Millions of Australian consumers were expected to withdraw from ATMs yesterday as part of Cash Out Day, an event designed to keep cash relevant in an increasingly digital world.

The movement has gained significant support across Australia and has even been credited with spur the passage of the nation’s recent cash mandate. As of the start of the year, major retailers and convenience stores are required to accept cash for most purchases under $500.

However, the Cash Out Day campaign is not resting on its laurels. Organizers hope to double the average daily volume of ATM withdrawals in a single day, sending a clear message to financial institutions that cash is still critical for many segments of the population.

For example, data from the Reserve Bank of Australia (RBA) found that about half of Australians use cash at least once per week, with older and lower-income consumers among the most frequent users. The RBA also warned that reduced access to cash could have negative consequences for roughly a third of the nation’s population.

The Cash Uptick

While the efficiency of digital payments and the widespread adoption of smartphones have led many experts to predict the decline of cash, the RBA found that around 15% of last year’s transactions were conducted using cash—a 2% increase from two years earlier.

Australia is not alone in maintaining a strong preference for cash. Countries such as Switzerland have long been cash strongholds. According to the Swiss National Bank, that trend remains intact: mobile payments declined by approximately 1% last year, while cash and debit card usage held steady.

Both Sides of the Debate

There has, however, been pushback against cash mandates in other regions. For instance, an alliance of merchants and wholesalers in the European Union has opposed a proposed law requiring businesses to accept cash. The crux of their argument is that handling cash securely imposes significant time and cost burdens on retailers.

It is worth noting that these merchants oppose a mandate—not consumers’ continued access to cash. Meanwhile, Cash Out Day organizers emphasize that they support digital payments, provided cash remains a viable alternative.

The post Australia’s Grassroots Movement Fights to Preserve Cash Access appeared first on PaymentsJournal.

Revolut is preparing to open a physical space in Barcelona, but it’s deliberately avoiding calling it a bank branch. The move signals a shift for the digital-first company as it experiments with bringing parts of its app-based banking experience into a real-world setting.

The store will employ more than 20 people and is expected to resemble an Apple Store-style environment, described by Revolut as a “high-visibility, immersive space.” It won’t offer traditional branch banking services. Instead, Revolut says it will function as a physical touchpoint for customers to learn about and receive advice on its suite of products, which includes payments, savings, crypto, trading, insurance, and lifestyle features.

A Base in Barcelona

Although Revolut is headquartered in the UK, Barcelona has become one of its key operational hubs in Europe, and Spain is one of its larger markets. The city’s established tech ecosystem and status as an international destination may also support customer engagement as the new site.

The news comes as traditional banks continue reducing their physical footprint. In the U.S., around 6,000 commercial bank branches have closed over the past five years. A 2025 American Bankers Association survey found that only 9% of customers prefer using physical branches as their primary banking channel.

Blending Physical and Digital Banking

The launch may also reflect broader industry trends in which fintech companies experiment with physical locations while remaining primarily digital. Revolut holds a UK banking license but is still operating under certain restrictions as it continues expanding its regulated banking services.

Instead, it remains in a holding pattern, limited to holding £50,000 in total customer deposits. Revolut’s UK customers remain unprotected by the government’s Financial Services Compensation Scheme, which insures consumers up to £85,000 if their bank goes under.

Separately, the company has applied for a banking license in the U.S., which is still pending. This expansion effort is taking place alongside ongoing speculation about a potential initial public offering, which the company has indicated is still several years away.

The post Revolut to Open First Physical Location in Barcelona appeared first on PaymentsJournal.

Western Union is the latest legacy financial services firm to enter the stablecoin race, revealing that its U.S. dollar-backed token, USDPT, is in the “final stages” of preparation.

Western Union is also rolling out two new services to help integrate the stablecoin into a broader ecosystem. The USD Stable Card, expected later this year, will allow consumers to hold value in Western Union stablecoins and spend it globally.

The second product, the Digital Asset Network, will leverage USDPT to connect crypto wallets with Western Union’s existing retail and agent network.

Sluggish Revenue in Consumer Transfers

While stablecoins are playing a growing part of business-to-business cross-border transactions, Western Union’s core business remains individual remittances. That segment has recently lost momentum. Consumer money-transfer revenue accounted for 87% of total revenue in 2025 but declined by 3% in the first quarter.

Even so, USDPT appears to be designed primarily for settlement within Western Union’s global agent network, rather than as a purely consumer-facing product.

Western Union could have integrated existing stablecoins into its cross-border infrastructure. Instead, by issuing its own, the company is positioning itself as a competitor to established players like Circle and Tether. This approach also allows Western Union to avoid transaction fees paid to third-party issuers and intermediaries.

