Digital payment industry 追蹤 ( 一 )

先了解一下支付運作過程

Digital payment process : a quick look

ABC's Payment value chain

Digital payment 的基本架構& 專有名詞 ( Paypal 為例 )

Transaction expense is primarily composed of the costs related to a customer’s funding source of payment. These costs include fees paid to payment processors and other financial institutions when we draw funds from a customer’s credit or debit card, bank account, or other funding source they have stored intheir digital wallet

We refer to the allocation of funding sources used by our consumers as our “funding mix.” The cost of funding a transaction with a credit ordebit card is generally higher than the cost of funding a transaction from a bank or through internal sources such as a PayPal or Venmo account balance or our consumer credit products. As we expand the availability and presentation of alternative funding sources to our customers, our funding mix may change, which could increase or decrease our transaction expense rate




Our transaction expense rate is impacted bychanges in product mix, merchant mix, regional mix, funding mix, and fees paid to payment processors and other financial institutions

Transaction expense increased by $2.4 billion, or 30%, in 2021 compared to 2020 due primarily to an increase in TPV of 33%. The decrease in transaction expenserate in 2021 compared to 2020 was due primarily to a decline in transaction expense rates associated with both our core PayPal and Braintree products, offset by anincrease in the share of volume associated with our Braintree products




Transaction and credit losses

Transaction losses include the expense associated with our buyer and seller protection programs, fraud, and chargebacks. Credit losses include the losses associated with our merchant and consumer loans receivable portfolio. Beginning in 2020, these losses are based on current expected credit losses. Our transaction and credit losses fluctuate depending on many factors, including TPV, product mix, current and projected macroeconomic conditions including unemployment rates,merchant insolvency events, changes to and usage of our customer protection programs, the impact of regulatory changes, and the credit quality of loans receivable arising from transactions funded with our credit products for consumers and loans and advances to merchants.

Transaction losses were $1.2 billion and $1.1 billion for the years ended December 31, 2021 and 2020, respectively, reflecting an increase of $18 million, or 2%,year-over-year. Transaction loss rate (transaction losses divided by TPV) was 0.09%, 0.12%, and 0.15% for the years ended December 31, 2021, 2020, and 2019,respectively. The increase in transaction losses was due primarily to growth in TPV, partially offset by benefits realized from continued risk mitigation strategies,which also contributed to a decrease in our transaction loss rate over the same period. The duration and severity of the impacts of the COVID-19 pandemic and related global economic conditions remain unknown. Any negative impacts on macroeconomic conditions could increase the risk of merchant bankruptcy,insolvency, business failure, or other business interruption, which may adversely impact our transaction losses, particularly for merchants that sell goods or services in advance of the date of their delivery or use.

Net charge-off ,  Loss reserve

來看一下什麼是Loan loss reserve  ! 

What Is Loan Loss Reserve? 

Loan loss reserves (LLRs) are types of insurance and credit enhancement that help banks and lenders mitigate estimated losses on loans in the event of defaults or nonpayments. Should borrowers default on their loan, banks might use loan loss reserve funds to alleviate these losses.
How Often Are Loan Loss Reserves Calculated?

Loan loss reserves are revised quarterly. Should an increase in the balance occur, it is called a loan loss provision. A decrease in the balance, however, is referred to as a net charge-off.

Loan Loss Reserve Accounting Example

Bank XYZ has made $10,000,000 of loans to various companies and individuals. Bank XYZ works very hard to ensure that it lends only to people who are able to repay their loans in full and on time. However, some will inevitably default, fall behind, or even need to renegotiate their loan payments.

Bank XYZ knows this and estimates that 1% of its loans (i.e. $100,000) will probably never be paid. This $100,000 estimate is recorded as Bank XYZ’s reserve for loan losses and is entered a negative number on the asset portion of its balance sheet.

If Bank XYZ decides to write all (or a portion) of a loan off, it will remove the loan from its asset balance while also removing the amount of the write-off from its loan loss reserve. The amount deducted from the loan loss reserve may be tax-deductible for Bank XYZ.

What Is Loan Loss Reserve?

