clearXchange announced the availability of its real-time payments solution enabling consumers, businesses and government to receive payments in real-time. The service is currently available within the same bank but the enhancement will allow for real-time payments between banks – clearXchange member banks are expected to rollout this new service in 2016. Given broad applications (P2P transfers, bill payment, government disbursements) and relative simplicity (senders only need the recipient’s email address or cell phone number), this new service should prove to be practical and convenient. The real-time payments space is getting increasing attention – MasterCard, Facebook, Fed’s Faster Payments.
American Express lost a bid to block an injunction that requires it to let merchants steer customers toward lower-cost cards. The case stems from a February 19 ruling by a U.S. District Court in Brooklyn, NY that stated that Amex’s rule against steering violated antitrust laws. The court further ruled on April 30 that American Express could not enforce anti-steering and that merchants were free to offer discounts, rebates and incentives to customers to pay with a non-American Express card. While symbolic and significant, and underscoring new merchant power, from a practical standpoint (given Amex brand, customer demographics, merchant verticals), we would not expect any meaningful steering or volume impact.
Canada’s Standing Senate Committee on Banking, Trade and Commerce, after studying Bitcoin and digital currencies, has ruled in a pragmatic manner. It stated that given risks associated with tax evasion, money laundering and terrorist financing, digital currency exchanges should be regulated similar to other money transmission businesses. However, the report acknowledged the potential of blockchain technology: “These new technologies may have innovative and as-yet unimagined applications and are at a delicate stage in their development and use. We must tread carefully when contemplating regulations that might restrict and stifle their potential.”
SNL Financial reports that credit card yields were up in May while delinquencies trended down and loss rates were mixed. According to master trust data, the net yield for major issuers was 16.95% (up from 15.94% in April), 30+ day delinquency was sub 2% (Capital One 2.05%) and loss rates trended below 3% (Amex 1.15%). The credit card business continues to present an attractive investment opportunity.