Daily Dash: BaFin Comes Down Hard On E-Money Institution

September 8, 2023
The German Federal Financial Supervisory Authority has prohibited the electronic money institution Payone from carrying out transactions for certain customers, while Hyundai has launched an in-car payment service.

BaFin Prohibits Transactions By E-Money Institution 

The German financial regulator BaFin has prohibited Payone, an electronic money institution, from carrying out transactions for certain business customers due to deficiencies in its financial crime controls. 

BaFin has also ordered a ban on new customers in this area. The ban on transactions and new customers is intended to prevent the electronic money institution from being misused for money laundering.

In a special audit ordered by BaFin and not yet completed, it was found that Payone had serious deficiencies in compliance with and the implementation of the increased due diligence obligations. 

As a result of inadequate security systems, Payone had built up a conspicuous high-risk portfolio in its e-commerce business area, BaFin said.

Payone's business model includes processing transactions for online merchants, and findings from ongoing supervisory activities indicate that retailers' websites are linked to, among other things, fraudulent subscriptions, phishing and fake shops.

Hyundai To Launch In-Car Payment Service By Year-End

Hyundai’s US arm has confirmed that it will launch Hyundai Pay, an in-car payment service, when sales of the latest Hyundai Kona model go live later this year.

In a statement, the automaker said that the Hyundai Pay system allows customers to find and pay for things on their vehicle’s touchscreen using stored card details.

Hyundai has also partnered with Parkopedia to launch Hyundai Pay’s first service, a new parking payment system.

This system enables US drivers to locate, reserve and pay for parking at 6,000 locations from inside their vehicle, after an initial set-up.

Nine other Hyundai models will get Hyundai Pay through model year changes or remote updates in future.

Hyundai’s moves in the payment space follow those of Mercedes-Benz, which launched a biometric in-car payment system in Germany in March this year.

EU Names Six Gatekeepers Under Digital Markets Act

The European Commission has designated six gatekeepers under the bloc’s Digital Markets Act (DMA), namely Google, Amazon, Apple, ByteDance, Meta and Microsoft.

These firms have six months to comply with a set of requirements aimed at increasing competition.

For instance, the bigtechs will have to provide interoperability for third parties with their own services, and will be prohibited from discriminating against third parties' products in favour of their own.

In April, as covered by Vixio, the commission designated 17 very large online platforms and two very large online search engines under the Digital Services Act (DSA). 

Together with the DMA, this forms part of the bloc’s plan to make EU competition rules fit for the digital age.

UK Finance To Test Regulated Liability Network For Retail Payments

UK Finance has announced plans to launch a proof-of-concept study of a new financial market infrastructure known as the Regulated Liability Network (RLN).

The study will test three use cases of the RLN, namely consumer domestic payments, wholesale cross-border payments and securities settlements.

The RLN is a shared ledger for central bank money, commercial bank money and electronic money, with partitions for each regulated entity to record, transfer and settle their liabilities on the same network.

“The purpose of the RLN is to create a new substrate for sovereign, regulated currencies that enables innovation around commercial bank money and is not just limited to central bank liabilities,” said UK Finance.

“Some of the core features of RLN would mean that it is ‘always on’, ‘programmable’ and can support ‘multi-asset’ settlement, thanks to the adoption of distributed ledger technology (DLT).”

'Hang Up Now' - Monzo Launches New Feature To Help Identify Scammers

UK neobank Monzo has launched a new feature that will tell customers whether it is really the bank calling them, and whether to stay on the call or hang up.

“If someone calls you claiming to be from Monzo, you can now check to see if they’re telling the truth or not in the Monzo app,” the bank said in a statement.

“It’s a new feature we designed to stop fraudsters from tricking you into sending them money by convincing you they work for Monzo.”

If someone calls and says that they work for Monzo, customers can now open the Monzo app and head to "Privacy & security" in Settings.

If the "Monzo call status" is showing that a member of the Monzo team is not talking to you, customers should hang up immediately and report the call to the bank. Reports can be filed easily by tapping the call status.

Indian Central Bank Publishes Rules For UPI-Based Credit Lines

The Reserve Bank of India (RBI) has published a new directive on the operation of pre-sanctioned credit lines by banks using the Unified Payments Interface (UPI).

As noted by the RBI, the directive expands the scope of permitted uses of UPI by banks to include credit lines as funding accounts for instant payments.

Only scheduled commercial banks will be able to use this facility and, to do so, they must obtain prior consent from both the board and the end user.

The bank must also publish a policy statement on the use of such credit lines, alongside terms and conditions that include items such as credit limits, periods of credit and interest rates.

In April, as covered by Vixio, the RBI first suggested that UPI could soon be repurposed for direct bank-to-consumer credit provision, as a way to reduce the cost of credit to end users.

Germany’s Financial Supervisory Authority Suffers Cyberattack

Germany’s Financial Supervisory Authority (BaFin) has reported that its website went down on Friday (September 1) due to a distributed denial of service (DDoS) attack.

“BaFin has taken appropriate security precautions and, immediately after the attack began, initiated defensive measures which are effective,” the regulator said on X.

As a result of those measures, BaFin’s website was temporarily down, although it said all other BaFin systems worked “without restrictions”.

BaFin apologised for the inconvenience and said it is “working intensively” to restore full access to its website.

Although several newspapers reported that the website was down for four days, Vixio could access the regulator’s site on Tuesday (September 5) afternoon.

