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Google and Amazon stand to gain from Meta’s social commerce exit

Ever since the pandemic outbreak, the e-commerce industry landscape has undergone a major revamp, with social commerce emerging as the next growth driver for the global market. Players such as Meta, Google, and Amazon all made a major push in the segment to tap into the high-growth potential of the social commerce industry. According to PayNXT360 estimates, the global social commerce market is expected to grow at a compound annual growth rate of 12.7% from 2022 to 2028. The global social commerce GMV will increase from US$661 billion in 2023 to reach US$1.3 trillion by 2028.

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The global gift card market continues to grow at an accelerated pace on the back of digital gift card offerings in 2023

Digitalization, tech-savvy population, and increasing trend of strategic alliances is driving the growth of the global gift card market in 2023. The growth rate is significantly higher in markets like the United States. According to a report from PayNXT360, the United States gift card market is expected to grow at a compound annual growth rate (CAGR) of 5.7% from 2023 to 2027. Based on the estimates, the industry will increase from US$185.4 billion in 2022 to reach US$247.9 billion by 2027.

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Opportunities in the global prepaid card and digital wallet market

Digitalization, rising e-commerce activities, and a tech-savvy population are the key factors aiding the growth of the global prepaid card and digital wallet market in 2023. The trend is projected to further continue over the next five years, as PayNXT360 estimates that the market will grow at a compound annual growth rate (CAGR) of 10.3% from 2023 to 2027, increasing from US$1.5 trillion in 2022 to reach US$2.5 trillion by 2027. The data clearly indicates that there is plenty of headroom for growth in the global prepaid card and digital wallet market.

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Merger and acquisition trend accelerates in the global buy now pay later sector

Even though the adoption of buy now pay later schemes has continued to grow in 2023, firms have been finding it difficult to achieve profitability. The inflation-led macroeconomic environment has had a severe impact on the bottom line of many buy now pay later firms worldwide. The uncertain economic conditions have even led to the downfall of big names like Openpay and LatitudePay. Industry leaders like Klarna, on the other hand, have seen their valuation decline significantly. 

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Merger and acquisition trend accelerates in the global buy now pay later sector

Even though the adoption of buy now pay later schemes has continued to grow in 2023, firms have been finding it difficult to achieve profitability. The inflation-led macroeconomic environment has had a severe impact on the bottom line of many buy now pay later firms worldwide. The uncertain economic conditions have even led to the downfall of big names like Openpay and LatitudePay. Industry leaders like Klarna, on the other hand, have seen their valuation decline significantly. 

Amid the ongoing consolidation in the market, some of the firms that are struggling to extend their runway have turned to merger and acquisition strategies to keep their business afloat. Uplift, which offers BNPL services for travelers, is among the providers that have chosen the strategy.

Upgrade, which offers personal credit lines and other consumer financial products, entered into an acquisition agreement with Uplift in July 2023. The US$100 million cash and stock deal will see Upgrade further improving its product lines through the acquisition of Uplift.

For Uplift, this is not the ideal exit, as the firm had recorded significant growth during the pandemic outbreak. Since its inception, the firm has raised approximately US$700 million in debt and equity. In its Series C round alone, the firm secured US$123 million at a valuation of US$195 million.

According to Upgrade, Uplift initially reached out to the firm in May of 2023. This was to inquire regarding a potential strategic investment in the BNPL provider, which was looking to raise its Series D round. However, Upgrade believed that a potential acquisition made more sense for the firm, as it would enable it to further expand its product offerings and customer base.

The acquisition of Uplift will add 3.3 million users to Upgrade’s platform and will also boost the prospects of its initial public offering, which is on the horizon. Furthermore, the purchase will also enable Upgrade to expand its loan book, as it seeks to offer nearly US$10 billion in credit by the end of 2023.

The travel market is growing at a rapid pace after the global pandemic outbreak. Uplift, which happens to be one of the leading players in the travel-focused BNPL segment, also has a wide distribution network. The firm had secured partnerships with 300 airlines, hotel chains, and cruise lines. Upgrade is getting access to it all for just US$100 million, which otherwise would have taken much more if built from scratch.

With travel becoming more expensive, the demand for BNPL products is expected to remain high from the short to medium-term perspective. Consequently, PayNXT360 expects Upgrade to generate high revenue through its purchase of Uplift, which has operations in the United States and Canada.

