Fierce buy-now pay-later competition among payment card brands and independent providers is expanding conversion opportunities for merchants. By layering additional services onto existing rails, Visa, Mastercard, Discover, and American Express became global technology platforms. Similarly, independent BNPL providers first offered consumer financing and then expanded into apps, embedded commerce, and payment card issuance.

In recent interviews, industry analysts and providers shared perspectives on how buy-now pay-later evolved into broader capabilities, enhancing consumer and merchant experiences.

Embedded Commerce

Iconic credit card brands share a crowded stage with cryptocurrencies, digital wallets, and alternative payment schemes, each with its own value proposition and target demographic. Half of U.S. consumers use credit-card alternatives such as PayPal, Apple Pay, Venmo, and Cash App, according to Miles Tullo, managing director of banking and payments at J.D. Power and author of its 2024 “Digital Wallet Satisfaction Study.”

Tullo expects digital wallet platforms such as Apple Pay Later to continue scaling through diversified product and service offerings despite uneven merchant acceptance.

“The Apple Pay Later user tends to be younger, more mass affluent, and financially healthier than other buy-now pay later-users,” he said, noting that Apple Pay Later is embedded in the Apple wallet, providing users with a single-access view of multiple transactions.

Pat Suh, senior vice president of revenue at Affirm, a BNPL provider, cited embedded commerce as a key growth driver. “Growing with our merchants is a priority for Affirm,” he said. “Most of our volume comes from our merchant and partner integrations. We are constantly looking for and executing opportunities to deliver even more value for them, from rolling out new features and products to optimizing our integrations.”

Suh stated that Affirm has integrated with Shopify and payment platforms such as Stripe and Amazon Pay, enabling merchants to add Affirm as a checkout option with a few simple clicks. This has helped Affirm reach merchants and consumers at scale, he explained.

Payment Card Issuance

While most of its volume and users come from merchants and partners, Affirm is also growing its direct-to-consumer revenue through Affirm Card, which Suh described as a hybrid, combining physical card ease of use with virtual card flexibility and transparency.

“Our DTC business grew by 51% year-over-year to $2 billion in fiscal Q2 2024,” he said. “Our total volume grew by 32% — four times the rate of overall ecommerce growth for the period as we continued to take share and extend our reach.”

Affirm Card is accepted online, in-store, or wherever Visa is, Suh stated. Users can request a payment plan in the app before checking out, link their bank account to pay with the Affirm Card, or use the app to request payment plans for eligible purchases after swiping or tapping.

“Affirm Card users transact much more frequently than the rest of our base,” he said. “The card has increased our penetration in categories we did not historically address, such as everyday purchases and restaurants.”

More Competition, More Choice

Bryce Deeney, CEO of Equipifi, a BNPL provider for banks and credit unions, suggested the Affirm Card poses significant challenges to incumbent financial institutions.

“Companies like Klarna and Affirm acquire customers at the point of need for that one buy-now pay-later purchase by offering an alternative to the bank or credit union card,” he said. “And once the consumer is approved and downloads the app, these companies try to win the entire relationship — a major threat to traditional issuers.”

Deeney noted that merchants may have similar concerns. If consumers can get BNPL with a click, what stops them from shopping in a digital banking app instead of a merchant’s website?

Nonetheless, despite fierce competition, he said BNPL providers, financial institutions, and merchants ultimately want the same thing: to ensure customers have positive experiences with their brands and payment products.

“As long as consumers have easy access to credit and cash flow and merchants stay top of mind with their customers, that’s the world where everybody wins: consumers, issuing banks, and merchants,” he said.

Phillip Jackson launched Future Commerce in 2016. The company produces articles, newsletters, and podcasts focusing on coming trends and developments in business.

He believes commerce produces a gentler society, one that fosters culture and stability. Commerce is culture, he states.

