PayPal gets more physical; Biden weighs student loan forgiveness

Wall Street Journal

Getting physical

“The pandemic, which has been a boon for contactless tapped or scanned payments, seems to have gotten PayPal into the physical realm in a big way. ” The company said Wednesday that “payments with QR codes are now accepted at more than 600,000 retail locations, and that in 2020 it had signed up 29 large enterprises such as CVS and Macy’s to offer them. PayPal did more than $20 billion worth of in-store volume across its payment types in 2020.”

“That is just a small piece of the nearly $1 trillion in total payment volume PayPal did last year, but it is important volume for investors to track. For one, volume growth in a new arena will be vital as PayPal tries to sustain the momentum built by the pandemic’s behavioral shift to digital spending. Plus, in-store transactions are relatively profitable for PayPal. This helps PayPal more closely embed itself in users’ day-to-day lives, giving it further opportunity to offer its growing list of services, like buy-now-pay-later and bill payments.”

The company also benefited from its support for buying and selling cryptocurrencies and its entry into the buy now/pay later market, American Banker reports.

Forgive them their debts

“Responding to pressure from Democratic lawmakers and progressive groups,” the Biden administration “is considering using executive action to forgive Americans’ federal student debt,” possibly up to $50,000 per borrower.

“Our team is reviewing whether there are any steps he can take through executive action and he would welcome the opportunity to sign a bill sent to him by Congress,” White House press secretary Jen Psaki wrote on Twitter.

Sold

Real estate data provider CoreLogic has “agreed to sell itself to two private-equity firms for about $6 billion. Stone Point Capital and Insight Partners said Thursday they agreed to buy CoreLogic for $80 a share, or about $6 billion. The deal represents a 51% premium to CoreLogic’s share price in June.”

See no evil

Credit Suisse Group “overlooked red flags for years while a rogue private banker stole from billionaire clients, according to a report by a law firm for Switzerland’s financial regulator. The private banker, Patrice Lescaudron, was sentenced to five years in prison in 2018 for fraud and forgery. He admitted cutting and pasting client signatures to divert money and make stock bets without their knowledge, causing more than $150 million in losses.”

The report “found Mr. Lescaudron’s activities triggered hundreds of alerts in the bank that weren’t fully probed in the 2009-15 period studied. In addition, around a dozen executives or managers in Credit Suisse’s private bank knew Mr. Lescaudron was repeatedly breaking rules but turned a blind eye, proposed lenient punishment for his misconduct or otherwise glossed over the issues because he brought in around $25 million in revenue a year, the report found.”

Do it again?

Deutsche Bank, which Thursday reported its first annual profit in six years, “faces a new problem in 2021: higher investor expectations. The German bank reported steady full-year results, buoyed by a stellar performance from its investment bank and lower credit losses.”

“But this year could be very different, as capital markets normalize and the economy is weaned off government-support programs. Although Germany performed relatively well in the first wave of the pandemic, its home-market economy still contracted 5% in 2020 and the country hasn’t been spared in the second wave.”

New York Times

Prepare yourself

While cautioning that it’s not yet ready to go negative, the Bank of England “told British banks that they should take whatever steps are necessary to prepare their systems for negative interest rates. After consulting with banks about whether it would be feasible to cut rates further, the central bank found that most firms would need to make some changes to their systems and processes. On Thursday, it asked the banks to begin making these changes.”

“While the Com`mittee was clear that it did not wish to send any signal that it intended to set a negative Bank Rate at some point in the future, on balance, it concluded overall that it would be appropriate to start the preparations to provide the capability to do so if necessary in the future,” the minutes from the bank’s February monetary policy meeting said. Banks should prepare “to be ready to implement a negative Bank Rate at any point after six months.”