Daily Dash: G20 TechSprint Winners Announced

October 14, 2022
The Bank for International Settlements and Bank Indonesia unveil the winners of their central bank digital currency competition, trade association reports surge in EU ATM attacks and US regulator reveals the high fees in college banking.

BI, BIS Unveil 2022 CBDC Tech Sprint Winners 

Bank Indonesia (BI) and the Bank for International Settlements (BIS) Innovation Hub have announced the winners of the G20 TechSprint 2022, which revolved around concepts for a central bank digital currency (CBDC).

Judges for the competition included central bank leaders from the Bank of England and the Monetary Authority of Singapore, as well as organisations such as the OECD and World Bank. 

“This TechSprint has allowed us to improve our practical work on CBDCs. These technological solutions add to the central banks' toolbox and provide a springboard for further development of CBDCs.”

Overall, there were three winners.

​The Dragonfly Fintech team from Singapore won the "Implementing effective and robust issuance, distribution and transference" category with an end-to-end CBDC solution. 

A collaboration between financial institution Bitt and French security company IDEMIA won the “Enabling financial inclusion” category with a secure offline CBDC payment solution. 

Thirdly, Partior, a company also hailing from Singapore, won the “enabling connectivity and interoperability” category with the “Project Naucratis: Enabling Connectivity & Interoperability for mCBDC” solution.

Surge In European Terminal Fraud Attacks

ATM related fraud attacks are up 81 percent, from 2,775 to 5,022 incidents, according to data from the European Association for Secure Transactions (EAST)

This increase was primarily due to a rise in cash trapping at ATMs, which increased by 284 percent, from 819 to 2,984 incidents.

In addition, a new type of "man-in-the middle" attack, which relies largely on eavesdropping, has become apparent in the data, with 501 cases reported.

According to EAST's European Payment Terminal Crime Report, covering the first half of 2022, total fraud losses of €97m were reported, down 5 percent from the €102m reported in H1 2021. 

International issuers accounted for most of these losses due to card skimming, totalling €80m.

“While an increase in cash trapping at ATMs has led to the surge in terminal fraud, the new man-in-the-middle/relay attacks are much more complex and, if successful, can lead to cash out at ATMs,” said Lachlan Gunn, EAST executive director. “Our Expert Group on All Terminal Fraud (EGAF) is monitoring and analysing these attacks, with close cooperation between industry partners and law enforcement in the affected countries.”

CFPB Study Finds High Fees In College Banking

US college students may end up paying higher prices for financial products in bank-college financial arrangements, a new report published by the Consumer Financial Protection Bureau (CFPB) shows.

Partnerships between banks and colleges help the educational institutions disburse federal financial aid and provide financial products to students, such as credit cards, and prepaid and debit accounts.

According to the report, a small set of financial institutions partner with hundreds of colleges and universities in the US and there is little transparency about the details of these arrangements.

Although these products are intended to support students’ financial health, the CFPB says they are often more costly than what students might otherwise find in the market.

As a result, it raises questions about “whether some marketing deals between colleges and financial institutions comply with Department of Education rules”, the agency says. 

“Today’s report suggests that there is more work to do to ensure that students are not steered into school-endorsed products with junk fees,” said CFPB director Rohit Chopra.

Four In Five UK Consumers Worried About Fraud, Says Study

A new survey has found that eight in ten Brits are worried about fraud, with identity theft, bank impersonation and phishing scams among their top three concerns.

In a survey of 2,000 consumers by Trust Payments and Perspectus Global, 74 percent said identity theft is their top concern, followed by bank impersonation (54 percent) and phishing scams (45 percent).

The survey also found that three in ten respondents are concerned about the safety of making payments online.

As reported by VIXIO, according to UK Finance, £609.8m was stolen by criminals through authorised and unauthorised fraud in H1 2022. Despite being a 13 percent decrease on the same period last year, UK Finance warned that this is no reason to get carried away.

ECB On Look Out For Digital Euro Scheme Rulebook Manager

The European Central Bank (ECB) is looking for a senior expert from the payments industry to coordinate the group that will draft a potential digital euro scheme rulebook, the set of rules for payment transactions with a digital euro.

The successful applicant will set up and coordinate the Rulebook Development Group. This will consist of representatives from Eurosystem national central banks and market representatives, including consumer representatives. 

They will also manage and facilitate the drafting and development of the digital euro scheme rulebook, and report to the Digital Euro Programme Manager in the ECB’s Directorate General Market Infrastructure and Payments (DG-MIP).

The work, which will be an integral part of the digital euro project, is expected to commence in January 2023.

Deutsche Bank, Fiserv Launch New SME-Focused Payments Company In Germany

Deutsche Bank has partnered with US acquirer Fiserv to launch Vert, a new company that offers payment acceptance and banking services designed for small and medium-sized enterprises (SMEs).