He and I recently discussed his company’s mission, large versus small brands, the maturity of ecommerce, and more. The entire audio of our conversation is embedded below. The transcript is edited for length and clarity.

Eric Bandholz: Who are you?

Phillip Jackson: I am the co-founder and CEO of Future Commerce, a small, bootstrapped business researching and producing media for ecommerce businesses. We work with large and small brands. We’re trying to predict the future of commerce, which was technology for the last 15 or 20 years, but now that every business is technology-enabled, we have to think about the next phase. We have four podcasts: Future Commerce, Infinite Shelf, Step by Step, and Decoded.

Ten years ago, big brands said, “We need to be online,” and “What does direct-to-consumer look like for us?” Let’s say you’re dealing with Mondelez (the food and beverage holding company) or some other conglomerate where you have individual brands with their own innovations teams, futures teams, and P&Ls within the business. They’re all resourced differently, have separate budgets, and are not talking to each other.

Some brands will find a way to achieve breakout success on the sly. You have little scrum teams or individual operating teams that don’t ask for permission—they ask for forgiveness and demonstrate success somewhere within the business. Some of the best innovations occur when they bring in entrepreneurs who understand how to get stuff done. They’re not just about theory, sitting in boardrooms, and figuring out spreadsheets. They’re good at rolling their sleeves up and getting things done.

Bandholz: You talk about an idea that commerce is culture. Can you explain?

Jackson: We’ve been at it with Future Commerce for about eight years. Over the last three or four years, ecommerce has mostly been solved. You can talk about all the tips, tricks, and tactics, but generally, it’s just buying a new piece of software.

The early exciting internet promise based on technology is gone. What has become exciting is going back to the fine arts. When I talk to folks in corporate roles, such as the head of commerce for YouTube or the head of innovation for Visa, they yearn for something deeper. Commerce is a human truth, and independent cultures have all created and found each other through trade routes. The world came together through this necessity of having something others need. Commerce is not just a value exchange — it’s a cultural connection.

We’ve learned that live-streaming isn’t the future of commerce, yet every analyst said it would be because that was happening in Asia. Maybe commerce is more cultural. Every independent culture has its own way of expressing itself, and maybe commerce is one of those. We’ve pared it down to “commerce is culture.” It is who we are at our core. It’s what we value.

A French philosopher believed that commerce makes people more amenable. When you have things you love, prize, and value, you don’t want to lose them. People who have nice things become better actors in society. As a nation becomes richer and attains wealth, it’s less prone to social upheavals. Commerce has a gentle effect on society and gives us the capitalist economy today.

Eric Bandholz: Where can people support you?

Jackson: Visit FutureCommerce.com. Find me on Twitter and LinkedIn.

Fintech FIS has joined forces with Banked, the open banking solution provider, to drive new pay-by-bank offerings for both businesses and consumers.

As open banking matures in the US, the partnership between FIS and Banked looks to support the mission to bring pay-by-bank features and capabilities to critical industries like insurance, higher education, utilities, governmental agencies and more.

Pay-by-bank solutions simplify payments by combining the benefits of real-time payment rails with the flexibility and efficiency of open banking, where third-party financial service providers have direct access to banking data to complete digital payments.

As a result, businesses and consumers can make payments directly between business and consumer bank accounts without the need for card details, account numbers or sort codes. Businesses benefit from less fraud, reduced friction, faster settlement and lower processing fees, while consumers enjoy a smoother payment experience, easier verification and faster access to funds.

Seamus Smith, group president of global business-to-business payments at FIS, said: “Corporations and consumers are clamouring for solutions that move their money easier and faster, and as open banking and fraud prevention mature, FIS is in a unique position to start offering pay-by-bank solutions for both businesses and consumers.

“Partnering with Banked is a proof point of FIS’ commitment to bring frictionless payments to a wider spectrum of critical industries in a secure, convenient and cost-effective manner and complements the investments we’re making in next-gen payments infrastructure.”

