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Hi,

This is Jennifer, Vice President at Business Insider Intelligence. Each weekend, our team of research analysts puts together a recap of the biggest stories from the prior week and delivers it right to our subscribers' inboxes.

Below, you can see a preview of this week's stories from our Payments Briefing.

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Jennifer Willcox
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Business Insider Intelligence
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---------- Forwarded message ----------
From: BII PAYMENTS BRIEFING <intelligence@businessinsider.com>
Date: Feb 22, 2019
Subject: Apple, Goldman Sachs partner on cobrand card | Green Dot focuses on banking services for growth | Alipay to impose credit card fee
To: nguyenvu1187.love5@blogger.com
BI Intelligence
PAYMENTS BRIEFING

Apple, Goldman Sachs partner on cobrand card | Green Dot focuses on banking services for growth | Alipay to impose credit card fee

Payments Research Team | February 22, 2019

Good morning! PAYMENTS BRIEFING is delivered first thing every morning exclusively to Business Insider Intelligence members and BRIEFING subscribers.


APPLE, GOLDMAN SACHS PARTNER ON CREDIT CARD: Apple and Goldman Sachs are reportedly planning to issue a cobrand credit card later this year that will come with associated iPhone and money management features, following initial tests with employees in the coming weeks, according to The Wall Street Journal, which cited people familiar with the matter. The card — which was initially reported on last year — will feature tools connected to the Apple Wallet, like the ability to set spending goals, track rewards, manage balances, and receive notifications on spending, which are reportedly being developed by Apple engineers. And the credit card, which will run on Mastercard's network, is going to offer up to 2% cash back on most purchases.

The credit card could allow both firms to lean on each other's expertise to enter further into the payments space with a unique product.  

  • The card could escalate Goldman Sachs' push into retail- and consumer-oriented products. Goldman has been enhancing GS Bank, its consumer banking business, through several initiatives: In 2016, it acquired GE Capital and launched Marcus, its digital-only offering that provides personal loans and an online savings account, which recently reached $35 billion in deposits. Further, Goldman Sachs acquired credit card startup Final and recently acquired Clarity Money, a personal finance management (PFM) app, both indicating a deeper interest in the credit card and personal finance space. Partnering with Apple could be an effective way for Goldman to streamline its push to reach consumers on a large scale — particularly if the card offers cash back, which is a top motivator for consumers to make a card their primary card. And the card — which would mark Goldman Sachs' first credit card — could accelerate the firm's goals to generate $1 billion in annual revenue by 2020 through its new consumer banking business.
  • For Apple, partnering with an established financial institution could cultivate consumer trust in its other payment offerings. Apple plans to boost revenue from its services segment to $50 billion by 2020, and this credit card can help ensure that goal: Apple currently takes a fee when customers use credit cards through Apple Pay, but swipe fees through a credit card would be more lucrative for the firm. Further, Apple executives hope that the card will boost Apple Pay usage, per The WSJ. Though the card isn't directly tied to mobile payments, it could help spotlight Apple Pay and encourage adoption — Apple Pay surpassed 1.8 billion transactions in Apple's fiscal Q1 2019 (ended December 29, 2018) — as only an estimated 14% of US consumers use mobile wallets, suggesting its user base is small. That's especially true if the firms add a direct Apple Pay integration or incentive tied to the card. And as Apple expands its presence in the payments space, that could ultimately increase interest, trust, and awareness of Apple Pay.

GREENDOT FOCUSES ON BANKING SERVICES FOR GROWTH: Prepaid issuing giant Green Dot reported its Q4 2018 results, counting 5.34 million active accounts, which is down slightly sequentially and up just 1% year-over-year (YoY). That represents a significant deceleration from the 27% YoY active account growth Green Dot saw in Q4 2017. But both gross dollar volume (GDV) and purchase volume (PV) increased, reaching $9.8 billion and $6.3 billion sequentially. In the firm's earnings call, Green Dot president and CEO Steven Streit introduced the firm's six-step plan for 2019, which includes continuing to build out its banking-as-a-service (BaaS) segment, which powers the back-end of two key services: Apple Pay Cash, the mobile wallet's peer-to-peer (P2P) offering; and the PayPal-Walmart partnership that allows customers to reload their PayPal accounts with cash. Further, Streit unveiled the firm's expanded partnership with accounting software Intuit, which is now using Green Dot's BaaS platform for its payroll product, Intuit QuickBooks Desktop, as well as its renewed partnership to power Intuit's Visa Turbo prepaid card. Continuing to build out its BaaS segment — which is on the rise in the prepaid industry and is causing a necessary shift in strategy among providers — could prove effective in accelerating Green Dot's growth in the evolving prepaid industry: Business Insider Intelligence expects prepaid card transaction volume to reach $396 billion by 2022.

Green Dot Q4 2018

ALIPAY TO CHARGE FEE FOR CREDIT CARD REPAYMENT: Major Chinese mobile wallet Alipay will start charging a fee to customers who use its platform to pay credit card debt, according to The Wall Street Journal. The 0.1% fee will go into effect on March 26 for monthly payments more than ¥2,000 ($299). Alipay's parent company, Ant Financial, which cited rising operational costs as the reason for this fee, is likely imposing this fee as an effort to offset some of the costs associated with building out Alipay's capabilities and user base. Further, Alipay accounts for more than 50% of Ant's revenue, making Alipay a particularly important channel to generate revenue through: The mobile wallet handled an estimated $10 trillion in the 12 months ending in September 2018. But the fee also comes at a time when mobile wallets — which are ubiquitous in China — need a boost in generating revenue due to tightening regulations from the central bank. And this could be a good strategy for Ant and Alipay, considering many Chinese consumers rely on mobile payments: 92% of consumers use either Alipay or WeChat Pay as their primary payment method. Hence, the implementation of this fee isn't likely to negatively impact Alipay's volume — especially because WeChat Pay implemented the same fee last year, but as a flat fee for all credit card purchases. 

chinese wallet active usersADYEN LEVERAGES PSD2 FOR NEW PAYMENT PLATFORM: Dutch payments technology firm Adyen launched a new payment service powered by open banking in the UK, with plans to launch in other European markets in the future, according to PYMNTS. The service is intended to act as an alternative to credit card payments: Customers can select it as a payment type during checkout, which is enabled through an application programming interface (API) from Adyen, and they will be redirected to their bank's online platform to confirm the payment. The bank then uses the customer's preferred method of authentication — either face ID, touch ID, or an online banking password — enabling the funds to be sent directly from the consumer; Adyen then handles the payment flow between the bank and the merchant. Adyen's service leverages the European Union's (EU) Payments Service Directive (PSD2) requirement, which tightens security standards and authentication requirements for all payments in the region and is intended to promote competition among nontraditional banks. Adyen is one of the first firms to roll out an open-banking-compliant API in the UK, which can give it an early mover advantage and allow it to boost volume as it rolls the service out to other parts of Europe and scales throughout the region.  

Adyen revenue

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