Daily Dash: Irish Mobile Payments Venture Hires New Chair

August 12, 2022
<span style="font-size:11pt; font-variant:normal; white-space:pre-wrap"><span style="font-family:Arial"><span style="color:#000000"><span style="font-weight:700"><span style="font-style:normal"><span style="text-decoration:none">An Irish interbank mobile payments app has hired a new board chair as it gears up for launch, Amazon expands its palm-reading payment technology and, in Argentina, results are released of a digital ID pilot using blockchain technology. </span></span></span></span></span></span>

Synch Names Chairperson

Synch, the instant payments service being backed by Irish banks, has appointed the former chief of the UK's Chaps high-value payment system, Tim Fitzpatrick, as its chairperson.

Synch intends to build out a mobile money transfer app, called Yippay, and it has backers from the Irish retail banking sector — AIB, Bank of Ireland and Permanent TSB.

Fitzpatrick's previous experience includes senior executive roles in HSBC Bank, as well as a stint as a non-executive director and chair of the audit committee at Pay.UK. 

He has also served as a senior advisor to the Bank of England.

Amazon's Palm-Reading Payments System Takes Over At Whole Foods

Amazon has announced that its palm-reading Amazon One payment system will soon be expanded to 65 more Whole Foods stores in California.

The move marks the single-largest expansion of Amazon One since its debut at two Amazon Go stores in Seattle in 2020.

Prior to the California announcement, Amazon One’s availability was limited to seven Whole Foods stores and a handful of Amazon Go and Amazon Book stores.

Amazon One works by linking a customer’s credit or debit card to their unique palm signature. 

Users then hover their palm over a biometric reader to pay, using their hand much like a contactless card.

Argentina Releases Report On Blockchain-Based Digital ID Pilot

Bitcoin Argentina and global technology firm OS City have released the results of a pilot project aimed to create a digital identity solution based on blockchain technology.

The report is part of Project DIDI, an initiative focused on developing a self-sovereign identity model to improve how Argentinians interact with government agencies.

The pilot was carried out in collaboration with local government agencies in the province of Misiones and General Pueyrredon and is supported by the country’s undersecretary for public sector innovation.

“The decentralised identity will simplify the relationship that citizens have with organisations, solving existing interoperability problems,” the document says.

“Each state or private entity will be able to issue formal documents to citizens thanks to the verifiable nature of their identity, providing confidence, security and agility to the transactions they carry out,” it adds.

UK Regulators Announce Open Banking Working Group, Chair

The Joint Regulatory Oversight Committee (JROC), a cross-authority task force responsible for, among other things, thinking about the future vision and governance of open banking, has announced the set-up of a strategic working group (SWG).

The SWG will act as a non-decision-making consultative forum for the committee to engage with industry and other stakeholders. It will operate from August until December 2022. 

It will be the main method for stakeholders to input into the vision and strategic roadmap for further developing open banking, as well as responding to queries the committee may have. 

The SWG will be made up of industry representatives, subject matter experts and other stakeholders, such as consumers and businesses, and will be independently chaired. 

Bryan Zhang, co-founder and executive director of the Cambridge Centre for Alternative Finance, has been announced as chair by the authorities. 

Zhang will be responsible for selecting and appointing the SWG members, arranging and facilitating SWG meetings, collating stakeholders’ views in response to the committee’s questions and providing regular updates to the committee.

South Korea To Investigate Apple, Google For Suspected In-App Payments Breaches

The Korea Communications Commission has launched an investigation into app store operators Apple, Google and One Store over suspected in-app payments violations.

The commission suspects that the three operators may have broken South Korea’s new Telecommunication Business Act which outlaws in-app payment practices that discriminate against third-party billing services.

Effectively, the act makes it illegal to force app developers to use Apple, Google or One Store’s own billing system.

Should the commission find wrongdoing by the three operators, they could face fines of up to 2 percent of the average annual revenue from the business in question.

As covered previously by VIXIO, the act was passed in August 2021 and has been in force since March this year.

Banks Protest Against US Credit Card Legislation

A coalition consisting of 51 state banking and credit union associations and the American Bankers Association (ABA) has sent a letter to US Congress expressing their strong opposition to Senator Dick Durbin’s proposed Credit Card Competition Act.

In the letter, the associations say that the “deeply flawed” proposal will lead to “fewer options for consumers, greater threats to consumer data and privacy, weakened community banks and credit unions and the disappearance of card rewards programs that families of all income levels use to stretch their budgets".

Instead, they argue, the bill will “transfer wealth from community financial institutions and consumers to a handful of high-volume, highly profitable large merchants".

In late July, Durbin, the US Senate majority whip and author of the US post-financial crash debit card legislation, introduced legislation that requires large issuing banks to enable double routing on credit card transactions.

