Daily Dash: UK Supermarket Draws MP’s Ire Over BNPL Offering

August 26, 2022
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A UK lawmaker has expressed concern about Iceland, a UK-based supermarket, offering consumers a buy now, pay later (BNPL) product to help them deal with the cost of living, while American Express has been told by India's regulators that it is able to onboard customers again.

Labour MP Clashes With UK Store Over New BNPL Offering

Labour MP Stella Creasy has called a new buy now, pay later (BNPL) offering by UK grocery story Iceland Food Club “deeply disingenuous” and could make consumers spend more than what they can afford.

Creasy’s tweet follows Iceland’s announcement that the supermarket is launching an interest-free scheme of up to £100 to help customers deal with the cost of living.

The new initiative allows customers to take out small loans from charity lender Fair For You and receive a prepaid Mastercard they can use in Iceland stores.

Defending the new offering, Iceland CEO Richard Walker said that “these [critics] are middle-class people who have no difficulty accessing mainstream banks themselves, and would not think twice about paying for their own weekly shop with a credit card”.

He added that the company deliberately makes these loans available only in school holiday windows to help struggling people smooth out incomes rather than induce permanent dependence.

Amex Can Now Onboard New Customers In India

The Reserve Bank of India (RBI) has lifted restrictions imposed on American Express that prohibited the card network from onboarding new customers.

The ban was introduced last April after the central bank found that the company violated data localisation rules, which require payment service providers to store all customer data, including transaction history, payment message information and payment instructions, in data centres located in India.

The RBI now says that Amex demonstrated “satisfactory compliance” with the data storage rules and it has lifted the restrictions with immediate effect.

The RBI has a long history of banning payment processors from onboarding customers as a result of faulty data storage practices. 

Last year, it imposed a similar ban on US card networks Diners Club and Mastercard, followed by restrictions imposed this year on local super app Paytm

APAC On Top For Digital Payments, Reveals Mastercard

Consumers in the Asia-Pacific region remain some of the most enthusiastic adopters of digital payments in the world, Mastercard research has revealed

According to the payments scheme, 88 percent have used technologies such as digital wallets, QR codes and buy now, pay later (BNPL).

Some 69 percent of APAC consumers, meanwhile, increased their usage of at least one digital payment method during the same period.

In comparison, 52 percent of consumers in North America and 48 percent in Europe increased their usage in the same way.

The research also suggested that APAC consumers moved away from cash during the pandemic, with 40 percent of consumers saying that they have been cutting back on their use of the payment method.

Match Continues Its War With Bigtech 

Tinder-owned dating app Match has filed an antitrust case against Apple with India’s Competition Commission, according to a Reuters report. 

The filing, which was made in July, argues that Apple’s conduct restricts innovation and choice by enforcing the use of its in-app purchase system and 30 percent commission.

A similar dispute in the Netherlands led to Apple being fined €50m and an agreement to allow different payment methods in Dutch dating applications.

Monzo, Revolut Payments Banned From UK Buses

Ensignbus, an Essex-based bus company, has blocked the use of certain contactless payment methods on its buses due to “a significant rise in debit and credit card fraud”.

“As part of ongoing CONTACTLESS fraud/ non-payment issues, a number of banks are now blocked on our ticket machines,” the company said in a Twitter post.

“The most common which may affect you are Revolut, ABN Amro & Monzo,” they explained.

The company has also lowered its cap on contactless card payments, including Apple and Google Pay, to £10. This means that travellers buying tickets over £10 may need to make more than one contactless payment transaction, while certain seasonal tickets will only be available with cash payments.

In response to a comment that lamented the move may create a barrier to accessing public transport, Ensignbus replied that “[t]here will be a much bigger barrier if the company loses hundreds of thousands of pounds”.

Nigeria’s e-Payments Surge

Electronic transactions recorded under Nigeria’s Instant Payments (NIP) service have skyrocketed this year, reaching NGN205.5trn ($488bn) in value between January and July 2022, CAJ News Africa reported, citing data from the Nigeria Inter-Bank Settlement System (NIBBS).

This shows a 41 percent growth compared with last year in terms of value, while the NIBBS also registered a 46 percent increase in the number of transactions, which hit 2.7bn already in 2022.

NIP payments remained the dominant method for transferring funds, accounting for 92 percent of total value of transfers made through formal payment channels.

