The news: Synchrony may develop its own digital wallet—though for now, it’s content with allowing its digital cards to be accessed via third-party wallets like Apple Pay, Google Pay, and Samsung Wallet, Synchrony chief growth officer Mike Bopp told Payments Dive. Bopp said that many customers still opt for Synchrony’s physical cards but the firm is seeing customers “segueing to digital.”
Why it’s worth watching: Synchrony is weighing a potential digital wallet down the road as the payment method gains more steam and as its card-based revenues face regulatory pressure.
Recent regulatory scrutiny surrounding card fees threatens to undermine a key revenue source for Synchrony—which may be why it's looking into a branded digital wallet. The Consumer Financial Protection Bureau is considering lowering the amount credit card issuers can charge for late payments. Late fees are about 17% of Synchrony’s net interest income, according to UBS analysts. A digital wallet may be a way for the firm to pad a blow to card revenues since it could open the door to marketing and loyalty benefits that drive higher spending.
Weighing the pros and cons: A digital wallet could be a valuable investment for Synchrony—but there are risks involved.
This article originally appeared in Insider Intelligence's Payments Innovation Briefing—a daily recap of top stories reshaping the payments industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.
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