Solana Plays a Key Role

Western Union has been laying the groundwork for this move for some time, with significant support from Solana, which is expanding its footprint in the stablecoin space. Earlier this year, Western Union joined the Solana Foundation’s enterprise developer program, enabling it to explore blockchain-based payment applications.

Solana’s lower costs likely made it an attractive choice. Transaction fees on Solana are typically less than a penny, compared with Ethereum, where fees can range from $1 to $50.

On top of that, Solana has introduced features like token extensions, which allow developers to create tokens with specialized functionality for specific use cases. These capabilities were a key factor in PayPal’s decision to expand its stablecoin, PYUSD, from Ethereum to Solana.

The post Western Union’s Stablecoin Is Almost Ready for the Market appeared first on PaymentsJournal.

Payment services firm EBANX, a key partner in the development of Brazil’s highly successful Pix instant payment system, is expanding into several new markets in Southeast Asia, strengthening its footprint beyond Latin America. The fintech is launching operations in Thailand, Indonesia, and Turkey, with plans to enter Malaysia and Vietnam later this year.

The company aims to bring cross-border solutions to these markets by connecting global merchants with local payment methods. The expansion underscores EBANX’s strategy of growing in emerging markets where credit card penetration remains low.

APAC Growth Strategy

EBANX facilitates hundreds of local payment methods and streamlines cross-border transactions for businesses operating in emerging markets. The Asia-Pacific region has been a central pillar of its growth strategy, driven by rising digital payment adoption and strong demand for localized checkout solutions.

To support this expansion, the company recently opened a regional headquarters in Singapore, strengthening the ability to serve merchants across APAC and deepened relationships with local payment ecosystems.  

Last year, 36% of EBANX’s total payment volume (TPV) came from the Asia-Pacific region. Its QR PH solution is now the fastest-growing payment method in the Philippines, and the company expects TPV in Asia to grow by 30% this year.

Overall, EBANX recorded a 48% increase in TPV in 2025, serving more than 500 merchants worldwide. That same year, 65% of its gross profit was generated outside Brazil, including 20% from markets beyond Latin America.

Landscapes for Further Development

EBANX has also contributed to the development of instant payment ecosystem in additional markets. In Colombia, it helped develop the Bre-B system, modeled closely on Pix. More than 30 million users—over three-quarters of the country’s adult population—have already registered.

With only 18% of Colombians holding credit cards, the market is well-suited for alternative payment systems. Credit card usage is even lower in Indonesia, where only 6% to 7% of adults have one.

Indonesia launched its national QR payment system, Quick Response Code Indonesian Standard (QRIS), in 2019, while Turkey has adopted digital payments through its FAST instant payment system, which processes around 3.5 million transactions daily. These types of payment environments EBANX targets for its cross-border services.

The post EBANX Targets Southeast Asia in New Cross-Border Payments Push appeared first on PaymentsJournal.

The U.S. dollar dominates global finance, but that dominance may face a credible challenge sooner than expected.

Harvard economist Kenneth Rogoff recently suggested that the Chinese yuan could become a global reserve currency within five years, potentially rivaling even the fast-growing digital assets industry.

That said, the dollar’s position remains deeply entrenched. According to data from the U.S. Reserve, it accounts for 58% of international transactions and has long been regarded as a safe haven currency. Beyond cross-border payments, it also maintains a strong hold over the rapidly expanding stablecoin market. Many of the world’s leading payments networks are U.S.-centric, including the global systems operated by Visa and Mastercard.

This dollar-heavy global financial ecosystem has proven difficult to displace, reinforcing the currency’s central role in global commerce—even as geopolitical tensions and trade conflicts have intensified.

China, however, has been working to change that. It has long sought to expand the role of the yuan in global payments. Although these efforts have yet to gain much traction—the Fed estimates the yuan is used in only around 2% of cross-border payments—there are signs that its role could grow.

Bucking Western Estimates

According to the South China Post, one reason Western estimates of yuan usage may be understated is that they don’t fully account for transactions conducted through China’s Cross-Border Interbank Payments System (CIPS). Developed as an alternative to the U.S.-backed SWIFT—a cornerstone of global payments—CIPS has become a crucial part of China’s strategy.

China has prioritized expanding CIPS, even easing some regulations to introduce new programs with countries such as Vietnam and Indonesia. These cross-border integrations enable QR code transfers, allowing domestic merchants to accept payments from Chinese travelers.

Cementing the Currency’s Standing

Separately, China has also focused on its central bank digital currency—the digital yuan—which has gained more ground than many other CBDCs globally.