繼續看Paypal 財報注釋

The benefit in the year ended December 31, 2021 was attributable to the net release of reserves for loans receivable due to improvements in both current and projected macroeconomic conditions, including lower projected unemployment rates, as well as improvements in the credit quality of loans outstanding, partially offset by provisions for originations during the period. Allowances for our merchant and consumer portfolios included qualitative adjustments which took into account continued volatility with respect to macroeconomic conditions, as well as uncertainty around the financial health of our merchant borrowers, including uncertainty around the effectiveness of loan modification programs made available to merchants. The credit losses in the year ended December 31, 2020 were primarily associated with an increase in provisions for our loans receivable portfolio resulting from a reserve build driven by a sharp deterioration inmacroeconomic projections reflecting the anticipated impact of the COVID-19 pandemic and provisions associated with originations, both of which significantly increased our then current expected credit losses, and to a lesser extent, changes in credit quality during the period. The increase in provisions associated with macroeconomic projections in the year ended December 31, 2020 included qualitative adjustments to account for the impact of limitations in our expected credit loss models resulting from the extreme fluctuations in both the actual and projected macroeconomic conditions during the period as well as to incorporate varying degrees of merchant performance in the current environment and expected performance in future periods. The consumer loans and interest receivable balance as of December 31, 2021 and 2020 was $3.8 billion and $2.2 billion, respectively, representing a year-over-year increase of 77% driven by growth of our installment credit products in international markets and the U.S. and, to a lesser extent, growth of PayPal Credit ininternational markets. 


The net charge-off rate at December 31, 2020 benefited from payment holidays provided by the Company as a part of our COVID-19 payment relief initiatives.We offer merchant finance products for certain small and medium-sized businesses, which we refer to as our merchant finance offerings. Total merchant loans, advances, and interest and fees receivable outstanding, net of participation interest sold, as of both December 31, 2021 and 2020 were approximately $1.4billion. Approximately 82% and 8% of our merchant receivables outstanding as of December 31, 2021 were due from merchants in the U.S. and U.K, as compared to approximately 81% and 10% as of December 31, 2020, respectively

The increase in the percent of current merchant receivables, decrease in percent of merchant receivables greater than 90 days outstanding, and decrease in the net charge-off rate for merchant receivables at December 31, 2021 as compared to December 31, 2020 were primarily due to the charge-off of accounts that experienced financial difficulties as a result of the COVID-19 pandemic in the prior year as well as improved performance in the current year partially attributableto the below mentioned modifications to the acceptable risk parameters including tightening of eligibility terms. Beginning in the third quarter of 2020, we granted certain merchants loan modifications intended to provide them with financial relief and help enable us tomitigate losses. The associated loans and interest receivable have been treated as troubled debt restructurings due to the borrowers experiencing financial difficulty and significant changes in their loan structure, including repayment terms and/or fee and rate structure. Modifications to the acceptable risk parameters of our credit products in 2020 in response to the impacts of the COVID-19 pandemic resulted in the implementation of a number of risk mitigation strategies, including reduction of maximum loan size, tightening eligibility terms, and a shift from automated to manual underwriting of loans and advances. These changes in acceptable risk parameters resulted in a decrease in originations in 2020 as compared to prepandemic levels. We continue to evaluate and modify our acceptable risk parameters in response to the changing macroeconomic environment and such changes in2021 have resulted in a gradual increase in originations over the past nine months. While the impact of the COVID-19 pandemic on the economic environmentremains uncertain, the longer and more severe the pandemic, the more likely it may have a material adverse impact on our borrowing base, which is primarily comprised of small and medium-sized merchants. For additional information, see “Note 11—Loans and Interest Receivable” in the notes to the consolidated financial statements, and “Item 1A. Risk Factors—Our credit products expose us to additional risks” included in this Form 10-K.

