SUNRATE, a Singapore-based payment and treasury management platform, is bringing Apple Pay to its customers, offering a safer, more secure and private way to pay, and using the iPhone’s power to protect each transaction.

Now, SUNRATE customers can use an iPhone or Apple Watch at payment terminals to make contactless payments. Every Apple Pay purchase is secure because it is authenticated with Face ID, Touch ID, or a device passcode, as well as a one-time unique dynamic security code.

Customers can also use Apple Pay on iPhone, iPad, and Mac to make faster and more convenient purchases in apps or on the web in Safari without having to create accounts or repeatedly type in shipping and billing information.

Qincheng Wang, head of product at SUNRATE, commented: “More and more businesses seek out the same degree of convenience and security that they enjoy in their everyday personal transactions – therefore, even though we are known to be a global B2B payment platform, we’re thrilled to bring Apple Pay to our customers.

“Ever since SUNRATE started issuing commercial cards, it has been all hands on deck to expand our offerings and bring even more features to our customers – the support of Apple Pay is part of SUNRATE’s global vision to drive B2B digitalisation for businesses worldwide.”

Maximising payment security

SUNRATE commercial cards enable customers to settle card spends in more than 15 currencies, as well as customise key parameters such as card limits and expiration dates.

SUNRATE explained that it chose Apple Pay due to its security and privacy benefits. When customers use a credit or debit card with Apple Pay, the actual card numbers are not stored on the device or Apple servers. Instead, a unique Device Account Number is assigned, encrypted, and securely stored in the Secure Element, an industry-standard, certified chip designed to store the payment information safely on the device.

Customers can also generate real-time transaction statements, and cater to various reconciliation needs. SUNRATE is certified to the international financial data security standard: Payment Card Industry Data Security Standard (PCI DSS) Level 1.

The Middle East and Africa (MEA) has emerged as a region that is no stranger to innovation. With consumers being at the heart of a lot of startups, a new partnership between Yabx, the sustainable financial inclusion fintech, and PayCliq, the business payment tool provider, is looking to accelerate merchant credit capabilities. 

The partnership will see Yabx leverage the business data from PayCliq and use AI/ML algorithms on its cloud-powered digital lending platform. In doing so, it will build credit scores and personalised credit limits for each business which will not only solve the problem of credit but also the problem of payments.

Consequently, this means that businesses can get an instant line of credit in their operating accounts and pay for it in 30, 60 or 90-day installments.

Why now?

The collaboration comes at a crucial time for Nigeria, which is actively promoting a cashless economy, focusing on streamlined transactions and simplified auditing processes. In a market where over $19 trillion is transacted annually in cash payments, the opportunity to digitise these payments is substantial.

Furthermore, with approximately 100 million MSMEs in Africa and 42 million in Nigeria alone, consumer payments on the continent are projected to exceed $2.1trillion by 2025. PayCliq, a business tool specifically designed for businesses across Africa, is set to facilitate seamless payments for merchants, promoting financial inclusion and supporting Nigeria’s cashless policy and business accountability.

AI scoring partner, Yabx is poised to speed up the uptake of digital payments by building a lending infrastructure for small businesses. MSMEs often find it difficult to secure formal loans as they encounter challenges with providing proper identity documents, collateral, or a credit history. However, with the understanding that adopting digital payments can help them build a credit score becomes a compelling reason for them to embrace this opportunity.

Ensuring a cashless society prospers

PayCliq, with operations spread throughout Nigeria and Lagos as its main hub, through its array of partnerships specialises in bookkeeping, inventory management, invoicing and facilitating payments for businesses through various channels, including Bank Transfers, QR codes, apps, and card transactions on Point of Sale (PoS) terminals.

While the push for a cashless economy is evident, challenges persist, such as, the late supply of goods due to manufacturers and suppliers want money upfront and the inability to meet growing demand as many businesses’ stock is impacted by the current exchange rate. Yabx and PayCliq are strategically positioned to address these issues by providing innovative and inclusive credit and business solutions.

The new service is anticipated to go live within Q2, enabling businesses to make more sales as well as providing comprehensive and inclusive payment solutions to address the unique needs of the Nigerian market.

The Businesses Cash Advance service, which provides funds directly into the businesses account and assists in the settlement process, is expected to be a game-changer for approximately 10,000 businesses, by increasing profitability within the extensive customer base. Processing around one million dollars in settlements daily, PayCliq and Yabx are committed to enhancing financial inclusion and accelerate the growth of small businesses in Nigeria.

