Daily Dash: Visa Confirms Pismo Acquisition

June 30, 2023
Visa has announced a move into issuer processing and core banking with its Pismo acquisition, Lithuania has set out its National Fintech Guidelines, and Shanghai Clearing House has launched e-CNY clearing and settlement.

Visa Gets Into Issuer Processing, Core Banking With Pismo Acquisition

Visa has announced that it has signed a definitive agreement to acquire Pismo, a cloud-native issuer processing and core banking platform with operations in Latin America, Asia-Pacific and Europe, for $1bn in cash.

The acquisition will enable Visa to provide core banking and issuer processing capabilities across debit, prepaid, credit and commercial cards for clients via cloud-native APIs. 

Visa will also be able to provide support and connectivity for emerging payment rails, like Pix in Brazil, for financial institution clients, following the acquisition.

Pismo was founded in 2016 in São Paulo, Brazil, and has offices in the UK and the US. According to the announcement, the company will retain its management team.

The transaction is subject to regulatory approvals and is expected to close by the end of the year.

Lithuania Confirms National Fintech Guidelines For 2023-2028

Lithuania has the goal of becoming the EU leader in fintech, according to its Ministry of Finance's memorandum of understanding (MoU). 

The MoU sets out plans to strengthen the management of risks such as money laundering, terrorist financing and cybersecurity, as well as to improve the cooperation of public authorities and the exchange of information.

Meanwhile, there will be increased attention paid to training and consulting, as well as to cooperation with higher education institutions. The latter in particular is to reduce the likelihood of a shortage of professional employees.

Among the signatories of the MoU are the Ministry of Finance, the Bank of Lithuania, city development agency Go Vilnius, and several business associations and hubs such as ROCKIT and Fintech Hub. 

"Over the past six years, we have achieved a real breakthrough in the Fintech sector in the country, and further qualitative development of this sector is one of our priorities,” said Gintarė Skaistė, minister of finance.

“Therefore, we aim not only to strengthen the position of Lithuania as a regional financial technology centre, but we also aim for our country to be universally recognised as a European Fintech centre with high added value.”

Shanghai Clearing House Launches e-CNY Clearing And Settlement Services

The Shanghai Clearing House (SCH) has launched clearing and settlement services for China’s central bank digital currency (CBDC), known as the e-CNY.

These services are available only for bulk spot commodity purchases for the time being, and will be offered with zero fees.

Kathleen Tyson, CEO of multicurrency payment solutions providers Granularity and Pacemaker.Global, said the commodity could be a use case to expand use of the Chinese yuan in the global south.

“It effectively makes e-cny convertible to gold or other commodities,” she said. “Most importantly, there will be no US surveillance, as there is on SWIFT, or Foreign Account Tax Compliance Act (FATCA) reporting.”

Majority Of UK Firms Ready For Consumer Duty, FCA Survey Suggests

According to Financial Conduct Authority (FCA) polling, most UK firms that it supervises now believe that they are on course to implement the new Consumer Duty rules by the July 31 deadline. 

Some 64 percent of firms surveyed said they would be fully compliant by the deadline, while a further 23 percent said that they would comply with most requirements by the deadline but would still have some work to do.

Meanwhile, 7 percent of firms surveyed said they would still have significant work to do after the deadline or had not started work on the incoming rules. 

Payments and electronic money institutions' involvement in the Consumer Duty has been a controversial issue for some firms, but the FCA has found that engagement is lowest among retail finance providers and debt advice firms.

“We remain concerned that a small minority of firms have not prioritised the Duty sufficiently and made use of the substantial support available,” the FCA said. 

“Firms in sectors highlighted by this survey as not giving the Duty adequate focus can expect more scrutiny from us in the coming months.”

Australian Government Fights De-Banking With Voluntary Data Collection Initiative

The Australian government will request that the country’s four largest banks submit voluntary data on de-banking as part of the country’s fight against financial exclusion.

The government says the lack of available data on de-banking makes it challenging to design effective policy responses.

“The government views data collection to be a fundamental aspect of the response to de-banking.” 

The data will enable monitoring of the extent and nature of de-banking and “help inform any future policy formulation and monitoring”, the government said.

The announcement was made as part of the government’s response to advice from the Council of Financial Regulators (CFR), which made four recommendations to counter de-banking.

