Lloyds Banking Group’s rumoured £120 million acquisition of Curve highlights just how critical digital wallets have become in shaping the future of payments. With Google Pay and Apple Pay consumers increasingly expecting seamless, secure ways to manage multiple cards and payment methods, investing in wallet innovation now makes strategic sense. So why is Lloyds interested in Curve?

Curve recently launched Curve Pay, an NFC alternative to Apple Pay and Google Pay, and Lloyds may be planning to use this to launch a proprietary tap-to-pay solution to avoid the fees that Apple charges issuers. However, getting customers to move away from Apple Pay is a substantial undertaking given its ease of use, and the large and famously loyal Apple customer base. In any case, why would Lloyds need Curve when they could go directly to Thales whose NFC technology powers Curve Pay?

There is another possibility. Lloyds may be interested in Curve’s wallet funding capabilities rather than NFC. Curve’s key value proposition has always been its ability to support multiple funding sources – debit, revolving credit, eMoney, BNPL, and even Open Banking – all fronted by a standard scheme card that can be loaded into Apple Pay or Google Pay. The Curve wallet works by enabling back-to-back transactions, rather than requiring pre-funding like Revolut. The payment on the Curve Mastercard that fronts the wallet triggers a corresponding transaction on the selected funding source in real time.

Lloyds could use the Curve wallet technology to issue a (virtual) card that allows the user to select which type of payment they want to make via the Lloyds app before the transaction, or via “go back in time” after the transaction. Curve smart rules also allow users to direct specific types of transactions to a particular funding source, for example paying grocery purchases via debit but putting airline flights on revolving credit or BNPL instalments. Lloyds could pre-load their own funding sources (debit, credit, BNPL etc) into the wallet when the card is issued and access them directly via Lloyds payment systems rather than via scheme rails, avoiding the scheme fees that make the economics of back-to-back scheme card transactions unattractive. They also could easily integrate partner products into the wallet.

Curve potentially allows Lloyds to offer a new type of transaction account to consumers, one which is digitally native and unconstrained by perceptions of the traditional bank product. Instead of opening a current account, applying for a credit card, and using merchant’s BNPL offers, customers could open an account with the flexibility to choose the funding type appropriate to each individual transaction. It would also allow Lloyds to claw back BNPL volume from Klarna, Clearpay etc. by offering Lloyds BNPL on any transaction at any merchant. Digital customers may find the ability to view and manage all their funding options from the Lloyds app very attractive. The combination of the Lloyds brand trust with this new category of account is potentially very powerful.