Nilson Report

Issue 1173 | Apr 2020

FEATURED COMPANIES

Companies featured in this issue include:

Canada Purchase Transactions & Brand Market Shares in 2019

Investments & Acquisitions—March 2020

Market Shares of Purchase Transactions in Canada 2000–2019

Canada General Purpose Cards 2019 vs. 2018

Canada Credit Card Purchase Volume in Canadian Dollars 2015–2019

General Purpose Credit Card Issuers in Canada 2019—Ranked by Outstandings

Canada Market Shares of Visa & Mastercard Outstandings 2019

General Purpose Credit Card Issuers in Canada 2019—Ranked by Outstandings

The 25 issuers of Visa, Mastercard, and American Express credit cards in Canada shown in the issue held outstandings of $81.54 billion at year-end 2019, an increase of 3.4% from the prior year. The top 4 are shown below.

1. TD Bank
$15.59 billion outstandings, –0.6%
2. RBC Royal Bank
$15.49 billion outstandings, +4.4%
3. CIBC
$9.93 billion outstandings, +0.2%
4. Desjardins
$8.95 billion outstandings, +7.2%

Full access to the General Purpose Credit Card Issuers in Canada 2019—Ranked by Outstandings results is available when you subscribe to The Nilson Report.

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POSTED APR 16, 2020 | PRINT

The Payment Industry’s Response to Covid-19

Please note: Only subscribers can access the charts included with this article.

Gathered on pages 10 and 11 are a range of payment card industry responses in recent weeks to the Covid-19 pandemic. Within days of stay-at-home (lockdown) orders and social distancing measures required to protect public health in countries worldwide, the global card networks, credit card issuers, merchant acquirers, alternative lenders, and other companies took actions in the face of rapidly declining economic activity. In less than four weeks, the U.S. workforce went from what was effectively full employment (unemployment of 3.2%) to an unemployment level (13+%) not seen in 90 years. The International Monetary Fund estimates global gross domestic product will fall 3% in 2020, a drop of around $7.000 trillion.

However, social distancing succeeded in flattening the growth rate of new virus cases in South Korea, Taiwan, and China to a degree that allowed for an easing of stay-at-home orders. Denmark, Germany, Italy, and the Czech Republic have taken first steps toward relaxation of stay-at-home orders. In the U.S., consortiums of states on the West and East coasts of the country have confirmed they will coordinate relaxation of stay-at-home orders. Initial steps could be announced within a week.

Merchant Cost Relief 

In India, PayU offered to build websites for businesses with the company’s payment gateway built-in. Visa’s Authorize.net is waiving monthly fees through June 1 for new clients to help them establish an online presence. Plaid, another Visa-owned company, announced it would develop a tool to gather payroll data and ease the workload of Payroll Protection Program loan applications. Revel started a program to help merchants reduce fees they pay. Signifyd bundled and discounted ecommerce fraud protection services for retailers. Bill.com offered to waive three months of subscription fees, and extended customer service support hours, while FIS waived minimum monthly service charges for U.S. and U.K merchant clients in April. Mastercard subsidiary RiskRecon offered free cybersecurity assessments to healthcare organizations worldwide. Paysafe dropped all fees and foreign exchange charges for transfers to Italy using Skrill, and Equifax eliminated the requirement for a hard credit inquiry for new mobile phone, internet, and pay accounts.

In the UK, AllPay made available a prepaid card to local councils for the distribution of emergency funds, while in the U.S., Intuit, PayPal, and Square successfully lobbied to become part of the distribution mechanism for the $349-billion Payroll Protection Program. The fund was exhausted in 13 days. Ant Financial’s Alipay launched an in-app mechanism to identify vendors and services from Wuhan to help boost business in the hard-hit city. PayPal waived chargeback and business account-to-bank instant transfer fees for the 19 million merchants using their services. 

