Second quarter results from the leading e-commerce players have confirmed the historic shift to online commerce hastened by the global lockdown. Total payment volume at PayPal for that period therefore rose by 29 percent year on year, from $172 billion to $222bn, far above the $210bn that analysts had predicted. Venmo, the company's high-profile P2P service, saw payments volume rise by 52 percent, with active users now above 60 million, eight million more than at the end of the previous quarter. In its own latest results, Canadian e-commerce tools provider Shopify reported new stores opened on its platform grew by 71 percent in the quarter versus the same period the year before, illustrating the trend even more powerfully. Admittedly, Shopify did make things much easier by extending its free trial period to 90 days from the customary 14, but it may well be that many merchants never look back. In another sign of confidence in the future of online commerce, PayPal's erstwhile partner eBay is partnering with LendingPoint to provide eligible sellers in the United States with as much as $25,000 in funding.
Google's yet-to-be-launched banking platform, codenamed Project Cache, has quadrupled its partner count with the addition of half a dozen more companies. Two notable names among the newcomers are BMO Harris, a Bank of Montreal subsidiary in the United States, and BBVA USA, the American unit of the multinational Spanish firm which was among the first banks in the world to bring out its own API. TechCrunch usefully encapsulates the offering: "Much like the mobile banking services offered today by a number of startups, Google will provide the consumer-facing front-end to the digital banking services it makes available, while the accounts themselves will be held by the FDIC-backed partner institutions." The most important partner in the enterprise by far remains Citibank: next year will see the project become a reality, all going to plan, with the outcome potentially triggering a revolution in American banking.
Across the Atlantic, French banks have been counting the cost of a lockdown that was among the most extreme worldwide. BNP Paribas ' diversified model is being praised as the saviour as its trading activities made up for a 5.2 percent fall in retail banking revenues. Rival lender Société Générale reported a loss of €1.26 billion ($1.49bn), with its retail banking division's activities, such as corporate credit transfer and card transactions, hit particularly hard in April and the first half of May. Unfortunately for SocGen, trading losses meant that investment banking, in contrast to BNP, was unable to mitigate the Group's balance sheet shock. London-headquartered HSBC meanwhile reported a drop of two thirds in pre-tax profits, with 700,000 loan, credit card and mortgage repayment holidays having been granted. Loan-loss provisions as high as $13bn are the major factor in the performance, with executives citing the US-China trade war and bilateral tensions as a concern.
Finally, Japan's payments market seems on the verge of a shake-up after the Japanese Bankers Association opened up access for fintechs to the money transfer system used by traditional financial institutions. The move means that consumer choice could dramatically increase as early as next year. Previously, the country's Fair Trade Commission had found fault with the market, noting high fees and the access exclusivity of the system. At present some 6.5 million payments take place every day using the platform. The government sees the opening up of this market to new players beyond incumbent banks and credit unions as crucial to economic growth.
To end, links to some other stories of interest this week...
Brazil: Central bank says WhatsApp payment tests have begun
NZ: Retailers welcome Visa and Mastercard interchange moves
Spain: CaixaBank to sell part of stake in Comercia Global Payments
US: Laundromats are running out of coins
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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