A2A payments are on the rise

Digital payments are experiencing significant growth due to consumers’ increased adoption of digital wallets and mobile payment apps. They have become the preferred method of fulfilling payments for merchants and consumers alike.

According to the 2023 FIS Global Payments report, account-to-account (A2A) payments like pay-by-bank generated an estimated $525billion in 2022 e-commerce transaction value. The report also projects that A2A payments will grow at a 13 per cent compound annual growth rate.

Brad Goodall, co-founder and CEO of Banked, discussed the partnership: “Together, we are enabling businesses to leverage the power of open banking and real-time payments to offer their customers a superior payment experience.

“FIS takes a highly innovative approach to solving real pain points for their clients. They see the value pay-by-bank solutions can bring for a variety of use cases now and in the future, and we are excited to build out the partnership and bring new payment capabilities to market.”

In 2023, FIS helped spur the adoption of real-time payments by being one of the first in the fintech industry to complete testing and certification for the FedNow Service, and its new partnership with Banked promises to capitalise on that momentum to modernise a payments segment ripe for disruption.

The Payments Association, the community promoting innovation and collaboration in the payments industry, is gearing up for a charitable journey this month to support the survival and development of Ukrainian citizens.

From 26 to 28 January 2024, Tony Craddock, director general, and David Hunter, chairman, at The Payments Association, will join a convoy of vehicles from London to Poland on a mission to donate these vehicles as well as essential supplies to aid Ukraine during its challenging time as winter conditions set in and infrastructure issues continue.

The initiative, with a goal of raising £5,000, is a joint effort involving key figures from the payments industry, including Neil Harris, chair of The Payments Association advisory board and CEO of b.yond, and advisory board member Kamran Hedjri, group CEO of PXP Financial.

Since the war started two years ago, The Payments Association and members b.yond, PXP Financial as well as fscom have raised over £45,000 for Ukrainian causes. Charity Ukrainian Action purchased the vehicles for this mission, thanks to some of these donations.

The mission 

Ukrainian Action has transported hundreds of vehicles filled with humanitarian aid from London to Ukraine since February 2022. The concept is straightforward yet effective. Dedicated mechanics in the UK purchase vehicles, including SUVs, pickup trucks, and ambulances, and make them roadworthy.

These vehicles, along with essential supplies, form a convoy of 10 to 12 vehicles, heading to Ukraine via Poland. Trusted Ukrainian helpers near the border take charge of the vehicles, ensuring safe and efficient aid delivery without crossing into Ukraine itself.

The efficiency and low administrative overhead of this charitable model appealed to The Payments Association, ensuring that every pound donated directly benefits those in need. Their journey will span three days, including stops in Belgium and Poland.

Hunter told The Fintech Times: “There are many people working in the fintech community, especially in the computer engineering side, that have been affected by the Ukraine crisis, including people we know personally.

“We had some funds left over from our previous fundraising efforts and we felt like this would be the smartest way to use it. Not only is it a lovely thing to do from a charitable perspective and will hopefully raise awareness, but it’s actually going to be quite a lot of fun and a bit of an adventure for us too.”

Craddock, Harris, Hedjri and Hunter will depart from London to Europe via Eurostar, with a send-off from fscom director Alison Donnelly, who expressed the collective sentiment regarding the ongoing crisis in Ukraine.

“When the invasion happened, we were all startled and taken aback, and our hearts went out to them,” she said. “Things have changed over the past number of years, and it’s hard to believe that this still continues because it hasn’t changed for our colleagues and friends there, so we’re really pleased to be able to support the initiative.”

Find out more, including donating to the fundraiser, at the JustGiving page.

 

 

 

Real bipartisan legislative efforts are rare in Washington, DC, these days, but Democratic Senators Elizabeth Warren and Joe Manchin and Republican Senators Lindsey Graham and Roger Marshall have managed to come together to co-sponsor a bill focused on crypto crime. 