Read More - The B2B BNPL sector is benefiting from soaring inflation and working capital optimization in 2023

In the United States, the BNPL industry is expected to grow at a significant rate, based on PayNXT360's estimates. BNPL payments, for instance, are expected to grow by 19.0% on an annual basis to reach US$112.9 billion in 2023. From 2023 to 2028, the BNPL payment adoption is projected to grow at a compound annual growth rate (CAGR) of 10.4%. The steady adoption rate of the payment method will also aid the growth of Upgrade from the short to medium-term perspective in the United States.

Read More - Strategic partnerships continue to aid the buy now pay later industry growth in 2023

In another acquisition deal, NymCard acquired Spotti in the United Arab Emirates in June 2023. In the MENA region, NymCard is one of the leading payment infrastructure providers. The acquisition of Spotti will provide NymCard with Spotti's technology, risk engine, and market expertise to offer credit-on-demand products in the region.

Read More - Klarna makes a resilient comeback with losses halved and profit on the horizon

The acquisition came at a time when Spotti was beginning to wind down its operations in the United Arab Emirates. The firm, notably, also acquired a BNPL license from SAMA in June 2023. Since its inception, Spotti has amassed more than 1 million registered users and partnered with 1,500 merchants. The purchase will extend the runway for Spotti, whereas NymCard will be able to offer a more comprehensive suite of payment solutions across the Middle East and North African region.

Based on PayNXT360's estimates, the BNPL market in Africa and the Middle East is expected to grow at a compound annual growth rate (CAGR) of 17.8% from 2023 to 2028. During the period, the gross merchandise value in the region will increase from US$9.49 billion in 2022 to US$27.7 billion by 2028.

Going forward, PayNXT360 expects more mergers and acquisition deals to emerge in the global market, as consolidation is expected to continue in H2 2023. Despite consolidation, the adoption of BNPL schemes has remained strong worldwide. During the 2023 Prime Day sales event, the usage of BNPL products have recorded an estimated increase of 26-31%, compared to last year.  This is a clear indication that the demand for BNPL has remained strong and the trend is projected to further continue from the short to medium-term perspective. In line with this trend, other global players are also incorporating the BNPL strategy to push forward their commerce ambitions. TikTok, for instance, entered into a strategic collaboration with Atome to provide BNPL payment options on its e-commerce marketplace in Malaysia. The Southeast Asia market has emerged as a high-growth region for TikTok over the last 12 months. The incorporation of the BNPL strategy is expected to further aid the growth of TikTok over the next three to four years. The projection comes on the back of the accelerated adoption of BNPL services in Malaysia and other Southeast Asian countries.

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The global gift card market continues to grow at an accelerated pace on the back of digital gift card offerings in 2023

Digitalization, tech-savvy population, and increasing trend of strategic alliances is driving the growth of the global gift card market in 2023. The growth rate is significantly higher in markets like the United States. According to a report from PayNXT360, the United States gift card market is expected to grow at a compound annual growth rate (CAGR) of 5.7% from 2023 to 2027. Based on the estimates, the industry will increase from US$185.4 billion in 2022 to reach US$247.9 billion by 2027.

[paynxt360fintech]

Google and Amazon stand to gain from Meta’s social commerce exit

Ever since the pandemic outbreak, the e-commerce industry landscape has undergone a major revamp, with social commerce emerging as the next growth driver for the global market. Players such as Meta, Google, and Amazon all made a major push in the segment to tap into the high-growth potential of the social commerce industry. According to PayNXT360 estimates, the global social commerce market is expected to grow at a compound annual growth rate of 12.7% from 2022 to 2028. The global social commerce GMV will increase from US$661 billion in 2023 to reach US$1.3 trillion by 2028.

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After Starbucks now messaging app Line launches its prepaid debit card

After Starbucks announced launch of its prepaid card with a new loyalty program, messaging application Line has launched its prepaid debit card called the Line Pay Card at the brand’s Line Conference Tokyo 2016 occasion. The card has been developed in partnership with the credit card company JCB and is supported by a well-developed loyalty program along with Line’s app integration. This may indicate a new trend where core companies from retail and other consumer centric businesses with sizable consumer base are going to use open loop prepaid card as a strategy to boost sales and increase loyalty. This would indeed impart momentum to growth of prepaid cards across developed and emerging markets.

