The announcement marks a significant shift for the retailer, which has traditionally focused on its vast physical and e-commerce platforms. With the majority-owned fintech subsidiary, One, now offering installment loans, Walmart is expanding its financial offerings and setting the stage to disrupt the existing BNPL landscape dominated by players like Affirm and Afterpay.

A report on CNBC discusses Walmart’s entrance into the Buy Now, Pay Later Arena:

Strategic Expansion Beyond Retail

“Walmart is not just a retail giant anymore; it’s moving into high-margin businesses,” CNBC.com’s Melissa Repko explained during a discussion. The retailer is adopting a strategy similar to Amazon’s by focusing on its core retail operations and exploring more profitable sectors such as advertising and financial services. The introduction of installment loans through its fintech arm signifies Walmart’s intent to tap into the lucrative financial industry, offering consumers new ways to finance their purchases directly through Walmart, which could enhance customer loyalty and increase sales.

This shift towards financial services underscores Walmart’s intention to maximize profits and reduce reliance on low-margin retail sales. By creating its BNPL service, Walmart aims to retain more control over its financial ecosystem, potentially offering more competitive rates and terms than external providers. This could improve profit margins and attract a new demographic of consumers looking for flexible payment solutions.

Impact on Existing Partnerships

The new initiative by Walmart’s fintech One is raising concerns among its current partners. “With Walmart building out its technology to support BNPL loans, partners like Affirm might soon find their relationship with the retailer in jeopardy,” added CNBC’s Hugh Son. As Walmart moves to integrate these services in-house, it might reduce its reliance on third-party financial technology providers, which could reshape current business alliances and affect the competitive dynamics within the BNPL space.

Particularly troubling for existing partners like Affirm is Walmart’s potential to fully replace its services with its solutions. If Walmart’s in-house BNPL offerings gain traction, it could significantly reduce its partnerships with specialized fintech firms, which rely heavily on the volume generated by such large retail clients. This strategic shift could force these companies to rethink their business models as Walmart aims to consolidate more of its financial operations internally.

Future of Walmart’s Fintech Ventures

Speculation is growing about the potential future expansions of Walmart’s fintech capabilities. Analysts are curious whether One will evolve to offer branded credit cards, further enhancing Walmart’s financial service offerings. “It’s too soon to tell,” remarked a CNBC analyst during the interview, highlighting the cautious approach Walmart is taking in unveiling its complete fintech strategy. However, the potential for One to encompass features such as credit issuance is significant, considering Walmart’s vast retail network and customer base.

Integrating these financial services within Walmart’s ecosystem could be a game-changer for the retailer and its customers. By offering a seamless financial experience under the Walmart umbrella, One could enhance customer retention and increase average spend per visit. This strategic move aligns with Walmart’s long-term vision to remain a dominant player in the retail sector and establish a significant foothold in the financial services industry.

Walmart’s History and Strategy in Financial Services

Walmart’s foray into financial services is not new; the company has been attempting to penetrate this sector since the 1990s. Despite facing regulatory hurdles and opposition from banking lobbyists, Walmart has persisted in its efforts to integrate financial services into its offerings. This persistence reflects the retailer’s understanding of the financial sector’s potential profitability and its desire to diversify its revenue streams beyond the low-margin retail industry.

Historically, Walmart’s attempts to establish a banking division have been thwarted by regulatory challenges. However, the landscape appears to be changing as Walmart employs innovative strategies to circumvent these barriers. By partnering with Ribbit Capital, a renowned fintech VC firm known for its investments in Affirm and Robinhood, Walmart is well-positioned to overcome previous obstacles. This partnership underlines Walmart’s commitment to enter the financial services market and innovate within it.

Understanding 3D Secure Mandates

The 3D Secure protocol, initially developed by Visa under the name Verified by Visa, is an authentication protocol designed to enhance the security of online transactions. It provides an additional layer of verification for cardholders, thereby reducing the risk of fraudulent transactions. Over time, other major credit card networks, including MasterCard, American Express, and Discover, have adopted their protocol versions, such as MasterCard SecureCode and American Express SafeKey.

The 3D Secure mandates are regulatory requirements set forth by various payment networks and regulators. They require merchants to implement 3D Secure authentication for online transactions. These mandates aim to reduce fraud, enhance customer confidence, and create a safer e-commerce environment. While the specifics of the mandates may vary across regions, their overarching objective remains the same: increasing security for online transactions.

The Need for 3D Secure Mandates

The primary driver behind implementing 3D Secure mandates is the escalating problem of online fraud. As e-commerce thrives, fraudsters increasingly target online transactions, leading to substantial financial losses for merchants and consumers. By adding an extra layer of protection through 3D Secure authentication, merchants can mitigate these risks and verify the legitimacy of cardholders, thus bolstering security in the online shopping ecosystem.

Moreover, 3D Secure mandates play a crucial role in fostering consumer trust. In an era where data breaches and cyberattacks are all too common, consumers are more discerning about where they shop online. Merchants who prioritize security and implement 3D Secure authentication send a clear message to their customers: their financial information is safe and protected.

