Insights

COVID-19 Upends the Payments Ecosystem

Merchant Payments Digest Issue 35

The Merchant Payments Digest is a regular update from Oliver Wyman to keep merchants apprised of developments in the rapidly shifting payments space.


PAYMENTS SPOTLIGHT

Transformational payments solutions:

PayPal, Square, and Intuit have launched COVID-19 stimulus lending through the Paycheck Protection Program. The fintechs expect to lend to smaller businesses that have struggled to receive capital from banks and are generally supporting their existing merchant clients with this offering. 

Source: Bloomberg

   

Rules and standards:

Visa delayed interchange rate changes planned to take effect in April 2020 back to April 2021 due to the COVID-19 pandemic. This delay impacts all merchants except for supermarkets, which will receive a rate decrease. Mastercard is similarly delaying its scheduled interchange rate adjustments but has yet to set a concrete timeline. Visa also announced that it is postponing its requirement for gas stations to support chip and contactless payments by six months to April 2021.  

Source: Business Insider, Nasdaq

   

Customers’ evolving expectations:

Recent consumer polling by Mastercard found a strong shift among US consumers towards contactless payments, which includes mobile wallets and tap-to-go cards. 51% of consumers have adopted contactless payments, a figure that Mastercard attributes to behavior change due to COVID-19 health concerns. Half of the respondents indicated concern about the hygiene of signature touchpads, and roughly a third have replaced their primary credit card with a contactless option.

Source: CNBC

   

Data:Forter announced a solution that allows merchants to analyze returns data and to detect abuse from consumers. Forter expects its solution to reduce the volume of returns received, which is one of the key challenges that merchants are facing during the current pandemic. In addition to potential staff shortages to process returns, merchants face hygiene considerations when deciding which returned items to resell. Another stressor for merchants is longer return windows, which some retailers, including Amazon and Sephora, have begun implementing due to COVID-19.

Source: Forter, CNBC

   

New providers:

Goldman Sachs has partnered with JetBlue to launch MarcusPay, a new installment loan product to help consumers make large purchases. MarcusPay, an extension of Goldman Sachs’ existing Marcus brand, is initially available for JetBlue bookings, with other merchants to follow. For Goldman Sachs, this move is part of a broader partnership strategy aimed at creating banking relationships with consumers who will drive lending and deposit volume during the recovery from the pandemic.

Source: CNBC, Reuters


PARTNERSHIP SPOTLIGHT


  • Walmart is encouraging customers to receive their stimulus payment through MoneyCard, a prepaid card offered with Green Dot. Signing up for this program allows unbanked and underbanked consumers to receive their stimulus payouts via direct deposit to a MoneyCard and removes the need for an in-person trip to cash a check. To encourage adoption, Walmart is waiving maintenance fees through June 30 for new MoneyCard holders depositing at least $500.

    Source: PYMNTS

  • Fiserv acquired Bypass Mobile, an independent software vendor focused on point of sale technologies. This move cements an existing partnership between the two firms; Fiserv and Bypass Mobile together already serve 50+ stadiums and arenas. Bypass Mobile’s core offering enables payments across multiple devices and includes management and reporting tools, and its merchant portfolio primarily consists of restaurants, food service companies, and entertainment venues.

    Source: Business Wire

MERCHANT SPOTLIGHT

  • Delta and United are contemplating selling frequent flyer miles in bulk to their credit card banking partners to raise cash. This may be necessary given the tremendous financial pressure caused by the COVID-19 pandemic. Offloading miles, which are later passed to consumers via credit card rewards, is a high-cost option given the discount on miles that airline carriers would likely offer to banks. In a similar maneuver, both Hilton and Marriott recently agreed to pre-sell points to American Express, with sales of $1BN and $350MM, respectively.

    Source: Business Insider, Bloomberg, Bloomberg

  • Amazon has simplified its Prime Video payments process on Apple products by making in-app purchases available on its iOS and Apple TV apps. Payments are processed using payment information stored by Amazon instead of through Apple’s typical in-app purchasing process. Amazon video purchases were previously routed through a web browser in order to avoid Apple’s 30% fee on in-app purchases; it’s unclear if this fee has been altered to accommodate Amazon.

    Source: The Verge

CONSUMER SPOTLIGHT

We launched the COVID-19 US Shopping Outlook Survey in mid-April. This weekly flash survey measures consumers’ attitudes during the pandemic using our proprietary Shopping Confidence Index. We also track metrics related to shopping sentiment and financial confidence, among others.


To have a discussion with Oliver Wyman on your payments issues and opportunities, please contact Beth Costa, Rob Mau, or Rick Oxenhandler at payments@oliverwyman.com.

Note that Oliver Wyman believes the curated content to be reliable, but it has not been verified.  As such, Oliver Wyman gives no warranty as to the accuracy of such information.  Oliver Wyman’s curation of such content should not be interpreted as an endorsement of the organizations that published the content.