Here's what happened in payments this week


REWARDS WOULD MOST INCENTIVIZE CONSUMERS TO ADOPT A MOBILE WALLET: Apple just announced that the next generation of Apple Pay will sync with users' loyalty cards. But a new survey from CMB shows that consumers planning on using a mobile wallet also desire a rewards program specific to the wallet.

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    44% of likely mobile wallet adopters, or those who haven't made an in-store mobile payment but plan to do so in the next six months, said that a wallet-specific rewards program offered on top of loyalty card acceptance would be a motivating factor.
  • There's less excitement surrounding other value-added features. The second-most popular feature, chosen by 20% of respondents, was the ability for a mobile wallet to be used as a photo ID. Other options captured 11% or less of the participants' interest.

The results show that rewards, in general, can be the most powerful draw for potential mobile wallet users - compatibility with third-party rewards weren't mentioned in the survey, but the assumption is that those rewards programs would also be important to consumers.

The takeaway for Apple, Google and other mobile wallet players is that pushing rewards above other features could be the fastest way to pick up new customers. Moreover, doubling down on rewards by developing a proprietary rewards program could accelerate adoption.

This story originally appeared in this week's PAYMENTS WEEKENDER, a weekly collection of our favorite payments news by BI Intelligence, a premium research service from Business Insider.Learn more about our FREE trial now »

CREDIT KARMA RAISES $175 MILLION AND PLANS TO PIVOT INTO A MONEY MANAGEMENT COMPANY: Credit Karma, a company primarily known for offering people free credit scores, just raised $175 million in Series D funding, money it plans to use to transform its service into a personal finance management platform. The new platform will leverage the troves of data Credit Karma already has to generate specific recommendations for customers. The platform will be able to help someone consolidate their student debt, suggest the best loan package and lender, and could also calculate the optimal credit card for someone to open.


Given the extent of the funding, Credit Karma probably has the resources to actually create a platform this sophisticated. The platform would disrupt a number of areas of finance, from financial advising to money management apps to alternative lenders. For example, Credit Karma will be able to speed up the loan application process because it already has so much of someone's data that it could potentially help banks pre-approve clients. If the platform is linked with a traditional bank, this could reduce some of the pain points consumers have when taking out a loan. This could also erase some of the advantages peer-to-peer (P2P) lenders enjoy, like fast application decisions.

However, if Credit Karma's new platform incorporates both the legacy institutions and alternative lenders, both types of companies could benefit from greater borrower demand. In essence, more people might actually apply for a loan if it takes fewer steps and less effort.

CONTACTLESS CARD LIMITS COULD STUNT APPLE PAY'S GROWTH IN THE UK: There are a few factors that could hurt Apple Pay's launch in the UK next month, based on the information Apple Pay provided on a new FAQ page for UK merchants:

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  • Some Apple Pay transactions will be limited to £20: Although a contactless payments infrastructure is well-developed in the UK, merchants with industry standard contactless terminals will have to treat Apple Pay transactions as contactless card payments, which are currently capped at £20. This will limit the scenarios in which a customer could make an in-store Apple Pay payment, which ultimately could hamper Apple Pay's initial growth in terms of transaction volume. The contactless card limit is set to rise to £30 in September, but this is still very low.
  • Merchants will have to perform costly upgrades to circumvent the transaction limit: To accept Apple Pay transactions without a limit, UK merchants will have to upgrade their terminal hardware to include payment processing technology that can properly accept biometric-authenticated payments. This costly undertaking could discourage merchants from adopting new points-of-sale, which means that Apple Pay would continue have a transaction limit at some locations. This would again slow down initial adoption.

UK lawmakers set a contactless limit in part because the security of contactless payments was still unproven. But Apple Pay is more secure than a physical contactless payment card because it uses biometric technology like a fingerprint to authenticate transactions. Given that Apple Pay transactions are more secure, it's possible that many merchants will want to upgrade their systems to support those types of payments.


