Fintech companies did a good job in first week of the month: Apple collaborated with PayPal, Amazon launched a new service for merchants, Visa revealed its plans for NFT, and MoneyGram became even deeper involved in cryptocurrency industry. Read on to find out more.
TOP NEWS | 31.10-06.11
- Amazon launches a new service for merchants
- Apple and PayPal made a deal
- Klarna is reaping the benefits of open banking
- Digital asset have been classified
- Binance head underestimates CBDC threat to cryptocurrencies
- Integrated global financial networks are not far off
- Klarna takes heavy losses
- Visa revealed its cards about NFT
- Saudi Arabia takes another step towards open banking
- Bank of Ireland found a way to save on card issuance
- MoneyGram interest in cryptocurrency has become even deeper
- NatWest fraud spooky tales
- 6 significant payment takeaways from powerful consulting firms
Amazon Launches a New Service for Merchants
Amazon has introduced a new service for the merchants on its platform. It will provide third-party sellers with additional financing to scale their business.
It is a cash advance program that doesn’t require a credit check or personal guarantee. The seller is only required to make payments on each successful transaction.
The tech giant promises transparent and fixed rates, no fixed term for payments, and no late fees.
Businesses may receive money ranging from $500 to $10 million, with payments based on a predetermined proportion of their gross product sales.
As part of the MCA program, Amazon cooperates with Parafin, the fintech startup from San Francisco.
Apple and PayPal Made a Deal
PayPal and Apple have agreed to allow each other's customers to use their respective payment services within their separate ecosystems.
Apple's Tap to Pay technology will allow U.S.-based businesses to accept contactless payments on smartphones via PayPal and Venmo's iOS apps.
Apple Pay will be offered as a payment mechanism to PayPal's unbranded payment streams on platforms for merchants such as the PayPal Commerce Platform.
Next year, PayPal and Venmo clients will be able to add these credit and debit cards to Apple Wallet.
What the f🤖ck is Tap to Pay?
Tap to Pay on the iPhone is a new feature launched by Apple earlier this year that allows you to turn your smartphone into a payment terminal. To pay, the buyer's smartphone or NFC-enabled bank card must be held up to the merchant's smartphone.
Klarna Is Reaping the Benefits of Open Banking
Klarna Kosma, Klarna's open banking arm, has helped Swedish SMEs receive on average 15% larger loan offers at a 4% lower interest rate through a tie-up with Krea, a Swedish digital lending platform.
Krea's single portal allows small and medium businesses to apply for business loans from a network of over 30 banks and lenders who return their best loan offers based on the data provided in the application.
SMEs may transmit transaction-level data straight from their business bank account to the Krea platform using Klarna Kosma, enabling lenders to make larger loans at cheaper interest rates.
According to Krea, the service has resulted in a significant rise in loan approvals, with over 20,000 loan proposals being made to SMEs this year.
Digital Assets Have Been Classified
Goldman Sachs has partnered with MSCI and Coin Metrics to create a new datonomy, a system for categorizing digital assets.
The datonomy data service categorizes currencies and tokens according to how they are utilized, giving market players a standardized approach of monitoring and evaluating the digital assets ecosystem.
MSCI has assumed responsibility for investment analysis and index development; it is also the owner and sole administrator of the system. Goldman and Coin Metrics, meanwhile, serve in an advisory board role.
The digital asset classification system will increase market transparency by allowing investors, service providers, developers, and researchers to track changing market trends and evaluate risk and portfolio returns. It will also allow them to contribute to the development of new products.
Binance Head Underestimates CBDC Threat to Cryptocurrencies
Cryptocurrencies are not threatened by central bank digital currencies (CBDCs). At least that is what Changpeng Zhao, CEO of Binance, the world's largest cryptocurrency exchange, believes.
CBDCs, he says, will help bolster the confidence of skeptics by confirming the underlying technology of blockchain.
Regarding the linkage between the financial markets and cryptocurrencies, Zhao also emphasized that there is a fundamental difference between cryptocurrencies and Central Bank Digital Currencies (CBDCs). He argued that native crypto is still a deflationary asset, while he admitted that both equities and cryptocurrencies have seen a similar steep market correction when interest rates rose because the same individuals who purchase stocks also buy equities.
