As the second week of April swings into full gear, Americans will divide into exactly three groups. The first group did their taxes some time ago and view this particular run of days as nothing new or special. The second group just spent their entire weekend searching for their relevant tax paperwork and have plans for this year’s extra weekend involving actually filing their taxes/having their accountant file their taxes — quietly cursing themselves for not taking care of this earlier.
The third group has forgotten all about taxes and will likely move to do something about filing late, in a month or so when it occurs to them there was something they forgot to do in mid-April. If you are a member of the third group that just joined the second group, you’re welcome.
At any rate, between tax self-satisfaction/panic/amnesia, the presidential race that seems increasingly like it was created by a frustrated playwright, an international security situation best described with the word “terrifying” and “American Idol” going off the air at long last, we understand if your bandwidth is a little stretched.
Which is a shame because there was a lot to digest in payments in the last seven days: Google dropped its debit card; Jeff Bezos accused non-Amazon prime users of being irrational; PayPal celebrated its tenth year in mobile and broke up with North Carolina over its stance on gay rights; and Trump Hotels got hacked.
And that was just the lighter stuff. As for the heavies, well…
Amazon Pay For Everyone
When listing big payments players, it is easy enough to leave Amazon off the list, since payments is more a means to its bigger end of enabling eCommerce inside of its own platform.
But, as Amazon VP of External Payments Patrick Gauthier hinted a few weeks ago at Innovation Project 2016, Amazon is getting amped up to take its yellow Pay with Amazon one-click buy button outside of its own walled garden.
“A payment is a bit like the electricity of commerce,” Gauthier then mused, “but the focus has to be commerce.”
Consumers don’t care much about how payments work or why — only that they work and always.
And that, Gauthier noted, will become more prevalent as payments move to the edges of traditional points of sale into (and inside) of other ecosystems, like cars, appliances, other apps and the eponymous plastic “Dash” buttons of which Amazon now has 100.
Amazon believes it can ride that wave of more invisible, more efficient background payments with Amazon Payments Partner Program. The goal? Make it easy for third parties to enable the familiar yellow checkout button so that their end users — the consumers — experience simple, one-click, secure checkout.
“The Amazon Payments Partner Program provides Partners with the tools and resources needed to extend the trust and convenience of the Amazon experience to their merchant customers,” Gauthier said. “We are working together across geographies and industries to help merchants grow and create experiences that delight customers throughout the shopping journey.”
The Amazon Payments Partner Program offers eCommerce platform providers and developers options, such as solution pre-integration and best practices, to make it easier for merchants to adopt the solutions. Amazon also announced that merchants can receive exclusive benefits and services from the program, including knowledge-sharing and white glove integration services. The program is free to participate in and available by invitation in the United States, Germany, the United Kingdom and Japan.
“Checkout is not where a lot of value is created these days. Yes, you can streamline it, etc. But, ultimately, what [providers] want is to enable the consumer to take his or her identity — and the commerce dimension of identity — where they want to go. And to use it with the same degree of trust and convenience everywhere they want to go,” Gauthier said.
“The notion of commerce identity that enables people to go where they want to go and to use the tools that they are familiar with,” he added.
The Costco Card Is Coming! The Costco Card Is Coming!
While store-branded cards typically don’t stir up much in the way of human passion, the coming Costco card has certainly come as close as imaginably possible. Granted the “birth” of the soon-to-be-launching Costco-Visa co-branded product came about as a result of the rather spectacular “death” of the American Express-Costco relationship that preceded it. But even discounting that drama, the Costco card is generating buzz.
Is that buzz merited?
A large chunk of the excitement seems to be coming up as a result of the rewards package included with the card, which is rather stepped up from the previous incarnation.
While the old American Express-Costco store card offered 3 percent cash back on gas (up to $4,000 annually), 2 percent back on restaurants and eligible travel and 1 percent on purchases made outside of the wholesale retailer, the new Citi-Costco card ups the ante: Members will now enjoy 4 percent back on gas (up to $7,000 annually), 3 percent on restaurants and travel, 2 percent on all purchases made at Costco and 1 percent everywhere else.
And since Costco only requires a $55 membership fee to apply for the “Costco Anywhere Visa Card by Citi,” the move has some analysts at NerdWallet calling it a masterstroke of new consumer acquisition tools.
“We believe the improved rewards program has strong potential to drive this card to top of wallet for many consumers, which should also benefit Costco,” Robert Drbul, analyst at Nomura Securities, explained in a research note via Fortune.
As for the savings, according to ValuePenguin, when compared to another of Citi’s Double Cash cards (1 percent cash back on all purchases plus an additional 1 percent when those are paid off) instead, Costco nets $96 on gas annually as opposed to $48 and $83 on restaurants as opposed to $55. Interestingly, on groceries, the cards tie at $79 (but only if consumers do all their grocery shopping at Costco). If consumers aren’t diehards for Costco, the savings aren’t quite as impressive.
Which makes sense, considering Costco has thrived on its closed membership business model throughout the years. And while the base $55 fee will let anyone join the club, the razzle-dazzle surrounding its new card may not be as industry-changing as first thought, so much as a very nice perk for the already inculcated.
Alternative Lenders Unite!
They say everything is easier when one takes it on with a partner, and it seems that marketplace lenders are deciding to adopt that particular old adage of wisdom.
The CEOs of Funding Circle, Lending Club and Prosper have announced the launch of the Marketplace Lending Association (MLA).
“As an industry, there’s not one specific issue we’re particularly worried about — the space is already heavily regulated, with borrower protections on one side and securities rules on the other,” said Sam Hodges, cofounder and U.S. managing director of Funding Circle, which is based in London.
Between the three primary players in the association, about $20 billion has been loaned out, and analysts predict that, by 2020, the marketplace lending sector could represent assets totaling around $122 billion.
The new association is aimed at promoting responsible business practices and “sound public policy.”
“But it is really important to be in active dialogue with regulators to provide a forum for thoughtful discussion as the industry develops. Specific regulation [for the marketplace lenders] could be a healthy thing,” Hodges added.
Healthy or not, the coming regulations are almost a certainty.
The Office of the Comptroller of the Currency said last week it was seeking comments on a whitepaper on “responsible innovation” in marketplace lending. The FDIC warned mainstream banks about buying marketplace debt, and the CFPB has set up a special desk for marketplace lending-based complaints.
Lenders are responding by beefing up their compliance teams and adding board members with financial regulation experience and connections: Sheila Bair, former FDIC chief, joined Chicago-based lender Avant’s board this week; Raj Date jumped from the CFPB to the board of Prosper; and former Treasury Secretary Larry Summers sits on Lending Club’s board.
MLA is getting off the ground this week at LendIt, an annual industry event in San Francisco. So far, the idea has gotten some good buzz from industry members.
“Right now, we’re lining up against various agencies individually,” noted David Klein, chief executive of CommonBond, a student loans specialist serving some 14,000 borrowers. “We’re telling our stories uniquely, rather than combined.”
So, what did we learn this week? Apparently, we are entering the spring of the partnership and pair-up. Amazon wants to play nicely with other merchants and make their payments process smoother, Citi and Costco are teaming up to capture loyalty and marketplace lenders have decided to stand together, rather than risk falling to regulations apart.
Isn’t it nice when we can all just get along?