3D Secure mandates help merchants comply with various regulatory requirements, particularly in regions like the European Union. For instance, the revised Payment Services Directive (PSD2) necessitates strong customer authentication (SCA) for most online transactions. Implementing 3D Secure authentication is one way merchants can meet this requirement and ensure compliance with regulatory standards.

Navigating Compliance with 3D Secure Mandates

For merchants looking to comply with 3D Secure mandates, several key steps are essential:

Choose the Right 3D Secure Solution: Select a suitable 3D Secure solution that supports the latest protocol version (3D Secure 2.0) and offers improved customer experience and risk-based authentication.

Integrate the Solution: Integrate the chosen 3D Secure solution with your e-commerce platform, following the integration guidelines provided by the solution provider.

Inform Your Customers: Communicate the added security benefits of 3D Secure authentication to your customers and provide clear instructions on completing the verification steps during checkout.

Monitor and Optimize the Authentication Process: Continuously monitor the authentication process, utilize available analytics and reporting tools to identify areas of improvement, and optimize the risk-based authentication process in collaboration with your 3D Secure provider.

Stay Updated on Regional Mandates: Stay informed about the latest developments in 3D Secure mandates in your operating regions, subscribe to industry newsletters, join relevant forums, and maintain open lines of communication with your payment gateway or solution provider.

3D Secure mandates represent a significant step towards securing the rapidly evolving e-commerce landscape. By proactively complying with these mandates, merchants can protect their businesses and customers from fraud, build consumer trust, and effectively meet regulatory requirements. With the right approach and the appropriate 3D Secure solution, merchants can navigate the compliance landscape easily and confidently, ensuring all stakeholders a safer and more secure online shopping experience.

Understanding Your Market

The cornerstone of successful merchandising lies in understanding your target market. Through meticulous research and analysis of consumer needs, preferences, and trends, merchants can tailor their offerings to meet the demands of their clientele. By staying abreast of industry news and consumer behavior, businesses can ensure relevance and competitiveness in a rapidly evolving marketplace.

Building Strong Relationships

Establishing robust relationships with suppliers, customers, and partners is paramount to long-term success. Effective networking, collaboration, and transparent communication foster mutually beneficial partnerships that drive growth and innovation. By prioritizing honesty, reliability, and integrity, merchants can cultivate trust and loyalty among their stakeholders.

Providing Excellent Customer Service

Exceptional customer service is the bedrock of customer satisfaction and loyalty. Prompt response to inquiries and complaints, personalized support, and proactive engagement are vital for nurturing lasting relationships with customers. By soliciting feedback and leveraging it to enhance products and services, merchants can continuously improve their offerings and strengthen customer loyalty.

Maximizing Sales

Optimizing sales channels and leveraging various marketing strategies are essential for maximizing revenue. From online platforms to brick-and-mortar stores, merchants must harness the power of social media, email marketing, and search engine optimization to expand their reach and attract potential customers. Offering secure and seamless payment options instills confidence and trust, thereby facilitating transactions and driving sales.

Effective Tricks and Strategies

Upselling and cross-selling are effective tactics to boost sales and revenue. By offering complementary or upgraded products and services, merchants can enhance the shopping experience and encourage customers to make additional purchases. Discounts, promotions, and loyalty programs are powerful tools for attracting new customers and retaining existing ones, fostering brand loyalty and repeat business.

Strategies for Success

Successful merchants must maintain a keen eye on their finances, monitoring cash flow, expenses, and profits to ensure financial stability and profitability. Adapting to the ever-changing business landscape requires agility and resilience. By staying informed about industry trends, consumer behavior, and emerging technologies, merchants can pivot quickly to capitalize on new opportunities and remain competitive.

Conclusion

Mastering the art of being a merchant is a multifaceted endeavor that requires a combination of skills, strategies, and techniques. By understanding the market, building strong relationships, providing excellent customer service, maximizing sales, and employing effective tricks and strategies, merchants can navigate the complexities of commerce and achieve lasting success in today’s dynamic business environment.

Understanding Payment Risk

Payment risk refers to the potential loss associated with processing credit card transactions. This risk can stem from various factors, including fraud, chargebacks, and regulatory compliance issues. For merchants, classifying their business as low, medium, or high risk can significantly impact their access to payment processing services and the associated costs.

Low-Risk Merchants

Low-risk merchants typically operate in stable, well-regulated industries with low risk of chargebacks and fraudulent activity. Examples of low-risk businesses include brick-and-mortar retailers, restaurants, and personal service providers. Despite their low-risk classification, these merchants still need to remain vigilant, as credit card fraud in the U.S. exceeded $1.9 billion in 2021, according to the Federal Trade Commission.

Medium-Risk Merchants

Medium-risk merchants operate in industries with a moderate degree of regulatory oversight or have a higher rate of chargebacks. Medium-risk businesses include online retailers, subscription-based services, and ticket sales companies. These merchants may encounter more stringent underwriting processes, higher processing fees, or be required to maintain reserve accounts to cover potential losses.