Still, the yuan is far from challenging the U.S. dollar. Rogoff acknowledged this and laid out steps China could take to further cement the currency’s global standing, including opening its government bond markets to foreign investors and continuing to expand CIPS as a viable alternative to SWIFT.

In many ways, China’s payments strategy mirrors that of the European Union, which has also reprioritized its CBDC efforts and sought to bolster the euro’s role in cross-border payments. However, while strong government backing may drive incremental shifts, it remains to be seen whether these efforts will be enough to overcome the dollar’s entrenched position at the center of the global financial system.

The post Unseen Momentum Could Be Mounting Behind the Yuan appeared first on PaymentsJournal.

Charles Schwab is slowly rolling out a platform that will allow its clients to purchase cryptocurrency directly. The brokerage firm has opened a waitlist for its Schwab Crypto accounts, which are slated to launch in the first half of 2026.

Schwab clients already have access to crypto through ETFs, futures, and other indirect vehicles, including its own Schwab Crypto Thematic Index ETF. Those products have attracted significant assets. Last July, CEO Rick Wurster said Schwab clients held more than 20% of all crypto exchange-traded products industry-wide.

The next question is whether that same client base—generally made up of individual investors—has the appetite to own crypto directly. Schwab will also need to determine whether digital assets can fit into the workflow of a mainstream brokerage customer.

Simple and Direct

Qualified clients will be able to trade Bitcoin and Ethereum through a dedicated account tied to the firm’s affiliated banking subsidiary. Schwab is separating these spot crypto holdings securities and ETFs, which offer SIPC insurance of up to $500,000. Crypto assets held through the new product will not be insured by either SIPC or FDIC.

For now, the offering is relatively limited. The accounts will not accept external crypto deposits or allow withdrawals to self-custody wallets. Features such as staking, recurring purchases, and limit orders will also be unavailable.

Those are standard features on many native crypto platforms, and their absence highlights the differences between Schwab’s approach and that of firms like Coinbase.

Slow Rolling the Offering

The rollout will be gradual. The accounts will first be tested internally with Schwab employees, followed by a limited early-access group drawn from the waitlist.

Since the SEC first approved crypto ETFs two years ago, the category has grown to $120 billion, alongside a more favorable regulatory backdrop for the industry and its investors. Shortly after the 2024 presidential election, Wurster said Schwab planned to introduce spot crypto trading once U.S. regulations eased.

Schwab isn’t the only brokerage exploring this space. E*Trade, owned by Morgan Stanley, is also preparing to offer spot trading in Bitcoin, Ether, and Solana, via a partnership with blockchain startup Zerohash.

The post Schwab Eyes Crypto Spot Trading, with Caution appeared first on PaymentsJournal.

As transformative payment types like digital assets and real-time payments have emerged, many have treated their eventual dominance as a foregone conclusion.

While these methods have gained rapid traction in some regions, payments inertia has proven difficult to overcome in others. In the U.S., a deeply entrenched financial services infrastructure has fostered a card-driven ecosystem where alternative rails have struggled to gain meaningful share.

In Switzerland, cash has long held a unique cultural and functional appeal. A key driver is the nation’s strong preference for financial privacy—perhaps not surprising for the country synonymous with the Swiss bank account.

This preference has not wavered even as new payment options have come to market. In fact, data from the Swiss National Bank (SNB) found that mobile payment apps like Apple Pay and Switzerland’s own Twint accounted for 17% of transactions last year, down one percentage point year-over-year.

Circulating High Values

Cash remains a defining feature of Swiss commerce. The country issues the world’s third-highest denomination banknote—the 1,000 Swiss franc note, worth approximately $1,250—and it extends even to large purchases, including automobiles.

That said, cash is no longer the leading payment method. According to the SNB, debit cards were used in 37% of transactions last year, while cash accounted for roughly 30%. Both figures were largely unchanged year-over-year.

For the Love of Cash

Despite Swiss consumers’ preference for privacy, there has been little catalyst to drive a shift from debit and cash toward digital alternatives. Even with the launch of the Swiss Interbank Clearing Instant Payments (SIC IP) system—and exploration of interoperability with the neighboring European Union’s TARGET Instant Payment Settlement service—adoption has been limited.

One possible impetus for change could come from merchants. While much attention has been paid to card interchange fees, cash handling also carries meaningful costs, including security, storage, and transportation.

This is why many EU merchants recently banded together to urge lawmakers not to mandate cash acceptance. They argued such requirements would force businesses to maintain costly cash-handling infrastructure.