Merchants welcomed the legislation but told VIXIO that it will not be an easy road to get the bill through Congress against the lobby of large banks that have a strong vested interest in preserving the status quo.

Bank Of Lithuania Offers Another UK Company Door To EU

The Bank of Lithuania, which has tried to position itself as a fintech-friendly regulator in the EU, has approved another payments institution licence for a UK company. 

Pay By B was incorporated in the UK in 2018, where it already holds a payments licence. 

Its indirect investors are Bank of America and Edenred SA, a US payment services company operating in 45 countries around the world.

According to the Bank of Lithuania, Pay By B plans to provide payment initiation services to e-commerce companies and financial institutions domestically and elsewhere in the EU that will enable users to connect to their own bank accounts and make payments online. 

It will also provide account information services based on innovative solutions that will enable users to access information about the funds in their accounts.

Apple Pay Hits Southeast Asian Mainland In Malaysia Launch

Apple Pay has officially launched in Malaysia, marking the product’s long-awaited debut in mainland Southeast Asia.

Starting Tuesday (August 9), thousands of Malaysian retailers will accept Apple Pay, with support from some of Malaysia’s most established banks across major credit and debit card networks.

Apple said it prioritises security and privacy for users of Apple Pay and does not retain any transaction data that can be tied back to the customer.

Credit and debit card numbers are, likewise, not stored on the user's device or on Apple servers.

Instead, a unique Device Account Number is assigned, encrypted and securely stored in the Secure Element on the user’s device, and each transaction is authorised with a one-time unique dynamic security code.

Malaysia is the ninth jurisdiction in Asia-Pacific to launch Apple Pay, alongside Australia, mainland China, Hong Kong, Japan, Macao, New Zealand, Singapore and Taiwan.

Cash For Living As UK’s Post Office Reports Record ATM Withdrawals

The UK’s Post Offices handled a record £801m in personal cash withdrawals in July (equivalent to 11 percent of cash withdrawn at LINK ATMs), up almost 8 percent compared with the £744m in June. 

“Our latest figures clearly show that Britain is anything but a cashless society,” said Martin Kearsley, banking director at the Post Office. “We’re seeing more and more people increasingly reliant on cash as the tried and tested way to manage a budget.”

The Post Office has suggested that the reason for a larger amount of cash withdrawals can be attributed to people budgeting in the cost of living crisis, as they learn to budget on a weekly or day-to-day basis, as well as people opting to holiday in the UK instead of overseas. 

However, long-term data from LINK suggests that July, August and December are typically peak months for cash withdrawals.

Nevertheless, recent research by the ATM network claims that 10 percent of consumers surveyed plan to save money by using contactless less and 9 percent intend to use cash more frequently. 

For this latter group, the most popular reasons for intending to use cash more frequently were that doing so gives them a better idea of how much they’re spending at 63 percent, helps them to spend less at 58 percent, while 57 percent said that it helps them to keep track of spending and to budget. 

Goldman Sachs Under US CFPB Scrutiny

The US bank revealed in its quarterly securities filing that it is subject to an investigation by the Consumer Financial Protection Bureau (CFPB).

According to the filing, the CFPB is investigating Goldman Sachs’ US subsidiary over credit card account management practices, including with respect to the application of refunds, crediting of non-conforming payments, billing error resolution, advertisements and reporting to credit bureaus.

The firm said it is cooperating with the agency that has come forward as one of the fiercest regulators since Rohit Chopra took over the leadership last October.

Although the filing makes no mention of the bank’s partnership with Apple, CNBC points out that a significant part of Goldman Sachs’ $11.84bn card loans during the second quarter was extended via Apple Card.

Swiss National Bank Launches Major Payment Methods Survey

The Swiss National Bank (SNB) has launched its third survey on everyday payment methods, in an effort to identify long-term shifts in the country’s payment habits.

The survey, which will be answered by 2,000 Swiss residents, will ask questions on topics such as payment choice criteria, the relative importance of different types of payment method and their perceived levels of security.

The survey consists of two parts: the first is a 30-60-minute interview in which participants respond to questions about their payment habits; and the second is a diary in which participants record each of the payments they make over a one-week period.

The 2022 survey will be conducted in collaboration with DemoSCOPE, a market research institution, and will be completed over the coming months. 

The SNB will then provide further analysis of the survey results after an evaluation process. Previously, the SNB carried out similar surveys in 2017 and 2020.

Malta Financial Regulator Launches Corporate Governance Code

The Maltese Financial Services Authority (MFSA) has published a corporate governance code for entities that it oversees. 

The code provides a list of what it says are guiding principles designed to enhance the legal, institutional and regulatory framework for good governance in the Maltese financial services sector.

