Daily Dash: Worldpay Sold To Private Equity

July 7, 2023
Worldpay has been sold to private equity funds managed by a US firm, Synch has been told that it needs to be approved under EU laws before it launches, and Spotify to no longer allow in-app payments via Apple’s App Store.

FIS Agrees Sale

FIS has agreed to sell 45 percent of its Worldpay Merchant Solutions business to private equity funds managed by GTCR, a US firm. 

The transaction values Worldpay at $18.5bn, including $1bn of consideration contingent on the returns realised by GTCR exceeding certain thresholds. Worldpay had previously been acquired by FIS in 2019 for $43bn.

“This transaction allows FIS to partially monetize our Merchant Solutions business at an attractive valuation and provides certainty for all stakeholders,” said FIS CEO and president Stephanie Ferris. “It also allows us to simplify and drive greater focus on delivering innovative, next-generation financial technology and software solutions."

"At the same time, Worldpay will become a privately held company and benefit from the resources and expertise of GTCR, which has committed additional capital to allow Worldpay to pursue inorganic growth in the rapidly evolving payments space.”

Synch Needs Further Stamp Of Approval From Regulators

Synch Payments, the mobile payments joint venture developed by Ireland's leading banks, will not launch until at least next year as it needs approval under the EU-derived Payment Services Regulation. 

“Synch has been engaged with the Central Bank of Ireland (CBI) for some time to ascertain whether authorisation would be required and welcomes the certainty that the decision brings,” the company said in a statement.

Synch intends to submit an application to the CBI for authorisation “as soon as possible with a view to Synch entering the market next year”, the firm said.

AIB, Permanent TSB, Bank of Ireland and the former KBC Ireland set up Synch Payments in 2020, and were cleared by the country’s competition regulator last year. 

No More Apple App Store Payments Allowed, Says Spotify

Spotify has announced that it will no longer accept in-app payments for its Premium subscription products via the App Store, due to what Spotify says are excessive fees charged by Apple.

For customers who are currently using this payment method, Spotify has informed them that their subscriptions will be cut off at the end of their current billing cycle, and they will be asked to re-subscribe and set up payment via the Spotify website.

The move marks a new form of stalemate between Apple and Spotify, which had already disabled new subscription purchases via the App Store back in 2016.

Since then, Spotify has continued to challenge Apple over its in-app payments policy. In 2019, it filed an antitrust complaint against Apple in the EU, accusing it of violating the EU’s “anti-steering” obligations — a case that is still ongoing.

Mastercard Launches AI Tool In UK To Tackle Scams

The UK has become the first country with access to Mastercard’s Consumer Fraud Risk AI mechanism, helping banks predict scams in real time and before any money leaves a victim’s account.

Leveraging Mastercard’s latest AI capabilities, it allows banks to predict and prevent scam payments. 

Nine UK Banks, including Lloyds Bank, Halifax, Bank of Scotland, NatWest, Monzo and TSB, have partnered with Mastercard on this. 

TSB, an early adopter, said that the amount of payment scams prevented over a year would equate to almost £100m saved across the UK, should its performance be mirrored by all banks.

Italy Nominates Rome To Host AMLA

Rome has become the latest city to be put forward to host the EU’s Anti-Money Laundering Authority (AMLA), joining others in the running such as Madrid and Vilnius. 

"I thank the government for having believed in our project to host the headquarters of the European Anti-Money Laundering Authority in Rome, a candidacy of fundamental importance not only for the capital but for the entire country system," said Rome Mayor Roberto Gualtieri.

"Italian anti-money laundering legislation and systems are among the most advanced in the world and constitute a real national point of excellence," he continued.

Other Italian cities such as Turin and Milan were reportedly also in the running.

DBS Launches e-CNY Merchant Collection Solution

Singapore’s DBS has become one of the first foreign banks in China to launch an e-CNY solution, enabling local businesses to meet growing usage of the country's central bank digital currency (CBDC).

Announcing the completion of its first client transaction, DBS said the solution allows corporate clients of DBS China to collect payments from customers in e-CNY and receive automated settlement in a regular CNY bank deposit account.