Major central banks, as well as the Bank for International Settlements, have investigated the possibility of launching their own digital currencies. The European Central Bank also said in August that CBDCs might be the holy grail of cross-border payments.
Integrated Global Financial Networks Are Not Far Off
Three financial companies — JPMorgan, DBS Bank, SBI Digital Asset Holdings — completed the first pilot transactions on a project inspired by Singapore's central bank. The project aims to understand decentralized finance's possible uses in wholesale funding marketplaces. Participants also want to make tokenized bonds with open, interoperable networks.
DeFi enables entities to execute direct financial operations with one another using smart contracts. This eliminates the need for financial intermediaries.
DBS Bank, JPMorgan, and SBI Digital Asset Holdings participated in the pilot by conducting FX and government bond trades against liquidity pools composed of SGD bonds, JPY bonds, and USD.
As an isolated experiment, a live cross-currency transaction using real-world assets was carried out utilizing tokenized JPY and SGD deposits, with a simulated test including the purchasing and selling of tokenized government bonds.
The pilots demonstrate the potential of institutions to trade, clear, and settle deals among themselves instantly, without the need for clearing and settlement middlemen, MAS says.
The central bank will also conduct two additional industry pilots.
Klarna Takes Heavy Losses
In 2021, Klarna Australia lost $56 million. That's four times what the corporation lost when it entered the region in 2020 — back then it reported a $14 million loss.
According to local media news.com, Klarna Australia had a net asset deficit of $70 million as of December 31, 2015. The audit showed that the Stockholm-based parent company had been forced to support the unit.
These figures raised significant doubts about the group's ability to continue its activities, Ernst and Young’s partner says.
Klarna Australia is reported to have suffered a 71 percent decline in revenue from trade and consumer commissions, dropping to $3.1 million in 2021, down from $10.8 million in 2020. It also saw credit loss costs skyrocket from $169,271 in 2020 to $8.5 million in 2021.
However, a Klarna spokesperson told news.com that the scope of the issues may have been overstated.
Visa Revealed Its Cards About NFT
Visa has filed two applications for trademarks pertaining to the metaverse, non-fungible tokens, and digital currency wallets.
Applications filed with the U.S. Patent and Trademark Office earlier this month refer to virtual environments in which users can interact with each other for entertainment purposes, as well as «collectible series of non-fungible tokens».
According to the application, Visa is also working on software to manage digital transactions. It is anticipated that it will be used for the following purposes:
- digital transactions management;
- use as a digital currency wallet and storage services software;
- use as a cryptocurrency wallet;
- use of blockchain technology to manage and verify bitcoin transactions.
In fact, earlier Mastercard and American Express also applied for the metaverse trademark.
Saudi Arabia Takes Another Step Towards Open Banking
The Saudi Central Bank has released an open banking framework that includes legislation, regulatory guidelines, and technical standards. Initially, open banking will focus on account information services and then on initiating payments.
The programme is meant to allow clients to share their data with third parties while also strengthening connections between banks and fintech businesses and improving financial infrastructure. And it’s a part of a broader fintech strategy that aims to position Saudi Arabia as a global financial technology hub.
Saudi Arabia's central bank stated that it is monitoring banks and fintech firms to ensure that they are ready to provide services in Q1 of the following year.
Bank of Ireland Found a Way to Save on Card Issuance
Bank of Ireland has found a solution that will make it more environmentally friendly and allow it to reduce the cost of producing debit and credit cards. By 2026 the Bank will completely switch to issuing cards from bio-based materials, saving 4.48 tons of plastic and 17 tons of CO2.
The cards, available to personal and business customers, will be made from 84 percent renewable biomaterials, such as field corn. This ensures that their decomposition period is only six months, unlike their plastic counterpart, which takes about 400 years.
In addition to switching to eco-friendly cards, the Bank plans to redesign the cards, adding flat-printed numbers with larger font sizes and a notch to help people insert it correctly into a card machine or ATM.
Bio-raw cards would be available to all new and existing customers when their old cards expire. Eco-cards will also be able to replace damaged, lost, or stolen cards.
MoneyGram Interest in Cryptocurrency Has Become Even Deeper
Continuing to venture into the crypto world, MoneyGram International introduced a new service that should make life easier for the company's customers interested in cryptocurrency.
MoneyGram customers will now be able to buy, sell and hold cryptocurrency in its mobile app.
