Data Dive, Pushing Forward, Pushing Back: Visa, Apple And PayPal

With only 15 days left until the end of the year, the year-end push has officially begun. The last big pay or expansion of the year on the positive side; or one final fistfight out the door on the less than wholly positive side.

This week we saw a little bit of both. Visa, and more specifically Visa Direct, made two great pushes for outward expansion, while Apple is working to push both its new card and its new line of phones, possibly in reaction to its China slowdown. Then there was the pushback of the week, care of PayPal, which is looking for better defined mobile wallet rules from the CFPB.

Did you blink and miss something? That’s OK, we didn’t …

Visa Direct’s March Forward

Visa announced last week that global payment technology firm TransferWise is the latest partner tapping into its real-time push payments platform, Visa Direct. Visa Direct has been used to process 2 billion transactions in 2019, a number it is looking to grow in 2020.

“TransferWise is on a mission to move money around the world in a cost efficient, quick and transparent way,” said Kristo Käärmann, CEO and co-founder of TransferWise. “Integrating Visa Direct further eases the transfer process and brings us another step closer to achieving our mission.”

TransferWise’s Visa Direct-powered service will launch in Spain to start, with plans to follow in Romania, Hungary, Czech Republic and Bulgaria. The broader goal will be to take the Visa Direct-enhanced offering and work with the card network to scale its offering throughout Europe and worldwide in 2020.

“Technology is bringing us closer together, yet there are still challenges that it hasn’t solved when it comes to individuals and small businesses moving money around the world,” said Bill Sheley, global head of Visa Direct. “The TransferWise collaboration is the latest addition to Visa’s efforts to help our clients enable individuals and small businesses to send and receive international payments quickly and securely by utilizing the power of Visa Direct.”

And Europe wasn’t the only continent seeing a big Visa Direct expansion last week. Visa also announced a partnership with pan-African FinTech leader MFS Africa that is designed for bridging the gap between the rapidly growing mobile money ecosystem in Africa and the world of online digital payments by distributing Visa payment credentials via the MFS Africa digital payments hub.

While mobile money has rapidly grown in Africa, the addition of Visa payment credentials to mobile money accounts will allow African consumers access to the global digital commerce markets. The partnership will also include an integration of MFS Africa into Visa Direct, to provide mobile money users a fast, convenient and secure way to send and receive money and remittances directly from or into their mobile money wallets via eligible card credentials.

“Africa is adopting a mobile-led, digital payments ecosystem, and with Visa looking to accelerate the distribution of payment credentials and expand the acceptance space for digital payments, this partnership is an important one,” said Jack Forestell, executive vice president and chief product officer at Visa. “MFS Africa will help us enable digital payment use cases at scale through their aggregation model.”

Apple’s Financing Expansion (And China Contraction)

Just in time for the holiday sales season, Apple is making both the Apple Card and a new iPhone just a bit more desirable by offering cardholders zero percent installment financing on iPhones through the end of the year. During Apple’s last earnings call, CEO Tim Cook hinted this development was on the way. Apple has already updated the Wallet app on iOS with the new monthly installment option.

He also said that every Apple Card holder who uses the card to buy and finance an iPhone with zero percent interest will also get 3 percent Daily Cash on their total purchase. The minimum payment amount for the card will include the required monthly payment for the installment plan for customers sign up to pay for an iPhone using the card’s installment option.

It is not known whether Apple Card monthly installments and zero percent interest will be offered to finance other Apple products like the iPad; at least for the time being it seems to be limited to the iPhone alone.

Which, looking at the China numbers estimates out this week, makes sense — Apple may be looking to juice U.S. iPhone sales particularly hard, since they are not strong in China, according to research by Credit Suisse.

Credit Suisse claims China’s iPhone shipments were down 35.4 percent, measured year over year and for the month of November. The drop clashes with a 20-basis-point increase in the Chinese smartphone market. Why?

The trade war? The new phone launches? A hit to margins? Or maybe all of the above?

That remains up in the air. What is not is the data from the Ministry of Industry and Information Technology (MIIT), though the single month of data might be an incomplete story. One month’s data may not paint the whole story. Two months’ data might.

The Credit Suisse findings were echoed by other investment bank research. As reported by CNBC, UBS wrote that timing had “likely impacted” sales in the month.

“If we look at the data over the last five months, which normalizes the impact of launch timing, iPhone shipments are down 5 percent versus 3.3 percent overall market decline,” wrote UBS Analyst Timothy Arcuri.

Paypal vs. the CFBP

PayPal has officially filed suit against the Consumer Financial Protection Bureau (CFPB), alleging the agency has dismissed its arguments that digital wallets do not operate in the same way as reloadable debit cards — and the contention that they do combined with the disclosure rules mandated by the agency force them to make “misleading and confusing” disclosures about its products.

The lawsuit issues from a rule that went into effect earlier this year, the “Prepaid Accounts Under the Electronic Fund Transfer Act (Regulation E) and the Truth in Lending Act (Regulation Z) Rule.” PayPal argues that it has arbitrarily been placed under the jurisdiction of the rules, despite the fact that its purpose it to regulate prepaid or general purpose reloadable cards.

Forcing them under the same disclosure rules as prepaid card products, PayPal maintains, will likely confuse consumers who use digital wallets.

“The resulting regulatory regime is fundamentally ill-suited to PayPal digital wallets and is likely to mislead or confuse consumers,” PayPal said in the filing. “The rule mandates PayPal make disclosures concerning fees that PayPal does not charge and misrepresent the actual fees paid by most customers.”

PayPal is accusing the CFPB of a “category error” and said the bureau cited no reports or evidence that consumers acquire or use the cards or wallets in the same way. The CFPB counter-argues that even though digital wallets are used “to store the consumer’s bank account, debit card, credit card, and/or prepaid card credentials,” they may also be used to store funds, meaning they should be regulated in the same way as the reloadable cards.

“The Bureau thus seized on an occasional and incidental feature of digital wallets to impose on digital wallets a sweeping regulation designed for GPR cards,” PayPal said in the lawsuit.

PayPal has petitioned the court to rule that the rule’s application to PayPal is unconstitutional and that the rule be vacated.