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$195.24 1.0  0.5%

Last Trade - 29/05/20

Large Cap
Market Cap £337.01bn
Enterprise Value £346.09bn
Revenue £19.35bn
Position in Universe 11th / 6364

BREAKINGVIEWS-Payment companies will emerge as lockdown winners

Fri 3rd April, 2020 9:49am
(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.) By Lisa Jucca MILAN, April 3 (Reuters Breakingviews) - Widespread lockdowns will be good for electronic money. The coronavirus pandemic has made people reluctant to touch banknotes and reduced the opportunities to spend them, hastening the transition to digital cash. The $1.9 trillion payments industry should be a winner when the crisis eases. Widespread retail closures and the refusal by some vendors to accept cash have dramatically reduced the amount of physical money changing hands. The sum withdrawn from British ATMs almost halved following the country’s lockdown, according to network operator LINK. Card issuers including Mastercard MA.N have responded to fears of contagion by doubling the upper limit for contactless transactions in several nations. That’s reduced the need for shoppers to tap PIN codes into devices – further encouraging adoption of digital payments. Banknotes were already on the way out in countries like Sweden and Britain. But the crisis may also make notes and coins less popular in Germany or Spain, where only a minority of retail transactions were previously electronic. Retailers and restaurants are also pushing digital payments as they switch to online sales and home deliveries. For many small businesses, it’s their first experience with e-payments. Maurizio Corrao, owner of Milan’s Choco Rock café, says he ordered a wireless point-of-sale terminal in order to offer direct home sales of cakes and pastries. The collapse in air travel, holiday bookings and restaurant visits means overall payments volumes have plummeted. Cross-border transactions on Visa’s network were down 19% year-on-year in the month to March 30. Still, emergencies can provide a catalyst to change habits. Limits on ATM withdrawals imposed during the Greek debt crisis led to a trebling in debit card usage in the country, say Goldman Sachs analysts. UK-listed mobile payments and data company Bango BGO.L said average online consumer spending in Asia rose 40% for food and over 20% for streaming, online goods and gaming after lockdowns started in the region. Investors are betting on the digital shift lasting when the lockdowns end. Shares in Amsterdam-based Adyen ADYEN.AS have gained 1.3% this year, against a 25% fall in the STOXX Europe 600 index. And Italian rival Nexi NEXII.MI has lost just 1.5% over the same period. If cash becomes another victim of Covid-19, payments companies will be the obvious winners. On Twitter CONTEXT NEWS - The number of cash withdrawals on the UK’s LINK network fell to 21.2 million in the week ending March 29, down from 36.3 million in the previous week, according to data published by the ATM operator. Customers withdrew 1.08 billion pounds, down from 1.81 billion pounds a week earlier. - Payments volumes on Visa’s U.S. network in the month to March were down 4% on the same period of 2019, the payments operator said in a regulatory filing on March 30. Cross-border volumes were down 19% year-on-year in March, Visa said. - Shares in Dutch mobile and digital payments provider Adyen were up 1.3% for the year as of April 2. Italian payments company Nexi, which listed last year, is down 1.5% over the same period, while rival Worldline is down 17.3%. The benchmark STOXX Europe 600 index has dropped 25%. - Global payments revenues totalled $1.9 trillion in 2018, up 6% from the previous year, according to a report by McKinsey. - For previous columns by the author, Reuters customers can click on JUCCA/ - SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ UK LINK data Visa filing McKinsey report ECORYS report ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Editing by Peter Thal Larsen and Oliver Taslic) (( ; Reuters Messaging:
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