Thanks to a partnership with Coinme, a cryptocurrency exchange, and crypto-service provider, MoneyGram clients can buy, sell and hold cryptocurrency in its mobile app.
The company also said it plans to expand its list of supported cryptocurrencies as it expands into other markets in 2023. The only thing that could get in the way of the company is international regulations.
Listen to NatWest Fraud Spooky Tales
NatWest has enlisted the help of legendary actor Simon Callow to read some real-life Halloween horror stories on the perils of fraud.
The actor, whom we all know from his role as Gareth from The Four Weddings and One Funeral, narrated three stories based on true events. We have to admit, they're really scary.
Here's the plot:
Twisted Fate explains how fraudulent bitcoin investment pitches may defraud people out of their money by making misleading promises.
Romance is Dead is a seductive romance fraud that illustrates the dangers of internet dating.
The Final Demand depicts the horrors of an invoice redirection scam, illustrating how a small company owner is targeted by a bogus "supply" who claims their information has changed and they need a new invoice.
NatWest also shared the results of a survey showing that three-quarters of Britons have had unfortunate experiences with scammers. At the same time, 60% of Brits have experienced fraud in social networks. On average, each victim lost £350.50.
Read to 6 Significant Payment Takeaways From Powerful Consulting Firms
In recent years, the payments environment has changed significantly, with the COVID-19 epidemic accelerating the spread of digital and mobile payments. However, as the global economic situation deteriorates, competition intensifies, and regulatory scrutiny grows, the payments business confronts new hurdles.
In their latest reports, major accounting and consulting firms Ernst & Young, Forrester Research and McKinsey & Company analyze factors affecting the payments industry and make predictions for the future. We will retell them very briefly.
Global payment revenue has surpassed pre-pandemic levels
The global payments industry's revenue has already surpassed pre-pandemic projections. It is expected to reach $3 trillion by 2026, McKinsey says.
Last year, the biggest revenue from payments came from the Asia-Pacific region ($1.1 trillion). This growth is due to an increase in the number of payment transactions between accounts.
North America, meanwhile, accounted for just $500 billion; the region's predominant card transactions showed the same growth rate as before.
The firm also stated that 50% of financial operations in the US (33% of worldwide card spending) are now conducted online.
paytech runs the show, but banks still have a chance to join
The dominant position in the fintech industry is held by "paytech" companies. With their integrated solutions, they hold about a quarter of the market and also set the value of payments by serving intermediaries, payment providers, networks or hardware providers.
The global payments market is estimated at about $240 trillion, and paytech's share has "exploded" to $2.17 trillion.
However, according to EY report, banks and traditional payments processors still can stay ahead of disruptive technologies by investing in key areas.
Open banking & cross-border payments are everything
The consumer in 2022 wants more control over their money. Open banking gives them the tools to do that, speeding up the movement of money and enabling them to better interact with their accounts.
The report also notes that payment service providers and regulators are finally working in synergy, with the former offering new and improved business models for service delivery, while the latter are setting the framework for cross-border payments to become more contemporary.
There is no good news for some payment companies
With venture capital becoming increasingly challenging to obtain and transaction volumes expected to decline, Forrester predicts that one-quarter of payment providers will stop operating in 2023. According to the firm’s report, chief financial officers focused on growth are being replaced by those prioritizing cost efficiencies. That is why we are witnessing mass layoffs.
Companies «without strong protection» also risk being swallowed by more adaptable industry giants, or struggle with wage inflation.
Merchants are not okay with «swipe» fees
Card network interchange fees, commonly known as «swipe» fees, have long been an unavoidable burden for businesses. Given that fees, like legal restrictions, are ever increasing, they've had enough.
Forrester predicts that in 2023 at least one powerful retailer will make an attempt to bypass these fees. This will lead to conducting a global campaign to promote the use of bank-based payment methods.
Fraud attacks will become even more sophisticated
According to Forrester, card-based payment fraud will decrease by 2023 due to increased usage of multifactor authentication systems and tokenization technology improvement. Furthermore, mobile devices are introducing biometrics into the payment landscape.
However, Forrester believes that these improvements would encourage fraudsters to focus their efforts on customers through social engineering methods in the push payment realm.
Curiosity didn’t kill the cat. Ignorance did.Stay up-to-date with the finest fintech stories. Subscribe on our social medias to not miss the last updates: