Daily Dash: PSR Consults On LINK ATM Accessibility

March 24, 2023
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UK payment regulator is consulting on its specific direction for ATM operator LINK, Checkout moves into card issuing, Circle targets French crypto and e-money licences, and the US Federal Trade Commission is looking at competition and security risks in cloud computing.

PSR Launches First Review Of LINK's ATM Commitments

The UK’s Payment Systems Regulator (PSR) is looking for feedback regarding Specific Direction 12 (SD12).

SD12 is designed to support LINK Scheme Holdings Ltd (LINK), the operator of the LINK ATM network, meet its commitment to maintain a broad geographic spread of the UK’s free-to-use cash machine network and meet service-user needs.  

SD12 was issued to LINK in March 2022 and it will remain in force until January 2, 2025 unless varied or revoked. 

It is due to be reviewed after 12 and 24 months, should it still be in place.

The PSR wants feedback on how effective SD12 has been and how well requirements have worked in practice in relation to maintaining and replacing protected ATMs.

The PSR also wants feedback on whether SD12 should remain in place, considering recent initiatives such as the government’s Financial Services and Markets Bill.

Checkout.com Goes For Card Issuing 

Checkout.com has announced the launch of card issuing to enable businesses to issue fully customisable virtual and physical cards and diversify revenue by offering financial services products to their customers.

Issuing will go alongside other products in the company’s payments stack, such as acquiring. 

The company is also hoping to stake a claim in embedded finance, a market which the company expects will be worth $121bn by 2029 in the UK and EU, a 187 percent increase from 2022.

“Card issuance and embedded finance has exploded over the past few years as sectors like online travel, marketplaces and digital banking use payments to stay at the heart of their customers’ financial lives,” said Checkout.com’s Meron Colbeci.

“Checkout.com Issuing is built on open, flexible APIs that mean businesses can create purpose-built card programmes, enhance cash flow and unlock new revenue opportunities.”

Circle Applies For DASP Licence In France Under 'Rigorous' New Framework

Circle, issuer of the USDC and EUROC stablecoins, has filed applications in France to become a licensed electronic money institution and a registered digital asset service provider (DASP).

The move, which is part of the company’s European expansion plans, could see Circle become the first crypto firm to receive full approval as a DASP from France’s Financial Markets Authority.

Circle will also have to meet the “rigorous” standards of the French Prudential Supervision and Resolution Authority, it said.

The permissions granted will enable Circle to on-shore EUROC, its flagship product for the European market, and begin the process of making it a Markets in Crypto-Assets (MiCA)-compliant e-money token under the EU’s incoming framework.

US Agency Seeks Input On Cloud Computing In Finance

The US Federal Trade Commission (FTC) has issued a request for information (RFI) about how competition works in cloud computing and its potential security risks.

In addition to the potential impact on competition and data security, the FTC is interested in the impact of cloud computing on specific industries including finance, e-commerce, transportation, healthcare and defence.

“Large parts of the economy now rely on cloud computing services for a range of services,” said FTC chief technology officer Stephanie Nguyen. 

“The RFI is aimed at better understanding the impact of this reliance, the broader competitive dynamics in cloud computing and potential security risks in the use of cloud.”

The high market concentration of cloud service providers has been a growing concern elsewhere too.

In June, HM Treasury published a policy statement on a "critical third-party regime", which will give the UK’s financial watchdogs the oversight of a firm’s arrangements with cloud providers.

Later in September, Ofcom, the UK’s communications regulator, announced a market study into the position of Amazon, Microsoft and Google in the cloud services market.

Card Payments Cost US Merchants $161bn In 2022

US merchants paid $161bn in processing fees to accept credit, debit and prepaid cards issued in the United States, which represented a 17 percent increase from $138bn in 2021, according to the Nilson Report

Fifty-four percent, or $5.8trn, of the total $10.6trn card purchase volume went through credit cards, including American Express, Discover, Mastercard and Visa and various private label cards.

Credit cards accounted for 79 percent of total processing fees that merchants paid in 2022, up from 76 percent in 2021.

Credit cards also represented the fastest growth in processing fees jumping 20 percent during the year, compared with the below inflation 6 percent growth of debit card fees.

In response to the findings, the Merchants Payments Coalition (MPC) called on US Congress and the Federal Reserve to move quickly to address credit and debit card swipe fees.

“These fees are a multiplier for already high inflation and drive up costs for small businesses and prices for American consumers every day,” MPC executive committee member Doug Kantor said.

“Fees are going up nearly twice as fast as card volume, so this is not just a matter of increased card spending.”

According to the merchants’ lobby group, Senators Richard Durbin and Roger Marshall are preparing to reintroduce the Credit Card Competition Act in Congress, which would increase competition in credit card processing and aim to reduce these costs.

European Banking Authority Lists Job In Prep For MiCA

The EU’s Markets in Crypto Assets (MiCA) regulation may not have crossed the finishing line yet, but the EU’s regulators are already on the move.

The European Banking Authority (EBA) has listed a new job vacancy for a MiCA and crypto-assets supervision officer. 

The successful applicant will be tasked with carrying out preparatory steps for MiCA-related supervision at the authority. 

Once the regulation is in force, the EBA will be responsible for supervising issuers of significant stablecoins. 

EPI Throws Support Behind EU Instant Payments Proposal

The European Payments Initiative (EPI), which aims to deliver a pan-EU payments solution to rival the international card schemes, has welcomed the EU’s instant payments proposal, stating that it “provides reassurance”. 

“EPI encourages the European Parliament and the Council to rapidly adopt this new regulation, sending a signal to the market that delivering the best of instant payments to European citizens is a worthwhile investment, and that a viable business model will be granted for the developing solutions,” the company said in a statement

If enforced, the EPI has said that it wants to contribute to an efficient implementation of the regulation, together with the European Commission and all relevant market players. 

“Nevertheless, EPI Company remains conscious of the continuous investments made by the private sector to enable this capability on behalf of European citizens and would like to emphasise the importance of allowing fair remuneration for the services that will be provided,” the pan-EU consortium cautioned, echoing statements made last year by chief executive Martina Weimert about the cost of setting up the EPI. 

India’s PhonePe Seals $200m Funding Package From Walmart

Indian fintech PhonePe has announced a new $200m funding package from US supermarket giant Walmart, its majority shareholder.

In a statement, PhonePe said it will use the extra funding to expand its UPI footprint, with a focus on UPI-based credit services and UPI Lite, an instant payments service for small-value transactions.

PhonePe will also develop new business verticals such as insurance, stockbroking, wealth management and shopping aggregation using the government’s Open Network for Digital Commerce (ONDC), an initiative to connect smaller e-commerce businesses with consumers.

The Walmart funding brings PhonePe one step closer to its goal of raising $1bn in funding, following a $450m raise earlier this year.

In 2018, Walmart acquired a 77 percent stake in Indian e-commerce giant Flipkart for $16bn. Previously, Flipkart was the owner of PhonePe, but in 2022 ownership was transferred directly to Walmart. 

Uruguay And India Come Together To Discuss Instant Payments

Representatives from the Central Bank of Uruguay (BCU) and India’s NPCI International Payments have met to share their experience regarding instant payments.

The meeting was part of the BCU and NPCI’s collaboration agreement that aims to support the South American country’s efforts to improve its payment system.

The BCU first announced its plans to adopt a faster payment system in its 2023-2025 roadmap last November, emphasising that the project will build on “the best international practices”.

According to Bloomberg Linea, at the time of announcement, BCU president Diego Labat singled out Brazil and India as prime examples for a successful instant payment system, ones that could be brought to Uruguay.

Previously, both India and Brazil have expressed their intent to support the international expansion of their respective instant payment systems.

Amex Off The Hook In CFPB Probe

The US Consumer Financial Protection Bureau (CFPB) has ended an investigation into American Express regarding its consumer sales practices.

Amex has been under scrutiny by the agency since January 2021 when it received a civil investigative demand.

In January this year, however, Amex was notified that the CFPB had completed its investigation and that it does not intend to start an enforcement action, the card network said in its annual report.

The CFPB investigation followed separate cases opened by the Office of the Comptroller of the Currency and the Department of Justice concerning Amex’s historic sales practices to small business customers. Additionally, the Attorney’s Office for the Eastern District of New York is looking into the card network’s sales practices.

These cases are still ongoing.

Non-Banks Among Latest Batch To Join Indonesian Payments Infrastructure 

The number of participants in Indonesia’s BI-FAST scheme has expanded to 122, representing a 94 percent share of the national retail payment system.

BI-FAST is an instant payments system launched in 2021 and operated by the central bank.

Alongside 14 new bank participants that went live on March 20,  local e-wallet solutions ShopeePay and Dana became the first retail-focused non-bank entities to access the infrastructure.

Saudi BNPL Tamara Seals $150m In Goldman Sachs Funding

Tamara, a Saudi buy now, pay later (BNPL) firm, has announced that it has secured $150m in debt financing from US investment bank Goldman Sachs.

In a statement, Tamara said the deal is the first of its kind for a BNPL firm in the Middle East, and will bring its total financing raised since the launch of the platform in 2020 to $372m.

Tamara, which is available in Saudi Arabia, Kuwait, Bahrain and the United Arab Emirates, now has more than 6m users and 15,000 merchants, including multinationals such as Ikea, Shein and H&M.

Speaking to Saudi news agency Argaam, Tamara said its app offers a new marketing channel for merchants, where about one third of Tamara customers start their purchasing journeys.

The deal is Goldman Sachs’ first major BNPL investment of 2023, following its acquisition of US BNPL GreenSky for $2.24bn, a deal that was confirmed in 2021 and closed in 2022.

SVB Parent Co Files For Bankruptcy As Treasury Secretary Reassures Depositors

SVB Financial Group, parent company of Silicon Valley Bank (SVB), has filed for Chapter 11 bankruptcy protection in the Southern District of New York.

The judge presiding over the case, Martin Glenn, has since last July also presided over the bankruptcy of crypto lender Celsius.

In a Senate Finance Committee hearing last week, Treasury Secretary Janet Yellen reaffirmed that all SVB depositors, whether insured or uninsured, will be made whole.

Senator James Lankford (R-OK) asked whether that would include foreign depositors such as Chinese investors, of which SVB had a large number.

“Uninsured investors will be made whole in that bank, and I suppose that could include foreign depositors, but I don’t believe there’s any legal basis to discriminate among uninsured,” said Yellen.

FTC Asks Bigtechs About How They Protect Against Fraud

The US Federal Trade Commission (FTC) has issued orders to several social media platforms, including Meta, TikTok, YouTube and Twitter, asking them about how they screen for misleading ads for scams and fraudulent products.

The inquiry follows the agency’s findings that fraud originating on social media platforms has skyrocketed since 2017.

Last year, consumers reported losing more than $1.2bn to fraud that started on social media, which has become the most popular tool for fraudsters to approach their victims.

“Social media has been a gold mine for scammers who tout sham products and other scams that have cost consumers enormously in recent years,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection.

“This study will help the FTC ensure that social media and video streaming companies are doing everything they can to keep scammers and deceptive ads off their platforms.”

The orders were sent to Meta, Instagram, YouTube, TikTok, Snap, Twitter, Pinterest and Twitch.

FTX Executives Paid Themselves $3.2bn, New Court Filing Shows

A new court filing has shown that executives of the FTX crypto exchange took $3.2bn in payments and loans from the company before it went bust.

Founder Sam Bankman-Fried took the highest amount, at $2.2bn, followed by director of engineering Nishad Singh ($587m) and co-founder Gary Wang ($246m).

Caroline Ellison, former girlfriend of Bankman-Fried and former CEO of Alameda Research, the FTX-affiliated trading company, took $6m.

These amounts exclude more than $240m that the executives spent on property in the Bahamas and political and charitable donations.

As covered by VIXIO, Singh, Ellison and Wang have all pleaded guilty to criminal charges, including fraud, but Bankman-Fried has pleaded not guilty.

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