High-Risk Merchants

High-risk merchants often operate in industries prone to regulatory changes, high chargeback ratios, and increased fraud risk. Examples of high-risk industries include gambling, entertainment, e-cigarettes, and telemarketing companies. Securing payment processing services can be challenging for high-risk merchants, as many payment service providers avoid servicing these businesses due to their inherent risks.

The Underwriting Process

For merchants, the underwriting process is a critical risk management strategy employed by payment service providers and acquiring banks. This process involves a comprehensive review of a business’s financial stability, processing history, creditworthiness, and compliance with relevant industry regulations. While rigorous, the underwriting process is necessary for high-risk businesses to secure payment processing services in a compliant fashion.

Compliance and Risk Management

Maintaining compliance with industry regulations is essential for businesses of all risk levels. This includes adhering to standards such as the Payment Card Industry Data Security Standard (PCI DSS) or GDPR. Fraud prevention tools, chargeback management strategies, and secure payment gateways are essential components of effective risk management for merchants.

Practical Tips for Merchants

1. Invest in fraud prevention tools.
2. Proactively manage chargebacks.
3. Stay compliant with industry regulations.
4. Select the right payment processor for your business.
5. Utilize secure payment gateways.
6. Consider implementing 3D Secure authentication for online transactions.
7. Finding the Right Payment Processor

For high-risk merchants struggling to find conventional payment processors, specialized high-risk merchant accounts may provide a solution. These accounts, offered by acquirers willing to accept a greater level of risk, can provide access to vital services tailored to the unique needs of high-risk businesses.

Conclusion

Navigating payment risk is a multifaceted challenge for merchants across all risk levels. By investing in robust fraud prevention tools, staying informed about regulatory changes, and building solid relationships with reliable payment processors, merchants can mitigate risk effectively and ensure the integrity of their payment processing operations. Understanding your business’s risk level is the first step toward implementing strategies to protect against potential losses and maintain a thriving business in today’s digital economy.

Harley Finkelstein, COO of Shopify, discusses how COVID has dramatically sped up the timeline for commerce moving online and has also moved Shopify closer to its goal of becoming the world’s first retail operating system:

Shopify Evolving Into World’s First Retail Operating System

Most people assume that Shopify is an ecommerce provider. We have more than a million stores on Shopify. If you were to aggregate our stores in the US we’d be the second-largest online retailer in America. Of course, we’re not a retailer but we’re a platform. But we now have these great economies of scale that we’re using to level the playing field for entrepreneurs and small businesses. That being said, what really Shopify is evolving into is the world’s first retail operating system. 

What we’re trying to figure out is what do brands and entrepreneurs and retailers need, not just now but in the future? We think the future of retail is retail everywhere. A brand that’s going to be successful in 5, 10 or 15 years from now needs to sell across any platform and across any channel where they have customers. This idea of enabling Shopify merchants to very easily push their products to the Amazon Marketplace or the eBay marketplace or now the Walmart marketplace, that gives them access to a new set of consumers. The idea is that it all feeds back in one centralized back-office, the retail operating system, which is Shopify. 

Then we’ve gone ahead and asked what else can we do for these merchants? Can we do capital? We’ve now given out about a billion dollars worth of cash advances and loans to small businesses. We’re doing fulfillment and we’re doing shipping. We’re increasing the scope and the relationship that we have with the million stores on Shopify. This is allowing them to become category leaders.

COVID Speeds Up The Ecommerce Revolution

From our view, it seems like the commerce world that would have existed in the year 2030 has really been pulled into the year 2020 (as a result of the COVID crisis). We’ve seen ecommerce as a percent of total retail go from 15 percent to 25 percent in the last three months. That’s the same growth rate that we’ve seen over the last 10 years. What really has emerged here is sort of this tale of two retail worlds. On one side you have these resilient retailers that are doing great, they’re pivoting, and they’re expanding their businesses. On the other side, you have these resistant retailers who have not made it. In many ways, it’s probably the most exciting time for retail in a very long time. 

We talk a lot about these direct to consumer brands that are becoming category leaders. The Allbirds and the Gymsharks who started on Shopify when they were very small and have grown to become the incumbents in their industry. Every 25 seconds a brand new entrepreneur makes his or her (products) for sale on Shopify. We talk a lot about those new startups, those new DTC brands. But actually, what we’re also seeing on Shopify are companies like Lindt Chocolate or Heinz ketchup or Chipotle. They are signing up for Shopify and basically from like five days from contract to launch they are completely changing their businesses. 

This resiliency isn’t simply in the hands of just the smallest of brands. Big companies are also beginning to think a lot more about how to stay resilient in this time. They’re moving well beyond ecommerce or thinking about offline commerce now. They’re thinking about how do they sell across social media? How do they sell across different marketplaces? So no, I don’t think it’s too late (to enter ecommerce) but I do think they have to rethink their strategies.

Farfetch plans to use their IPO windfall to dramatically improve their technology which they see as the best way to improve the consumer experience.

Farfetch Founder and CEO José Manuel Ferreira Neves recently discussed Farfetch and the online luxury brand industry on Bloomberg:

Online Luxury is Growing 25 Percent a Year

It’s a very unique opportunity. You have this amazing global industry. It’s $300 billion, the personal luxury goods industry and only 9 percent is online. There are two opportunities here really. One is the growth of online luxury which is going to grow to 25 percent a year for the next seven years. This is a $100 billion opportunity shift in online luxury.