Analysts expect Square's Bitcoin revenue to continue rising this year before cooling off next year. They also expect its growth in transaction-based and seller service revenue, which slowed down 這應該是Ark 木頭姐大舉買 Square 原因

据悉，近日，美国移动支付公司Square表示，将通过290亿美元的全股票形式交易，收购澳大利亚金融科技支付公司Afterpay，向消费贷款领域扩张。交易完成后，预计Afterpay持有合并后公司约18.5%的股份。

　　这一消息提振了Affirm股价，可能是因为猜测该公司可能成为收购目标。Affirm美股周一收盘涨14.90%，报64.71美元。

　　对于Square与Afterpay的合并，Max Levchin表示该交易“是一个强有力的声明”，即支付处理的“世界正在改变”。他表示：“信用卡将成为这笔交易的输家。”此外，他没有直接回答有关潜在追求者的问题，称他无法预测，但指出Affirm一直是收购方

加密货币方面，Max Levchin还暗示该公司可能正在考虑接受加密货币，称Affirm将“去商家想去的地方”。该公司目前暂不接受比特币，但Max Levchin认为加密货币正在“过渡到主流”。Max Levchin称不想“预先宣布”任何事情，但他确实表示，随着对比特币和其他加密货币接受程度不断上升，Affirm将“拭目以待”

July 2021  

It was investment legend Warren Buffett who coined the phrase “economic moat” as a graphic description of a company’s protection from competitors. News that Apple Pay is to moving into buy now, pay later, Wednesday’s launch of PayPal’s own BNPL instalment product in Australia and the impending entry of the Commonwealth Bank into the space suggests Afterpay’s moat is pretty dry.

These three corporate behemoths are the competitive monsters of which nightmares are made.

The BNPL invasion will set off an avalanche that is sure to damage Afterpay - the Australian fintech darling that has so captivated investors that it ranks among the country’s top 15 listed stocks by share market value.

Numerous different flavoured fintech startups in the buy now, pay later sector have experienced some level of success but Afterpay has had critical mass sufficient to ward off any serious threats from smaller standalone BNPL players.

這段在講BNPL趨勢, 不只讓Paypal感到威脅, 同樣的其他fintech 新進公司也感到威脅, 覺得未來成長性受限

• COVID-19 has reinforced the trend of digital adoption in payments and retail commerce, across payment types and demographics
• The digital growth picture is not entirely rosy, however—consumer trust has eroded slightly and although consumers are turning to digital payments in increasing numbers, it is not clear whether all recent behavior shifts will prove to be permanent
• Despite growing awareness and adoption, nearly half of consumers either have not heard of contactless payments or remain uninterested in them due to perceptions of value, security, and availability, posing a continuing challenge for merchants and card issuers in effectively communicating the value and enabling ubiquity of digital solutions.

上面說的原來將近2年前, 疫情爆發沒多久, 一般美國40歲以上族群對於手機支付還是陌生的, 這樣稍微解釋Paypal在2021以後對於Buy now pay later以及數位支付開始引進Bitcoin- Crypto系統
Paypal在這方面失去先機. 尤其上述提到2項在未來將會引領數位支付的趨勢

Significant gains have been recorded, however, in the share of consumers using two or more digital payments methods, which jumped from 45 percent last year to 58 percent in 2020 (Exhibit 1). This indicates a deeper level of digital engagement, 這邊有個小地方可討論, 假如美國人手機同時擁有2-3種Payment APP, 代表他們仍會保留Paypal 付款方式呀 ~ 又不是我用過Affirm, Stripe, SQ 就準備把PYPL 從手機刪掉 ( 多感傷 〰 ) 

which can presumably be tied in part to pandemic-related behavior. The two most common forms of digital payments (in-app and online, used by 57 and 53 percent of consumers, respectively) lend themselves to remote shopping models and were also the fastest growing, accounting for nearly all the gains over 2019.

Significant gains have been recorded, however, in the share of consumers using two or more digital payments methods, which jumped from 45 percent last year to 58 percent in 2020 (Exhibit 1). This indicates a deeper level of digital engagement, which can presumably be tied in part to pandemic-related behavior. The two most common forms of digital payments (in-app and online, used by 57 and 53 percent of consumers, respectively) lend themselves to remote shopping models and were also the fastest growing, accounting for nearly all the gains over 2019.