Consumer Payment Relief

In the U.S., Apple and Goldman Sachs opened a program for Apple Card customers to skip payments in March and April penalty-free. JPMorgan Chase began a program to let credit card customers delay payments for as long as three months. Citi offered waivers on service fees for retail customers and small businesses. In Canada, RBC reduced credit card interest charges 50% for clients receiving minimum payment deferrals. The UK Financial Conduct Authority asked lenders to offer temporary payment freezes, and hold off charging interest on overdrafts for three months. ACI Worldwide added a “Delay My Payment” feature to its Speedpay product. Across the globe, struggling airlines are dealing with $35 billion in refund liability, an unidentified percentage of which is being held by credit card companies. The number of passengers going through TSA checkpoints has declined 96% in the U.S.

Contactless Payments

In Australia, The Commonwealth Bank found digital wallet users spent over $630 million (A$1.00 billion) in March, setting a record with 36 million transactions. AusPayNet raised the limit for contactless payments from A$100 to A$200.

 In Canada, Visa and Mastercard raised the limit for contactless payments from $71 (C$100) to $178 (C$250), and Mastercard raised contactless limits across most of Europe, where the technology generates 75% of its transactions. 

Despite Visa reporting a 7% year-over-year decrease in U.S. payments made with credit cards during March, the Electronic Transactions Association reported a 27% increase in payments to small businesses made with phones and contactless cards. Grocery chain Publix rolled out contactless payment acceptance terminals in all 1,242 of its U.S. stores. 

In Asia, UnionPay partnered with Kazakhstan’s Halyk Savings Bank to issue 100,000 contactless payment cards, and said it had distributing deals for contactless cards in Russia with Gazprombank and in Mongolia with Kahn Bank. 

Increases in Gaming & Fraud

ACI Worldwide researchers found that consumer spending on gaming saw its best month ever, along with increases in online banking and retail, while events ticketing, travel, and online dating saw steep declines. The company also found that criminals committing fraud had become more ambitious. The value of attempted fraudulent transactions increased 13%. The South African Reserve Bank warned the public that banknotes were not being withdrawn after criminals with fake identification went door-to-door collecting “infected” cash. 

Charitable Donations 

American Express partnered with Hilton Hotels to donate 1 million room nights to healthcare professionals. Mastercard committed $250 million over five years to support small businesses, and partnered with the Bill and Melinda Gates Foundation and Wellcome to fund clinical trials through the Covid-19 Therapeutics Accelerator. Mastercard is also funding Lyft through the LyftUp initiative, which provides free rides and meal delivery services. Twitter and Square founder Jack Dorsey pledged $1 billion of his equity in Square to his charity Start Small. The Visa Foundation pledged $210 million to support small and micro businesses. 

Technology Innovations

Mobile payment platform M-Pesa raised transaction limits and waived fees for 90 days on transactions less than $10 to discourage the exchange of cash in Kenya. Online marketplace Jumia implemented a “contactless safe delivery” option that included payments as well as deliveries, and reduced fees on JumiaPay, while donating 500,000 face masks to national health ministries. In South Korea, the Ministry of Land, Infrastructure, and Transport used credit card data and CCTV footage, among other sources, to analyze the movements and interactions of people who had contracted Covid-19 to quickly tamp down the spread of the disease.

Spain’s largest bank, CaixaBank, launched a service that enabled retailers to sell products directly from their social media accounts, and to take payments via a web link, and TrustPay launched a link-to-pay product for merchants without an online presence. Kabbage partnered with Facebook to sell and list private label prepaid card/certificates for small businesses on the social media platform, even as they furloughed employees and shuttered their Bangalore office in the face of a dramatic decline in revenue from those same small businesses. In Australia, EML Payments negotiated a $115-million (€105-million) discount on its purchase of Ireland-based Prepaid Financial Services. 

Corporate Adaptation 

Fiserv CEO Jeff Yabuki and COO Frank Bisignano are taking 100% temporary cuts in their base salaries. Those savings will benefit a company fund for Fiserv employees enduring coronavirus-related financial hardships. The CEO of Gravity Payments responded to a 50% drop in revenue from its small business clients by asking its employees to volunteer what they could afford to give up in salary—98% volunteered with an average 20% pay cut, mitigating the need for layoffs and extending the company’s ability to stay in business an additional five months.



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