However, the prevalence of cash in Switzerland suggests physical currency will continue to be a core part of the retail environment. Many respondents in the SNB survey said they feel a greater sense of control when paying with cash and value the tangible nature of the experience.

Further reinforcing this outlook, the SNB recently held a competition to design its next series of banknotes, slated to launch in 2030—a sign that Switzerland’s affinity for cash is unlikely to fade anytime soon.

The post Mobile Payments Stall as Switzerland Clings to Cash and Debit appeared first on PaymentsJournal.

As sports betting operators move away from credit cards, BetMGM is eliminating them entirely following a fraud-related settlement with Pennsylvania.

The Pennsylvania Gaming Control Board also fined BetMGM $100,000, alleging it “failed to have sufficient procedures to prevent the fraudulent behavior,” particularly in identity verification.

State regulators identified multiple cases in which fraudulent users opened accounts, moved money, and withdrew funds using stolen or fabricated identities—a pattern that persisted for several years. One individual opened 119 BetMGM and Borgata accounts and gambled nearly $900,000. In a separate scheme from 2021 to 2024, a fraud ring created 1,567 accounts, depositing more than $13,000 using stolen payment methods and withdrawing more than $28,000.

Following Other Platforms

BetMGM is the latest gambling platform to drop credit cards. FanDuel stopped accepting them earlier this year after Senator Elizabeth Warren noted that nearly a quarter of bettors used credit cards, often incurring fees as high as half of the original wager.

DraftKings cited those fees when it ended credit card payments last year. However, it was also fined $450,000 by the Massachusetts Gaming Commission for violating the state’s credit card ban on gambling. The company said it misunderstood the law, believing it applied only to users physically located in the state.

States Have Taken the Initiative

Online sports betting is now legal in 32 states, but Massachusetts and seven others already ban the credit card funding. Last week, Maine lawmakers approved a bill to do the same.

The Maine legislation also sets technical requirements to enforce the ban. Gambling operators would have to update all payment systems—including digital wallets, mobile apps, websites, and in-person kiosks—to automatically block credit card transactions.

The post BetMGM Is the Latest Gambling Platform to Move Away from Credit Cards appeared first on PaymentsJournal.

India’s Unified Payments Interface (UPI) has grown into the dominant force in global instant payments, accounting for more than four out of every five real-time transactions worldwide. The system’s rapid rise has been fueled by strong government support, widespread consumer adoption, and acceptance across a rapidly expanding network of merchants.

According to MSN, India’s finance minister, Nirmala Sitharaman, said the network accounted for 81% of global real-time payments last year, cementing UPI’s position as the largest instant payments system in the world.

The total volume of retail transactions on UPI has skyrocketed, rising from ₹7,176.9 crore (around $77 million) in FY22 to ₹22,167.9 crore (roughly $2.39 billion) in FY25. Even as UPI approaches saturation in India’s immense payments market, the network has still found room to grow—transaction volume on the system increased by more than 35% last year.

The growth was fueled by several factors, including the prevalence of smartphones, broader financial inclusion, and improved transaction safeguards.

Biometric Guardrails

Among the most notable of these safeguards is biometrics authentication, which was launched on UPI last year. Previously, consumers were required to enter a PIN to authorize transactions. However, India’s regulators added biometric functionality to reduce checkout friction while strengthening transaction security.

This made biometric authentication available to users who opt in, with their data managed through Aadhaar, a digital identity program operated by India’s government. Aadhaar issues citizens a 12-digit number after they provide verifiable biometric and personal data.

Like UPI, Aadhaar is also the largest system of its kind in the world and has frequently been spotlighted as a gold standard for other digital identity systems to emulate.

Fighting Faster Fraud

Sitharaman credited Aadhaar authentication with improving UPI payments, but she also highlighted the persistent challenges of fraud. One reason biometric programs have been slow to gain traction in many parts of the world is that they require both consumer adoption and merchant investment in acceptance infrastructure.

While government backing for Aadhaar and UPI suggests that infrastructure deficiencies may not be a major obstacle in India, gaps in consumer awareness and adoption will likely remind. And since faster payments often equate to faster fraud, challenges related to fraud persist across UPI and other instant payments systems.

To combat this issue, Sitharaman noted that India’s regulators and financial institutions are also conducting frequent awareness campaigns via text messages, radio campaigns, and other platforms.

The post UPI Tightens Grip on Global Instant Payments Market appeared first on PaymentsJournal.

More than half of organizations now rank generative artificial intelligence as their biggest security threat, surpassing stolen credentials. The rise of AI-driven attacks—from deepfakes to hyper-personalized phishing—is upending cybersecurity, with speed and scale overwhelming traditional defenses.

