Morning Brief 5.7.20: PayPal earnings hit despite online spending shift

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Mixed results

Despite PayPal's efforts to get people to receive — and spend — their stimulus checks from PayPal accounts, the coronavirus pandemic caused its revenue for the first quarter to fall short of company guidance.

PayPal was significantly impacted during March by shelter-in place lockdowns and consumers spending significantly less. The hardest hit spending categories were travel, hospitality and entertainment, with Schulman commenting that three specific customers — Uber, Airbnb and events promoter Live Nation — saw rapid drops as consumers stopped traveling and events were cancelled or postponed.

PayPal was one of many payment companies that lobbied the Treasury Department to be offered as an option to receive stimulus payments as an alternative to a mailed check. PayPal also provided instructions for how to receive stimulus funds to a PayPal Cash Card, which could already receive tax refund deposits.

These efforts, combined with a global shift toward digital payments, led to a dramatic shift influx of net new accounts starting at the end of March. In the month of April PayPal added 7.4 million net new accounts. “I would characterize April as perhaps our strongest month since our IPO,” said Dan Schulman, PayPal's president and CEO, in an earnings call Wednesday.

European Union

UnionPay International is working with a set of payment technology companies to extend digital acceptance as more payments move online during the coronavirus pandemic.

The partners include UberEats, and Santander in Spain and Nexi, Italy's largest merchant acquirer. UnionPay is focusing on mobile order and delivery for food and pharmaceuticals, which includes an additional partnership with Glvo, a Spanish delivery service that's expanding to other European markets.

UnionPay International, which is a unit of China UnionPay, reports global online transactions have increased 20% during the past two months, with Europe increasing 10%. The U.K., France and Spain have all seen 60% increases in online payments in the past two months, while Switzerland has seen a 400% jump.

Virtual bet

U.K. fintech Confirma Pay will support Visa virtual cards in its mobile app, giving workers another option when making business payments.

The feature covers all contactless and mobile payment acceptance points, and captures payment details for reporting purposes--giving commercial card program managers visibility into employee spending.

By using a virtual card, Conferma contends it can reduce reliance on paper receipts and manual expense reports.

AP course

Digital accounts payable firm Tipalti has lined up three partnerships to add services for startups and mid-sized companies, with a focus on speeding transaction processing.

FloQast Glo is a software firm that supports faster payment closing for accountants; Affise is a Software-as-a-Service platform that supports affiliate marketing; and Myers-Holum is a business management technology firm. Tipalti plans to shorten transaction routing while making it easier to tie accounts payable to enterprise resource planning systems and other business practices.

Tipalti serves "gig economy" payroll and B2B payments for the companies with international transaction needs, with users including Roku and GoDaddy.

FedNow's community

The coronavirus has delayed several longstanding payment initiatives, but the Federal Reserve says the FedNow real-time payments project is still on target for a launch in the next three to four years.

The Federal Reserve has set up a community to share ideas and collaboration among industry stakeholders to influence features, design and implementation plans.

The community will be digital at first to avoid in-person meetings, and the Fed is asking payment companies to submit profiles detailing their experience, expertise and role in faster payment processing. The Fed says it will call on stakeholders in the coming years to participate in webinars, focus groups and small projects.

From the web

Google and Gates Foundation to help spread digital payments in developing countries
FORTUNE | Wed May 6, 2020
On Wednesday, a coalition of nonprofits and tech companies including Google and the Bill and Melinda Gates Foundation announced the formation of the Mojaloop Foundation, which will develop and promote a free, open-source real-time payments platform intended for nations and central banks.

Shopify posts surprise profit as lockdowns drive online traffic
REUTERS | Wed May 6, 2020
Shopify Inc said more people were shopping online as the COVID-19 crisis kept them at home, helping the Canadian e-commerce company post a surprise adjusted profit for the first quarter and sending shares to a record high.

Virgin Money suspends thousands of credit cards with no warning
THE GUARDIAN | Wed May 6, 2020
Virgin Money has suspended thousands of customers’ credit cards without warning, at a time when many households are on a financial cliff edge.

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