The big question is how is technology going to help brands and retailers really improve the consumer experience in the physical store. This is something at Farfetch that we are very passionate about.

China is an Incredible Opportunity for Online Luxury

China is a very exciting opportunity. Chinese citizens are at the onset of the luxury industry, whether they shop at home or when they’re shopping abroad. Online penetration is very low in China so this means that there is an incredible growth runway for Farfetch in the territory.

That led to our partnership with JD.com where we have our own team. We have the Farfetch China app and website, we have local customer service, local payment systems, and local marketing. It’s a truly localized service. That is what’s driving incredible growth to the Farfetch brand in that region.

José Neves, founder and CEO of @farfetch, told us about the company’s grand ambitions for China at the WWD’s Men’s Wear Summit this week. https://t.co/MrMj7y5VCG

— Jing Daily | 精日传媒 (@JingDaily) March 29, 2018

WeChat is an amazing app with over 900 million users. It is the Instagram, plus WeChat, plus PayPal, etc. of China in one app. That is very powerful and very interesting. Now with our acquisition CuriosityChina we are powering the retail presence of 80 luxury brands. We think that is very interesting for the industry and we think that is probably something that we will see for the western world.

How Farfetch plans to capture the growth in online luxury e-commerce https://t.co/t9HI0igMFV pic.twitter.com/RjvAel79li

— Bloomberg TV (@BloombergTV) September 21, 2018

Brands Now Using Social and Digital Marketing Extensively

I think brands move cautiously and they choose their marketing channels very carefully. As these newer channels have developed the brands have adapted to them and their now using social media and digital media extensively to create desire, to drive discovery of new products obviously transactions as well.

It’s a gradual pace but it’s really exciting that were at that inflection point where the brands see this as a tremendous opportunity.

As part of the partnership between the two companies, “Coinbase will use Google Cloud’s powerful compute platform to process blockchain data at scale.” Coinbase will also benefit from Google’s fiber-optic network, using the speed of the service to help power machine-learning crypto insights.

Google plans to allow select customers to pay for cloud services via crypto, with customers in the Web3 space being given the opportunity first.

“We are excited Google Cloud has selected Coinbase to help bring Web3 to a new set of users and provide powerful solutions to developers,” said Brian Armstrong, Co-founder and CEO of Coinbase. “With more than 100 million verified users and 14,500 institutional clients, Coinbase has spent more than a decade building industry-leading products on top of blockchain technology. We could not ask for a better partner to help execute our vision of building a trusted bridge into the Web3 ecosystem.”

“We want to make building in Web3 faster and easier, and this partnership with Coinbase helps developers get one step closer to that goal,” said Thomas Kurian, CEO of Google Cloud. “We’re proud Coinbase has chosen Google Cloud as its strategic cloud partner, and we’re ready to serve the thriving global Web3 customer and partner ecosystem. Our focus is making it frictionless for all customers to take advantage of our scalability, reliability, security, and data services, so they can focus on innovation in the Web3 space.”

The Digital Payment Playing Field

Cryptocurrencies have emerged as significant players in digital payments. These digital currencies, housed on blockchain technology, include Bitcoin, Ethereum, and Tether. By 2023, the value of worldwide crypto payments reached $9.28 billion. The volume of global payments for Non-Fungible Tokens (NFTs), a type of crypto token, exceeds $1 billion. Blockchain technology also enables smart contracts that are autonomous, irreversible, and support unmodifiable payments, improve safety and fairness in various industries, such as casinos.

Central Bank Digital Currencies (CBDC) are revolutionizing the landscape of fiat currency. Eleven countries adopting digital forms like DCash in the Eastern Caribbean and e-CNY in China. CBDCs are under research in 46 countries and are in advanced planning stages in fifty-three countries. They signify a significant shift, especially in the online gambling sector, where 26% of people globally gamble online daily, showcasing the widespread adoption and acceptance of this digital transformation.

PayPal Casino Payments are another innovation in the realm of digital transactions. These are legal in specified areas, including Europe, India, Ireland, Japan, and North America. They depend on elements like BankID, Trustly, and Plaid. These payments not only augment the fluidity of transactions but also illustrate the extensive penetration of digital payment methods across various global territories. The average RTP rates by game type depicting promising prospects.

Future Trends

Predictions of payment growth from 2020 to 2025 depict a vibrant future, with almost all global territories experiencing increases in payment revenue. APAC is expected to increase 42%, North America 28%, and LATAM 40%. These predictions underscore the widespread growth of digital payment solutions, subsequently show a decline in physical and paper payments.

Today, diverse ways to send and receive money online have been established. This includes digital wallets like Cash App, PayPal, and Venmo, which should constitute 53% of e-commerce transactions by 2025. The versatility of options available—account-to-account transfers, credit or debit card payments represent 32% of payments. Digital wallets represent 49%, depict the dynamism and the varying preferences in the evolving payment playing field.