Supporting Nigeria’s growth

Puneet Chopra, chief growth officer at Yabx, said: “We’re thrilled to partner with PayCliq, combining our AI-driven credit scoring expertise with their robust payments infrastructure to transform the financial landscape in Nigeria. By streamlining repayments and unlocking transactional data, we’re committed to creating seamless, fully automated lending journeys that empower local businesses and consumers.

“Now is the ideal time to harness the potential of technology and collaboration to build stronger, more agile systems that support Nigeria’s growth in consumerism.”

Susan Adewunmi (head of operations) at PayCliq, said: “PayCliq is excited to collaborate with Yabx in providing innovative solutions to address the challenges faced by businesses in Nigeria. Additionally, by providing direct funds to the businesses and assisting in the settlement process, we are addressing the challenges faced by our target audience – the 42 million businesses in Nigeria, predominantly consisting of mom-and-pop shops and SMEs.”

International banking group Crédit Agricole has partnered with Worldline, the payment and transactional services company, to launch a new joint venture CAWL; a payment services brand for merchants in France.

CAWL will offer all-in-one payment solutions combining acceptance and acquisition and integrating value-added services specific to each business sector: industry-vertical offerings to simplify merchants’ lives and enable them to focus on developing their businesses.

CAWL’s solutions will enable merchants to focus on their growth, effectively manage their commercial performance, optimise their sales, and mitigate fraud risks, thus fostering the development of their business activities.

Meriem Echcherfi, CEO of CAWL, explained: “CAWL has the ambition to be a major player in payments for all merchants in France, with an offering that combines service, proximity, and high technology, leveraging the strengths of Crédit Agricole and Worldline. We also aim to be a leader in innovation by creating integrated offerings that significantly increase the added value for merchants and, by extension, for their own customers.”

CAWL combines Worldline’s technological expertise, offerings and services with Crédit Agricole Group’s commercial performance and distribution power.

The payment services provider aims to provide complete and innovative offerings for all merchants, regardless of size, industry, and sales channels. For larger merchants, CAWL will offer omnichannel solutions with dedicated commercial teams and expertise for each industry.

Starting in 2025, CAWL will roll out all-in-one offerings by industry verticals. Crédit Agricole Group banks plan to widely distribute these offerings, through dedicated teams, as well as via an entirely digital channel.

By leveraging the capabilities and technologies of Worldline, alongside Crédit Agricole Group’s knowledge of the French market, CAWL will launch a platform with new features enabling merchants to offer their customers a seamless and omnichannel shopping experience and optimise their conversion rates and commercial activities.

All new offerings will enable merchants to access multi-currency, multi-country, multi-payment network services, and alternative payment methods, supported by a pan-European acquisition platform and personaliszed services.

Earlier this week, payment giants Visa and Mastercard agreed to lower fees charged to merchants for credit card transactions in the US, following a lawsuit spanning almost two decades.

In a move that could collectively save merchants as much as $30billion, Visa and Mastercard have agreed to reduce so-called ‘interchange’ fees by 0.04 percentage points for a minimum of three years, and to cap them at the same level seen at the end of 2023 for five years – subject to approval by the US District Court for the Eastern District of New York.

Interchange rates, set by the two payment giants, generally sit between two to four per cent of each transaction total. According to Rob Beard, chief legal officer and head of global policy at Mastercard, the agreement delivers “certainty and value to business owners, including flexibility in how they manage acceptance of card programmes”.

Currently, merchants in the US can add surcharges to transactions for consumers using American Express cards – but not on Mastercard and Visa cards. But if the settlement is approved, merchants will be able to change the rates they charge for all cards, instead of basing it on the credit card network alone.

However, the majority of interchange fees actually go to the issuer banks, to cover the card services they provide, such as customer support, fraud prevention and to cover other associated handling costs. While it remains unclear which party will take the brunt of the cut, early suggestions look as though the banks will take the biggest hit. Questions could arise over how much of an impact these cuts could have on issuing banks across the US.

In response, Kim Lawrence, president of the North America region at Visa, explained: “Importantly, we are making these concessions while also maintaining the safety, security, innovation, protections, rewards and access to credit that are so important to millions of Americans and to our economy.”

A win for merchants, but a loss for cardholders?

Matt Schulz, chief credit analyst at LendingTree, an online lending marketplace, explains that, while US merchants will enjoy savings, this may not be the case for their customers, who may even become privy to higher fees.