Although it's unclear exactly how many UK merchants will have to comply with the contactless limits for Apple Pay, the inconsistency of transaction limitations between merchants could disincentivize consumers from adopting the wallet because the user experience will not be uniform. For example, if a customer walks up to a storefront and they believe there's a chance the store might limit transactions, they might be hesitant to try Apple Pay there.

One factor that could mitigate this issue is the early excitement that merchants feel towards the mobile wallet. A recent survey showed that one-quarter of UK merchants are already considering adopting Apple Pay. This could be partially the result of Apple Pay's increasing visibility in the US.

MILLENNIALS ARE CHECKING THEIR FINANCES OFTEN: The vast majority of millennials are keeping close tabs on their financial accounts, a new survey from Goldman Sachs Global Investment Research reveals.

  • BII Rate Millennials Check Finances
    A majority check their finances at least once per week:
    Of the respondents, 30% said they check their finances every day, and 37% said they check their finances at least once per week. This means more than two-thirds of millennials monitor their accounts on a weekly basis.
  • The remaining one-third of millennials check their accounts at various rates. Fourteen percent check their finances every few weeks, and 6% check in once a month. Only 7% claim to "never" track their finances.

Millennials' financial engagement is high likely because accounts are now easier than ever to access via mobile banking apps. Many surveys indicate that mobile banking adoption among this generation is high; therefore, millennials likely enjoy the convenience of accessing their account information with just one click.

Although it's unclear what all "checking" finances entails, assuming it implies a quick overview of things like balances and transaction history, this data lends credibility to the theory that although mobile banking visits are rising quickly, these visits are low in value from a bank's perspective. Checking the status of an account doesn't earn a bank any revenue, so if a large portion of mobile banking visits are routine, banks may not reap as many benefits of mobile banking as some believe.


Conversely, there is evidence that branch banking visits are becoming higher in value on average. For example, Chase Bank customers are choosing to visit branches for more complex financial advice, like opening a mortgage, taking out a loan, or inquiring about retirement or business banking, a rep from Chase told BI Intelligence.

BRANCHLESS, STARTUP UK BANK ACQUIRES BANKING LICENSE: Atom Bank, a UK-based startup bank that plans to launch later this year, has attained a formal banking license from the Bank of England, which will enable it to legally hold deposits, provide funds, and conduct other traditional banking activities. Atom Bank will only build out a mobile and online channel to provide its services, and won't operate any branches. To give customers access to cash, it will partner with an existing ATM network that will enable customers to deposit checks or withdraw cash from any ATM in that network. Atom Bank customers will be able to open their accounts via mobile using biometric authentication, such as a fingerprint. The company will offer a wide array of financial products, including commercial and personal accounts as well as loans and mortgages.

The branchless model has already been proven in the US: Ally Bank has been a prominent force in the financial world for years, and offers banking through only mobile and desktop. Therefore, it incurs lower costs than a comparable bank with a branch network. It passes on these cost savings in the form of more favorable interest rates. For instance, the Annual Percentage Yield (APY) of its savings account is 0.99%, much higher than the industry average.

MASTERCARD ISSUING PAYMENT CARDS TO ECOBANK CUSTOMERS IN 32 AFRICAN COUNTRIES: MasterCard has forged a partnership with Ecobank, one of the largest continental banks in Africa, that will allow MasterCard to issue debit, credit, and prepaid cards to Ecobank banking customers across the region. Ecobank will also be giving thousands of merchants MasterCard's mobile point-of-sale devices. MasterCard will also provide Ecobank's retail customers with a payment gateway network that will allow them to accept payments online. The goal of the overall partnership is to help upgrade Africa's payments ecosystem, giving African citizens more ways to purchase things. The companies are also aiming to improve financial inclusion in the continent by encouraging citizens to open bank accounts with the new payment cards.

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In many cases, financial development in Africa has been driven instead by mobile money platforms, which rely on mobile network operator (MNO) systems instead of card networks like MasterCard to move funds around. For example, in Kenya, which has a thriving mobile money network, 75% of the adult population has a bank account.


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