According to the senators, the Digital Asset Anti-Money Laundering Act of 2023 aims to close loopholes in the nation’s Anti-Money Laundering rules. The bill would amend the Bank Secrecy Act and would designate a diverse range of digital asset providers as financial institutions. 

The Bank Secrecy Act establishes program, recordkeeping and reporting requirements for national banks, federal savings associations, federal branches and agencies of foreign banks. Digital asset providers would be required to adhere to many of the same regulations as traditional banks.

Warren introduced the legislation to the United States Senate on July 27, 2023, on behalf of herself and Senators Joe Manchin, Roger Marshall and Lindsey Graham. The bill was then referred to the Senate Committee on Banking, Housing and Urban Affairs. It hasn’t been voted on by the entire Senate or sent to the U.S. House of Representatives for consideration. Nor has President Biden signed it, and it is not a matter of law at this time. 

The same rules should apply to the same kinds of financial transactions with the same kinds of risks. So my new, bipartisan ​​Digital Asset Anti-Money Laundering Act will make the crypto industry follow the same anti-money-laundering standards as banks, brokers, & Western Union.

— Elizabeth Warren (@ewarren) December 29, 2022

The legislation would add several types of cryptocurrency providers to U.S. regulators’ list of financial institutions. These include unhosted wallet providers, digital asset miners and validators or other nodes that validate third-party transactions, miner extractable value searchers, other validators or network participants with control over network protocols, or just about anyone else who facilitates or provides services related to exchange, sale, custody or lending of digital assets.

All these organizations and individuals would be subject to the same regulations currently applied to financial institutions in the United States. The bill does include exceptions for those who use distributed ledger, blockchain technology or similar technologies for internal business purposes. 

Crypto under federal review

If the bill becomes law, within 18 months of its enactment, the U.S. Treasury’s Financial Crimes Enforcement Network would announce that any U.S. person with $10,000 in digital assets or one or more digital assets overseas would have to file a report. Within the same timeframe, the U.S. Treasury would establish controls to mitigate unlawful financial risks associated with digital asset mixers and anonymity-enhanced cryptocurrency. 

Within two years of the bill’s enactment, the Treasury, in consultation with the Conference of State Bank Supervisors, will create a risk-focused examination and review process for those digital asset participants newly designated as financial institutions. They would determine if efforts to stop money laundering and to counter crypto-funded terrorism are adequate and if crypto providers and facilitators are compliant with the new rules. Subsequently, within the same time frame, the Securities and Exchange Commission and the Commodity Futures Trading Commission will consult with the Treasury on exactly the same matters. 

What about my favorite BTC kiosk?

The next part of the bill is focused on digital asset kiosks. Within 18 months of the bill’s passage, FinCEN will require digital asset kiosk (ATM) owners and administrators to submit and update the physical address of their kiosks every 90 days. The kiosk owners will also need to verify the identity of each customer using a valid form of government-issued identification, and they will have to collect the name and physical address of each counterparty to each transaction. 

Within 180 days, FinCEN will issue a report about any digital asset kiosks that haven’t been registered. The report would include an estimate of the number of unregistered kiosks, their locations and an assessment of additional resources that FinCEN might need to be able to investigate them.

Within a year of the enactment of the legislation, the U.S. Drug Enforcement Agency would issue a report identifying recommendations to reduce drug trafficking and money laundering associated with digital asset kiosks. 

Crypto industry impact

Grant Fondo, co-chair of Goodwin’s digital currency and blockchain practice and a former Assistant U.S. attorney, tells Magazine that “the bill is an attempt to pull more players in the digital asset industry within regulatory control, to close gaps in what some in Congress see as not covered under the current regulatory regime.” 

Fondo believes that, if passed, the legislation would have the practical effect of killing decentralized finance in the U.S. by applying an unworkable regime on DeFi protocols. Fondo sees the legislation as imposing a burden on validators and miners and also questions how realistic it would be to impose bank-like requirements on a software company validating blockchain transactions. 

