Daily Dash: India Consults On Payments Systems

August 19, 2022
India’s central bank has released a new discussion paper on payment fees, while a New Zealand bank becomes the latest to offer a mobile payments terminal for merchants, and Dubai leans into the metaverse.

India Opens Up Discussion On Payment System Fees

The Reserve Bank of India (RBI) has released a discussion paper on charges in payment systems.

The discussion paper asks a series of questions from the public regarding all aspects of charges in payment systems.

This includes fees in the popular instant payment service Unified Payments Interface (UPI), debit cards, credit cards and prepaid payment instruments (PPIs).

“Charges for payment services should be reasonable and competitively determined for users while also providing an optimal revenue stream for the intermediaries,” the RBI said in the announcement.

The consultation is part of a comprehensive review looking at various charges levied in the payment systems. It follows consumer complaints about high and non-transparent charges.

Interested parties can submit feedback via email until October 3.

New Zealand Bank Unveils Mobile Payments Terminal 

The Bank of New Zealand (BNZ), one of the country’s largest retail banks, has launched its BNZ Pay app. It will mean retailers can use their android phone as a contactless payment terminal.

Developed alongside Visa and Australian payment service provider Quest Payment Systems, the app will be free to use for merchants who settle with a BNZ account until the end of 2024 and after, a monthly fixed fee of NZ$10 (US$6.28) will be applied.

The service charge drops to zero in months when the app is not in use. As well as accepting payments, the app consolidates sales data into a dashboard and can issue invoices, manage customer profiles and send receipts by text or email.

Emirates NBD Looking For Metaverse Start-Ups

Emirates NBD, one of the largest banks in the MENA region, has launched a global accelerator programme for metaverse start-ups to enhance customer experience in the virtual space.

“With 94% of all financial transactions and requests conducted outside the branches, the bank is exploring new technologies in the web 3.0 world to expand its digital footprint and create immersive experiences for our customers,” the bank said in the announcement.

The state-owned bank is now looking for fintechs, digital experience start-ups and emerging technology players operating across the metaverse landscape to enhance its immersion in the virtual world.

This will include the development of a decentralised payment infrastructure for customers to create, monetise, buy and sell digital assets and services.

The programme is carried out in partnership with the Dubai International Financial Centre (DIFC) Fintech Hive and Microsoft.

The move is in line with the emirate’s ambitious Metaverse Strategy. This aims to place Dubai in the world’s top ten metaverse economies.

Pomelo To Launch World’s First Combined Credit And Remittance Card

Pomelo, a US-based fintech, has secured $70m in seed financing to launch a combined credit and international money transfer card — thought to be the world’s first of its kind.

The card will enable customers in the US to extend credit to family members abroad while avoiding remittance fees. The card’s first “corridor” will be the Philippines.

Unlike traditional money transfer services, transfers using Pomelo are paid for by merchant interchange fees and daily foreign exchange rates.

The Pomelo Mastercard is issued by Coastal Community Bank with a licence from Mastercard International, and is paired with Android and iOS mobile apps. 

US citizens and permanent residents aged 18 and over can apply for the Pomelo Mastercard and invite overseas relatives to join their family plan.

Relatives will receive a virtual card instantly and a physical card via courier delivery.

California Crypto Dealer Must Send Data To Tax Agency

The US Internal Revenue Service (IRS) has secured yet another court order authorising the agency to seek information from Californian crypto dealer SFOX.

The order obliges SFOX to send to the US tax agency data about Americans who conducted transactions in cryptocurrency worth at least $20,000 between 2016 and 2021 through SFOX and is intended to inform the agency of potential tax evaders.

The so-called “John Doe” summons has been a tool increasingly used by the IRS to collect information about possible violations of tax laws against Americans whose identities are unknown.

The tax agency has previously used John Doe summons to gather a vast amount of information about potential tax law breakers from Coinbase, Kraken and Circle.

Although the IRS has been brought to court, first by Coinbase and later by an affected crypto holder, the courts sided with the tax office in both cases.

Going forward, the IRS is expected to enhance its efforts to crack down on tax evaders. As part of the Inflation Reduction Act that President Joe Biden signed into law on Tuesday (August 16), lawmakers allocated an extra funding of $80bn to the IRS to be used to step up its enforcement over the next ten years.

All Roads Lead To Digital Rouble In 2024 For Russia

The Central Bank of Russia (CBR) has announced plans to begin rolling out a central bank digital currency (CBDC) in 2024.

According to a CBR policy briefing published on August 11, the launch will begin by gradually connecting banking institutions to its digital rouble platform.

At the same time, the CBR will work with other central banks to connect CBDC networks and facilitate cross-border payments and foreign exchange (FX) transactions.

The CBR said it plans to roll out its CBDC in phases to allow market participants to gradually get comfortable using it.

The CBR is currently running digital rouble tests ahead of a wider pilot scheme set in 2023, during which the bank will offer settlement in CBDC for transactions between individuals and enterprises.

In 2025, Russia plans to launch an “offline mode” for its CBDC.


Let 1,000 Cyborgs Bloom

Walletmor, a provider of under-the-skin payments implants, has announced that it has just sold its one-thousandth device to a customer in Turku, Finland.

In a LinkedIn post, the company said “This is another important milestone in the progress of Walletmor society.”

Launched last year, Walletmor is available for €199 in the EU, $299 in the US and the company hopes to expand its sales to the Middle East in the near future.

The Walletmor implant is a passive near-field communication (NFC) transponder consisting of a silicon chip, on which payment data is stored, encased in a metal sheaf that acts as an antenna.