The government says it “agrees” to the first recommendation on voluntary data collection, and it “supports” the second and third recommendations.

The second recommendation requires all banks to document reasons for de-banking a customer and apply five measures to improve transparency and fairness.

The government says it also supports the third recommendation, which requires the big four banks to provide guidance to their peers on their requirements and risk tolerance regarding the fintech, remittance and crypt sectors.

Finally, the government says it “notes” the fourth recommendation, which urges the government to fund targeted education, outreach and guidance to the fintech, crypto and remittance companies.

Cash App Apologises For Zero Balances And Double Charging During Outage

Cash App has apologised after two days of outages left customers facing zero balances and double charges on spending.

“We have fixed and refunded incorrectly charged amounts for all affected Cash Card transactions for the recently discovered technical issue,” Cash App Support said in a statement.

“Your cash balance will now show that you've been refunded, though it may take up to 24 hours for Activity and receipts to be updated.”

Some users who contacted Cash App via social media said their balance went negative during the outage, while another said that the money she was refunded due to double spending was later removed from her account.

Cash App Support said it will continue to answer customers directly whose balances do not restore to the correct amounts.

Another E-Money Firm Receives Fine In Lithuania 

Finci, an electronic money institution, has been fined €30,000 by the Bank of Lithuania for failing to comply with anti-money laundering laws. 

According to the central bank, the institution's internal control procedures for the implementation of international sanctions had “significant shortcomings”. 

For example, the regulator found that there were no established measures to determine whether the transactions and operations carried out by clients fell under the international restrictive measures (determining sectoral, trade, restrictions on certain services) list. 

Finci also failed to ensure that enhanced customer identification was applied before entering into international correspondent relationships with third-country financial institutions and customers registered or residing in high-risk third countries.

When imposing the fine, the Bank of Lithuania said that it took into account that the institution had taken measures to eliminate the violations.

JPMorgan Slapped With $4m Fine For Deleting 47m Emails By Mistake

The US Securities and Exchange Commission (SEC) has imposed a $4m fine on JPMorgan after the bank unintentionally deleted 47m emails that it should have kept.

US regulations require broker-dealers to keep for at least three years' worth of originals of all communications received and copies of all communications sent relating to its business.

An order posted on the SEC website shows that, in June 2019, JPMorgan employees deleted emails from the first quarter of 2018 wrongly believing that all the documents were coded in a way that prevents permanent deletion of the records.

Since the emails were deleted, JPMorgan could not properly fetch information in at least 12 civil securities-related regulatory investigations, eight of which concerned SEC-led investigations, the regulator said.

“Because the deleted records are unrecoverable, it is unknown — and unknowable — how the lost records may have affected the regulatory investigations,” the regulator pointed out in the order.

This is not the first time that the largest US bank was caught in a failure to keep business communications as required by law.

In December 2021, JPMorgan was the first one to receive a $200m fine for using WhatsApp and employees’ own devices to discuss business matters. This, however, turned out to be a widespread issue at Wall Street banks leading to a further $1.81bn in total fines against 16 firms in September 2022.

Nigeria Imposes Limits On Contactless Transactions

The Central Bank of Nigeria (CBN) has issued new guidance for financial institutions (FIs) on contactless payments, alongside a circular on contactless transaction limits.

As per the circular, the CBN has asked FIs to limit contactless payments to N15,000 ($20) per transaction and N50,000 ($65) per day - effective as of June 27.

The CBN said payments that exceed these limits must revert to contact-based technology and shall require “appropriate verification and authorisation”.

Contactless payments are picking up momentum in Nigeria, with new entrants including Verve, a subsidiary of pan-African fintech Interswitch, which launched its first contactless card in April this year.

Last September, Nigeria’s ProvidusBank also launched Tap-to-Pay, a new contactless partnership with Mastercard, Thales and Interswitch, which allows merchants to use a smartphone as a payment acceptance device.

Italy Tests Wholesale CBDC

Italian banks are working on a wholesale central bank digital currency (wCBDC) test which is aimed at analysing the benefits of a wCBDC and examining whether it can meet the “capacity, efficiency and robustness” requirements of central bank systems.

