One of the companies that has been thriving of late thanks to the boost in online retail is Shopify, which is now planning to add some powerful new features to its suite of merchant services. As readers will be aware, Buy Now, Pay Later (BNPL) has been a runaway success in Australia and a growing number of other markets. In the United States, Klarna, Square and PayPal all currently offer the facility. In common with standard practice, Shopify's forthcoming BNPL version, Shop Pay Instalments, will allow consumers to divide the amount due into four interest-free payments. Shop Pay Instalments will go live later this year. Another ambitious addition, set to launch imminently and expand into the United States later in the year, is Shopify Balance, a banking account for small business with no fees or minimum balance requirement for opening. Alongside cashflow management tools and bill payment facilities, merchants will be given a debit card in both physical and virtual forms. As the Wall Street Journal noted earlier this week, with a market value now close to $100 billion, Ottawa-headquartered Shopify is now worth about the same as IBM.
Flexibility is the new order of the day for market leaders such as American Express, who this week dramatically enhanced their member relief programme to temporarily lower interest rates and monthly payment expectations as well as introducing measures to preserve credit ratings. For enrolled card members who "make required payments," says the company, "we'll keep reporting their account to the credit bureaus as current, or if it's past due it will not be reported as any further past due. Card members enrolled in the short-term payment plan, who are current on their payments, can continue making purchases with their card up to a reduced limit. They will also continue to earn and can redeem rewards." Forty years ago, a British domestic scheme came up with a winning slogan for its credit card: "your flexible friend". Now Amex is bringing that promising description to life.
It has been a long time since European banks have enjoyed the kind of extended period of business-building and optimistic investment enjoyed by, say, their Australian counterparts for many years. But a curious thing about being a lender in conditions constantly beset with economic and financial pressures is that you become quite good at dealing with crises. European banks have been faced with one challenge after another for over a decade now, most recently struggling to turn a profit in the ongoing low interest rate environment. But that resilience might now set them in good stead as more loans become delinquent and the failure rate among small businesses seems set to rise. According to the European Banking Authority (EBA), the region's banks have built up capital buffers of over €430 billion that "should be sufficient" for short-term protection at least, although the time will come when states may have to step in with further funding: a move that will almost certainly be unpopular, but as EU citizens know better than anyone, a necessary recourse when the chips are down.
Beijing has revealed that the central bank's much-heralded digital yuan should be in circulation on registered smartphones at Chinese cities hosting the 2022 Winter Olympics. Given the current conditions through which we are living, it is hard to know which prospect seems the more fantastical: a central bank digital currency on your phone or an international sporting event. A few weeks back, screenshots revealed that the prototype app looked, to all appearances, not unlike Alipay's offering. But an article in the Nikkei Asian Review highlights a key difference in user experience: because the digital yuan effectively disintermediates the banks, it will be possible to tap one phone against another to transfer money, in essence replicating the experience of handing somebody a banknote. Another key difference the newspaper notes: "The app will compete directly with Alipay and WeChat Pay – but with the difference that stores will be legally required to accept it given the digital yuan's status as legal tender, granting it an advantage over private-sector rivals".
To end, links to some other stories of interest this week...