“This settlement is potentially a big deal for merchants’ bottom line, but the financial impact on their customers is unclear. There’s no guarantee that even a dime of these savings gets passed on to consumers.

“Merchants will now be more able to add surcharges to purchases made with credit cards that come with higher swipe fees. That can help them recoup the cost of accepting those cards, but it also risks alienating customers.

“These changes come with some real risk to merchants. For example, a high-end credit card may cost more for a merchant to accept, but the typical user of that high-end card might be an extremely desirable customer with a lot of spending power. This dilemma is going to lead to some very interesting conversations within these companies.

“The measures in this settlement that allow for more surcharging and greater competition could lead to swipe fee reductions well beyond just what is mandated. The ultimate impact of this settlement on credit card rewards and the industry as a whole will depend on how that all plays out.

“Banks have plenty of levers to pull and buttons to push when it comes to recouping revenue in cases such as these. It is reasonable to expect that we might see other types of bank fees rise once the settlement is finalised. Banks don’t tend to take these types of changes lying down.”

Impact on issuing banks

Brad Goodall, CEO and co-founder of Banked, a fintech powering open banking payments, explains how the settlement between Visa and Mastercard could impact issuing banks, and how fintech could resolve future issues: “Mastercard and Visa have committed to maintaining average interchange fees at least seven basis points lower than the current rates over the next five years, providing a period of stability for merchants after a US judge clears the settlement.

“The big questions are; will this introduce surcharging at point of purchase and if so what will that do to consumer experience and cost? Will this open a door for alternative payment methods?

“The deal will also negatively affect issuing banks, which will take a moderate hit to the revenue they collect amidst a tough macroeconomic climate for banks as interest rates remain stubbornly high. Issuing banks are largely responsible for ensuring fraud is monitored and kept out of the system and they use part of this interchange to fight fraud.

“It’s key that fintech steps up to provide reliable and importantly, safe alternative payment methods for both merchants and banks. One promising path for innovation is Pay by Bank, a payment method built on global open banking payments rails, vastly reducing fees and providing near-instant settlement, whilst shoring up revenue for issuing banks.

“The collaboration between banks and fintechs to innovate on account-to-account rails is paramount. This partnership provides a unique opportunity, particularly as issuing banks face mounting pressures from diminishing interchange fees. This pressure incentivises them to envision a future where they can chart their own course towards a new network model. By harnessing core payment services and fraud tools, they can create a novel, real-time payment method that benefits merchants and consumers.”

Bank revenues ‘remain quite steady’ 

Not all agree with the idea that reduced interchange fees will genuinely hurt issuing banks. Dan Carter, senior director and head of global payment strategy at Redbridge Debt & Treasury Advisory, a global financial management partner to corporations, appears to suggest this, as he highlights that consumers shouldn’t fear significant additions to their bills.

“From a consumer perspective, there should be little to no major changes. Interchange rate increases have far outpaced the proposed decreases.

“As of October 2023, high-end rewards cards issued under Visa and Mastercard have reached 2.6 per cent plus $0.10 for interchange alone – up 0.1 per cent from just April 2023. Issuers may complain and may deflect with comments about fraud losses and bad debt write-offs, but their revenues remain quite steady.

“While surcharging, allowable since 2013, is more prevalent post-COVID, merchants who accept American Express are still bound by the terms of their agreements.

“What may be allowed under Visa and Mastercard may be prohibited under American Express, a network known for aggressively pursuing ‘honour all’ and anti-discrimination practices.”

Looking to the future of payments

Kjeld Herreman, head of strategy advisory at RedCompass Labs, a fintech consultant and accelerator, also explains how, even if the settlement comes into play, merchants worldwide could still benefit from other payment solutions; even those based across Europe, where interchange fees sit at around 0.3 to 0.4 per cent.

“Every card transaction that is made costs businesses money, and they usually must wait two to three days after taking payment for any money to reach their account. When it arrives, they’ve lost a chunk to interchange fees. Money that could be used to pay staff, suppliers, rent, and bills goes to the payment processor. Not only is the business worse off in real terms, but waiting for the money to arrive can create pressure with suppliers and staff who need to be paid.

“P2B real-time payments are a solution for merchants everywhere who are tired of paying interchange fees and waiting days for their money to arrive. The faster the payment, the faster the business is paid, the faster it can reinvest, and the faster it grows.

“The EU is attempting to tackle this issue to reduce the power of large foreign businesses. The European Payments Initiative is building a card-like scheme on top of real-time payment rails, as well as adapting interchange and chargeback processes. It is also mandating that all banks must be ready to send and receive real-time payments by the end of 2025, levelling the playing field between PSPs and card networks.”

