Amex boosts its Swiss footprint; UK tightens BNPL rules

American Express this week acquired the 50% of the 26-year-old Swisscard venture that it did not own. The deal, which is expected to close in early 2025, should contribute, albeit modestly, to Amex's quest to grow its presence outside of the U.S., where it trails Visa and Mastercard.

The card lender bought the Swisscard stake from UBS Group and will be sole owner of the card business, which launched in 1998 as a joint venture between Credit Suisse and Amex. UBS inherited Swisscard from Credit Suisse in 2023 as part of a UBS deal to acquire assets from Credit Suisse, which was in danger of collapse.

UBS has since siphoned off parts of the former Credit Suisse business that did not fit its strategy, including a securities unit in China, an insurance-oriented investment product and a $2 billion real estate fund. Amex, which did not respond to a request for comment, plans to expand its franchise in Switzerland.

Swisscard will continue to issue cards for Amex, Visa and Mastercard in Switzerland. For Amex, the Swisscard deal follows a third-quarter earnings report that beat analysts' expectations but also showed signs of slower payment growth.

Amex's strategy includes growing its international presence, including products for restaurants and small businesses, though analysts say Amex's position in Europe will make that a challenge. Amex's market share in Europe ranges from 1% to about 10%, depending on the country, according to Statista. Amex's market share in Switzerland is about 20%, according to Ask Wonder.

"The acquisition of the remainder of Swisscard could help Amex's core card business if it can convert some of the existing Visa and Mastercard cardholders, and could enhance its acceptance in Switzerland," said Aaron McPherson, a principal at AFM Consulting, adding Amex's lack of wide acceptance in Europe compared with Visa and Mastercard is partly due to higher fees, with Visa and Mastercard maintaining an advantage due to the development innovations such as Visa's Flexible Credential, which enables cardholders to choose between accounts and card types to make payments.

The Swisscard deal could be part of an Amex strategy to compete with these moves from its rivals, according to payment experts.  "The Swisscard seems like a small advantage, however, compared to the broader challenges of competing in a world where cards are increasingly being challenged by newer alternatives." McPherson said. 

On its face, acquiring full control of Swisscard does nothing to increase American Express' mass or relevance in Switzerland, according to Eric Grover, a principal at Intrepid Ventures.

"If it can provide greater incentives to use Amex to cardholders and merchants as a result of full control of its acquirer and principal issuer, that may help. But even in a small market like Switzerland, Amex would benefit if it implemented creative issuing and acquiring partnerships to build and extend its network reach." —John Adams

The U.K. government is increasing its regulation over the buy now/pay later industry in an attempt to align the product with other consumer credit products. 

BNPL regulation now falls under the oversight of the Financial Conduct Authority and the Consumer Credit Act, the government said. 

Under the new rules, the FCA will be able to apply affordability rules that require BNPL firms to check that consumers are able to afford repayments. BNPL companies will also be required to provide information about risks associated with late payments ahead of loan funding in a move that will disapply standard disclosure rules under the Consumer Credit Act to "ensure users are given this information in a way that is tailored to the online setting in which BNPL products are generally used," according to a government release. 

Consumers will also be provided with "stronger rights" on issues that arise with products purchased and financed through BNPL, the government said.

The increased BNPL oversight in the U.K. comes as U.S. regulators attempt to reclassify BNPL as credit.  —Joey Pizzolato

Payment companies around the world are jumping to take advantage as Apple loosens control over its payments technology. Brazil, which is adding new technology to its real-time processing rail, is attracting technology partners such as Matera, which sees the Apple move as a way to bring more users into the PIX network.

The Central Bank of Brazil is developing a standard that will enable Near Field Communication payments on PIX. The government-driven PIX is one of the largest and fastest-growing real-time payment networks in the world, with yearly volume that's far larger than networks such as the FedNow and RTP networks in the U.S.

The central bank is considering NFC models that include payments via a digital wallet, bank mobile apps and "tap to pay" transactions that involve holding NFC-enabled devices near to each other, according to the Sao Paulo-based Matera, a payments company that participated in PIX's September meeting. While PIX is driven by a government mandate, the central bank has not decided if NFC will be mandatory.

NFC would open a wide range of point-of-sale transactions to instant settlement with less reliance on Apple to act as a gatekeeper to the technology.

Apple recently settled with regulators in the EU to provide more access to NFC technology, one of several regulatory moves globally that are resulting in Apple regularly becoming less restrictive about its payment systems, which are becoming less expensive as a result. 

Other payment companies are also expanding their mobile payment strategies due to Apple's moves. PayPal recently told analysts it is interested in market opportunities since it can now more easily embed its massive user base into iPhones. Curve, a payment company that sells a card that allows consumers to toggle between multiple card accounts, recently entered into a partnership with Samsung to build a new payment app in response to the regulatory pressure on Apple. —John Adams