Here are the week’s main news stories in the world of small business and digital payments:
Asia set to overtake US for cashless payments
Asia will soon surpass the US in terms of the total value of cashless payments, according to a report by consultant Capgemini. The report estimates that the total value of cashless payments made in the US will grow by 4.7 per cent, rising to $184.5 billion in transactions in the next year. In comparison, emerging Asian markets are set to rise by 30 per cent to $208.7 billion in 2020. This means the US is set to fall behind as the world’s largest cashless region to emerging markets in Asia due to popular and well-established payment systems including Alibaba’s Alipay and Tencent’s WeChat Pay.
Small-business confidence hits eight-year low
Confidence among small businesses reached an eight-year low this month at the beginning of December, according to the Federation of Small Businesses (FSB) Small Business Index (SBI), which reached its lowest point since the last recession. The survey showed that 46 per cent of small firms expected their performance to worsen over the next three months. Just 24 per cent said they expected performance to improve. Confidence is particularly low among retailers, with two-thirds expecting their businesses’ performance to decrease over three months. The survey also found that the amount of small businesses reporting declining profits (42 per cent) had reached a five-year high.
PayPal enters China with GoPay acquisition
PayPal has acquired a 70 per cent equity stake in payment gateway provider GoPay, making it the first foreign payment platform to provide online payment services in China. GoPay has licences for both online and mobile transactions, and mainly provides payment products for e-commerce, cross-border commerce and tourism. Similarly to PayPal, GoPay allows merchants to accept payments on their websites when customers are shopping online. China’s payment market today is currently led by local players, such as Alipay and WeChat Pay.
Riksbank aims to reclaim payments role
Sweden’s central bank, Riksbank, is planning a not-for-profit system for the instant settlement of payments, in a litmus test for other central banks. The move is a response to the diluted influence of the bank over its own financial system thanks to the declining use of banknotes and commercial banks controlling Sweden’s electronic payment infrastructure. The head of the Bank of International Settlements (BIS) recently said central banks should remain the foundation of payments systems to ensure a level playing field, particularly as big technology firms enter finance.
Indian firms to face fines for not accepting digital payments
Shops or companies with an annual turnover of 500 million rupees or more will be required to provide digital payment facilities to customers as part of the Indian government's efforts to reduce the use of cash across the economy. If businesses fail to accept payments in the prescribed digital modes from 1 February 2020, they will face fines of 5,000 rupees per day.
Minimum wage hike announced
Almost three million minimum-wage workers will take home up to £930 extra each year under new plans announced by the UK government. The National Living Wage will jump from £8.21 per hour to a minimum of £8.72 per hour in April. Meanwhile, 21- to 24-year-olds receiving the National Minimum Wage will also receive a hike from £7.70 to £8.20 an hour. The cash boost, which is four times the rate of inflation, still falls short of the £9.30 hourly rate called for by the Living Wage Foundation, which claims the higher pay is required to meet the rising cost of living.
Indonesia plans fixed fees for e-wallet transactions
Indonesia reportedly plans to impose fixed fees on some e-wallet transactions, in a move that could restrict a key revenue stream and raise costs for payment start-ups backed by the likes of Alibaba’s Ant Financial. Providers of e-wallet services in Southeast Asia’s largest economy currently customise fees for vendors, charging a premium for big retailers and absorbing costs for smaller merchants in an effort to get them to use their platforms. But Bank Indonesia is believed to have held talks with the biggest digital-payment start-ups to make fees on QR code transactions uniform, building on its move in August to standardise electronic payments that use the matrix barcode.