Viva.com, Europe’s technology bank for payments powering card acceptance in 24 markets, has launched ‘Merchant Advance’; a new credit solution looking to solve critical cashflow issues for thousands of businesses across Europe, helping them invest in growth.

Viva’s Merchant Advance looks to offer transparent capital to businesses, based on merchant acquiring data. Loan disbursement is instant, to help businesses of any size or type immediately access capital for growth.

Merchant Advance by Viva.com is currently available in Belgium, Germany, Netherlands, and Spain, with more European countries of operation following soon.

Yannis Larios, senior VP of strategy and business development at Viva.com, explained: “Having access to reliable and flexible capital is critically important for growing businesses, but for millions of European merchants, it’s a real struggle to find the right solution.

“Traditional capital providers, and even newer market entrants, have to vet businesses properly, which results in time-consuming processes before any decision is made.”

While other capital providers can force businesses into lengthy application processes, Viva’s Merchant Advance leverages the merchant’s payment history with Viva.com – enabling access to near-instant capital with no fuss.

The new credit solution boasts smart prescoring, based on advanced payments data analysis for each business; as well as fast access to capital, charged with a single explained fixed fee.

It also offers a flexible automated repayment process via a percentage of daily card sales; no late payment fees; as well as a fully digital process with no collateral or other commitments.

Supporting business growth ‘without restrictions’

Merchant Advance is the latest inclusion in Viva.com’s market-leading digital payments bundle, a collection of integrated services that combine to power all businesses across Europe. From acquiring and issuing to business accounts and tailored financing, Viva.com’s solutions help businesses grow without limits.

“Viva’s Merchant Advance changes the game, allowing our customers instant access to working capital based on smart prescoring. This allows us to offer instant, flexible and transparent capital that they can use to grow without restrictions. Merchant Advance is the latest addition to our product suite, built to solve payment issues for businesses of all shapes and sizes,” added Larios.

The new Viva credit solution will be provided through a range of leading financial partners.

Viva.com is Europe’s first technology bank for payments, powering card acceptance across 24 countries and over 985 devices. With an ECB-approved banking licence and physical presence in 24 European markets, Viva’s ‘Tap on Any Device’ for in-store payments, smart checkout for online payments, and marketplace payment solution, help European businesses of any size to accept and manage payments how they want.

Global payment solution provider Splitit sheds light on the growing popularity of general-purpose credit card installment plans among both merchants and consumers.

Merchants are increasingly adopting these payment options, citing benefits such as reduced declined transactions and faster processing times.

However, discrepancies exist between merchants and acquirers regarding the timing of offering installment plans during checkout. Consumers, especially those with higher incomes, are utilising installment plans for better spending management, often preferring them for larger purchases.

A Splitit and PYMNTS Intelligence report, Divided, Not Conquered: Acquirer and Merchant Confusion Clouds Split-Payments Landscape, finds that 78 per cent of merchants intend to improve, or are currently improving, their ability to accept these payments.

Forty-eight per cent of surveyed merchants point out fewer declined transactions and faster processing times as benefits of card-attached installments, while 44 per cent of surveyed acquirers highlight greater transparency in payment processes. Additionally, while nearly one-third of merchants anticipate increased consumer spending with general-purpose credit card installments, 76 per cent expect a rise in consumer usage of card-attached installment plans.

Nandan Sheth, CEO at Splitit, said: “Although some disconnects between merchants, acquirers, and consumers were found in the report, the future is very bright for card-attached installments. We know that providing a white-label card-based solution, such as Splitit’s, is appealing to a broad range of highly qualified shoppers with, on average, higher FICO scores and fewer delinquencies overall.”

Further findings

The survey reveals significant disparities between merchants and acquirers regarding installment plans, including consumer preferences and timing of offering options. While 50 per cent of acquirers claim to support general-purpose credit card installment plans during checkout, analysis shows it’s closer to eight per cent.

Additionally, 30 per cent of merchants believe consumers prefer early payment option disclosure, but 66 per cent of shoppers want to see options before deciding. Only four per cent of merchants offer pre-checkout installment plans, missing out on potential sales boosts and competitive advantages, according to 100 per cent of surveyed merchants aiming to implement pre-checkout plans.