Initially, Vert will offer three solutions: Cover Flex, a mobile-optimised payment acceptance device; The Go by Vert app, an Android-based contactless payment terminal; and PAX A50, a lightweight card reader.

Vert describes itself as the only German provider to combine payment acceptance, payment processing and traditional banking solutions.

Among its offerings, Vert provides next-banking-day payouts and a single merchant portal with an overview of all transaction data, invoices and reports.

Vert said it will primarily aim to tap into Deutsche Bank’s network of 800,000 SMEs, although its solutions will also be available to non-Deutsche Bank customers.

FCA Updates Branch Closure Guidance

The Financial Conduct Authority (FCA) has updated its guidance stating that it expects banks to carry out thorough checks on the impact that partial branch closures will have on customers.

Until now, the FCA guide set such a requirement only in case of permanent branch closures.

"The industry must make sure they are supporting people and businesses who rely on cash and banking services. That is why we’ve published updated guidance for banks that are considering branch closures and reminded them that we want alternatives, such as banking hubs, delivered quickly and as a priority," said Sheldon Mills, FCA executive director consumer and competition.

Almost half of the UK’s bank branches have closed since 2015, according to Which?.

Crypto Exchange Bittrex Settles US Treasury Case For $53m

The Office of Foreign Assets Control (OFAC) and Financial Crimes Enforcement Network (FinCEN), both part of the US Treasury, have announced settlements for more than $24m and $29m, respectively, with virtual currency exchange Bittrex.

The agencies found violations of multiple sanctions programmes and willful violations of the US federal anti-money laundering (AML) and suspicious activity report (SAR) reporting requirements.

This is OFAC’s largest virtual currency enforcement action to date and it also represents the first parallel enforcement actions by FinCEN and OFAC in this space. 

Samsung Launches New Tap To Pay Smartphones With Built-In POS System 

Samsung Belgium has launched a new line of smartphones that allow merchants to use their device as a point of sale (POS) system, with no additional equipment required.

The Samsung Tap to Pay smartphone line comes pre-installed with Viva Wallet, an app that can turn any Android device into a card payment terminal.

In a press statement, Samsung said it launched the new Tap to Pay smartphones to help Belgian merchants comply with a new law, introduced in July, which mandates that they must offer at least one electronic means of accepting payments.

Samsung’s Tap to Pay smartphones include the Galaxy XCover6 Pro, the Galaxy S22 and the Galaxy Z Fold4.

UPDATE: PayU's $4.7bn Acquisition Of BillDesk Falls Through In India

Prosus, the Netherlands-based parent company of India’s PayU payment gateway, has announced that it has terminated an agreement to acquire BillDesk, a rival digital payments provider.

In a statement to investors, Prosus declined to say why the deal had fallen through, except that “certain conditions” were not fulfilled.

“Closing of the transaction was subject to the fulfilment of various conditions precedent, including approval by the Competition Commission of India (CCI),” said Prosus. 

“PayU secured CCI approval on 5 September 2022. However, certain conditions precedent were not fulfilled by the 30 September 2022 long stop date, and the agreement has terminated automatically in accordance with its terms and, accordingly, the proposed transaction will not be implemented.”

As reported by VIXIO last month, the deal would have been India’s largest web service acquisition since 2018, when a US supermarket giant acquired a majority stake in e-commerce platform Flipkart for $16bn.

Prior to the termination, PayU had said that after absorbing BillDesk it would be one the largest online payment providers in the world, handling a combined total payment volume (TPV) of $147bn per year.

Peru Issues Payment Interoperability Rules

The Central Reserve Bank of Peru (BCRP) has published interoperability rules and standards to improve the efficiency of the digital payments market in the country. 

By June 2023, all regulated financial entities must interoperate with each other using the payment rails of the private sector clearing house Cámara de Compensación Electrónica (CCE).

This BCRP decision provides the possibility for consumers to decide how to make their payments, either from an electronic wallet or a bank account to another person in any electronic wallet or bank account.

The lack of interoperability has been a huge hindrance to the widespread adoption of digital payments in Peru, as reported by VIXIO.

Last month, the CCE announced plans for creating a new platform that will facilitate interoperability among all payment systems and financial services in the country.

“Undoubtedly, this regulation represents a great improvement in the digital payment ecosystem”, the CCE said in a comment.

Real-Time Payment Benefits Hinge On Interoperability, Says Payments NZ

Payments NZ, the operator of New Zealand’s core payment systems, says real-time payments (RTP) are an important benefit for the economy but the lack of interoperability between the various national RTP systems remains to be a challenge.

“Providing functionality and connectivity within real-time platforms beyond payments instruments can help create a significant national infrastructure asset which opens new economic opportunities beyond those traditionally associated with account-to-account payments and which acts as an important building block of future digital economies,” according to the agency.