Hadas Jacobi, an attorney in the Financial Industry Group at Reed Smith who previously worked as a financial enforcement regulator for the State of New York, agrees. According to Jacobi, the act would apply Bank Secrecy Act requirements, depending on the context, to crypto participants that are not financial institutions.

“The act could be read as applicable to programmers and other tech providers who create the framework for financial services operations rather than provide services themselves,” Jacobi says.

Although Jacobi believes there is a need for legislative clarity in the space, she questions whether the primary intent of the legislation — the crypto sector’s threat to national security — is even relevant. Jacobi says that on-point regulation of cryptocurrency and digital asset services providers is necessary, but digital assets do not threaten national security.

“A general statement that digital assets pose a threat to U.S. national security, however, would be both inaccurate and short-sighted. Bad actors in the digital asset space pose a global threat from both a national security and a financial stability standpoint — but the digital asset industry and its underlying technology do not,” Jacobi says.

What the politicians are saying

In a written statement, Senator Marshall says that the bill addresses U.S. concerns about national security.

“This legislation is a matter of national security. Mastermind hackers from adversarial countries like Iran, Russia, and North Korea are committing cybercrimes against the United States to the tune of BILLIONS of dollars; they must be held accountable. The reforms outlined in our legislation will help us fight back and secure our digital assets by using proven methods that our domestic financial institutions have been complying with for years,” Marshall states.

Marshall says that the legislation would extend Bank Secrecy Act responsibilities to include Know Your Customer requirements for those affected, would address a “major gap” with unhosted digital wallets, would direct FinCEN to issue guidance on financial institutions to mitigate digital asset risks, would strengthen enforcement of BSA compliance, would extend BSA foreign bank account rules to include digital assets and would mitigate illicit finance risks of digital asset ATM’s. 

Warren argues that U.S. authorities have warned that crypto is being used for all types of crimes and for antagonistic nations to avoid U.S. sanctions.

“Rogue nations like Iran, Russia and North Korea have used digital assets to launder stolen funds, evade American and international sanctions, and fund illegal weapons programs,” Warren says.

Suggesting that the act will help to subvert these efforts, Warren focuses her statement on North Korea’s missile program.

“Nearly half of North Korea’s missile program, for example, is estimated to be funded by cybercrime and digital assets. In 2022, illicit digital asset transactions totaled at least $20 billion — an all-time high,” Warren writes. 

Manchin asked Democrats and Republicans to come together and vote for the bill. “Our bipartisan legislation would curtail these security risks and require cryptocurrency platforms to abide by the same Anti-Money Laundering rules that banks have to follow. I urge my colleagues on both sides of the aisle to support this common-sense legislation to protect Americans by preventing bad actors from using cryptocurrencies to finance their criminal activities,” Manchin says.  

Fondo doesn’t see how the Anti-Money Laundering Act could minimize risks to national security but does recognize how the bill might address issues associated with anonymity-enhanced cryptocurrency.

Still, he would like to see this legislative effort well thought out before passing the bill. “No one wants terrorists and criminals masking their financial transactions. But conversely, privacy is a rare commodity, so it’s important to properly balance it with national security,” Fondo says. 

Jacobi is concerned that overregulation will lead to redundancy and excessive costs that will drain the industry. She says that the act would direct FinCEN to regulate digital service providers as money transmission businesses, although she believes that they have already been doing that since 2013. Furthermore, she says that most state regulators have been examining and registering them for almost as long. 

“The Act has the potential to upset the balance of the existing U.S. dual state and federal regulatory regime by creating redundancies in the supervision and examination of money transmission businesses, not to mention exposing the digital asset industry to resource-draining, duplicative enforcement actions,” Jacobi says. 

Will the bill become law?

It’s anybody’s guess. The House of Representatives is just getting back on its feet after struggling for weeks to elect a new speaker. 

