Daily Dash: US Credit Card Debt Hits New Record High Of $1.13trn

February 9, 2024
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Americans’ credit card balances continued to rise in Q4 2023, as did missed payments, meanwhile in France, an antitrust regulator has opened an inquiry into generative AI.

US Credit Card Debt Hits New Record High Of $1.13trn

Americans added another $50bn to their credit card balances in Q4 2023, bringing the nation’s total credit card debt to $1.13trn.

Compared with Q4 2022, serious delinquency on credit card debt — defined as 90 days or more delinquent — also increased from 4 percent to 6.36 percent.

“Credit card and auto loan transitions into delinquency are still rising above pre-pandemic levels,” said Wilbert van der Klaauw, economic research advisor at the New York Fed.

“This signals increased financial stress, especially among younger and lower-income households.”

Total US household debt — a figure which includes mortgage debt — also hit a new record high of $17.5trn in Q4 2023.

French Competition Watchdog Opens Gen AI Investigation

The Autorité de la concurrence, France's antitrust regulator, has launched a new inquiry into generative AI due to the “high stakes and the very rapid development of this sector".

The generative AI sector is expected to be worth €42bn in 2023 (double the 2022 figure) and could exceed annual revenue of €200bn by 2030, the agency said.

According to the regulator, the new sector is rapidly taking shape around digital companies that already have a strong presence in adjacent markets, such as cloud services.

The authority will look in particular at the practices implemented by these entities and at issues relating to access to cloud infrastructure, data and skilled workforces.

It will also examine investments by major digital players in innovative companies specialised in generative artificial intelligence.

As part of its inquiry, the authority has also launched a public consultation to gather comments from stakeholders, who will need to respond by March 22.

Worldpay Now An Independent Company, While FIS Takes Minority Stake

Worldpay has announced that it has closed on a deal to become an independent company with a new majority shareholder, while FIS will retain a 45 percent stake in the company.

As previously announced, private equity firm GTCR will become the majority shareholder and will work with the management of both Worldpay and FIS to optimise performance and accelerate growth.

Worldpay executive chairman Charles Drucker will also return to his former role as CEO.

As an independent company, Worldpay said it plans to pursue strategic acquisitions across multiple verticals and geographies.

It added that GTCR has committed an additional equity capital investment of up to $1.3bn to pursue these opportunities.

Sweden’s Swish Payments Switch To Riksbank System

From March 2024, all payments sent via Sweden’s Swish mobile app will be settled through the Riksbank's payment system RIX-INST.

Throughout this month, payments made using the Swish app will switch from the current private system, Betalningar i Realtid (BiR).

By switching, the Riksbank said that liquidity risks will be reduced for banks.

An added benefit for businesses is that the Riksbank is connected to the Eurosystem's TARGET Instant Payment Scheme (TIPS), which is connected to other EU central banks.

Worldline, Commerzbank Expand Instant Payments Partnership In Switzerland, EU

Worldline has expanded its partnership with Commerzbank so that customers in Austria, France, Italy and the UK can send and receive instant transfers in euros.

The partnership has also been expanded to include the processing of instant payments in Switzerland in Swiss francs.

Worldline said the launch in Switzerland comes in response to a move from the Swiss National Bank (SNB) in June 2021, making instant payments acceptance mandatory for financial institutions.

From August 2024, the largest Swiss banks, including Commerzbank due to its annual transaction volume of more than 500m, must be able to process instant payments.

In line with a forthcoming regulation on instant payments in the EU, the remaining Swiss banks will follow by 2026.

Major Outage Of Contactless Payments Acceptance At Tesco Resolved

Tesco has announced that its systems have been restored following a major outage of contactless payment acceptance on Saturday (February 3).

More than 400 shoppers in locations throughout the UK reported issues to DownDetector.co.uk, and others complained to Tesco’s customer service account on X.

“Contactless payments not working in Tesco,” said one customer. “The whole shop completed and no ability to pay using Apple Pay.

“The staff in the Oakham store don't care. You need a better way of looking after your customers when this happens.”

One customer in Exeter claimed to have waited an hour for the contactless terminals to work but was still unable to pay, while others were unable to pay for items online for delivery or click and collect.

Later in the day a Tesco spokesperson announced: “We have fixed a technical issue which briefly meant we were unable to accept contactless payments in store and which also impacted some online orders. We apologise for the inconvenience.”

Time For FIs To Get Smart About Internal Compliance Monitoring, Says RBI

The Reserve Bank of India (RBI) has written to all regulated financial institutions (FIs) requesting that they conduct a “comprehensive review” of their internal compliance monitoring and tracking processes.

If necessary, FIs are asked to implement changes to their existing systems or implement new systems by June 30, 2024.

The RBI’s request comes after the central bank carried out an assessment of a sample group of FIs and their internal compliance monitoring practices.

The RBI wanted to find out the extent of use of technological solutions to support compliance with regulatory instructions, and found that automation of these processes is a “work in progress”.

“It is seen that supervised entities have adopted varying levels of automation to support this function, ranging from use of macro-enabled spreadsheets to workflow-based software solutions,” said the RBI.

“There is, thus, a need to implement comprehensive, integrated, enterprise-wide and workflow-based solutions and tools to enhance the effectiveness of this function.”

Bank Of Japan Confirms November 2025 Migration To Latest ISO 20022 Version

The Bank of Japan (BOJ) has confirmed that it will migrate to version 8, the latest version of the ISO 20022 messaging standard, in November 2025.

The central bank will introduce the new messaging standard to the Bank of Japan Financial Network System (BOJ-NET).

This is the payment system the BOJ uses for foreign exchange yen settlements and current account transactions related to deposits of overseas institutions.

The BOJ’s migration will therefore coincide with the end of the co-existence period during which MT, an older messaging format, and ISO 20022 can both be used on Swift.

Tata Reportedly Set For Faster Payments Takeover In UK

Tata, India’s largest conglomerate, could be set to take over the operation of the UK's Faster Payments Service (FPS), according to a report from Sky News

If successful, Tata would take over from Mastercard-owned Vocalink. In the Sky News report, Tata is said to be the “leading contender” to succeed Vocalink.

However, the appointment of a new operator of the FPS will be put on hold until the government publishes a revised sector strategy.

Known as the "Vision for Payments", the strategy was informed by last year's review of the payment sector by the Treasury and former Nationwide CEO Joe Garner.

A Tata takeover of the FPS could provoke a backlash, following mass redundancies at the Tata-owned Port Talbot steelworks. Last month, Tata Steel confirmed that 2,800 roles in the UK would be cut.

India Warns Against Rising Fraud Under The Guise Of KYC Updation

The Reserve Bank of India (RBI) has issued a warning to members of the public to be alert for fraud attempts under guise of updating know your customer (KYC) requirements.

Due to “continuing incidents” of customers falling prey to these attempts, the RBI has urged the public to contact their financial service provider directly in the event of receiving any request for KYC updation.

According to RBI rules, last updated in January 2024, regulated entities must adopt a “risk-based” approach to periodic updation of KYC.

For high-risk customers, updation should be carried out at least once in every two years; for medium risk customers, once every eight years; and for low-risk customers, once every ten years.

Members of the public should use the National Cyber Crime Reporting Portal or through cybercrime helpline if they have been targeted by KYC updation fraud.

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