However, creating an effective cross-border system hinges on agreeing technological standards, operational governance, dispute management and regulatory frameworks across international borders, the organisation says.

The statements have been made as part of Payments NZ’s 2022 Environmental Scan Report, which also discusses trends regarding embedded finance, open banking, cryptocurrencies and central bank digital currencies (CBDC).

FTX Crypto Exchange Expands Account-Linked Visa Debit Card Beyond The US

Crypto exchange FTX has announced a new partnership with Visa that will allow users outside the US to pay in cryptocurrency using their exchange account.

Under the deal, FTX will begin offering FTX-branded Visa debit cards to FTX customers internationally, with a focus on countries in Latin America, Europe and Asia in the initial phases of the rollout.

The debit cards are currently available in the US and will now be rolled out in more than 40 additional countries.

The next phase of the rollout is expected to take place in Europe before the end of the year, with additional regional launches planned for 2023.

EMVCo Publishes New Kernel Specifications

EMVCo, the global technical body owned by the major international card networks, has released new specifications to streamline global contactless payment acceptance.

The so-called kernel specification provides a single set of functions for payment acceptance devices to process contactless transactions.

Currently, there are more than 20 different payment system contactless kernels in use around the world, which creates a complex environment for merchants and hardware terminal vendors to support and maintain.

“The EMV Contactless Kernel Specification is the latest example of the payments industry collaborating to deliver a specification that supports marketplace needs, and advances seamless and secure payments globally,” said Alisa Ellis, EMVCo executive committee chair. 

“EMVCo stakeholders identified an opportunity to standardise and simplify the contactless environment with an EMV specification that over time can help reduce the number of contactless kernels that stakeholders need to support and maintain, creating opportunities for merchants, solution providers and payment systems to reduce costs, and improve roll-out speed and time to market.”

The publication of the specifications follows a consultation earlier this year.

OFAC Issues Guide On Sanctions Compliance For Instant Payments

The US Department of the Treasury's Office of Foreign Assets Control (OFAC) has published a sanctions compliance guidance for instant payment systems.

The guide reminds firms that all US persons are required to comply with OFAC regulations.

It reiterates that there is no one-size-fits-all approach to managing sanctions risks and financial institutions should take a risk-based approach to manage sanctions risks in instant payment systems.

OFAC also encourages developers of instant payment systems to incorporate sanctions compliance considerations and features as they develop these systems.

Singapore Authorities Unveil New Anti-Terrorist Financing Strategy

Singapore’s financial watchdog, home affairs department and finance ministry have unveiled a “five-pronged” National Strategy for Countering the Financing of Terrorism (CFT). 

Singapore’s threats are posed by regional and international terrorist groups, as well as radicalised individuals using financial resources for terrorism purposes, the authorities said. 

However, they also acknowledge that payment service providers (PSPs) carrying out cross-border money transfers and banks are inherently more vulnerable to terrorist finance threats. 

This is due to the relative ease and speed with which their services may be used, coupled with Singapore being a financial and transport hub, and its proximity to countries exposed to terrorism activities.

Of the five points in the strategy, the authorities have said that they want a joined-up, whole government approach, with review of the regime regularly, as well as a strong legal and sanctions framework.

The authorities have further said that they want to ensure that the country’s AML/CFT regulatory framework remains robust, while the risk-focused supervisory framework is effective and aligned with international standards and best practices.

They commit to further strengthening the private sector’s awareness of risks and CFT controls through targeted outreach, industry guidance and risk-focused supervision by sector supervisors such as the Monetary Authority of Singapore (MAS).

The approach also has an internationalist element. The authorities suggest that they want to increase efforts to provide and seek legal assistance from other jurisdictions, as well as leveraging informal channels of cooperation, to proactively tackle terrorist financing.

Binance Caught In $570m Hack But Manages To Retrieve Most Of The Funds

Binance, the world’s largest crypto exchange, was almost drained of $570m worth of crypto when a hacker compromised its BSC Token Hub late last week.

The BSC Token Hub is a cross-chain bridge that links between the BNB Beacon Chain and BNB Chain, each of which carry two different formats of crypto token.

A hacker was able to duplicate a transaction of 1m BNB, Binance’s proprietary crypto-asset, which was worth about $570m at the time of the attack.

Binance acted quickly to freeze the stolen funds, however, and escaped with only $100m being lost in the end, according to a statement from Binance CEO Changpeng Zhao.

“Some setbacks make you stronger. Never waste an opportunity,” Zhao said defiantly on Twitter.

However, as noted in a previous Week in Crypto, cross-chain bridges are becoming an all-too-obvious vulnerability in the crypto ecosystem, and one that is all-too-often exploited by hackers.

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