Week In Brief - March 4, 2022

March 4, 2022
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A short roundup of some of the week's payments news you may have missed. This week we look at the Federal Reserve's tiered review of fintechs, Ireland's An Post new open banking services, Indonesia's increase to QR limit on payments and Thailand's new digital asset custody rules.

United States: Fed Proposes Tiered Review Of New Fintech Accounts

The U.S. Federal Reserve has proposed a tiered-review framework for the evaluation of requests for access to reserve bank master accounts and services by fintechs.

The draft guidelines supplement a previous proposal issued last May and is intended to ensure that the reserve bank uses “a transparent and consistent set of factors” when reviewing requests to access Federal Reserve accounts and payment services.

"With technology driving rapid change in the payments landscape, the proposed guidelines would ensure novel requests for access to Federal Reserve accounts and payment services are evaluated consistently and transparently to ensure a safe and innovative payment system," said Governor Lael Brainard.

In the supplemental notice, the Fed proposes to establish a three-tiered review framework that provides additional clarity on how the reserve banks would apply the evaluation principles to different types of institutions.

Tier 1 would consist of eligible, federally insured institutions, and would be subject to a less intensive and more streamlined review.

Tier 2 would consist of eligible institutions that are not federally-insured but are subject by statute to prudential supervision by a federal banking agency, and any holding company of which would be subject to Federal Reserve oversight by statute or by commitments. The notice proposes an intermediate level of review for requests by Tier 2 institutions.

Tier 3 would consist of eligible institutions that are not federally insured and not subject to prudential supervision by a federal banking agency at the institution or holding company level, and “would be subject to the strictest level of review.”

Comments will be accepted for 45 days after publication in the Federal Register.

Ireland: An Post Leverages Open Banking

An Post has announced a partnership with Tink to develop a money management solution for its customers.

According to the Irish postal bank, the new features represent the next step in the evolution of its banking app, which it first launched in 2021.

The An Post Money Manager app utilises Tink’s open banking technology to help customers understand their spending behaviour, better manage their savings and set budgets to stay on track with their financial goals.

With its latest innovation, An Post hopes “to firmly position ourselves as a challenger to the banks in Ireland”.

The launch of its digital banking app follows a sharp rise in the number of new current accounts at the post office, which according to its most recent 2020 annual report rose 33 percent during the year, estimated by VIXIO at around 100,000.

Tink, which is in the process of being acquired by card giant Visa, said in a statement: “An Post is in the perfect position to help simplify money management for its customers through the power of open banking technology.”

Indonesia: Increase To QR Code Transaction Limit

Bank Indonesia (BI) has announced that it has increased the transaction limit for payments made using its QR code standard in the country.

From March 1, the limit increased from INR5m (£261) to INR10m (£521).

As volumes have increased using the standard, so has the industry’s ability to understand and manage the risk associated with the payment form. This change is, therefore, reflective of a staggered policy of gradually increasing the limit in line with measured risk management.

The QR Code Indonesian Standard (QRIS) was initially launched by BI in August 2019 to enable payments using e-money applications, electronic wallets and mobile banking. The service became operational in 2020.

According to BI, the standard was “directed at supporting financial inclusion, including the empowerment of micro, small and medium enterprises (MSMEs) as well as supporting the acceleration of national economic recovery”.

The increase in limit will also help further boost non-cash transactions by making its usage available to a wider category of merchants. According to BI, it is particularly targeting more “artisan” merchant categories, as well as transportation and tourism.

It is also part of wider efforts by the central bank to boost non-cash payments in Indonesia using its QR code system.

In December, for example, it said that it was targeting 15m new users of QRIS in 2022 through coordinating with payment system providers to integrate its usage at different government ministries and agencies.

Despite the increase in the transaction limit for QRIS, issuers have the right to set a cap below this depending on their risk appetite.

Asia: Thailand Strengthens Digital Asset Custody Rules

The Thai Securities and Exchange Commission (SEC) has amended its regulations on the custody of clients’ assets in digital asset businesses with an aim to enhance protection for digital asset investors.

The new rules require digital asset business operators to keep the records of investors’ assets under custody accurate, complete and updated, while the assets must be properly protected from relevant risks.

The rules apply to businesses that keep custody, offer withdrawal and transfer of clients’ fiat money and “seek benefits from clients’ assets”, both fiat money and digital assets, for the clients’ interest.

The rules came into effect on March 1 but give a transitional period of three to six months for businesses to adjust their processes and develop necessary work systems.

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