Meanwhile, mobile payments, which moved around NGN9.3trn ($2.2bn), showed the fastest growth at 159 percent compared with last year.

Point-of-sale (PoS) channels and e-bills payment platforms recorded growth of 29 percent (NGN4.6trn) and 32 percent (NGN1.7trn), respectively.

Nigerian Regulator Moves To Shut Down Digital Lenders

A Nigerian regulator has issued a new directive which mandates that payment gateways and mobile operators must block online loan companies from using their networks.

Issued by the Federal Competition and Consumers Protection Commission (FCCPC), the directive is primarily aimed at a company called Soko Lending, which is described as a “loan shark”.

“[It is] one of the most prolific actors in violating consumer privacy, fair lending terms and ethical loan repayment/recovery practices,” said the FCCPC.

In the same directive, the FCCPC also ordered Google to remove several lending apps from the Google Play Store, including Maxi Credit, Here4U, ChaCha and SoftPay.

The move is the latest digital lending enforcement action from the FCCPC, following similar actions with regard to multiple lenders in March this year.

The FCCPC notes that some of these lenders have devised methods to “circumvent account freezing and app suspension orders”, forcing the regulator to issue cease and desist orders to mobile and payment networks. 

The FCCPC has also published a new interim regulatory and registration framework for digital lenders.

Mission Accomplished: 98 Percent Of Israeli Payment Terminals Moved To EMV 

The Bank of Israel (BOI) has confirmed that the implementation of its new Europay, Mastercard and Visa (EMV) payments framework is now complete.

According to data from payments operator Shva, as of this month, approximately 98 percent of payment terminals in Israel are now using the EMV standard.

“This step places Israel in line with advanced countries worldwide, and upgrades the area of advanced and innovative payments, which became an integral part of the transaction experience at businesses in Israel,” said the BOI.

The remaining 2 percent of non-EMV terminals belong to merchants that attempted to switch to EMV but encountered technical difficulties. The BOI said it plans to assist these businesses in completing their shift to EMV.

Data from Shva also revealed that, in July 2022, 81 percent of EMV payments in Israel were made using contactless.

India, Russia Working On Payments System To Avoid Sanctions

Cards based on Russia’s Mir payment system could soon be accepted at ATMs and point of sale (POS) terminals in India as the two nations continue to negotiate the development of a financial system that would not be affected by Western sanctions on Russia, according to media reports. 

It is also anticipated that Russia could soon accept India’s RuPay system, which already has links with markets such as the UK and France. 

International payments schemes Visa and Mastercard exited the Russian market in March following the implementation of sanctions from the US and allies such as the UK and EU after the country invaded Ukraine. 

A source told the Indian publication the Deccan Herald that the two countries are working on interaction of the Unified Payments Interface (UPI) of the National Payment Corporation of India and the Faster Payments System (FPS) of the Bank of Russia.

WhatsApp Messages To Cost $2bn For Wall Street Banks

Ten large US banks are expected to pay fines totalling $2bn in investigations relating to their employees’ use of WhatsApp messages, Bloomberg has reported.

The investigations, which are being carried out by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), came after the agencies were repeatedly struggling to get information from banks. That is because communications between traders and their clients took place on the employee’s personal phones and were not archived as required, making it harder for law enforcement to uncover any wrongdoings.

The probes are now expected to lead to total fines of as high as $2bn, with many of the banks expecting to pay $200m each for the failure. This would be the same amount that J.P. Morgan was ordered to pay last December to settle two investigations into similar practices.

Settlements on the ongoing investigations are expected to be announced by the end of September.

The probes reportedly concern ten big banks, including Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley and UBS.

ECB Sets Out Crypto Licensing Plans

The European Central Bank (ECB) has said that it will be working closely with national competent authorities in the EU “to strive towards greater consistency in prudential assessments across national regimes”.

Until recently, there has been no EU-wide regulatory framework for crypto-assets, but that is about to change now that the Markets in Crypto Assets (MiCA) regulation will be introduced.

The ECB is working on harmonising the crypto-asset licensing procedure, noting that the regulation used for the assets is diverse in nature throughout the trading bloc currently. 

In Germany, for example, certain crypto activities are subject to a banking licence requirement and, to date, the ECB points out that several banks have requested to be authorised to conduct these licensed activities. 