Splitit stressed the need for merchants and acquirers to adapt split-payment offerings to evolving consumer preferences. Enhancing payment systems to accommodate more credit-card-based installments and offering transparent payment options earlier in the buying process can optimize sales and enhance customer satisfaction.

TotallyMoney, the personal finance app, has introduced a new feature aimed at improving the credit card application process.

Called TotallySure, the feature provides pre-approval to applicants, increasing the likelihood of acceptance pending final checks.

With millions of UK adults experiencing credit rejection and facing potential downselling practices by lenders, the introduction of this feature aims to address these challenges. By offering pre-approval to applicants, subject to final checks, the aim is to potentially increase the likelihood of acceptance.

Spotlight on application woes

Over the course of a year, lenders rejected credit applications for over nine million adults, with one in 20 individuals experiencing three or more declines. Multiple applications within a short timeframe can signal risk to lenders, potentially leading to continued rejection and inferior offers.

Moreover, banking regulations mandate that only 51 per cent of customers receive the advertised Representative APR, leaving nearly half susceptible to receiving different terms than expected. However, a mere 19 per cent of individuals believe lenders adequately communicate this discrepancy.

Research conducted by TotallyMoney discovered that a significant portion of credit card providers fail to provide pre-application product summaries or display the full range of possible APRs, contributing to consumer confusion.

Notably, popular credit card offers, such as those from Barclaycard and HSBC, may advertise one APR and offer duration but could provide different terms upon application. Additionally, only 40 per cent of consumers are aware that they might receive a different APR or credit limit than advertised.

TotallySure

TotallySure offers several guarantees to improve the credit card application process. Pre-approval reduces hard searches on credit files, ensuring that applicants are likely to be accepted, while a guaranteed APR provides clarity on borrowing costs, avoiding potential surprises. Additionally, guaranteed credit limits offer certainty on available funds, and guaranteed balance transfer and purchase durations ensure that customers receive the advertised terms without downselling, enhancing financial planning and transparency.

Commenting on the launch, Alastair Douglas, CEO of TotallyMoney, stressed the importance of transparent financial information and ensuring that customers receive what they see advertised.

“Now more than ever, people need to be able to take total control of their finances — and a big part of that is knowing where they stand when applying for credit,” explained Douglas. “That includes knowing the level of interest you’ll be paying, the credit limit you’ll receive, and how long a zero per cent interest-free period you’ll get.

“But for too long, regulation has allowed the banks to treat credit card applications as if they were a lottery — and to make things even more concerning, many people aren’t even aware they’re gambling with their finances. Lenders need to be upfront with customers about how products and services work, while ensuring they’re easily comparable. Key to that is by making sure that what people see is what they’ll get.

“Which is why we launched TotallySure. And to help raise industry standards and improve transparency, TotallySure offers are now recognised by our proprietary product ranking algorithm — Match Factor. As such, cards with the TotallySure badge will receive an upvote on our tables, making them more prominent to our customers, while helping lenders find more suitable borrowers, reduce costs, and improve trust and brand loyalty.”

 

Payments are arguably the face of fintech. When you think about financial technology, it is easy to think about solutions which are making payments faster, easier and more accessible.

Having debunked some of the biggest myths surrounding buy now pay later (BNPL), we now turn our focus on the technology’s potential. We reached out to the industry and asked if it believed BNPL could overtake credit card usage as new technologies rise in popularity.

Banks hold the power to take advantage of BNPL

Ralf Gladis, CEO, Computop said he did not think BNPL’s popularity would surpass credit cards due to it being “restricted primarily to online or in-store purchases, and many customers are happy to build up a good credit record by using their credit card.”

He continued: “What might be more relevant to look at is how banks can take a bigger share of the BNPL market. Accenture’s Global Consumer Payments Survey in 2022 found that four in ten customers would be more willing to adopt BNPL if it was a service offered by their main bank. As a result, banks are looking at how they embed this payment option into their platforms, and many are already doing it – Monzo and NatWest, for example.

“If they do this successfully – such as providing instant approvals and positioning themselves as the ‘responsible’ provider – the likelihood is that they will become the dominant players in the market.

Living together in harmony

A similar sentiment was shared by Edward Flanagan, partner at law firm, Shakespeare Martineau, who said credit cards and BNPL will live in symbiosis.

“Many banks are now embedding BNPL options into their consumer finance credit offerings in a bid to take advantage of the benefits of BNPL and to keep up with challenger fintech providers and, most importantly, safeguard their customer’s financial well-being.

