Payment News

iPhones to Work with Contactless Payments

In 2020 Apple bought Mobeewave, a start-up working to enable contactless payments using smart phones. Bloomberg has reported that Apple will allow small businesses to use iPhones to accept payments ‘in the coming months’.

The advantage for businesses is that no extra hardware is needed, unlike Square’s solution.

Mobeewave had worked with Samsung in this area and trialled ‘Samsung POS’ in 2019 in Canada, allowing Samsung phones to accept payments from contactless cards and Apply Pay, Samsung Pay and Google Pay.

Diem Sold Off

The Wall Street Journal was first to report that the Diem Association is being wound down. It is selling its technology to Silvergate Capital Corp for about $200 million.

Diem started life as Libra in June 2019, with Facebook masterminding the business and concept. Policymakers and regulators were concerned about a social network with the user base of Facebook entering into e-commerce and global payments.

They were concerned about a rapid uptake, across borders, and that this would lead to a loss of control of the money system, privacy issues and the potential for criminal activity.

The programme was renamed the Diem Association and the concept moved to be a dollar backed stablecoin based in the US, rather than Switzerland. However it appears that Facebook, now known as Meta Platforms Inc., is abandoning its digital currency ambitions.

Rise in Contactless Payments

The UK increased it contactless payment limit at point-of-sale terminals from £45 to £100 in October 2021. So far, the sky has not fallen in and card usage has continued to boom.

Barclaycard has published data that shows cards were used for 91.1% of all eligible card transactions in 2021, the total value rose 40.2% and the average number of daily transactions grew 27.5%. The number of contactless payments per person rose from 141 to 180 (28% increase) with the value rising from £1,640 to £2,293, a 9.5% increase per transaction.

Meanwhile, in 2021 the average use of contactless card payments increased in the Nordic region by 74% according to Nets, who are part of the PayTech Nexi Group.

Sweden and Finland were 70% and 71% respectively with Norway, 87% and Finland, 90%, ahead of them.

Garda Buys Tidel

Garda World Security Corporation has bought Tidel from its private equity and debt investment owner Littlejohn. Tidel provides cash automation technology and cash management solutions to allow retail institutions across the globe to better manage their daily cash operations. Tidel will join Garda’s Sesami Cash Management Technologies Corporation (Sesami), a newly created tech-enabled cash ecosystem solution integrator that operates as an independent entity of Garda.

Tidel provides smart safe and cash recycling solutions in North America. Tidel’s products are used to automate cash handling by all participants in the cash management ecosystem, including retailers, cash-in-transit providers, and financial institutions.

This announcement follows hot on the heels of news that the Gunnebo Group has sold its Cash Management business to Sesami.

Bank Mergers Do Not Drive Branch Closures or Banking ‘Deserts’

A paper by the Banking Policy Institute finds that bank mergers do not lead to disproportionate numbers of branch closures causing ‘banking deserts’. In addition, this has not led to consumers being unbanked.

In the US the number of banks halved between 1980 and 2020, but the number of branches more than doubled (38,738 to 84,898). While the number of branches has been declining since 2012, this has happened both to banks that have merged and those that have not. The growth of digital banking has reduced demand for branch banking. Data shows that changes in local population drive branch utilisation and, therefore, viability.

In 2020, within urban areas, the average distance of households to the nearest bank branch held stable at 1.5 miles, identical to what it was in 2000. Within rural areas, the average distance decreased from 4.4 to 4.3 miles. A Federal Reserve Bank of Cleveland study concluded that consolidation 'provides consumers access to larger networks of branches and has caused no significant change in a customer’s physical proximity to branches on average.'

The 2019 FDIC Survey of Household Use of Financial Services showed that just 2.2% of unbanked households in 2019 cited inconvenient bank locations as their main reason for being unbanked. However, between 2013 and 2020, the share of the US population that resides in a ‘banking desert’, a location characterised by the absence of conveniently located bank branches, rose from 5.6 to 6.3%.

Amazon and Visa Strike a Deal

In January Amazon suspended its plan to stop accepting Visa credit cards and it has now dropped the plan altogether, announcing that it has reached a global agreement with Visa. It is also dropping a 0.5% surcharge it introduced last year on Visa credit card transactions in Singapore and Australia.

Although the reason for this decision has not been given, one has to assume that new terms have been offered by Visa. Visa issued a statement that they would collaborate with Amazon’s ‘new product and technology initiatives to ensure innovative payment experiences for our customers in the future.’ 

There is industry speculation that payments are changing, particularly with the rise of Buy Now Pay Later (BNPL) and open banking-enabled payments, and that businesses have a real alternative to the card schemes.

Closed-Loop and A2A Payments on the Horizon

Research by Vixio, a regulatory intelligence agency, provides evidence of growing interest in closed-loop payment systems and account-to-account (A2A) payments, challenging traditional payment methods.

A survey of compliance professionals at fintech and payment firms in the US and UK showed 52% plan to launch a closed-loop payment product and 45% an A2A product for POS Payments in 2022.

E-wallets are also planned, although further out.

The report said open banking and the introduction of instant payment services are driving the trend.