DBS said the solution offers several perks to mainland Chinese merchants, including “seamless reconciliation” of itemised e-CNY transactions via DBS IDEAL, the bank’s digital platform for business banking.

As covered by VIXIO, e-CNY usage in China has grown steadily since its pilot launch in April 2020. At the end of last year, there was more than ¥13.6bn of e-CNY in circulation, with the CBDC accepted in 26 cities and 17 provinces,

Step Change Needed In Open Banking, NatWest Urges

A report commissioned by the retail banking giant has concluded that banks, fintech firms and regulators need to work together to resolve key economic obstacles that are holding back the wider adoption of open banking in the UK.

These obstacles, according to the Oxera-produced report, include a lack of commercial incentives to develop or enhance new use cases, and a lack of alignment between banks on the benefits of open banking.

“This report makes it clear that banks, fintechs and regulators need to work together to design new, flexible frameworks and commercial incentives that will support a far wider range of open banking use cases,” said Claire Melling, head of Bank of APIs at NatWest. 

The report outlines three routes forward: mandating banks to offer a wider set of open banking use cases; encouraging banks to expand open banking use cases through premium application programme interfaces; and the development of a new multi-party system.

“By acting on the recommendations in this report, we can enable open banking to reach its full potential and, ultimately, deliver new and enhanced propositions that will improve customer choice and experience,” continued Melling.

EU-US Gets Closer To New Transatlantic Data Framework

The United States has fulfilled its commitments for implementing the EU-US Data Privacy Framework, US Secretary of Commerce Gina Raimondo said on Monday (July 3).

On June 30, 2023, US Attorney General Merrick Garland issued orders that cement the rights of citizens of the European Union, Iceland, Liechtenstein and Norway for enhanced safeguards and redress mechanisms against US intelligence agencies.

The fulfilment of the commitments from the US represents “the culmination of months of significant collaboration between the United States and the EU”, Raimondo said.

Following the agreement on the updated data privacy framework principles in March 2022 and the issuance of the orders, the EU can now move forward to assess and hand down a decision on the adequacy of the new framework.

Revolut Launches Slimmed-Down Version Of Its 'Super App' In New Zealand

Revolut has launched a slimmed-down version of its “financial super app” in New Zealand, with the standard features of the app in other markets except for crypto and stock trading.

In a statement, Revolut said that New Zealanders can now access instant and fee-free foreign currency exchange, peer-to-peer payments and split group bills. Revolut also noted that 26,000 New Zealanders are currently on the waiting list to use the app.

The launch comes one month after the New Zealand Competition Commission announced that it will conduct a one-year inquiry into high fees and anti-competitive practices by Australia’s major banks.

Citing a recent survey by Consumer NZ, Revolut says 40 percent of Kiwi consumers do not trust their banks. It hopes to both increase consumer choice and drive market competition.

Georgia Grange, Revolut’s head of New Zealand, said: “From digitising the way they track their spending, to enhancing their global travel experience, Revolut will be a first of its kind for New Zealanders.”

UK Government 'Concerned' About Banks Shutting Down Accounts

HM Treasury (HMT) is reported to be investigating de-risking practices following reports over the past week that banks have terminated the accounts of customers due to political views.

After Brexiteer turned broadcaster Nigel Farage announced that his bank had terminated his account, Treasury minister Andrew Griffith voiced his concern.

“Banks and payment providers occupy a privileged place in society and it would be a concern if financial services were being denied to those exercising the right to lawful free speech,” Griffith told the Financial Times.

Since the account he has had for about 40 years was closed, Farage has said that he has been unable to access banking services elsewhere, having so far been rejected by nine other UK banks.

The story has also triggered a response from 10 Downing Street, with Prime Minister Rishi Sunak’s spokesperson telling reporters that “the Chancellor is concerned by some of the reports. Free speech within the law and the legitimate expression of differing views is an important part of British liberty.”

De-risking and free speech was already on the UK government’s agenda for payments companies, with the government’s Payment Services Regulation white paper suggesting that there could be new legislation to tackle potential issues.