The U.S. Senate still requires a supermajority vote to approve almost any piece of legislation, and all the while, members of Congress and President Joe Biden are hyper-focused on geopolitical matters like the Israel/Hamas conflict and the war in Ukraine. 

Also, most U.S. federal-level politicians are about to enter the 2024 election season, where control of the Senate, the House of Representatives and the Presidency are all up for grabs. 

Controversial legislation will certainly stall until after the election, but a potentially popular crypto bill might just be palatable to candidates on both sides of the aisle to find its way onto the president’s desk. If the Digital Asset Anti-Money Laundering Act were to become law, many cryptocurrency providers would have to learn how to comply with the same regulations as traditional financial institutions. 

Transit payments processing specialist, Littlepay, has officially deployed open-loop payments across Lima, Peru. Riders travelling on the AEMUS network of buses can now pay for rides using a contactless bank card or a digital wallet.

System integrator SIMA, which operates the existing AEMUS fare collection system in Peru, has partnered with Littlepay to add contactless payments to its infrastructure.

Didier Muguet, LATAM regional manager at Littlepay, said: “We are very proud to be part of the first deployment of an integrated transit infrastructure in Peru. AEMUS is driving progress in the region, paving the way for many more innovations in the future.”

SC Soft provides the validators with the new addition of a Planeta VSAM, a small modular add-on that fits into a spare SAM slot to rapidly enable full EMV processing on the device. Planeta Informatica, the provider of the VSAM, and Littlepay have a plug-and-play pre-integrated solution that enables EMV to be ‘switched on’ with almost no development required at the device level.

This can be a game changer for operators looking for a quick and easy path to accepting bank cards on their transit services. The merchant acquiring services are provided by IZIPAY via Visa’s Cybersource gateway.

“Uniting the local transportation ecosystem”

AEMUS is a syndicate of transit operators running bus services in the Lima and Callao metropolitan areas that promotes sustainable mobility in the city. The four founding companies Urbanito, Etuchisa, Nueva America and La50 formed the organisation to provide an inclusive, safe, reliable network in the region.

Now, they are investing independently in the deployment of open-loop payments across their network. The founding companies are introducing the new payment option on the first 400 buses with plans to expand it within the next month to the entire network of 1000 vehicles.

This is the first implementation of an integrated ticketing infrastructure in Peru giving residents, commuters and tourists the opportunity to pay for fares by tapping their contactless card on any AEMUS route.

Luis Edgardo Ramirez Garcia, general manager at AEMUS, also commented: “Our aim, by uniting the local transportation ecosystem, was to transform the lack of coordination and lack of efficiency of the current urban transportation into a harmonized system.

“Beginning with the introduction of the contactless digital payment method, called MOVILIZATE Card. The alliance with multiple transit operators allows us to provide a unified service with integrated fares and promotions.”

Muguet concluded: “It’s amazing to see the innovation that happens when a system integrator and modular partners work together. This has been an incredible opportunity for Littlepay to show that our modularity truly means we can support the needs of any transit system.”

Visa has revealed its findings following its central bank digital currency (CBDC) pilot test utilising tokenised deposits alongside HSBC and Hang Seng Bank. 

Beginning in May 2023, Visa took part in the e-HKD CBDC pilot programme focused on simulating two use cases of interbank B2B payment flows — property payments and acquirer-merchant settlement, each tailored to the Hong Kong market. It also demonstrated the potential benefits of tokenised deposits for B2B payments in terms of payment speed, settlement risk control, network resilience, and transaction transparency.

The pilot test began in May 2023 when Visa was selected by the Hong Kong Monetary Authority (HKMA) to participate in its e-HKD Pilot Programme (Pilot Programme). As a first-of-its-kind collaboration globally,

Visa and two Hong Kong-based banks jointly examined the atomicity and interoperability of on-us and cross-chain payments across interbank B2B payment flows using tokenised deposits.

