Week In Brief - February 25, 2022

February 25, 2022
A short roundup of some of the week's payments news you may have missed. This week we look at the latest access to cash statistics in the UK, Singapore's decision not to intervene over credit card bank fees, crypto AML requirements in Belgium and the latest assessment of Nigeria's eNaira.

UK: Cashback Locations Account For Over 85 Percent Of UK Cash Access

Data from the Financial Conduct Authority (FCA) has shown that the vast majority of cash access availability is covered by cashback locations, with 72,377 known UK cash access points and 429,482 cashback locations as of Q3 2021.

Although the FCA’s headline figures estimate 95.7 percent of the UK population are currently within 2km of a cash access point, with similar figures for a 5km range, these are based on access via banks, building societies, Post Office branches or any ATM.

Factoring in cashback locations, even rural populations are generally well serviced by cash availability, with 99.6 percent of the population having a cash source within 5km of where they live and 94.7 percent within 2km. These figures are unchanged from the second quarter of 2021.

The figures show a rise in the number of point of sale locations, such as shops and post offices offering cashback, which partly mitigates the decline of more conventional sites such as ATMs and bank branches.

The number of brick-and-mortar branches of the larger banks and building societies providing personal current accounts (PCAs) fell by 224, or 4 percent, between Q2 and Q3 2021.

Coverage by these branches decreased from 60.1 percent to 59.6 percent of the UK population at 2km and from 87.5 percent to 87.4 percent at 5km. Meanwhile, there was an increase in the availability of Post Office branches, offsetting the reduction in branch coverage.

The number of free-to-use ATMs also declined, but “the impact on coverage appears negligible”.

This trend is likely to continue with changes last year to the Financial Services Act 2021, creating an amendment that allowed consumers to request cashback, with or without an accompanying purchase.

The change has been touted as a minor Brexit dividend, as previously, a business wishing to offer cashback would have been required to be authorised or registered with the FCA.

Cabinet Office Minister Lord True said: “That is a significant burden for even the largest of retailers let alone small local ships along the various high streets across the UK.”

Responding to the amendment to the Financial Services Bill to enable cashback without purchase, David Postings, chief executive of UK Finance, said: "Cashback without purchase will allow retailers to enable consumers to access cash at a time and place that is convenient for them and is a welcome development, particularly for those in rural communities. This new legislation will complement the industry’s existing work to maintain access to cash, including the recently launched community access to cash pilots.”

Belgium: Crypto Firms Must Register With FSMA From This May

Certain virtual currency service providers established in Belgium will be required to comply with anti-money laundering (AML) rules, the Financial Services and Markets Authority (FSMA) has announced.

Starting from May 1, virtual currency exchanges, wallet providers and crypto ATM service providers established in Belgium will be required to register with the FSMA.

This implies that these service providers must continue to meet a number of registration and business conditions, including minimum capital requirements, professional reliability of the management team, and sound and prudent policy regarding their shareholders.

The new framework will put into effect the EU's 5th Anti-Money Laundering Directive.

Singapore: MAS Will Not Plan To Impose Credit Card Fees

The Monetary Authority of Singapore (MAS) has rejected a question by a member of parliament, Lim Biow Chuan, asking whether the central bank has plans to restrict credit card fees charged by banks to ensure all customers are treated fairly.

According to the notice issued: “Fees charged by banks for their services and products are commercial decisions. MAS does not interfere in these decisions, but expects all banks to deal fairly with their customers.”

In further elaboration, the MAS said that existing rules are in place to ensure transparent card fees and charges so that consumers are able to make informed decisions.

For example, the MAS requires banks to “clearly and conspicuously disclose late payment fees and interest charges in credit card statements”, as well as project the length of time and a breakdown of the total amount that the customer will take to fully pay off any outstanding balance.

It also noted that the Association of Banks in Singapore’s Code of Consumer Banking Practice further specifies when and how banks can effectively communicate to customers key terms and conditions, including annual fees, repayment grace periods and interest rates.

Although regulators tend to leave the market to decide the fees and rates it charges customers, in some jurisdictions authorities may intervene to cap certain fees, such as APRs. For example, in May 2021, Bank Indonesia announced at its Board of Governors' Meeting that from July 2021 it was lowering the upper limit on credit card interest rates from 2 percent to 1.75 percent per month.

Nigeria: New IMF Report Looks At Pros And Cons Of eNaira

The International Monetary Fund's (IMF) latest Nigeria country report has praised the potential of the country’s central bank digital currency to improve financial inclusion, help facilitate international remittances and reduce the informal and grey economy.

However, it has warned that “the expansion of eNaira use to cross-border fund transfers and agency bank networks may cause new money-laundering/financing of terrorism (ML/FT) risks”.

In particular, it stressed the need for the country “to fix existing deficiencies in the AML/CFT framework which could exacerbate these risks”.

The international body also noted that “the eNaira carries macro-financial, cyber security, operational, financial integrity and stability, and legal risks”.

It said there was a danger of bank disintermediation as eNaira may become perceived as safer and more convenient compared to bank deposits. The IMF acknowledged, however, that the Central Bank of Nigeria was mitigating this risk by placing daily transaction limits on how much could be sent from the customer bank to an eNaira wallet.

Introduced in October 2021, Nigeria became one of the first and largest markets to date to launch a full rollout of a central bank digital currency (CBDC). Made available to the public from the start, an eNaira can not only help improve financial inclusion, but also make it easier and more efficient for the government to provide social assistance.

Policymakers hope the eNaira will help them reach their ambitious target of 95 percent financial inclusion.

United States: New Californian Bill Wants Local Government To Accept Crypto

California state Senator Sydney Kamlager has introduced a bill that, if passed, would authorise a state agency to accept cryptocurrency as a method of payment for the provision of government services.

Senate Bill 1275 was introduced by the democratic senator and follows similar attempts by other states to promote or investigate the use of crypto currency, including for tax payments.

A bill in Wyoming proposes to allow sales and use tax to be paid for in cryptocurrency, while Senator Wendy Rogers has introduced a bill to recognise Bitcoin as legal tender in the state of Arizona.

Last week, Colorado Governor Jared Polis made headlines that he wanted to allow the state's citizens to be able to use cryptocurrency to pay state taxes by this summer. However, he also noted in an interview with CNBC, his proposals would not mean the state accepting crypto directly, but using an intermediary that would convert the cryptocurrency back into U.S. dollars.

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