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Starbucks reshaping its loyalty program through prepaid card system

Starbucks is all set to launch its new loyalty program effective from April this year. The major change which has been implemented in the new loyalty program is the earning of stars. In the old system, the number of stars earned was based on the count of transactions of a customer. In the new system, the stars would be awarded based on the amount spent at each transaction. Another significant aspect of the loyalty program is that, the prepaid card system will be launched by the end of 2016, which would function like a Visa Card and would be acceptable at other retail outlets too. The reward point structure on the card usage outside of Starbucks has yet not been structured, but it will soon be in place.

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CFPB ruling on force-pay could affect US prepaid card market

This is how force-pay transactions work: A few prepaid cards preauthorize charges based on an estimated purchase amount, for instance, expected price of eating at a restaurant. If the prepaid card does not have sufficient funds to cover the entire bill amount, the card is left with a negative balance, which is settled from the next deposit the consumer loads on the prepaid card. CFPB contends the function of prepaid cards is to allow people to spend only what they have and by allowing overdraft or force-pay, the primary function of the instrument is not being served. Many times it also happenes that cardholders are not aware that they have to pay an overdraft fees for such transactions.

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FreeCharge collaborates with Yes Bank to launch virtual prepaid card in India

A recent trend was observed in the Indian payments market, wherein many banks launched their own mobile wallets in order to compete with existing players such as PayTM, Oxigen, PayUMoney, CitrusPay, FreeCharge, and MobiKwik. Banks decided to venture into mobile wallet space because with increasing popularity of mobile wallets, use of credit cards and debit cards started witnessing a decline, especially among the millennials and Generation X, leading to loss of revenue.

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India introduces Unified Payments Interface to promote mobile money services

The National Payment Corporation of India (NPCI) recently launched unified payments interface (UPI), with the objective of extending mobile money services in India. UPI will allow users to receive and transfer money through their mobile phones from their existing bank accounts, utilizing unique identification details such as their Aadhaar number, mobile number, or a virtual payments address, without being required to enter their presonal credentials such as bank account details or security pins.

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Payments app Lydia gains popularity with millennials in France

Among various consumer demographics, marketers across industries are finding that understanding the requirements of the millennials is the most difficult as they showcase the most unpredictable behavior. In finanicial services industry also millennials are banking differently than any other consumer group; they are keen to embrace new technologies such as mobile banking, digital wallets, and alternative digital payment options, that offer them convenience and ease of use. This is the area witnessing a series of innovations, which are disrupting the way financial services industry operates. A case in point is Lydia, a leading mobile payment application targeting French millenials.

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Italy’s prepaid card market expected to reach USD 60.3 billion by 2020; government regulations creating a favorable environment for prepaid card growth

Italy is one of largest prepaid card markets in Europe. Prepaid cards, along with other financial cards, benefited significantly from the Italian government’s ‘war on cash’ that aims to limit the influence of the shadow economy. Ability to budget spending and increase in ecommerce and m-commerce has resulted in increased demand for prepaid cards in the country. For majority of Italian consumers, the added security and convenience offered by prepaid cards is one of the major deciding factors for its adoption.

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South African prepaid card market expected to reach USD 12.8 billion by 2020

Prepaid cards play an important role in South Africa’s efforts towards financial inclusivity by bringing the unbanked and under banked population into the formal banking system and providing them convenient and safe access to financial solutions. However, as compared to other financial cards in South Africa, prepaid cards remain a niche product. Consumer awareness regarding the card category remains low and users tend rely more on traditional payment cards. Creating awareness and driving customer adoption is expected to play a crucial role in increasing prepaid card usage in the country.

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Prepaid card market in the UK to reach USD 63.1 billion by 2020; corporate and government adoption expected to drive strong growth

Prepaid cards continue to enjoy high popularity in the UK with increasing utilization by retail customers for functions such as gifting, travel, transportation, and online shopping. Prepaid cards are also witnessing high growth in the country due to increasing corporate adoption. The UK Government is pushing for prepaid card use as well for benefit disbursements. Card issuers in the UK are focusing on designing prepaid products that meet the requirements of niche retail segments, such as international travellers, students, migrant workers, parents, to outperform competition and gain market share.

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Market Event - Partnership between Coins.ph and 7-eleven shows growing synergies between retail and wallet

An emerging trend can be observed across emerging and developed markets where retail companies and Fintech firms are collaborating to introduce solutions that enable the unbanked population to make non-cash payments. This not only helps in expanding the consumer base but is also bringing in operational efficiencies and benefits to both retail chains and Fintech companies.