In the coming years, tokenisation will present a new industry opportunity with untapped potential. Particularly, tokenised deposits have gained increased attention of the financial industry, with the potential to change the way banking and digital assets intersect. Visa will continue to explore meaningful use cases of tokenised deposits, with anticipated areas of focus on tokenisation of asset markets, programmable finance, expansion of retail offerings, and cross-border payments.

“The HKMA’s Pilot Programme provided a great opportunity for Visa to continue doing what we do best: working with partners to drive payment innovation and experiment with new forms of money movement,” said Paulina Leong, general manager for Visa Hong Kong and Macau.

“It has highlighted the vast applicability of Visa solutions in enabling secure money movement that could bring benefits to a larger number of people, businesses and places. We are immensely thankful for the collaboration with the HKMA, HSBC and Hang Seng Bank, and we are excited to continue our work in bringing forward the future of digital payments in Hong Kong.”

Alternative means for high-value transactions

The pilot illustrated that tokenised deposits could be an alternative means for high-value, time-sensitive transactions. For example, property payments, as it presents a secure method of payment with a potential to reduce settlement risks.

In addition, employing tokenised deposits as a mechanism for facilitating the settlement process between a card acquirer and their merchants could become a transformative B2B payment method. Major advantages include increased transparency and quicker settlement of high-value transactions.

Nischint Sanghavi, head of digital currencies, Asia Pacific, Visa added: “Through the pilot programme, Visa has highlighted various potential benefits for the deployment of CBDCs. These include quicker settlements, a more seamless payment experience for high-value transactions and better transparency. Not to mention  the other benefits that come with an ‘always-on’ infrastructure.

“Our involvement in piloting actual use cases delivered pivotal learnings that are not only paramount to the possible implementation of the hypothetical e-HKD but can also help shape the future of the payment ecosystem.”

The outcome of the pilot signals the potential to enhance existing banking processes and introduce greater efficiency and security to B2B transactions.

UK consumers are becoming increasingly likely to use shorter-term credit options such as Buy Now, Pay Later (BNPL) during the cost of living crisis. A new Marqeta study reveals that 38 per cent of UK consumers have used BNPL to make ends meet during the last 12 months, increasing to 61 per cent amongst 26 to 34-year-olds.

Marqeta, the modern card issuing platform, has released its 2023 State of Credit report – which finds that UK consumers have been increasingly reliant on credit in the last year, with 53 per cent of respondents reporting that they are now routinely using credit cards to make ends meet.

Via its survey of 3,000 consumers globally, including 1,000 in the United Kingdom, Marqeta found that respondents believe the increased cost of living makes it harder to make minimum monthly payments on their credit cards (46 per cent). Respondents also reported accessibility issues, as 46 per cent of UK respondents who have applied for a credit card in the past 12 months had their applications denied.

As a result, consumers are turning to new credit options and are using BNPL services as a tool to help build credit and secure access to additional credit services. Forty-seven per cent of UK respondents reported that they are looking to build a credit history or improve their credit score and 61 per cent of them confirmed they were interested in using BNPL to further improve credit scores and eventually get a credit card.

Forty per cent of consumers are very interested or somewhat interested in being offered the opportunity to use BNPL services by their current credit card provider, where they would be able to pay back a purchase over time for a small fee, rather than being charged interest.

Why are consumers opting for BNPL?

For BNPL users, the lack of interest fees was a popular feature, and 47 per cent of people who had used BNPL services in the last 12 months said they chose it because of zero interest.

Other motivations behind why consumers are turning to BNPL included convenience (46 per cent), flexibility (42 per cent) and help with budgeting (45 per cent). Interestingly, 15 per cent of consumers surveyed chose to use it because they had no other access to credit.

Todd Pollak, chief revenue officer at Marqeta, said: “BNPL appeared on the market as a strong challenger to the credit card giants, and was even termed a ‘credit card killer’.