“The adoption of BNPL by major banks and credit card companies gives the BNPL market an air of respectability – if they are offering it, it must be safe. Furthermore, credit cards are already regulated and so traditional credit providers are, arguably, in a better position to comply with any new BNPL regulation that may be implemented, which may involve applying for FCA approval and the associated burdens that come with that process.

“BNPL spending is on the increase but this doesn’t mean there is a corresponding drop in credit card usage as a result. Although increased credit card interest rates may encourage traditional card users to look at other less expensive repayment options, this is not an inevitable consequence. Research from Experian shows that consumers are not abandoning their credit cards in favour of BNPL.

Research says it all

Flanagan added: “According to Juniper Research, BNPL payments are expected to account for nearly a quarter of all global e-commerce transactions by 2026, up from just nine per cent in 2021. Younger generations prefer BNPL.

“Insider Intelligence forecasts 59 per cent of Gen Z and 53 per cent of millennials will make a BNPL payment in 2026, compared to 41 per cent of Gen X and 24 per cent of baby boomers. It’s a payment type that attracts all audiences, particularly Gen Z and millennials.

“GlobalData predicted that by 2026 in the UK, the credit card market size will reach $87billion in value of transactions while BNPL is expected to reach $47billion.”

Hope lies with the younger generation – but even then, there’s a long way to go

Moshe Winegarten, CRO, Ecommpay also looked at the technology’s users compared to those of credit cards to determine if it could out perform credit cards.

“Despite BNPL’s growth, it’s unlikely to surpass credit cards by 2025. At Ecommpay, we’ve observed BNPL’s popularity among younger demographics, while credit cards dominate among older millennials and baby boomers due to greater economic maturity and spending power. The BNPL market consolidation suggests it’s far from equal, let alone surpassing, credit card usage.”

Not a meteoric rise

Although BNPL’s popularity is driving considerable growth, it is not enough to truly advance the tech to a point it could overtake credit cards says Iryna Agieieva head of product payments at paytech Mollie.

“It’s highly unlikely that BNPL will surpass credit card usage by 2025. Despite its increasing popularity and 11 per cent CAGR growth, the credit card market significantly outweighs the BNPL global market. The growth rate, while fast, is not meteoric, and various challenges, including regulatory and socio-economic factors, have inevitably slowed down adoption. Like any emerging technology, BNPL expansion is likely to face constraints, making it unlikely to overtake credit cards in the near future.”

Serving different customer needs

Corinne Lleti, director general southern Europe, Provenir, the risk decisioning platform, identifies the benefits of both technologies. However, she does not see BNPL taking over anytime soon – although the possibility of it doing so in the future is not dismissed.

“Buy Now Pay Later is an attractive proposition for today’s consumers. The flexibility it offers, and the lack of interest is particularly alluring, making it the fastest-growing payment method. The global BNPL market is projected to reach $90.51billion by 2029.

“The growth of Buy Now Pay Later (BNPL) is undeniable as it provides consumers with an affordable way to split payments, as long as the payments are made on time. However, credit cards offer the advantage of being able to split payments on any product at any time, without requiring a specific offer. The practicality of credit cards has made them a convenient and versatile payment method, so it would be surprising if BNPL surpasses credit card usage by 2025.

“In the near future, both these payment methods will continue to exist with each serving a different consumer need.

“However, as BNPL becomes increasingly more widespread and credit-friendly, with numerous players entering the market, it’s likely to overtake credit cards as the preferred method of payment in coming years, although with increased regulation on the horizon, it will be certainly interesting to see how to industry will respond and whether the sector’s growth will be affected.”

A cultural shift is needed for meaningful change

Matt Purnell, research analyst Juniper Research, the market research firm, does not rule out BNPL overtaking credit cards, but he believes a lot of things must fall into place for the technology.

“Globally, no. Credit cards are too integrated in most countries that a massive but gradual cultural shift would be required for BNPL to become more prevalent. Additionally, not every country will see similar levels of BNPL adoption due to differing prevailing attitudes towards credit. However, BNPL is the one of the most used payment method for e-commerce transactions in markets like Sweden and Germany, so BNPL overtaking cards is a possibility that is dependent on a myriad of socioeconomic factors.”

Members of the European Parliament (MEPs) have officially adopted new rules to ensure transferred funds arrive immediately into the bank accounts of retail customers and businesses across the EU.

The new regulation looks to ensure that retail clients and businesses, especially SMEs, will not have to wait for their money. The European Parliament also explained that the move should enhance the safety of transfers.