By 2030, cashless transaction volumes are expected to more than double. This reiterates the significant strides in digitization and the increasing obsolescence of cash. The shift to digital platforms is not merely a transition; it is a paradigm shift designed to meet the evolving needs of the modern consumer. This is vividly demonstrated by the external factors shaping our new digital payment environment and the reliance on advanced, secure, and real-time payments.

In Conclusion

The future of payments in the digital age is steering towards a more integrated, secure, and advanced direction. The rise of crypto and the advent of Central Bank Digital Currencies bring change to diverse digital wallets. Innovations include PayPal Casino Payments show the nature of the market. As the realms of technology and finance become more involved, the global payment market is bound become more complex. See more about the future of digital payments in the visual deep dive below:

Esther Crawford was head of Twitter Payments, putting her in charge of Twitter Blue. According to Platformer’s Zoë Schiffer, Crawford is the latest to be purged from Twitter since Elon Musk’s takeover.

Crawford’s departure is especially surprising since she was viewed as a Musk loyalist. in fact, she was one of those employees that answered Musk’s call to fully commit to the company.

The Verge’s Alex Heath says the layoff extends to most of “product org.”

Crawford’s departure makes one thing crystal clear: No one is safe in Musk’s Twitter.

According to Bloomberg, JPMorgan is experimenting with face and palm recognition as a way for users to identify themselves and make purchases. The pilot program is rolling out to a variety of select merchants, including both brick-and-mortar stores and a possible Formula 1 race in Miami.

“The evolution of consumer technology has created new expectations for shoppers,” Jean-Marc Thienpont, head of omnichannel solutions for JPMorgan’s payments business, said in the statement. “Merchants need to be ready to adapt to these new expectations.”

Customers will be able to enroll their face or palm via an in-store process, paving the way to use their biometrics from that point forward. JPMorgan is also making it possible to link other credit cards and payment methods rather than locking customers into JPMorgan-only cards.

“Being able to roll out this new biometrics-based payments scheme would enhance the race-day experience for our guests, as they will enjoy a new, faster checkout process,” Ramon Peneda, chief information officer for the Formula 1 Crypto.com Miami Grand Prix this year, said in the statement.

Cryptocurrency and blockchain tech are in the process of revolutionizing a range of industries, although none as much as the finance market. JPMorgan has started using blockchain for collateral settlements, Mastercard has partnered with Bakkt to support crypto, and now American Express is getting in on the action with its own crypto rewards credit card, in partnership with Abra.

According to TechCrunch, the company has not revealed what cryptocurrencies will be supported, but Abra founder and CEO Bill Barhydt told the outlet that customers will eventually be able to choose from multiple different cryptocurrencies.

American Express customers wanting to take advantage of the crypto rewards will need to be registered with Abra, where they will be able to use the company’s exchange to swap rewards for a variety of cryptocurrencies.

“Eventually, we’re also working on a solution that will allow you to use your existing crypto balance to affect your credit line, which is something we’ll probably launch in the future. I think that’s a big benefit because a lot of crypto holders are kind of penalized when it comes to banking and credit,” Barhydt said.

The new card is expected launch in the latter part of 2022.

Harley Finkelstein, COO of Shopify, discusses how COVID has dramatically sped up the timeline for commerce moving online and has also moved Shopify closer to its goal of becoming the world’s first retail operating system:

Shopify Evolving Into World’s First Retail Operating System

Most people assume that Shopify is an ecommerce provider. We have more than a million stores on Shopify. If you were to aggregate our stores in the US we’d be the second-largest online retailer in America. Of course, we’re not a retailer but we’re a platform. But we now have these great economies of scale that we’re using to level the playing field for entrepreneurs and small businesses. That being said, what really Shopify is evolving into is the world’s first retail operating system. 

What we’re trying to figure out is what do brands and entrepreneurs and retailers need, not just now but in the future? We think the future of retail is retail everywhere. A brand that’s going to be successful in 5, 10 or 15 years from now needs to sell across any platform and across any channel where they have customers. This idea of enabling Shopify merchants to very easily push their products to the Amazon Marketplace or the eBay marketplace or now the Walmart marketplace, that gives them access to a new set of consumers. The idea is that it all feeds back in one centralized back-office, the retail operating system, which is Shopify. 

Then we’ve gone ahead and asked what else can we do for these merchants? Can we do capital? We’ve now given out about a billion dollars worth of cash advances and loans to small businesses. We’re doing fulfillment and we’re doing shipping. We’re increasing the scope and the relationship that we have with the million stores on Shopify. This is allowing them to become category leaders.

COVID Speeds Up The Ecommerce Revolution

From our view, it seems like the commerce world that would have existed in the year 2030 has really been pulled into the year 2020 (as a result of the COVID crisis). We’ve seen ecommerce as a percent of total retail go from 15 percent to 25 percent in the last three months. That’s the same growth rate that we’ve seen over the last 10 years. What really has emerged here is sort of this tale of two retail worlds. On one side you have these resilient retailers that are doing great, they’re pivoting, and they’re expanding their businesses. On the other side, you have these resistant retailers who have not made it. In many ways, it’s probably the most exciting time for retail in a very long time. 

