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Daily Tearsheet: Digital payments lead to questionable financial decisions, and BNPL’s ‘dangerous illusion’ is fueling overspending

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Daily Tearsheet: Digital payments lead to questionable financial decisions, and BNPL’s ‘dangerous illusion’ is fueling overspending

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Power of Payments Ep. 10: Digital payments and overspending, Revolut Reader, mobile wallets vs physical wallets, and more

In episode 10 of Power of Payments, host Ismail Umar discusses how digital payments are making it easier for young consumers to overspend.

Although the recent growth in digital transactions is undoubtedly making shopping more convenient, it’s also making consumers more likely to spend beyond their means and make questionable financial decisions.

Ismail also talks about Revolut’s first venture into in-store payments, the global microchip shortage, as well as the growing level of consumer trust in mobile wallets.

Listen / Read more

Data Snack: Credit and debit cards are king; BNPL’s ‘dangerous illusion’ is fueling overspending

Recent J.D. Power research surveyed American consumers to learn which digital transaction methods are more popular, and how consumers are using the different options they have today.

The study found that generally, digital transactions are gaining traction across age groups. While credit and debit cards are front runners in overall utilization, newer tools like BNPL, mobile wallets, and P2P payments are earning high customer satisfaction scores, especially among younger consumers.

Credit and debit cards lead as consumers’ preferred method of payment by a mile — on the other hand, BNPL’s ease of use leads to consumers feeling detached from their expenses, making financial education all the more important today.

Read more (exclusive to Outlier members)

Just look at the charts

1.   Payments play a central role in the banking ecosystem 

Source: Panagiotis Kriaris

2. The digital wallets landscape

SourceNicolas Pinto

Today’s stories

Stripe cuts internal valuation by 28%
Stripe told employees in an email that the internal share price was about $29, compared with $40 in the previous internal valuation (WSJ)

Wall Street texting habit costs $1 billion in fines
Regulators are poised to extract about $1 billion in fines from the five biggest US investment banks – JPMorgan, Goldman Sachs, Morgan Stanley, BofA, and Citi – for failing to monitor employees using unauthorized messaging apps (Bloomberg)

Plaid to embed crypto account data into its platform 
Plaid is adding support for leading crypto exchanges to its data network — while the firm previously integrated with large exchanges on an ad hoc basis, the move is an indication that the company sees crypto as important to its growth (TechCrunch)

JPMorgan and Morgan Stanley profit miss puts a damper on Wall Street
JPMorgan Chase and Morgan Stanley reported a bigger-than-expected decline in second-quarter profits that signaled the end of the industry’s pandemic-era earnings boom (FT)

Monzo aims to ramp up growth despite fintech downturn
The boss of UK digital bank Monzo said he’s targeting growth rather than immediate profit during a turbulent time for the fintech industry, after nearly doubling annual revenue while widening losses (Bloomberg)

Revolut hits 20 million users on its seventh anniversary
Champagne corks are popping at financial super app Revolut as it celebrates its seventh anniversary by surpassing 20 million retail customers worldwide, processing over 250 million transactions a month (Finextra)

CFPB penalizes BofA over alleged illicit account freezing
The Consumer Financial Protection Bureau has leveled a $100 million fine at Bank of America for allegedly messing up the disbursement of state unemployment benefits during the pandemic (PYMNTS)

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