Banks and other payment service providers (PSPs) will now need to ensure credit transfers are affordable and immediately processed. The new rules define ‘instant’ credit transfers as money transfers that arrive into the recipient’s account within 10 seconds, regardless of the time or day. The payer should be also informed within ten seconds of whether or not the funds transferred have been made available to the intended recipient.

PSPs located in the euro area will have nine months to ensure they are ready to receive instant credit transfers in euro and 18 months to send them.

Michiel Hoogeveen, a Dutch member of the European Parliament, discussed the new law: “The Instant Payments Regulation marks the long-awaited modernisation of payments in the European single market.

“Customers can now say goodbye to the inconvenience of waiting two or three working days to access their money. We are delivering on something that people and businesses truly care about: transferring money within 10 seconds at any time of the day.”

Member states which do not use the euro as their primary currency will also need to apply the rules, where the accounts already offer regular transactions in euro, after a longer transition period. There will be a special derogation from making the payment within ten seconds for such accounts outside business hours, given possible concerns about access to liquidity in euro.

Safeguarding customers against fraud

To maximise customer safety, PSPs will need to put robust and up-to-date fraud detection and prevention measures in place, to avoid credit transfers going into the wrong account due to fraud or error. All PSPs operating in the EU should now provide a service to verify the identity of a recipient – without any additional charges or fees.

This means that fees charged by a PSP for instant credit transaction in euro cannot be higher than the fees charged for ‘non-instant’ credit transfers.

As an additional safeguard against fraud, PSPs will also need to enable their clients to set a maximum amount for instant credit transfers in euros, which could be easily modified before the next transfer.

The new rules also outline that if any PSPs do not fulfil their fraud prevention duties to a high enough standard, and this results in financial damage, a client may demand compensation from the service provider, according to the new rules.

PSPs offering instant credit transfers should also verify whether any of their clients are subject to sanctions or other restrictive measures related to money laundering and terrorist financing.

Amid economic struggles across the globe, consumers in the US are trying to become more aware of their credit. Research from TransUnion has uncovered why this change in attitude has taken place, as 55 per cent of consumers look to open new credit accounts, 30 per cent want to better manage their debt and 15 per cent want to improve their credit scores.

The Global Credit Monitoring Study by TransUnion was conducted to better understand the distinct profiles, motivations and future outcomes of credit monitoring consumers. The study examined the behaviours of different consumers across the globe. Some notable markets included the United States, Brazil, Canada, Chile, Colombia, Dominican Republic, Guatemala, Hong Kong, India, Philippines, South Africa and United Kingdom.

To further identify how these benefits advance credit education and enable financial inclusion, the study used depersonalised credit data to analyse these outcomes for key consumer credit segments: new-to-credit, underserved, and credit-served consumers.

“Consumer credit monitoring has expanded considerably in awareness and usage over the past decade. This expansion has recently been fueled by the impact of the pandemic on consumer finances and the heightened familiarity among consumers of becoming victims of credit fraud,” said Charlie Wise, co-author of the study and head of global research and consulting at TransUnion.

“Our study measures the importance of credit education and quantifies the benefits that credit monitoring consumers experience. Furthermore, these benefits are shown to lead to better credit profiles, greater access to credit, or an improved ability to pay down debt, depending on the intent of consumers who monitor credit.”

Monitoring credit

The importance of monitoring credit has grown in the US in the last year. Over eight in 10 (86 per cent) of respondents said monitoring credit was at least moderately important with three in 10 saying it’s extremely important. Additionally, credit is being checked at least once per month by 58 per cent of respondents. Twenty-two per cent of respondents are checking it weekly and 10 per cent daily.

Users have signed up for credit services for a variety of reasons. TransUnion set out to find what goals US consumers had when signing up for credit monitoring services, as well as the actual benefits they have experienced.

The most common reasons US consumers initially signed up for credit monitoring services were that it was free (35 per cent), to improve their credit score (32 per cent), and to monitor their report for accuracy (31 per cent).

Additionally, after using monitoring services for some time, consumers reported added benefits that credit monitoring has allowed them to achieve: gain visibility to changes on their credit report (42 per cent), learn how to manage their credit score (41 per cent), detect fraud (39 per cent), and pay down debt (24 per cent).

The study further identified three distinct segments of credit-monitoring consumers based on their primary motivation for monitoring their credit. These included credit seekers, credit managers and credit improvers.

Credit seekers benefit from attaining new credit

More than half of the credit monitoring population (55 per cent) is doing so with a goal of attaining new credit. Credit seekers are consumers with near prime and above credit scores who monitor their credit with the intention of opening new credit accounts in the near future.