We talk a lot about these direct to consumer brands that are becoming category leaders. The Allbirds and the Gymsharks who started on Shopify when they were very small and have grown to become the incumbents in their industry. Every 25 seconds a brand new entrepreneur makes his or her (products) for sale on Shopify. We talk a lot about those new startups, those new DTC brands. But actually, what we’re also seeing on Shopify are companies like Lindt Chocolate or Heinz ketchup or Chipotle. They are signing up for Shopify and basically from like five days from contract to launch they are completely changing their businesses. 

This resiliency isn’t simply in the hands of just the smallest of brands. Big companies are also beginning to think a lot more about how to stay resilient in this time. They’re moving well beyond ecommerce or thinking about offline commerce now. They’re thinking about how do they sell across social media? How do they sell across different marketplaces? So no, I don’t think it’s too late (to enter ecommerce) but I do think they have to rethink their strategies.

Venmo is a popular secure payment platform owned by PayPal. Amazon announced that it will begin supporting Venmo on Amazon.com, as well as within the Amazon app. Support will begin rolling out to select Amazon customers today, with full support in the US in time for Black Friday.

“We want to offer customers payment options that are convenient, easy to use, and secure—and there’s no better time for that than the busy holiday season. Whether it’s paying with cash, buying now and paying later, or now paying via Venmo, our goal is to meet the needs and preferences of every Amazon customer,” said Max Bardon, vice president of Amazon Worldwide Payments. “We’re excited to continue to offer customers even more options when it comes to how and when they want to pay for their order.”

Once support is added, customers will be able to set up their Venmo account as a payment option and select it when making a purchase.

“We know that the Venmo community of nearly 90 million users value the safety, security, ease, and familiarity that paying with Venmo helps to bring to the checkout experience,” said Doug Bland, senior vice president and general manager, head of consumer, PayPal. “The ability to pay with Venmo on Amazon continues our ongoing commitment to offer the community more ways to spend, send, receive, and manage their money with Venmo.”

Stripe CEO Patrick Collison sent a memo to employees Thursday to deliver the bad news:

Today we’re announcing the hardest change we have had to make at Stripe to date. We’re reducing the size of our team by around 14% and saying goodbye to many talented Stripes in the process. If you are among those impacted, you will receive a notification email within the next 15 minutes. For those of you leaving: we’re very sorry to be taking this step and John and I are fully responsible for the decisions leading up to it.

Collison blamed the decision on a changing world, including significant financial headwinds that have become more apparent throughout 2022.

At the outset of the pandemic in 2020, the world rotated overnight towards e-commerce. We witnessed significantly higher growth rates over the course of 2020 and 2021 compared to what we had seen previously. As an organization, we transitioned into a new operating mode and both our revenue and payment volume have since grown more than 3x.

The world is now shifting again. We are facing stubborn inflation, energy shocks, higher interest rates, reduced investment budgets, and sparser startup funding. (Tech company earnings last week provided lots of examples of changing circumstances.) On Tuesday, a former Treasury Secretary said that the US faces “as complex a set of macroeconomic challenges as at any time in 75 years”, and many parts of the developed world appear to be headed for recession. We think that 2022 represents the beginning of a different economic climate.

The company is taking a number of steps to make the layoffs as painless as possible, including a minimum 14 weeks severance pay, with employees with more seniority receiving even more. The company will also pay all 2022 bonuses and pay employees for all unused PTO. Stripe will also “pay the cash equivalent of 6 months of existing healthcare premiums or healthcare continuation.” The company will also offer career support, immigration support for those on work visas, and more.

No layoff is ever good, but Stripe certainly deserves credit for trying to make the transition as seamless as possible.

Paypal earned its prominence by partnering with eBay and is widely recognized by most, if not all, online vendors today. It offers several features to help companies efficiently process and manage their finances and transactions. With digitalization increasing and e-commerce booming, the demand for platforms like PayPal has also been skyrocketing. Consequently, more competitors of PayPal are entering the market. This growing market saturation will likely make PayPal face challenges in the future:

1. High Competition

PayPal shared its plan to grow their average revenue per user (ARPU) by integrating new features and having the user hooked to platforms like Venmo, which provided peer-to-peer payment services to over 83 million users in the U.S. in 2021. However, Venmo faces intense competition in the market and threats from platforms like Zelle and Block’s Cash App.

Zelle alone grew its transaction volume by 59% in 2021, which amounted to $490 billion. Compared to this, Venmo only increased by 44%, which amounted to $230 billion. The competition is rising, and PayPal may be knocked out of its leading position at this growth rate. 

2. Frequent Layoffs 

PayPal is reportedly laying off its employees and closing certain operative departments, especially within the research and development team. This team was in-charge of PayPal’s cryptography, quantum computing, and distributed ledger technologies that enabled PayPal to be ahead of its competitors. The reason behind the layoffs was to boost PayPal’s ARPU and reduce the inefficiencies within the company. However, these layoffs can potentially drain the company of its talent. Innovation can be hindered, and the company may face problems if it continues to let go of its existing employees.

