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Transformational payments solutions:Square has launched ‘Square Card’ a free debit card to provide merchants real-time access to their funds. The new Mastercard debit card will give merchants that accept payments with Square an option to withdraw cash or use it for other purchases. The launch of the Cash App in 2013 was Square’s first attempt to onboard end-consumers, and now the Square Card complements that offering by being merchant-focused. Users of both the Cash App debit card and the Square Card get a 2.75% instant discount on merchants using Square to facilitate in-network transactions. Source: Square |
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Regulatory landscape: The European Commission has fined MasterCard $650 million over claims that it breached antitrust rules by raising payment processing fees artificially, leading to higher prices for merchants and customers. The penalty concludes a 6-year investigation by EU regulators over interchange fees. Regulators claim Mastercard forced merchants to use only banks in their home countries when processing payments, a requirement that prevented them from shopping for lower fees at banks in other European countries. The limitation of processing through international banks was deemed anticompetitive by regulators. Mastercard did not contest the penalty and said that it has discontinued the practice.Source: European Commision |
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Customers’ evolving expectations: The ubiquity of credit cards in the US have led some merchants to go cashless and not accept cash at retail locations. However, some lawmakers say that cashless businesses disenfranchise the unbanked and underbanked, reducing the overall availability of goods. A new bill running through the New Jersey legislature would prohibit merchants from going cash-free. After both the New Jersey State Senate and the State Assembly passed the bill, it is now up to Governor Phil Murphy to sign into law or veto. Research suggests that ~25% of Americans may not have access to conventional credit or debit cards and would be precluded from shopping at cashless stores. Under the proposed New Jersey law, merchants in violation of the policy would face fines of ~$2,500 for a first-time offense and $5,000 for a second offense. Any subsequent offense would then be considered under the Consumer Fraud Act. New Jersey would be the second state, besides Massachusetts, to demand merchants accept cash.Source: NJ.com |
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Data:American Express and Bill.com have partnered to launch Vendor Pay to help small merchants get better and more transparent payments data. The new dashboard will allow merchants who use the solution to have a full view into vendor payments, working capital, cash conversion cycles and payments reconciliation. The product will be available to existing business or corporate cardholders and will tie into Bill.com’s ACH and checking services. Smaller merchants often do not have full visibility into their data and generally pay for solutions to aggregate transaction and accounting data. Vendor Pay will be free to incentivize merchants to conduct transactions with their Amex card or Bill.com’s ACH service. Competition for SMB engagement is heating up, with Bank of America launching Business Advantage 360, a new digital tool for small business finance. Source: American Express and Business Wire |
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New providers: Caper, a FinTech firm focused on advanced computing, is now moving to transform the traditional store experience by replacing checkout lines with autonomous shopping carts. The carts come with a built-in barcode scanner and POS system. The card automatically scans items as they are placed into the cart and allows customers to ‘check out’ by swiping directly in the cart. This way, customers can skip the lines, while still maintaining their traditional store experience. Caper’s solution comes on the heels of other ‘smart’ POS systems such as Amazon Go’s cashier less stores.Source: Caper |
PARTNERSHIP SPOTLIGHT
- BB&T agreed to buy SunTrust in the largest bank merger in over a decade. The $28 BN deal will have both companies combine under a new name. The new bank will be the sixth largest commercial bank in the US by assets. The banks claim the merger will free up money for investment in technology while cutting ~10% of overall expenses. A new “Innovation and Technology Center” will also be created at the new headquarters in Charlotte, North Carolina.
Source: Bloomberg
- The International Air Transport Association (IATA) has partnered with ipagoo, a UK-based fintech company to pilot the first ‘IATA Pay’ ticket purchase transaction in a live test environment
IATA Pay is a direct-debit solution where funds are transferred from a customer’s bank account directly to the airline’s account in near real-time, thereby reducing payment costs from card interchange fees and accelerating settlement
Cathay Pacific Airways, Scandinavian Airlines and Emirates were among the airlines that were part of the pilot which currently covers purchases made directly on the airline’s website
This comes against the backdrop of the EU’s second Payment Services Directive (PSD2), and the UK’s Open Banking regulation which facilitate such newer forms of payment
Source: IATA
- Fiserv is merging with First Data, in an all-stock $22 BN deal
The combined company will marry First Data’s merchant acquiring business with Fiserv’s core acquiring business and suite of products for banks
The merger is expected to free up ~$500 MM in new cash to put into an “Incremental Innovation Investment” fund which will be deployed over 5 years on new technology
New investment in First Data’s acquiring technology may add to their offerings in mobile and eCommerce
First Data can also bring to bear Fiserv’s merchant solutions in eCommerce, integrated payments, and digital enablement to its existing merchant clients
MERCHANT SPOTLIGHT
- Walmart has announced a new partnership with PayPal that will allow customers to use the PayPal app at Walmart stores to ‘cash in’ and ‘cash out’
PayPal customers will finally be able to withdraw money from their mobile accounts at ATMs and service desks at Walmart locations across the US
The ‘cash in’ and ‘cash out’ fee is $3 per transaction
While PayPal had previously integrated with Home Depot for acceptance at the register, this is the first time that PayPal mobile app users will be able to take cash from their PayPal account in a brick-and-mortar environment
Additionally, PayPal debit card holders will be able to check their balances upon checkout at Walmart stores
Source: TechCrunch
- Tourism Australia is piloting a program with Alipay to attract Chinese consumers visiting Sydney by provisioning the Sydney City Card within the Alipay app
With this partnership, Chinese consumers visiting Sydney will get recommendations on places to see and shop, getting around and making payments - all directly within Alipay
The Sydney City Card is built into Alipay thereby removing the need for opt-ins by consumers
Source: CMO
Oliver Wyman is a global leader in management consulting with offices in 50+ cities across nearly 30 countries. Our Payments practice works with constituents across the payments value chain to deliver insights with real impact, combining deep industry expertise with powerful consulting capabilities. To have a discussion with Oliver Wyman on your payments issues and opportunities, please contact Beth Costa or Rob Mau at payments@oliverwyman.com.
Note that Oliver Wyman believes the curated content to be reliable, but it has not been verified. As such, Oliver Wyman gives no warranty as to the accuracy of such information. Oliver Wyman’s curation of such content should not be interpreted as an endorsement of the organizations that published the content.