The pilot dubbed Project Leonidas will involve the Italian Banking Association (ABI), NTT Data, R3 and a group of 18 banks that are going to test interbank wCBDC transactions on distributed ledger technology.

The project was selected by the Milano Hub, the Bank of Italy's innovation centre, to support the digital evolution of the financial market.

Going forward, the Bank of Italy will set up a multidisciplinary working group to support the project, which is expected to be implemented in six months.

It’s Our Duty To Issue Digital Currency, Says French Central Banker 

“I think it’s our duty to build this capacity for our fellow citizens, but it will be their freedom to use it,” said Francois Villeroy de Galhau, the Banque de France governor, during a speech last week. 

In his speech, the central banker said that the digital euro will offer European citizens an additional option in the way they make purchases and transactions, and they will determine the pace of its development, and its market share. 

He also insisted that money “will remain a public-private partnership”.

Discussing the digital euro, Villeroy de Galhau said that the purpose is to create a digital banknote, and that this is a necessity in a digitised economy. 

“I can imagine that two centuries ago, there were many voices questioning the need for a paper banknote, at that time a huge technical innovation, to be issued alongside the good old gold and silver coins,” said the regulator. 

His intervention comes in conjunction with the European Commission’s digital euro legal framework, which is due to be officially unveiled on Wednesday 28 June. 

Commonwealth Bank Outage Leaves Customers Unable To Access Funds

An outage at Commonwealth Bank of Australia (CBA) has left millions of customers unable to access their funds via online banking channels.

On Monday (June 26), CBA customers were unable to access their funds or make transfers via online or mobile banking for at least six hours.

During that time, many customers’ mobile banking apps showed a balance of $0, prompting a deluge of worried posts to CBA’s customer service channels on social media.

At about 4pm local time, CBA announced that it had “identified the cause” of the issues and that “services are being restored”, but gave no further details. CBA’s Commsec app, an online brokerage, was also down on Monday.

Crypto.com Obtains Licence In Spain

Crypto.com has received a virtual asset service provider (VASP) registration from Banco de Espana, the country's central bank. 

“Receiving the VASP registration from the Bank of Spain is the latest testament to our commitment to compliance and eagerness to work with regulators and public officials in responsibly advancing crypto and blockchain technology,” said Kris Marszalek, the company's CEO. 

“We look forward to continuing to work with the Bank of Spain as we launch our products and services in-market and providing users with the comprehensive, safe and secure crypto experience that they desire.” 

The company already has licences in fellow EU member states France, Italy, and Greece. Furthermore, it has secured licences in countries further afield including its home of Singapore, the United Arab Emirates and Australia. 

US Agency Finds 'Banking Deserts' In Southern States

The Consumer Financial Protection Bureau (CFPB) has issued two new reports on the financial opportunities and challenges facing southern communities.

The agency finds “banking deserts” in many areas of the states of Alabama, Arkansas, Georgia, Louisiana, Mississippi, North Carolina, South Carolina and Tennessee, where Americans often lack sufficient bank or credit union options.

The report notes that nearly one-quarter of the population of these states live in rural areas with more than a third of residents in the region being people of colour.

In this region, there are fewer bank branches per person than other areas of the country — 3.6 branches per 10,000 population, compared with five branches per 10,000 population nationally — and there is limited access to banking services like ATMs and lending services even when branches are present.

“The rural South faces distinct challenges when it comes to fair access to banking,” said CFPB director Rohit Chopra. 

“Understanding regional differences across the country will help us determine where financial marketplaces can work better for all.”

Amazon Launches Merchant Cash Advance In Partnership With YouLend

Amazon UK has launched a new embedded finance feature that will allow merchants to access credit on demand via the Amazon Marketplace.

Launched in partnership with YouLend, a UK embedded finance provider, the feature allows small businesses that sell on Amazon to access funding linked to their sales, which is then repaid as they earn.

Businesses can borrow up to £2m via their existing Amazon UK business account, without completing any “lengthy paperwork”, according to Amazon.

Once accepted, the borrower pays a single fixed fee with repayments tied to a percentage of their future sales on Amazon, and repayment is only required when the seller makes sales.

Amazon said the new feature provides “greater cash flow flexibility” than fixed-term business loans, which it already offers through its Amazon Lending arm.

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