3. Inability To Meet Investor Targets

PayPal claimed in an investor presentation that the growth in active users will double by 2025 as compared to 2020. The number was supposed to increase from 377 million users in 2020 to 750 million active users in 2025, enabling PayPal to increase its revenue from $21.5 billion to $50 billion and gain massive growth.

However, PayPal’s active users only grew by 13% in 2021, with revenue growth of  $25.4 billion. It dropped its goal of increasing users in the last quarter, leaving investors confused and disappointed.  The under-delivery of results and inability to meet investor targets can lead to withdrawal of support from investors if frequent results are not delivered. This can also result in a large loss of goodwill for the company. Such decisions will likely have challenging consequences for PayPal. 

Endnote

PayPal is still one of the leading names in the world of digital payments and FinTech. However, it must evolve with time to keep up with the rising competition and meet the goals it has set to sustain its shareholders’ interests. If PayPal fails to do so, it may find itself falling behind in the market’s race. 

PayPal’s stock is depleting each day as the company keeps on over-promising and under-delivering. However, PayPal can still maintain its position by focusing on innovation and partnering up with competitive supporting businesses. This can help PayPal give their business a much-needed boost and assist in gaining back investors’ confidence. 

Why Is Credit Card Debt So Dangerous?

Outside of payday loans, credit card debt is just about the most dangerous form. There are several reasons why carrying a credit card balance can be so disastrous for your financial health. These reasons are so intense, that recent studies have shown that people with persistent credit card debt suffer from physical ailments later in life. According to an article from the New York Times:

“The new research tapped Department of Labor data to analyze the financial health of almost 7,900 baby boomers over more than a decade, from age 28 to 40, as well as their physical health at age 50. It found that people who carried consistently high levels of unsecured debt were 76 percent more likely to have pain that interfered with their daily life than people with no unsecured debt.”

So what about credit card debt specifically makes it so bad for you? There are two elements to credit cards that work in tandem, which, when left uncheck, can absolutely ruin your life.

The first issue with credit cards is that they’re extremely easy to use and don’t force you to stop spending at a healthy limit—as is the case with debit cards or cash. When you pay with credit, you’re able to buy significantly more than what’s actually affordable for your budget. It only takes doing this one time to find yourself in a perpetual cycle of debt.

And what keeps you in that cycle of debt? High interest rates. Credit card balances come with notoriously high interest rates, oftentimes over 20 percent. If you’re not paying off your balance in full each month, it can just keep growing and growing. It makes sense that credit card companies would want to charge a higher interest rate, since they’re offering unsecured debt with few requirements. But many consumers—whether out of want or need—are unable to keep themselves from overspending on their credit cards. Doing this can put you in a cycle so pernicious, it will affect your physical wellbeing.

How to Pay Off Credit Card Debt

If you’re looking for credit card debt help, you want to make a plan to pay it down as soon as possible. The longer you wait to take on your credit card debt, the more damage it will cause to your life.

Utilizing debt repayment strategies such as the snowball or avalanche methods can be helpful in getting yourself on-track to freedom from credit card debt. With the snowball method, you pay off your smallest bills in whole first, and work your way up from there. The idea is that by gaining momentum, you’re more likely to follow through with your debt repayment. By using the avalanche approach, you’ll save the most money. This is because you pay off your debts in order of highest interest rates.

Some people might also be able to utilize credit card balance transfer to help supercharge their debt repayment. This is where you move your credit card balances to a new account that offers a low introductory interest rate. Doing this can help you get ahead on your debts, without accumulating interest for a period of time.

What to Do if You Can’t Pay Off Your Credit Cards

Some people will find that none of these strategies are enough to help get them out of credit card debt. For individuals in this boat, it might be time to start looking for more intensive options, such as debt relief. Working with Freedom Debt Relief is in some respects the ultimate credit card debt help for consumers.

When you find the right debt relief partner, you have the chance to finally get out from under your oppressive debt—and in only a fraction of the time. This is possible because companies like Freedom Debt Relief can negotiate with your lenders in order to reach a settlement. While this won’t be the right path for everyone, those who have been unsuccessful in finding credit card debt help elsewhere might finally be able to reclaim their finances. If you’re too deep in debt, it might be time to finally seek out help for your credit card debt. This can be a difficult decision, but will be worth it if you can get your life back on track.

The Case for BNPL

BNPL answers concerns about payment due dates, upfront costs, and sacrificing expenditures unexpectedly. These systems also afford consumers flexibility. It appeals to budgeters, which allows them to allocate and reserve expenses for big buys over time. 69% of consumers abide by a budget according to plan, with 78% of pet owners following strict ones. 77% of pet parents are aware of buy now pay later payment methods and 56% have tried it for themselves with success. By integrating expenses into long-term spending habits, instead of forfeiting large sums out of pocket, buy now pay later caters to consumers by allowing them to pay at the convenience of their calendar.

Buy now pay later methods offer other lesser-known, but perhaps more exciting perks. Ones that are much appreciated by parents of furry friends. 43% express gratitude for the temporal flexibility delayed pay offers. Not only in providing a larger window for payment but even in extending the set end date as needed. 30% are attracted to these systems for their capacity to steer clear of credit card fees and prices paid due to interest, keeping those unforeseen charges afar. 22% of pet owners commend buy now pay later’s fixed and unwavering or tiered rates. These give everyone the same fair grounds and expectations for payment, without being blindsided by fine print policies.

