AQN Payments Monthly – February 2019
AQN Payments Monthly is AQN’s monthly roundup of the biggest and most significant stories from the payments industry. It is curated by AQN’s Head of Payments Intelligence, Caio Mattos. If you would like to get the newsletter delivered straight to your inbox each month, you can subscribe here.
Feb 7th – BB&T to buy SunTrust in an all-stock deal worth $28.2B creating what will be the 6th largest domestic retail bank (Source - WSJ)
AQN’s Take – Post-merger they will have some significant tailwinds in their payments business given the size of their combined debit and credit business. We predict their increased size and subsequent economic benefits will enable them to offer a renewed and more competitive product set in the near future.
Feb 14th – JP Morgan rolls out the first US bank-backed crypto currency, JPM Coin, to initially be used in its wholesale payments business. (Source - CNBC)
AQN’s Take – While the initial use will be for settling wholesale payments for business we are interested to see the future extensibility of the JPM Coin. Given their dominance in the domestic debit and credit card space and their existing foray into a private network in partnership with Visa it is realistic to expect them to further disrupt the network industry in the near future.
Feb 15th – Visa and Mastercard plan to raise interchange and other associated payments fees on credit and debit transactions. (Source –WSJ)
AQN’s Take – With the networks continuously raising interchange rates and other fees it is imperative for large and small merchants alike to ensure they are optimized throughout their payments stack. While this is a negative for merchants it may be an opportunity for issuers to further optimize their spend margin beyond what was previously possible.
Feb 21st – Apple and Goldman Sachs team up to offer a Mastercard co-brand credit card that will pair with iPhone top help users manage their money. (Source - WSJ)
AQN’s Take – It will be interesting to see how issuing partners, who pay Apple up to 15bps to be accepted through Apple Pay, will react to Apple’s renewed entrance as a direct competitor. Depending on feature set and structure this product may have the ability to quickly disrupt the market as Goldman doesn’t have an existing credit card portfolio to cannibalize thus incenting singular focus on the Apple product and Apple has hundreds of millions of captive consumers to cross-sell to.
Feb 21st – Ant Financial’s Alipay to begin imposing re-payment fees to credit card companies for monthly payments above $299 as costs mount. (Source – WSJ)
AQN’s Take – As with most fintech payments companies Alipay has given customers freebies / financial subsidies through its growth phase and is now turning to more sustainable practices. The resulting customer reaction will be interesting not only for them, but the other large freemium global payments businesses such as PayPal’s Venmo plotting their path to profitability.
Feb 22nd – Mastercard renews its effort to enter Chinese market by partnering with NetsUnion Clearing Corp, an internet payments system for nonbanks set up by the People’s Bank of China is 2017. (Source - WSJ)
AQN’s Take – This renewed effort with NetsUnion is significant given its large ownership from the Chinese government and the two leading private payments companies in China – Tencent and Ant Financial. The partnership puts Mastercard in an enviable position to be the second US network, after AMEX in 2017, to be approved to provide clearing services in China giving them an advantage over global rival Visa.
Feb 22nd – Court announces $5.54B - $6.24B settlement to merchants who have accepted Visa or Mastercard since 2004 and gives merchants until Jul 23rd to exclude themselves. (Source - PRNewswire)
AQN’s Take – While the payout is good news for smaller merchants, larger merchants have a significant amount of analysis to do prior to the Jul 23rd on whether they want to pursue individual suits as part of the settlement includes a release of claims for a period of 5 years post-settlement approval and exhaustion of all appeals.