“The authority considers good corporate governance as being fundamental for investor protection, market integrity and financial soundness,” said Clare Farrugia, the regulator’s policy chief. 

Farrugia continued that the MFSA believes that the increased supervisory focus and the policy initiatives being implemented in this area, such as the code, are “conducive to steering board members and practitioners alike, to adopt good judgement and in guiding entities in the right direction to achieve a strong corporate governance ethic”.

The code has the goal of enhancing governance structures for entities that operate on the Mediterranean island, while also improving relations and strengthening trust with stakeholders. 

It also aims to assist senior management and company directors in fulfilling their duties and ensure that authorised entities have adequate and effective internal controls, and procedures to discharge their responsibilities and monitor outcomes.

European Commission Adopts Amended SCA RTS

The European Commission has approved the new Regulatory Technical Standards (RTS) for Strong Customer Authentication (SCA). 

The amendments are now with the European Parliament and European Council for the non-objection period. As long as there are no objections from either party, the new RTS should be enforced by October and EU banks will need to be compliant with it by next year. 

The amendment means that EU consumers will now need to strongly authenticate themselves once every 180 days instead of every 90 days when giving access to account information to an account information service provider (AISP).

The European Banking Authority finalised its draft amendment to the RTS in April this year, following a public consultation that garnered 1,200 responses. 

The RTS amendment aims to reduce frictions for customers using such services and to mitigate the impact that the frequent application of SCA and the inconsistent application of the current exemption have on AISPs’ services.

If You Don’t Pay For The Product, You Are The Product, CFPB Warns

A new report published by the US Consumer Financial Protection Bureau (CFPB) cautions that consumers may unknowingly pay with their data for new innovative payment products.

The Convergence of Payments and Commerce report looks at market trends and emerging consumer risks related to buy now, pay later (BNPL), super apps and embedded finance.

It outlines the “challenges and risks inherent in the rapid evolution of the payment ecosystem”.

The report notes that although these innovative products create a new type of consumer experience and offer seamless, low-to-no cost apps and products, they can expose consumers to unanticipated risks and potentially decrease consumer control over their personal information.

“Increasingly, many firms are moving from seeing their customer’s value as generating revenue from using that company’s financial products, to the customer as a source of behavioural and financial data to be leveraged and potentially sold to create an additional revenue stream.”.

The agency also warns that emergent business models by big tech or BNPL may create a new generation of dominant incumbents. By leveraging their scale, these market players could create further risks to consumers and merchants.

Malaysia Proposes BNPL regulation with Consumer Credit Act

The Government of Malaysia is consulting on proposals for creating a “comprehensive framework” for regulating consumer credit, as part of a two-stage consultation. 

The act will seek to regulate the conduct of credit services and providers, “proposed reforms to better protect individuals and small businesses” and seek to regulate new forms of credit such as BNPL providers. 

Stage 2 of the consultation, which will be issued in Q4 this year, will provide further details on authorisation, governance and conduct requirements that will be applied to credit providers and credit service providers.

The act will create a Consumer Credit Oversight Board (CCOB). This will act as an independent authority to oversee consumer credit providers and credit service providers.

Interested parties are invited to provide feedback and comments on the consultation paper to CCOB task force by September 5 by emailing CCAConsultation@bnm.gov.my.

Pakistan Fintech Forced to Reimburse Wallet Holders

The State Bank of Pakistan has ordered fintech Tag Innovation to refund all outstanding funds to its wallet holders by August 19. This action was taken after the central bank identified violations of regulatory requirements, as well as “other concerns”. 

Tag Innovation is currently in the pilot stage of the electronic money institution (EMI) licensing process. The startup was given in-principle approval from the State Bank in November 2020 and pilot approval in August 2021. 

Brazil’s Largest Bank Moves To The Cloud

Itaú Unibanco, Brazil’s largest bank, will move 60-70 percent of all of its systems to Amazon Web Services (AWS), the bank’s chief information officer, Ricardo Guerra, told BNamericas at a press conference.

The statement follows a November 2020 agreement in which Itaú announced a ten-year partnership with Amazon aimed to accelerate the bank’s digital transformation and enhance its banking experience.

The migration concerns the bank’s core banking platforms, call centre solution and online and mobile banking applications. 

Itaú’s Guerra told BNamericas that these are “quite significant figures” considering the bank’s massive and complex IT infrastructure and systems, noting that “the final percentage might turn out even higher” than 60-70 percent.

He stressed though that the bank “does not want to migrate everything."

Itaú will use AWS capabilities across its banking, credit cards and insurance lines of business, as well as throughout its subsidiaries, such as Rede, one of the largest electronic payment solution providers in Brazil.

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