What Buy Now Pay Later is Used to Pay

Both veterinarian and dental expenses need time to be paid in full. 38% of American pet owners pay for vet visits with a credit card. For only 18% of them, pet insurance covers the costs of vet fees in full. In dentistry, 40% of U.S. adults take one month, at minimum, to pay the full cost of a dentist visit. Both pet and people patients need more effective tools to help them cover healthcare expenses on their own time.

Interestingly, American East Coast residents express a higher preference for the implementation of buy now pay later. 55% report being very interested and more likely to use buy now pay later as opposed to 42% of West Coast dentist patients and pet parents who share the same sentiment.

In Conclusion

The results of a decisive study that gauged American adults’ holistic preference point to buying now and paying later over the ways we’ve always paid. 71% of U.S. dentistry patients cite a preference for BNPL. A whopping 86% of pet owners preferring this way of covering veterinarian costs. It’s time that healthcare professionals, practices, and institutions cater to the people’s preferred way to pay by offering more time. Also, they should offer convenience, as patients pay when the time is right.

The mobile money industry has been experiencing significant growth, according to the GSMA, registering 18% more accounts in 2021 over 2020, bringing the total to 1.35 billion accounts globally. The number of person-to-person transactions reached 1.5 million an hour.

Merchant payment transactions, in particular, were a driving factor, reaching an average of $5.5 billion per month.

“2021 was the year mobile money started to really diversify to B2B services. Beyond traditional person-to-person transactions, such as transferring money to family or friends, the industry is now central in helping small businesses operate more efficiently, and serve their customers better” said Max Cuvellier, Head of Mobile for Development, GSMA.

To learn more, the full 2022 State of the Industry Report on Mobile Money here.

While businesses have been required to report payments of $600 or more for years, this is the first time that online payment apps have been subject to that requirement. Previously, PayPal and others were required to report gross income exceeding $20,000 per year.

Under the new rule, bar is now lowered to $600. Fortunately, according to Fox News, this new rule only applies to payments classified as goods or services. Money sent to friends and family, gifts, reimbursements, and products sold at a loss will not be included.

For true income, however, users will need to be more careful when filing their taxes, as the IRS will now have a point of reference.

“For the 2022 tax year, you should consider the amounts shown on your Form 1099-K when calculating gross receipts for your income tax return,” PayPal’s Q&A section says. “The IRS will be able to cross-reference both our report and yours.”

Charlie Youakim, CEO and co-founder of Sezzle, discusses the massive growth of the Buy Now, Pay Later industry and how that is reshaping ecommerce and retail in general:

Focused Uniquely On Credit Building

Sezzle is generally focused on the ecomm space, that’s where we do most of our work. We are present on over 44,000 merchant websites. The Buy Now, Pay Later industry, in general, is typically focused on ecommerce. So as that push back into ecomm occurs (potentially due to increases in COVID causing more people to shop from home) we generally benefit from that.

We compete in this space by really focusing on our stakeholders, focusing on the merchants, focusing on the consumers, and doing the right thing by both of them. We really stand on the high road for the consumer. We are the only player in the space that focuses on credit building which is totally unique. We love it, our consumers love it and our merchant partners love it. By focusing on their needs, these consumers’ needs, and doing right by them and right by the merchants, you have a chance to do a really strong job within the sector.

Sezzle Pushing Into the Enterprise

With SMB’s we’ve been growing like wildfire. It just continues for us. That’s how we have that big count of merchants and we expect that to continue. We’re doing a great job there and the merchants love us. It’s viral in that space. For us now the push is into enterprise and in Target, Bass Pro Shops, those are two great examples of that for us. The reason we’re doing that is that our consumer wants to shop with us everywhere so we have to be everywhere. That means we have to be with SMB, we’ve got to be with mid-market, and we’ve got to be with enterprise.

That will be the push for Sezzle to continue to push in those spaces. If you look at the enterprise players in those spaces, what they want is they want a brand that they can believe in. That’s where you have Sezzle and our halo around doing right by the consumer helping them build their credit score up and being a partnerships player. That’s what really sets us apart.

Sezzle: The Creditization Of a Debit Card

The average order value per customer has been relatively stable. We’re around $100 per order. The only reason it’s been tracking a bit up for us is we’ve been expanding our services. We started with a pure ‘pay in four’ for over six weeks interest-free and so that’s where we tracked right around $100. But as we add long-term into the mix we’ve been starting to track upwards. The order values on a 12-month order or 12-month installment plan, tend to track towards $1,000. We feel it’s probably going to stay stable, it’s just going to be a mixed shift that creates any change for Sezzle.

We see from our consumers that they love our product because it represents purchasing power but also budgeting for them. They feel safe with it just like they do with the debit card. We’re driving a new wedge into payments between credit and debit. I call it the creditization of a debit card. I think it’s here to say because of that safety element that we give to the consumer.