AQN Payments Monthly – March 2019

Aqn Payments Monthly March 2019.png

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.

Mar 1st – Kroger to expand ban of Visa credit cards to an additional subsidiary, Smith’s Food & Drug, effective April 3rd. (Source – WSJ)

AQN’s Take – This latest move by Kroger could be just the beginning of network exclusions by large businesses as they more deeply analyze and understand cost acceptance differences and trends among networks. These bans further increase the importance for issuer’s to understand granular transactional trends, such as merchant penetration & concertation trends among their portfolio.

Mar 5th – Mexican central bank in talks with Amazon and MercadoLibre about new QR-code based mobile payments platform, CoDi. (Source – Reuters)

AQN’s Take – Mexico is the 10th largest country by population and more than half of the population has no bank account creating a sizable target market. If successful, this initiative has the potential to be a tailwind for online merchants operating in Mexico and facilitate the expansion of new business models that traditionally relied on card acceptance to function (ex: seamless rideshare).

Mar 8th – Mastercard acquires Transfast, a global cross-border money transfer company that works with both P2P and B2B payments. (Source – PYMNTS)

AQN’s Take -  As more businesses operate at a global scale, this acquisition enables Mastercard to better compete in the cross-border account-to-account space. We expect more of these acquisitions from the networks over time as they continue to stave off disruption by strengthening their secondary offerings.

Mar 18th – FIS to buy WorldPay for $35B in cash and stock creating an international payments powerhouse. (Source – WSJ)

AQN’s Take – This latest acquisition is not likely to be the last in 2019 as payments firms are increasingly trying to add capabilities and reach the economies of scale needed to be a leader in the payments industry. Consolidation will be necessary to effectively compete in the future as more businesses look for a single company to provide their global payments solutions.

Mar 25th – Apple launches its credit card in partnership with Goldman and Mastercard (Source – WSJ)

AQN’s Take – While the actual product underwhelmed from a rewards perspective the real story is how Apple Pay enabled issuers will react to this new direct competition and possibly preferred Apple Pay placement. It will be interesting to see if Apple lowers/eliminates the Apple Pay fees issuers pay or if major issuers retaliate with disabling support for it down the road.

Mar 26th – Citigroup is launching a consumer-payments business in partnership with Mastercard targeted at large merchants offering a suite of payment options from card, digital wallets, to direct bank account transfers. (Source – WSJ)

AQN’s Take – Although full terms haven’t been disclosed, this resembles Chase’s deal with Visa in back in 2013 in licensing its VisaNet transaction processing network. If that is the case Citi will be able to leverage its significant Mastercard credit portfolio to acquire processing relationships with large merchants through closed loop merchant discount rate negotiations allowing Citi to quickly scale its consumer payments business taking market share from competitors.