 

COVID-19 has reinforced the trend of digital adoption in payments and retail commerce, across payment types and demographics

The digital growth picture is not entirely rosy, however—consumer trust has eroded slightly and although consumers are turning to digital payments in increasing numbers, it is not clear whether all recent behavior shifts will prove to be permanent

Despite growing awareness and adoption, nearly half of consumers either have not heard of contactless payments or remain uninterested in them due to perceptions of value, security, and availability, posing a continuing challenge for merchants and card issuers in effectively communicating the value and enabling ubiquity of digital solutions.

 

 

Given the above assumptions we expect global payments revenues to quickly return to their long term 6 to 7 percent growth trajectory, recouping 2020’s declines in 2021 and reaching roughly $2.5 trillion by 2025. More importantly, however, as “payments” become further absorbed into commercial and consumer commerce journeys,

established payments providers will gain access to adjacent opportunities as large as the core payments revenue pool. Of course, an opportunity of this magnitude draws attention—tech firms and ecosystem competitors are already focusing on these attractive (and often less regulated) elements of the payments value chain, rather than traditional interchange, acquiring, and transaction fees linked to payment flows.

The behavior of the 35–54 and 18–34 brackets has converged to a greater extent than many might have expected. In-app payments is also the category with the widest age disparity(差異); its adoption rates are three times higher for 18-to-34-year-olds than for customers 55 and older.

 

Asked about BNPL, 30 percent of our survey respondents report having financed a purchase with this type of service (Exhibit 1). Although this share is only three percentage points higher than 2020’s, attitudinal data seem to support the value proposition put forth by BNPL providers—and given the product’s increased availability we believe usage may be growing faster than penetration.

 

Of the respondents who used BNPL, 29 percent report that without this financing option they would have made a smaller purchase or not purchased at all. Another 39 percent say they chose BNPL over use of a credit card, and the remaining 31 percent indicate BNPL was a substitute for a debit card or cash. Separately, “a lower-cost financing option” was the most commonly cited reason for BNPL use (31 percent).

 

 

BNPL’s impact on incremental sales varies significantly across verticals. We see the highest incremental conversion rates in certain discretionary categories—apparel, laptops, and beauty products, for instance—where up to 20 percent of respondents say purchases would not occurred without BNPL. Incremental conversion is far lower (3 to 5 percent) in less discretionary categories, such as tires and auto parts, home appliances, and home improvement.

 

Turning to cryptocurrency, its penetration remains nominal on a broad level, but its steep adoption curve is striking. One in five respondents report holding or having held crypto assets, up from 6 percent just a year earlier (Exhibit 2). Among the 74 percent of respondents familiar with but not owning crypto, 41 percent say a key reason for not yet having used crytpo is their lack of functional understanding—an indication of further room for growth.

Congress twice extended the programs, last December and again this March, but opted not to do so a third time.

 

Digital wallets making further dents in leather

Fifteen percent of digital-wallet users say they leave their residence regularly without their old-school version. Another 11 percent indicate they consider doing so only when they do not plan to purchase anything or know they can use a digital wallet.

 

Following widespread promotional efforts designed to coax consumers to enter card credentials, most respondents using digital wallets have now loaded multiple cards. Of those who say they have done so, 40% indicate that they frequently (every couple weeks or more) switch to an instrument other than their default option. The most commonly cited reason given for toggling 綁在一起 between cards is funds availability, followed by a desire to isolate different purchase types on separate cards and redemption of promotions or discounts.

 

While the COVID-19 pandemic slowed penetration of some forms of digital spending, the overall trend continues toward greater use of digital options. Innovations in digital payments, like BNPL and cryptocurrency, are also beginning to take root and show the potential for future growth. Consumers tell us that BNPL is enabling them to complete more purchases than they otherwise would. Despite cryptocurrency’s steep growth curve, a high percentage of non-users appear persuadable given further education—although interest to date has been driven by the instrument’s investment potential over its payments utility. Given another year to adjust to the pandemic’s ongoing economic effects, it will be fascinating to see how these digital trends progress in 2022’s survey.