Coincidentally, it is in this context that the ECB is taking steps to harmonise the assessment of licensing requests, the Frankfurt-based supervisor said. 

In particular, attention will be paid to business models, internal governance and fit and proper assessments, which will be proportionate to the size of the crypto-asset firm. 

Going forward, the ECB has said that there is work ongoing within the Single Supervisory Mechanism (SSM) on banks’ digital transformation, including the role of crypto technologies, which will result in horizontal analysis by the end of 2022.

Famed PSP CEO Resigns Over Misconduct Issues

Dan Price, chief executive at Gravity Payments, has posted a statement on Twitter stating that he has stepped down from his role to "focus full time on fighting false accusations made against me”.

Price’s resignation was triggered by a New York Times investigation into allegations that he has sexually assaulted multiple women. 

The now-former CEO made headlines in 2015 when he introduced a $70k minimum wage at the Seattle-based company.

Colombia Sets Sights On CBDC

The South American country’s tax and customs chief has said that the state is considering issuing a central bank digital currency (CBDC). 

In an interview with a local news publication, Luis Carlos Reyes, who serves as director of Dirección de Impuestos y Aduanas Nacionales de Colombia (DIAN), discussed the monetary policy plans of President-elect Gustavo Petro, including CBDC adoption to ease consumer transactions and fight tax evasion.

“This is important to improve the traceability of payments made in the economy,” he said, appearing to endorse the plans. “When cash transactions are not recorded anywhere, it is easier to make sales that are not recorded, and therefore people who must pay VAT or income tax on those transactions can avoid them.”

Petro, leader of the left-wing Colombia Humana, has previously advocated harnessing the country’s resources to sustainably mine bitcoin too.

South Africa Can Avoid FATF Greylisting

South Africa can avoid possible "greylisting" if it efficiently implements recommendations outlined in the Financial Action Task Force (FATF) mutual evaluation report, said South African Reserve Bank (SARB) governor Lesetja Kganyago during a parliamentary hearing. 

In 2019, the country, Africa’s largest economy, was subject to a heavily critical mutual evaluation report from FATF. 

Kganyago pointed out that the report recommends that all regulatory authorities should subject beneficial owners to fit and proper assessments. 

Beyond this, all regulatory authorities should verify that directors, senior management and beneficial owners or their associates are not criminals.

The deputy governor urged all relevant regulatory staff to work hard to gain an understanding of money laundering and terrorist financing.

Otherwise, the country may end up being greylisted in 2023, he concluded.

Did South Korea's Regulator Just Kill KakaoTalk's Payments Arm?

South Korea’s KakaoTalk instant messaging platform is facing headwinds from the country’s financial services regulator, as new legislation threatens to kill off its e-money transfer service.

According to a report in South Korea’s Electronic Times, the Financial Services Commission (FSC) is considering an amendment to the Electronic Financial Transaction Act that would outlaw KakaoTalk’s prepaid wire transfer system.

If applied in its current form, the amendment would make it illegal to transfer money using a prepaid e-money account, and would only allow transfers between bank accounts.

At present, services such as KakaoTalk allow users to transfer money without knowing the recipient’s bank account details.

For a KakaoTalk user to make such a transfer, all that is required is a KakaoMoney account topped up with sufficient funds, and a connection to the payee.

The FSC said it is considering the amendment to ensure that apps such as KakaoTalk are not used for money laundering or for making payments to minors, given the low level of ID checks carried out on users.

US E-Invoice Pilot Moves To Second Phase 

The e-invoice exchange market pilot, which aims at modernising the US B2B electronic payment process, has entered into a second phase, the Federal Reserve Bank has announced.

In this wave, the pilot will onboard additional organisations, bringing the total number of participating organisations to 28. Participants will then begin planning for the transition from market pilot to the actual production system environment by refining infrastructure requirements, as well as outlining the policy, rules and guidelines for oversight.

Launched in late 2021, the first phase of the pilot closed with the participants agreeing on technical specifications and the infrastructure for connecting and authenticating the framework.

Phase two is expected to be complete at the end of September, and the third and final phase will then begin where participants will finalise specifications for production through to the end of the year. 

The pilot is led by the Business Payments Coalition (BPC), an industry group with 650 representatives from small and large businesses, industry associations, financial institutions and payment processors.

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