Amex boosts its Swiss footprint; UK tightens BNPL rules

October 23, 2024 4:27 PM

India's getting set to ban cryptocurrency, partly in an effort to boost its lagging central bank digital currency. Brazil is adding NFC technology to its PIX real-time payment network, potentially enabling the country's payment firms to take advantage of Apple opening its payment technology amid global regulatory pressure. Here's what's happening in the world of payments.

Patrick T. Fallon/Bloomberg

Swisscard gives Amex an international boost — but not a big one

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

U.K. government issues new BNPL rules

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

Regulatory pressure on Apple attracts firms to real-time payments in Brazil

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

Adyen appoints Tom Adams as CTO and board member

Adyen on Wednesday added its incoming chief technology officer to its management board with the approval of shareholders.

Tom Adams will join the payment fintech group at the end of the year when the current CTO, Alexander Matthey, steps down.

Adams joins Adyen from Block's consumer business vertical, CashApp, where he served as head of engineering for four years. As CTO of Adyen, he will be responsible for the company's payments, data and financial products.

Matthey said in January that he would not seek another four-year term as CTO. Adams' tentative appointment was announced in late August and was subject to shareholder approval. —Joey Pizzolato

Diebold Nixdorf wins Greek bank's self-service contract

Athens-based financial institution Piraeus has expanded its relationship with Diebold Nixdorf to replace its fleet of more than 1,200 ATMs with cash-recycling devices.

The ATMs are located inside bank branches, and the new machines will enable the bank to migrate more branch functions to self-service. The ATM upgrade includes cash recycling, a process in which the machine receives deposits, converts the cash to digital funds in the customer's merchant account, then enables the deposited cash to be used for the next user's withdrawal.

Cash recycling enables a closed-loop that's designed to extend the amount of time that a cash is usable, called cash-in-transit, which can ease the cost of managing paper money. Diebold Nixdorf's other updates include adding NFC technology, enabling the machines to accept contactless payments.

Diebold Nixdorf has ramped up ATM automation and other self-service technology since emerging from bankruptcy in 2023. Much of the work has involved swapping out existing ATMs in favor of newer models that enable more staff work to be moved to machines.

Diebold Nixdorf's traditional rival, NCR Atleos, has undergone a similar transformation, outfitting new machines with technology that makes ATMs more amenable to a digital economy while supporting the lingering need for cash. —John Adams

India threatens crypto as its CBDC stagnates

India, which has a history of being hostile to cryptocurrencies, is threatening an outright ban that would benefit the country's digital currency.

Regulators signaled concern about the risk of cryptocurrency following consultations with key institutions, according to the Hindustan Times. Government officials say central bank digital currencies could provide most of the benefits of cryptocurrency with less risk, according to the newspaper.

India's central bank has been trying to boost usage of the country's CBDC for the past year and plans to expand its utility by linking it to the national UPI rail, which supports digital payment processing and is used by large technology companies like Google to enable e-commerce.

India's CBDC usage is short of its goal of one million payments per day and restricting other digital assets would improve the runway for the digital rupee. India's push for a CBDC is in contrast to other countries, such as the United Kingdome, Canada and Australia, which have expressed doubt about the benefits of government-backed digital currency in favor of private sector innovation. —John Adams

PayPal taps Global Payments to boost AI payments tech

PayPal is expanding its relationship with payment processor Global Payments to include Fastlane, a PayPal product that uses artificial intelligence to speed checkout.

Global Payments will offer Fastlane to PayPal- and Venmo-branded merchants, with the United States serving as the initial market. Global Payments provides merchant acquiring for PayPal in multiple regions, including the United Kingdom and the European Union.

Fastlane, which PayPal launched earlier this year, enables consumers to use a one-time passcode to make payments, with AI-powered analytics suggesting a checkout option for that consumer based on past transactions. PayPal has been building partnerships to scale Fastlane and other new products as the payment company attempts to improve its financial performance following an earlier slump.

PayPal's next earnings report is Oct. 29, while Worldpay reports earnings on Oct. 30. —John Adams

Bank of Kenya moves national payment system to ISO 20022

The Bank of Kenya has completed its migration of its national payment system, called Kenya Electronic Payment and Settlement System, to the ISO 20022 global messaging standard.

The migration will help speed up settlement times, streamline processing, enhance interoperability between domestic and international payment systems, and ultimately improve liquidity management for financial institutions, the Bank of Kenya said on Oct. 14.

The adoption of ISO 20022 is a key part of the central bank's four-year national payments strategy designed to create "a secure, fast, efficient and collaborative payments system that supports financial inclusion and innovations that benefit Kenyans." —Joey Pizzolato

Mastercard launches new commercial cross-border payment product

Mastercard on Oct. 20 at the Sibos Conference in Beijing announced the global launch of Mastercard Move Commercial Payments, a near real-time, cross-border payment product.

Move Commercial Payments will allow customers to initiate corporate trade payments in near real-time, 24/7/365.

"By powering fast, predictable and transparent payments, Mastercard Move Commercial Payments will bring what is already the norm in domestic payments to the commercial cross-border payment space, " said Alan Marquard, head of transfer solutions at Mastercard in a statement. "Our latest product innovation aims to directly address the pain points that are currently affecting the commercial cross-border payments market. By shifting to this new model, they will be empowered to generate new revenue streams while reducing risk and enhancing the offering for their corporate customers."

The launch follows a pilot in the United Kingdom between Lloyds Banking Group and UBS, which used Fnality as the settlement venue, according to Mastercard. —Joey Pizzolato