Payment News

Two Bidders for Cardtronics

Cardtronics runs 285,000 ATMs in 10 countries, making it the world’s largest operator of non-bank cash machines. This Houston based company is a major player in the cash industry but is now being pursued by two companies, firstly Apollo Global Management and Hudson Executive Capital and secondly NCR.

The first bid came in late last year and now NCR has offered $39 per share, ahead of the Apollo and Hudson bid of $35. This values the company at $1.7 billion. According to NCR, they are the world’s number one POS software supplier for the retail and hospitality sector and the number one supplier of multi-vendor ATM software.

Contactless Gathers Momentum in the US

The National Retail Federation in the US reported that by the summer of 2020, 60% of US merchants accepted contactless payments, with the uptake steadily rising and now estimated to have reached 75%. Partly this has been due to merchants enabling existing equipment, but also due to investment.

According to the Mercator Advisory Group, all Amex and Discover cards are now issued contactless enabled and Visa has been working to have 300 million contactless cards in the US by the end of 2020. Their data also shows 79% of small business have seen an increase in contactless payments.

Whether card, wallet or via a QR code, this suggests the US has moved fast to be contactless enabled with the cards and infrastructure increasingly in place.

President Trump Bans Transactions with Alipay, WeChat Pay and Others

As his presidency draws to a close, President Trump has used an executive order to ban transactions with 10 Chinese payment providers for reasons of national security. The order states that the apps could be used to track and trace US federal employees, allowing China to build detailed dossiers about those individuals.

The Commerce Department has 45 days to define which transactions will be banned. On 20 January the new President will be inaugurated, and he will have to decide whether to implement the ban. Should it go ahead, this would represent a setback to Ant Group and Tencent.

Venezuela Going Digital

Venezuela is grappling with the reality of hyperinflation. To try and combat this, in 2018 it launched a cryptocurrency, the Petro, backed by reserves of oil, gas, gold and diamonds. Despite that, sanctions and collapsing oil prices have seen the value of the bolivar reduce to the point where the highest denomination note, the 50,000 bolivar, is worth about $0.04. Bloomberg News estimates inflation to be 5,790% in 2020.

The result is that the US dollar been widely adopted. Local banks have started to offer accounts denominated in dollars, but sanctions mean there is no clearing system, which is necessary for digital transactions.

At the end of December President Nicolas Maduro, in a television interview with Telesur, explained that 18.6% of all commercial transactions are in dollars, while 77.3% are carried out in bolivars with debit cards. Only 3.4% are paid with bolivar notes. In this context, the President said: ‘we are moving this year to a more profound digital economy, in expansion. I’ve set the goal of an economy that’s 100% digital’.

He vowed to create ‘payment formats’ allowing transactions using dollars but said formal dollarization would not happen.

PBOC Digital Yuan Trial Moves Forward

The People’s Bank of China (PBOC) is moving its Central Bank Digital Currency (CBDC) trial into a new stage where it is testing its practical day to day use mimicking existing digital payments. It has introduced a contactless hard wallet along with Near Field Communication (NFC) wearable devices so that people can use the CBDC in shops and on the go in the transport system.

PBOC has already trialled the use of CBDCs for in-store payments, when it offered 100,000 residents in Shenzhen the chance to win 200 digital yuan ($31) in what was called a ‘red letter’ lottery. The money could be spent in the 10,000 shops taking part in the trial. In the first pilot in the city in October 2020, it is reported that residents spent almost 9 million digital yuan.

This new ‘hard’ digital wallet is like a conventional NFC enabled smart card, so that purchases can be made without having to have a digital wallet on a mobile phone. The first trials are in a hospital, allowing users to pay for medical services such as hospital diagnosis and treatments, physical examinations and parking fees using the card.

It is reported that PBOC has also begun testing its CBDC payments using a wide range of contactless wearable devices in Beijing, including watches, bracelets and badges. This is in preparation for the 2022 Winter Olympics, which will represent a major trial of the technology.

The Agricultural Bank of China is reported by Shenzhen News to have equipped a number of its ATMs to allow customers to deposit and withdraw the digital renminbi. The bank is also said to have established a ‘digital renminbi innovation laboratory’ in Shenzhen to innovate and pilot projects in new areas.

Huge Response to Digital Euro Consultation

The European Central Bank (ECB) issued a public consultation on the creation of a digital euro in October 2020. The response has been significant, with over 8,000 submissions.

Before the consultation, the ECB had published a paper setting out the background behind its work considering a digital euro, the reasons to issue one, the potential effects of a digital euro and implied requirements, legal considerations, technical and organisational approaches to euro digital services and follow up work.

The submissions appear to focus on three main areas – privacy of payments, security and the need for a pan-European reach. Privacy was easily the highest priority amongst these, with 41% of responses ranking this highest.

A Eurosystem task force drawn from the ECB and 19 national central banks are working on the topic. Analysis of the responses will be published in the spring and will be used in their final report to the ECB’s governing council.