The implants, which are about half a millimetre thick and about as long as a small safety pin, need to be installed at specialist clinics, of which there are at least 70 across Europe, including 5 in the UK. 

According to the firm, while many people will think of a cyborg as being Arnold Schwarzenegger in the Terminator, its invisible and almost imperceptible solution can “allow tech-enthusiasts to experience the latest trends, literally, inside-out.”  

Coin Center Weighs Suit Over Tornado Cash Sanctions

Crypto advocacy group Coin Center is considering a court action in wake of US sanctions targeting crypto mixer Tornado Cash.

Last Monday (August 8), the US Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash after it found that the crypto mixer helped launder more than $7bn worth of virtual currency, including hundreds of millions linked to the Lazarus Group.

The organisation now says that OFAC “overstepped its legal authority” by treating Tornado Cash autonomous code as a “person” and adding it to the sanctions list.

“How can it be proper to add to the sanctions list not a person, or a person’s property, but instead an automated protocol not under anyone’s control?,” the advocacy group poses the question.

It is now exploring the possibility of a court challenge against the action and will help users whose funds have been trapped at listed Tornado Cash addresses to get hold of their funds.

Cash No Longer King In Saudi Arabia

A new study has found that digital transactions have eclipsed cash in Saudi Arabia, in a drastic shake-up to the country's payments market.

In August 2021, according to a national payments usage study, only 38 percent of all payment transactions in Saudi Arabia were made in cash, down from 56 percent in July 2019.

The study confirms that cash is no longer the “dominant means” of consumer payment in the kingdom, with about 43 percent of household payments now made in cash.

“The use of card and electronic payments in Saudi Arabia has surged in recent years, with unprecedented growth of card payments over the last two years following on from a rapid rise since 2016,” the study noted.

The largest gainer has been card payments, especially those using near-field communications (NFC) technology at the point of sale (POS).

Between March 2020 and March 2021, POS card transaction volume grew by 127 percent. For the full year of 2021, POS transaction volume grew by 83 percent.

“COVID-19 is believed to have had a substantial impact on accelerating the growth in non-cash payments, especially in the consumer retail space,” said the study.

India: 99 Percent Of People Issued Aadhaar Numbers

Almost all Indian citizens, bar a few states, have been issued an Aadhaar number, which will now be necessary for access to welfare services. 

Aadhaar, a verifiable 12-digit identification number issued by the country’s Unique Identification Authority (UIDAI), has reached the crucial point of almost 100 percent use among citizens. 

According to the government, a “multitude of services and benefits” are now being offered to citizens due to the rollout of the ID. 

UK Co-op Makes Access To Cash Intervention

Co-op has committed to ensuring its brand continues to offer easy and affordable access to cash with a new set of initiatives. 

This includes protecting the use of cash in stores where customers are dependent on the payment method, as well as offering cash machines free of charge. 

The number of free-to-use ATMs in the UK has dropped by more than 12,000 since 2018, which comes to a quarter overall. 

Although the Co-op's "Way we pay" report reveals that cash use has fallen from 65 percent to 28 percent since 2016, in many areas cash payments remain as high as 44 percent, with counties in Northern Ireland, the Northeast, Wales and Scotland topping the list.

RBI Lays Down Ground Rules For India's Digital Lenders

The Reserve Bank of India (RBI) has implemented new digital lending rules designed to prevent mis-selling, breach of data privacy, unfair business conduct and the charging of “exorbitant” interest rates.

The new rules cover three areas: customer protections and conduct; data and technology; and regulatory reporting.

The customer protection and conduct requirements include a ban on third parties providing loan disbursals and repayments, a standardised Key Fact Statement (KFS) to be provided before each loan contract, and a ban on automatic increases in credit limit without the borrower’s consent.

The RBI’s data and technology requirements stipulate that data collected by digital lending apps must be “need-based”, must have clear audit trails and must only be only with the borrower’s explicit consent.

Finally, in terms of regulatory reporting, all lending sourced through digital lending apps is required to be reported to credit information companies, irrespective of its nature or tenor.

Malaysia's Central Bank Reassures On Payments System

Bank Negara Malaysia, the country’s central bank, has reassured stakeholders after a “potential data breach incident” with IPay88, a payments gateway service provider for banks and merchants.

In a notice, the central bank said the breach originated from and is confined to IPay88’s payment card system. The bank also mentioned “strong authentication methods” that would provide added protection against fraud to consumers, as well as saying that “customers will not be liable for any fraudulent or unauthorised transactions that may arise from this incident”.

The notice ended by saying that the bank takes any incident that could affect the confidence of the payment system seriously and advised consumers to notify their banks if they observe any irregular or unauthorised transactions on their cards.

US Top Senators Press OCC To Nix Crypto Guidance

Senators Elizabeth Warren (D-MA), Dick Durbin (D-IL), Sheldon Whitehouse (D-RI) and Bernie Sanders (I-VT) sent a letter to the Office of the Comptroller of the Currency (OCC) urging acting comptroller Michael Hsu to rescind previously issued cryptocurrency guidance.

The request concerns interpretive letters issued by former acting comptroller Brian Brooks which authorised banks to engage in certain crypto-related activities, including providing cryptocurrency custody service for customers, holding deposits that serve as reserves for certain stablecoins, and using independent node verification networks (INVNs) and stablecoins for payment activities.

Last year, following months of review, Hsu confirmed these letters, stating that banks can engage in these practices on the condition of receiving non-objection from their supervisory office.

“In light of recent turmoil in the crypto market, we are concerned that the OCC’s actions on crypto may have exposed the banking system to unnecessary risk, and ask that you withdraw existing interpretive letters that have permitted banks to engage in certain crypto-related activities,” wrote the lawmakers. 

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