When comparing credit seekers who monitor their credit to those that do not, credit monitoring consumers open 1.16x more credit accounts, such as credit cards and auto loans, over the following year.

Both New-to-Credit (NTC) consumers – those early in their credit journeys – and underserved consumers – those less engaged in the credit market overall – also saw similar higher activity for the credit monitoring segment.

NTC consumers who monitor their credit display 1.21x higher origination rates for any credit product than those who do not monitor their credit, and for underserved it is 1.24x. Served consumers, those with established credit histories and readily available access to credit, saw an 1.14x higher rate of opening new accounts.

“For new-to-credit and underserved consumers, who typically have a more difficult time expanding their credit wallets, credit monitoring can be a crucial enabler of greater credit education and access,” said Wise.

Credit monitoring consumers in US open a higher percentage of credit cards, the most used credit product

	Credit Monitoring Consumers	Non-Monitoring Consumers*
Overall	42%	36%
New-to-Credit	48%	34%
Underserved	55%	50%
Served	40%	35%

* Non-monitoring consumers were analysed over the same time period from the date when credit monitoring consumers with similar credit profiles began monitoring services   

Credit managers benefit from paying down debt and detecting fraud

As debt levels have risen to near-record levels in recent years, the study found that many US consumers (30 per cent) monitor their credit with the intention of keeping an eye on their overall balances. Credit managers are defined as consumers with near prime and above credit scores who generally monitor their credit to reduce or maintain their balances or monitoring for fraud.

When surveyed, 24 per cent of all US credit monitoring consumers said they were able to pay down debt as a result of credit monitoring. In alignment, the study found that credit managers decreased their overall balances by an average of 11 per cent within a year after starting monitoring.

“Though we are in a high-interest rate environment with consumer credit balances at near-record levels, it’s reassuring to see so many Americans taking the initiative to ensure they are paying down or managing their debt levels,” added Wise.

Average balance decrease after one year of credit monitoring in the US

Overall	– 11%
New-to-Credit	– 19%
Underserved	– 12%
Served	– 11%

Another primary motivation reported by credit managers is protecting against fraud. Four in 10 US consumers (42 per cent) reported that they continue to utilise credit monitoring services over time in order to detect and protect against fraud. This benefit is of increased importance to consumers in light of the continued rise in fraud activity that has been observed since the onset of the COVID pandemic.

Credit improvers benefit from improving scores and staying current on obligations

Credit Improvers, which make up 15 per cent of the US credit monitoring population, are defined as consumers with subprime (poor) credit scores who likely use credit monitoring to understand their current credit situations and take steps to improve their credit scores.

The study found that credit improvers in the US generally experienced credit score improvements by an average of 28 points one year after they started monitoring their credit. The improvement was even better, at 35 points, for NTC consumers. In both instances, the improvement was better than a comparison set of consumers who do not monitor their credit (average 23-point improvements for both overall population and NTC consumers).

Median score improvement one year after starting credit monitoring in the US

	Credit monitoring consumers	Non-monitoring consumers*
Overall	28	23
New-to-Credit	35	23
Underserved	27	12
Served	26	22

* Non-monitoring consumers were analysed over the same time period from the date when credit monitoring consumers with similar credit profiles began monitoring services  

“While credit improvers make up the smallest segment of credit monitoring consumers in the US, they also tend to see some of the most impactful benefits in terms of credit improvement,” said Lindsey Downing, head of TransUnion’s Consumer Interactive business.

“It’s a clear indication that those consumers who are actively looking to improve their credit health may achieve better results if they monitor their credit and can plan their steps and track their progress.”

Free credit monitoring benefits consumers and lenders

In an effort to help more consumers easily access their credit scores, many financial institutions are offering free credit monitoring tools. This easy access not only helps consumers, but enables lenders to build stronger relationships with their customers.

Over one-third of US consumers (35 per cent) said they initially signed up for credit monitoring because it was free. One in three of these customers (32 per cent) stated they would prefer the lender providing free credit monitoring services over other lenders when opening new products. Twenty-one per cent said they would prioritise that lender’s payments over other lenders’ payments.

“Consumers now expect financial institutions to offer free credit monitoring services, as it allows them to improve their credit profiles, better manage existing credit, and seek new credit in the future. Offering such services clearly benefits financial institutions as many of their customers are more likely to remain loyal to them for future credit activity,” concluded Downing.