“However, during this period of economic uncertainty, consumers are becoming more savvy about the different ways to access credit and are doing so in the ways that best suit them. As a result, we are seeing both pressure for traditional credit providers to offer more flexible credit services, and UK consumers using BNPL to access and build credit, sustain a good credit score and get access to credit cards.”

UK consumers show brand loyalty

UK consumers are becoming more reliant on their favourite brands to provide credit products with 31 per cent of respondents looking for a recognisable brand they trust when choosing to apply for a new credit card, compared to 21 per cent of US respondents.

Twenty-four per cent of UK respondents own a credit card affiliated with a brand (such as British Airways or Tesco credit card), while 54 per cent consider themselves a customer of the brand or store, instead of the bank that provides the physical card, and 47 per cent consider the brand to be responsible for customer service.

The report shows that payment cards and credit cards are the gateway to additional financial products, with 25 per cent of respondents reporting that they have more than one financial product from their credit card provider and 42 per cent confirming they had a credit card first and added additional financial products over time.

Pollak concluded: “Payment cards in general, and credit cards in particular have become the new front door to the banking industry. Brands and banks can offer these to deepen their relationship with customers and increase revenue.

“Going forward, we are likely to increasingly see the integration of financial services into non-financial products, giving consumers more seamless access to credit and the embedded finance experiences they require.”

Major cryptocurrency exchanges and businesses are being lured to a proverbial crypto oasis around the Persian Gulf, according to Binance FZE’s general manager.

Alex Chehade, who heads Binance’s local operation in Dubai, tells Cointelegraph reporter Ezra Reguerra that progressive regulatory frameworks in the region are a major drawcard for startups and established industry players:

“What stands out in the Middle East is regulatory certainty and clarity. We have a virtual-asset-specific regulator here in Dubai, VARA. We have ADGM with its virtual asset framework, we have Bahrain’s central bank being accepting of cryptocurrencies.”

Chehade believes that regulators in other jurisdictions have not quite figured out or taken the time to learn the ins and outs of the cryptocurrency landscape, or simply lack the “bandwidth” to begin regulatory the sector:

“So you’re seeing events like GITEX and Future Blockchain Summit as well as global companies coming here because it’s easy to do business.”

The Binance FZE general manager adds that businesses need certainty in order to create long-term plans and the regulatory parameters that exist in these specific jurisdictions are facilitating that process. 

Chehade also highlighted Binance’s role as a catalyst of sorts for Web3 companies and startups to become established in the region.

“We’re an ecosystem enabler, we’re the biggest Web3 company in the world. You often see network effects with size and we’re seeing a healthy environment with big and small players.”

Chehade stated that Binance now employs around 600 people in its Dubai-based operation and will continue to play its part in fostering the industry. He adds that Binance FZE has been operating as a regulated exchange in Dubai for a year and a half and is segregated from the rest of its global operations with ring-fenced custody and operations.

Related: Dubai lures AI, Web3 enterprises with 90% subsidized commercial licenses

In a prior interview with Cointelegraph at the Blockchain Economy Dubai Summit, Akshay Chopra, Visa’s vice president, and head of innovation and design, echoed Chehade’s sentiments regarding the region’s progressive regulatory outlook.

As a board member of the MENA Fintech Association, Chopra highlighted the “forward-looking and inclusive view of blockchain and crypto solutions” as a key driver of growth for the sector in the region:

“Regulators are actually looking forward and working with the local blockchain community, institutions, startups, entrepreneurs to come up with a very inclusive perspective on what is the future and how can we be best positioned both as a market and as a regulator.”

Research from blockchain analysis firm Chainalysis indicates that the MENA region is the fastest growing cryptocurrency market in the world. Transaction volume in the region reveals users received $566 billion in crypto between July 2021 and June 2022. 

Additional reporting by Ezra Reguerra.

Magazine: Blockchain detectives: Mt. Gox collapse saw birth of Chainalysis