WITH NEWS THAT Brussels is going to accept an offer from Visa and Mastercard to cut interchange for non-EU cardholders who spend within the bloc, the latest skirmish between the European Union and the global card schemes appears to be at an end. The networks have committed to bringing down interchange in such cases by an average of 40 percent: this mean, for card present payments, interchange on non-EU debit and credit cards of no more than 0.2 and 0.3 percent respectively; in card not present cases, the rates would be no higher than 1.15 and 1.5 percent. "The impact on card issuers should not be very significant as, for most non-EU issuers, spend in the EU makes up a small proportion of overall spend," commented David Hickey, head of research at Verisk Financial – Lafferty Research. "We might expect to see some reductions in benefits on cards aimed at frequent travellers, particularly in markets with close ties to the EU such as Switzerland. However, in general, the impact should be diluted across a large number of issuers around the world." The commitments are now legally binding, say European authorities, indicating that antitrust proceedings in this matter will now be shelved.
All is rosy too in the global payments garden, at least if Mastercard and First Data numbers are anything to go by: this week both companies announced revenues that beat expectations. Mastercard's results revealed that, year on year, net revenue increased nine percent, with the value of cross-border transactions notable for growing 13 percent. "These increases were partially offset by an increase in rebates and incentives, primarily due to new and renewed agreements and increased volumes," the scheme noted. There are now two billion Mastercard-branded and 471 million Maestro-branded cards throughout the world, numbers that even Silicon Valley might be impressed by. Meanwhile, First Data, in the news earlier this year as the subject of an acquisition by Fiserv, announced its own quarterly results, with total segment revenue up by eight percent over the same period last year, on an "organic constant currency basis" (ie, excluding divestitures). Chairman and chief executive Frank Bisignano cited "strong growth across our core global merchant acquiring and card processing businesses" for the positive start to 2019, adding that he was "confident in the value that the merger with Fiserv will create for our clients and our shareholders".
Results coming from banks around the world provide an assortment of news, ranging from Santander profits falling by a tenth to Singapore's DBS seeing net profit for the first quarter up by nine percent. According to the latter's statement, card fees increased by over a fifth as customer transactions rose across Southeast Asia. "Transaction service fees rose six percent...to 188 million Singaporean dollars ($134m) as both cash management and trade finance fees increased. Loan-related fees grew nine percent to 108 million Singaporean dollars." The bank's focus on digitalisation and its regional market appears to be paying off.
That marriage of the digital and the cross-border led Singapore's central bank, the Monetary Authority of Singapore, to complete a cross-border payments experiment with its counterpart in Canada this week in a test notable for the use of blockchain tech to make it possible: the object, as with all payments innovations worth the trouble, is to find a way to transfer funds that is not only cheaper and faster but also more secure than the correspondence method that currently dominates. Canada's interest in distributed ledger technology evidently goes beyond this use case as customers of no less than five of its banks can now avail of a digital identity app from SecureKey Technologies called Verified.Me which also runs on blockchain tech. Among the firms already on board are RBC, TD Bank, Bank of Nova Scotia and CIBC, with Bank of Montreal and National Bank of Canada said to be also coming on board soon.
To end, links to some other stories of interest this week...
US: Facebook working on cryptocurrency-based payments platform
UK: Checkout.com raises record $230m in Series A funding
UK: RBS returns to merchant acquiring
Mexico: EVO Payments agrees to acquire SF Systems' payment gateway
UK: Free cash machines vanishing at alarming rate
Ireland: Payzone acquired for €100 million
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 data going back to 2010 – and forecasts up to 2020 – our unique datasets cover 72 countries around the world and feature more than 250 metrics per market.