This comes after PayPal terminated (but later reinstated) an account belonging to anti-lockdown pressure group the Free Speech Union.

Australian Anti-Corruption Body Begins Operations

The National Anti-Corruption Commission has started its operations in Australia, Mark Dreyfus KC, the attorney general has announced.

“From tomorrow, the National Anti-Corruption Commission begins its work, acting as a powerful watchdog, delivering accountability and transparency that is rightly expected by the Australian public,” Dreyfus said in a June 30 statement.

Creating the anti-corruption body was an important part of the Labor party’s election pledge in 2022.

Within months of being elected, the centre-left government passed legislation to establish the National Anti-Corruption Commission. 

This has powers to detect, investigate and prevent corruption across the public sector by ministers, parliamentarians, statutory officer holders and others.

By law, the commission will operate independent of government, with discretion to commence inquiries on its own initiative or in response to referrals from anyone.

Zip To Snip One In Five Staff, Say Reports

Zip, one of Australia’s largest buy now, pay later (BNPL) firms, is reported to be cutting up to one in five staff members as part of a major cost-cutting effort.

As reported by The Australian, the cuts began within the last fortnight, and are expected to significantly reduce the firm’s 1,500 staff.

In FY2022, Zip reported its largest ever net loss of A$1.1bn. This was just over 60 percent worse than its second-largest net loss of A$678m in FY2021.

Earlier this month, Zip announced plans to reduce its net debt by A$192m without reducing the company’s cash balance of A$68.5m reported at the end of last year.

European Council, Parliament Strike Deal On Digital Identity 

EU lawmakers have reached a provisional deal on the EU’s Digital Identity regulation, sometimes known as the eIDAS 2.

“More and more people are using their identity and credentials in everyday contacts with public and private entities,” said Erik Slottner, representing the outgoing Swedish presidency of the EU. 

“A European digital identity wallet is therefore indispensable,” he said. “This way, at least 80 percent of EU citizens should be able to use a digital ID solution to access key public services by 2030.”

Among the agreements reached are for the creation of common standards for security, and alignment with existing EU cybersecurity legislation.

Although a deal has been agreed, technical work is necessary to complete the legal text in line with the provisional political agreement. 

Subsequently, this will be subject to formal approval by the European Parliament and the Council.

Once adopted, the European Digital Identity framework will enter into force on the 20th day following its publication in the official journal.

In preparation for the regulation, the European Commission is already investing €46m from the Digital Europe Programme in four large-scale pilots, to test the EU Digital Identity Wallet in a range of everyday use cases, including for payments, education and professional qualifications.

Mastercard Launches Tool To Help Consumers Unsubscribe From Unwanted Recurring Payments

Through a partnership with Subaio, Mastercard has launched a new service that allows consumers to see and unsubscribe from subscriptions and recurring payments within their digital banking platform.

Subscription economy has grown rapidly in recent years and is expected to reach $1.5trn by 2025.

It is estimated that a US consumer has an average of 12 media and entertainment subscriptions, with millennials averaging 17.

“Now more than ever, people want greater visibility over their monthly spending,” said Ajay Bhalla, president, cyber & intelligence, Mastercard. 

“This solution gives consumers direct control over their subscription payments through a single trusted source. This puts power back where it belongs — with the consumer.”

Mastercard has started to offer the new solution to banks in North America and Europe via an API.

Belgium Going Cashless, Payments Study Suggests

Some 83 percent of Belgians prefer digital payments, according to the country’s Digital Payments Barometer.

Belgians, on average, also pay twice as often electronically in physical stores than with cash.

The study also found that contactless payments have “now become the standard and continue to grow”. 

For example, four in five Belgians have made at least one contactless payment, up from 47 percent pre-COVID. Some 38 percent of respondents also stated that if they were to choose between all available payment options, they would opt for contactless payment by card. 

The study further found that mobile payments using QR code and other connected objects are becoming more popular in the country. 

For example, 44 percent of Belgians say they feel at ease with this method, a slight increase on the previous year’s 42 percent, and 36 percent of Belgian consumers have already used a QR code to pay in store.

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