Daily Dash: Quarter Of UK BNPL Users Hit By Late Fees

January 5, 2024
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New research has found that UK BNPL users are increasingly falling behind on payments, Singapore has become the first jurisdiction to accept e-CNY, and China is seeking to improve foreign card acceptance.

Quarter Of UK BNPL Users Hit By Late Fees

New research has revealed that around a quarter of UK buy now, pay later (BNPL) users have missed one or more repayments in the last six months, a figure rising to 34 percent of 18 to 34 year-olds.

The research, commissioned by the Centre for Financial Capability, found that of those who have missed repayments in the last six months, around two thirds have missed payments twice or more.

Meanwhile, more than a quarter of those who missed repayments had a decreased credit score as a result, or had been contacted by a debt collection agency.

The charity has warned that the current unregulated status of BNPL firms means that consumers risk spiralling into debt due to a lack of affordability checks.

For example, the research revealed that Clearpay charges 25 percent of the original purchase price. This is required to be paid at once and, if this is missed, a debt collection agency is used to recover amounts.

"As the ongoing cost-of-living crisis continues to impact the British public, it is apparent that many users are increasingly reliant on these schemes, without fully understanding the risks involved," said Jane Goodland, trustee of the charity.

Singapore Becomes First Foreign Jurisdiction To Accept China’s e-CNY

Singapore has become the first jurisdiction outside China to accept the e-CNY, China’s central bank digital currency (CBDC).

Under a new pilot scheme that will launch soon, tourists from both countries will be able to use the e-CNY when travelling in either Singapore or China.

The pilot follows the signing of a memorandum of understanding (MoU) in 2020 between the two countries’ central banks on digital finance cooperation.

Zhou Maohua, macroeconomic researcher at China Everbright Bank, said the pilot will contribute to the growing internationalisation of the renminbi.

"The initiative will allow e-CNY to be used for cross-border payments and settlements in more scenarios, contributing to the promotion of e-CNY," he said.

"This cooperation will not only bring more convenience to international tourists but also give full play to the e-CNY's advantages of being more secure, convenient and efficient."

China Making Efforts To Reduce Payment Friction For Overseas Visitors

The People’s Bank of China (PBOC) has issued a statement on improving the acceptance of foreign bank cards, mobile payments and cash for foreign visitors.

Zhang Qingsong, deputy governor of the PBOC, said that foreign visitors typically wish to use cards to pay for items in China, but for locals, mobile payments are the norm.

He, therefore, said that efforts will be made to make foreign bank cards more widely accepted by businesses in major business districts, airports and train stations.

The PBOC also noted that it has encouraged Alipay, Tenpay, China UnionPay and others to provide mobile payment solutions designed for foreign visitors.

Similarly, ATM providers have been ordered to upgrade their systems to accept foreign cards for cash withdrawals.

Record UPI Transactions Recorded In 2023

Transactions in India through its Unified Payments Interface (UPI) crossed the 100bn mark in 2023. 

This is the first time this has happened since its launch in 2016. 

The year closed at around 118bn transactions through the indigenised instant payment system of UPI, the National Payments Corporation of India (NPCI) has revealed. 

Overall, in 2023 there was a huge rise of 60 percent in UPI transactions compared with 74bn recorded in 2022.

ECB Issues Calls For Digital Euro Component Providers

The European Central Bank (ECB) has issued five calls for applications to establish framework agreements with potential providers of digital euro components and related services.

The calls for applications include the fraud management component, a component for offline services, and the app and software development kit (SDK) components, consisting of a digital euro app and an SDK to support intermediaries in the provision of digital euro services through their own mobile apps and online interfaces. 

Deadlines for applications vary but all conclude in February. 

The ECB has said that it is not making a commitment to launch any of the development work listed in the calls for applications. 

Rather, the purpose of the selection process is to establish framework agreements with the most suitable external providers to ensure that the Eurosystem is prepared to start developing a digital euro in the future if warranted. 

No decision to issue a digital euro will be taken until the European Union’s legislative process has been completed.

Revolut Revenue Tops $1bn But Higher Costs Wipe Out Profit Margin

Revolut has published its delayed financial statement for FY2022, revealing a significant growth in revenue but a flat-lining in gross profits.

In 2022, total revenue increased to $1.1bn (£923m), up 45 percent from $786m (£638m) in 2021.

The neobank also gained more than 10m new customers, increased its deposit base by 71 percent and increased the number of customers on paid plans by 55 percent.

However, these gains were cancelled out by large investments in staff, whose total headcount doubled from 3,000 to 6,000.

Revenue from cards and interchange also doubled from £149m to £306m, but overall, gross profit came in at about £6m for the year, down from £26.3m in FY2021.

The big question mark still looming over Revolut’s future growth is its UK banking licence application, which this month enters its third year without an answer.

UK Post Office Breaks Record For Highest Cash Withdrawals In Single Day

The UK Post Office has revealed that December 22, 2023 was a recording-breaking day for personal cash withdrawals, with £62.4m taken out over the counter.

The figure beats the previous record of £51.5m, which was set on December 23, 2023, by more than £10m.

Ross Borkett, head of banking at Post Office, also noted that £3m was deposited and withdrawn at Post Office branches on Christmas Day itself, which was an increase of almost £1m over the previous year.

About 1,500 of the Post Office’s 11,500 branches opened on Christmas Day — a service that Borkett said is “vital” for pub and restaurant owners who need to park their cash earnings ahead of a quieter January.

Affirm Expands BNPL Offering To Self-Checkouts At 4,500 Walmart Stores

Affirm has announced that its buy now, pay later (BNPL) solution can now be accessed at self-checkout kiosks at more than 4,500 Walmart stores in the US.

Previously, under a partnership launched in 2019, Affirm was available at staffed checkouts, online and via the Walmart app.

In Q3 2023, Affirm’s net loss narrowed to $171m, down from $250m in the same period in 2022.

The Nasdaq-listed BNPL has been on a cost-cutting drive for the past year. In February 2023, Affirm announced plans to cut one in five staff, and later that month, it also withdrew from the Australian market.

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