established a co-branded credit card with Apple in recent years. One year remains on its contract with current card-issuing partner, Capital One. At its investors' day in January, Goldman revealed ambitious plans for its consumer-facing units, with a target of more than $20 billion for card balances and loans by the middle of the decade.
With an eye on the cashflow pressures faced by small businesses this year, American Express and Amazon have launched a co-branded credit card in Britain: the card empowers holders to make a choice at checkout between earning rewards points or selecting a deferred payment term. The points can either be redeemed on Amazon itself or applied to the card balance. The two high-profile companies have already teamed up for a co-branded card partnership in their home territory of the United States. Colin O'Flaherty, American Express' general manager of UK global commercial services, commented: "We want to make it easier for businesses to manage their finances and continue accessing the goods and products they need -- with more options to pay".
The United Kingdom has led the world when it comes to Open Banking, a policy position that shows no signs of changing after Brexit, even with the possibility of regulatory divergence from the EU's revised Payment Services Directive, which has set the terms for the practice across the continent. This week, the statutory body charged with implementation in the UK revealed that the Open Banking-enabled product userbase has now doubled in six months to reach two million people. The question is: how heavy-duty are these apps? There is a world of difference between Account Information Service Providers (AISPs) and their more muscular Open Banking stablemate: Payment Initiation Service Providers (PISPs), with the latter empowering users wishing to move money from one account to another, for example at the point of sale. In time, as customers grow used to their power and flexibility, PISPs should become increasingly important. In addition, newly published research based on a survey of two thousand Britons this summer found that one in five had taken the plunge to use online banking apps during the lockdown, with 54 percent now "using them regularly".
Once a banking backwater, low-value consumer payments have been attracting all sorts of new players in recent years: now longstanding interbank payments system SWIFT is offering its member banks the opportunity to use its new and speedier payments layer to offer consumers and SMEs instantaneous cross-border transactions. SWIFT (Society for Worldwide Interbank Financial Telecommunication) faced existential challenges in the latter half of the decade just ended, first from high-profile cybercrime exploits and then from a burgeoning procession of challengers in the global value-transfer business, such as distributed ledger technologies including Ripple and JPMorgan's Interbank Information Network as well as a system currently in the works in a cooperative effort by Russia, China and India. Its primary response has been the global payments initiative (gpi) service, launched in 2017 to address speed, efficiency and transparency shortcomings in the legacy system. Now, as an increasing number of SWIFT-affiliated institutions have access to gpi, the infrastructure can be leveraged to get further into the high-volume, low-margin businesses that banks worldwide are increasingly looking to for revenue. Among the firms already involved are Wells Fargo, Barclays, National Australia Bank and Standard Chartered.
The Argentine fintech Ualá has met with great success in its domestic market, where it says between six and seven percent of inhabitants are now using its services. Now the startup is setting its sights on Mexico, which seems ripe for fintech innovation with a large unbanked cohort, mobile phones becoming commonplace and a government keen on developing digital infrastructure. As mentioned in our latest report for Mexico, approximately 80 fintechs in the country, a fifth of the total in operation, address the payments and remittances market. Meanwhile, Sao Paulo-headquartered fintech Nubank is launching itself in Colombia through a credit card with no fees attached. Nubank has already established operations in Brazil, Mexico and Argentina. A curious dovetailing of shifting consumer preference and official targets for financial digitalisation in countries from Mexico to Paraguay has increased the chances of a historic influx of Latin America's unbanked population.
To end, links to some other stories of interest this week...
Africa: Pandemic spurs mobile telcos to ramp up banking bid
EU: Central bank confident about digital euro challenges
Spain: JCB and Santander partner to diversify e-commerce portfolio
US: Checkout-free shopping is bigger than you think
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.
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