India’s Paytm Rolls Out 'Tap To Pay' Merchant Acceptance Tool

Paytm has launched Card Soundbox, a new “tap to pay” payment acceptance device that enables merchants to accept both mobile and card payments up to ₹5,000 ($60) across all Visa, Mastercard, Amex and RuPay networks.

The device combines Paytm’s existing Soundbox technology with near-field communication (NFC) and uses 4G network connectivity.

The Indian fintech said its Card Soundbox is an “industry-first solution” that provides both audio and visual payment confirmation through an LCD display to the merchant and the customer.

“Audio payment alerts have transformed digital payments in India and enabled many merchants to seamlessly digitise their businesses,” said the National Payments Corporation of India (NPCI).

“Paytm Card Soundbox is India’s first Soundbox that will also accept contactless card payments and would further accelerate cashless transactions in the country,” the operator of India’s UPI instant payments system added.

Digital Rupee Apps Become Interoperable With UPI

YES BANK has become one of several Indian banks to provide interoperability between its central bank digital currency (CBDC) app and the Unified Payments Interface (UPI).

In a statement, YES BANK said the launch of the new feature will allow customers to scan any UPI QR code through the YES BANK Digital Rupee app and make or receive transactions.

“This move is set to significantly expand the reach of the Digital Rupee (e₹) and underscores the Bank's commitment towards propelling digital innovations, and providing a wide range of transactional options for users across the nation,” the company said.

HDFC Bank, IDFC Bank and State Bank of India (SBI) have also launched a CBDC-to-UPI interoperability feature as of this week.

Study Finds 'Huge Gender Disparity' At Crypto Firms

Looking at the CEOs of the top 50 crypto and blockchain companies, a study by Forex Suggest finds that only 3 or 6 percent of the firms have a female CEO, while 94 percent of CEOs are male.

“Our analysis revealed a huge disparity between the number of male and female CEOs in the crypto and blockchain space,” the forex platform said.

“This clearly suggests that the industry is currently dominated by men, the extent to which could be hurting the crypto movement in several ways,” it added.

The study found that Changpeng Zhao (CZ) of Binance, Brad Garlinghouse of Ripple and Brian Armstrong of Coinbase are the most influential male CEOs.

Among female CEOs, Ola Doudin of BitOasis, a crypto exchange based in Dubai, Ambre Soubiran of French digital asset data provider Kaiko and Simone Maini of UK-based blockchain analyst Elliptic were named on the list.

They took the 15th, 34th and 42th places on the overall list based on their influence and online reach.

Bank Indonesia Hands Over Open Banking Keys To National Association

Bank Indonesia, the country’s central bank, has transferred the management of its open banking to the National Open API Payment Standard (SNAP) to the Indonesian Payment System Association (ASPI).

Launched in August 2021, SNAP is a national standard set by Bank Indonesia to facilitate open interconnections between payment processing applications.

With Bank Indonesia now handing over the management of SNAP to ASPI, the central bank aims to encourage further innovation in the country’s open banking sector.

“It is hoped that there will be an expansion of SNAP services and users in the future, so that it can increase efficiency, security and innovation in the payment sector in Indonesia,” BI said in a statement.

India's UPI Hits 10bn Monthly Transactions For First Time

India’s instant payments system has racked up more than 10bn transactions in a single month for the first time in its history.

In August, the Unified Payments Interface (UPI) handled 10.58bn transactions — an increase of 61 percent over the same period last year.

UPI’s success was among the talking points at the 15th BRICS Summit in South Africa last month, where Indian Prime Minister Narendra Modi touted the launch of UPI internationally, in markets such as France, the UAE and Singapore.

The news also follows the Reserve Bank of India’s decision to raise the limit on offline UPI Lite payments from ₹200 ($2.42) to ₹500 ($6.05), as announced last month.

UPI Lite is the single-tap service designed for small-value payments. The new limit has already been implemented by the National Payments Corporation of India (NPCI), the operator of UPI.

Afterpay To Cut Off Amex Transactions From Next Month

Afterpay, the Block-owned buy now, pay later (BNPL) service, has announced that from October 2 it will no longer accept payments from American Express (Amex).

In an email sent to customers, Afterpay urged affected customers to update their payment details before the deadline, but gave no reason for the decision to axe Amex.

Brad Kelly, managing director of Australia’s Payment services consultancy, received the email as a customer and shared it online.

Kelly added that Amex was “never a good fit for Afterpay”, and speculated that the only reason Afterpay had accepted Amex in the first place was due to restrictions placed on the BNPL by Capital One.

In November 2020, Capital One banned its credit card customers in the US from using their cards to make Afterpay purchases. “Amex was a fallback for Afterpay’s USA launch,” said Kelly.

UK BNPL Zilch Hints At IPO After Opening Trading On London Stock Exchange

UK buy now, pay later (BNPL) firm Zilch has celebrated its third birthday by opening trading at the London Stock Exchange (LSX) and hinting at an initial price offering (IPO).

On Thursday (August 31), Zilch co-founders Philip Belamant and Sean O’Connor rang the opening bell at the LSX, and revealed that the platform now has more than 3.5m registered customers.

Speaking with Bloomberg TV, Belamant said the firm, which is currently valued at $2bn, is considering an IPO in either the UK or the US, but is currently undecided on the location.

Belamant praised the LSX and the UK government for its support for fintech IPOs, and added that Zilch is on “a clear course to profitability and beyond”.

Shopping through the Zilch app allows customers to pay for items over six weeks interest-free, and allows customers to receive cashback and other rewards, similar to those offered by credit cards.

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