There are a lot of headlines in the payments world. PaymentsNews is Glenbrook’s curated news feed of the headlines that matter most every day, but we’ll readily acknowledge that it can be a lot to digest. That’s why we’re introducing PaymentsPost, a month-end roundup of the news items that got us talking as a team along with some commentary about why we think they’re particularly important to the direction of the industry. Each post is written by an individual member of the Glenbrook team and reflects that individual’s point of view; Bay Area-based consultant Justin Pituch is taking the lead this month.
Welcome to our first installment. We hope you enjoy it, and we welcome your feedback.
Item 1: FIS announces Worldpay spinoff
FIS acquired Worldpay in 2019, hoping to find synergy between FIS’s core processing and card issuing business and Worldpay’s merchant acquiring capabilities. Now it’s backing away. Earlier this month FIS announced that it was spinning off Worldpay, taking an almost $18 billion write-down on its investment. The announcement shows the difficulty faced by acquirers in a market that’s seen tremendous change driven by modern, tech-forward challengers.
But the story isn’t that cut and dry. It might be tempting to conclude that incumbent acquirers are disadvantaged, but consider the somewhat analogous case of Fiserv’s First Data acquisition. Fiserv, historically a core processing and card issuing player like FIS, also acquired an incumbent acquirer, First Data, in 2019. Fiserv has fared relatively well since then, showing that despite their similarities FIS and Fiserv differed in their ability to adapt to a changing market. Keep your eyes peeled for an upcoming PaymentsViews blog post detailing how these comparable cases have produced very different outcomes.
Item 2: Nacha cites B2B as driver of ACH growth
Nacha releases ACH volume numbers each February. In 2022, ACH volume grew 3% and the value of ACH payments rose 5.6%. But those numbers are down from 2021, when volume growth clocked in at 8.7% and value growth was 17.4%. Still, the 2022 growth numbers were helped by Same Day ACH and B2B, in part thanks to the Same Day ACH transaction limit being raised from $100,000 to $1 million in March of last year. Nacha also cited increasing B2B payments as a key driver of both Same Day ACH and standard ACH growth.
The growth in B2B ACH payments points to continued digitization in the historically slow-moving U.S. B2B payments environment, as well as the value of faster payments to corporate treasury practitioners. Given both of these points, I’m eager to see the impact of instant payments on the B2B space, as they combine speed with native ISO 20022-based data handling capabilities. TCH RTP continues to grow and FedNow is launching later this year, but it’s still too early to say how they will impact the U.S. B2B payments landscape. In the meantime we invite you to participate in the Faster Payments Council’s 2023 Faster Payments Barometer Survey here.
Item 3: RBI and MAS announce tie up
We’ve observed an increase in the attempt to facilitate cross-border instant transfers. One such approach is bilateral linkages between national instant payment schemes, the latest of which is the marriage of UPI and PayNow. Another such example was the linkage between Singapore and Thailand’s instant systems, which connected in 2021.
An alternative approach to facilitate cross-border instant transfers is the development of regional payments schemes, like the Southern African Development Community’s TCIB scheme which launched last year.
Cross-border transfers have long been a difficult use case to enable. We are paying close attention to how these approaches build efficiencies and scale.
Those are our stories for February. Look for a second installment next month. Get in touch with us if you have any questions until then.
All the best,
Justin Pituch and the Glenbrook Team