According to The State of Passwordless Identity Assurance, a study from HYPR, generative AI and agentic AI are enabling entirely new forms of attacks, including deepfakes and employee impersonation. The study found that nearly two-thirds of organizations surveyed had already been targeted by personalized phishing emails—AI-generated messages designed to imitate executives—highlighting how quickly these threats are evolving.

Phishing was the most common type of cyberattack organizations faced in the past 12 months, followed by malware and ransomware. These findings align with a study from Cofense, which found that rate of phishing attacks is accelerating, with spam filters flagging one phishing email every 19 seconds in 2025, up from one every 42 seconds the previous year.

Speed Is of the Essence

Nearly 40% of respondents reported experiencing some form of generative AI-related security incident in the past 12 months. Concerns are growing, as 43% of respondents identified AI-driven attacks as the most significant change in cybersecurity over the past year.

Yet too many organizations still react only after the damage is done. Three in five respondents said they had incurred a hindsight tax, increasing their cybersecurity budgets only after a breach had already occurred.

In the era of AI, that approach is no longer sufficient. AI has increased the scale, speed, and effectiveness of phishing and other cyberattacks. While most identity-based attacks are detected within hours, AI-driven automation allows data to be stolen before human intervention can occur.

Threats from Agentic AI

Another emerging risk, agentic commerce, is also making headlines. According to HYPR, automated agents are on track to leak more passwords than people this year, amid growing reports of agents going rogue.

AI security firm Irregular recently conducted a test in which AI agents were instructed to create LinkedIn posts using material from a company’s internal database. The agents evaded anti-hacking protocols and ended up publishing sensitive password information. In another case, AI agents bypassed antivirus software to download files containing malware.

The post Study Finds That AI Is Organizations’ Top Cybersecurity Fear appeared first on PaymentsJournal.

Just a few years ago, more than one hundred countries were exploring central bank digital currency (CBDC) projects. Many of those initiatives were later shelved as privately issued stablecoins rose to prominence.

However, there are signs that CBDCs are gaining momentum again. One of the most notable examples is China’s digital yuan (e-CNY), which has processed roughly $2.37 trillion in transactions over the past two years.

Several factors are driving this growth. Chiefly, the CBDC has the full support of China’s government. Authorities have gone so far as to ban cryptocurrencies and tokenized assets, including stablecoins backed by the yuan.

China has also positioned the digital yuan at the center of Project mBridge, a cross-border payments platform. The initiative was launched in 2022 by a consortium of central banks led by the Bank for International Settlements (BIS), though the BIS stepped away from the projects two years later.

The revamped Project mBridge now includes UAE, Thailand, Saudi Arabia, Hong Kong, and China. Earlier this year, transaction volumes on the platform surpassed $55 billion, with the digital yuan accounting for over 95% of that total.

Reprioritizing Programs

A central goal behind these efforts is to strengthen the yuan’s role in global trade and challenge the dominance of the U.S. dollar and dollar-backed stablecoins. This objective has become a common theme in the renewed push for CBDCs elsewhere, including South Korea’s revived trials of the digital won.

Lawmakers in the European Union have also reprioritized their focus on the digital euro, recently asking payments firms to guide the CBDC through its pilot phase. This marks an important step forward: despite years of debate and delays, the digital euro now appears to be on track for a potential launch late next year.

Overcoming Retail Inertia

Concerns around privacy, security, and infrastructure have slowed progress, and the European payments market is already saturated with alternatives—including card networks, crypto, and domestic real-time payments systems.

Government mandates mean the digital yuan is likely to face a smoother road to consumer adoption. To hasten the pace, China has recently introduced the ability for e-CNY balances to earn interest and has confirmed that digital yuan holdings are protected under the country’s deposit insurance system.

Despite strong government backing, the digital yuan still faces a formidable challenge. China’s retail payments landscape is dominated by super apps like Alipay and WeChat Pay—an entrenched ecosystem that may prove difficult to displace.

The post Government Backing and Cross-Border Payments Fuel Digital Yuan appeared first on PaymentsJournal.

Over a quarter of the U.S. workforce now participates in the gig economy in some capacity. As these platforms have grown, payouts have become a central operational concern: timely, reliable payments are essential to attracting and retaining freelancers and gig workers.

The Philippines is experiencing a similar shift, with nearly a quarter of employed workers engaged in gig work. Unlike their U.S. counterparts, however, many Filipino freelancers work on projects for foreign clients.

That dynamic has created a pain point. Cross-border payouts are often slowed by intermediary banks, weighed down by transfer fees, and subject to foreign exchange costs. Payments can take days to settle and may shrink by as much as 10% by the time they reach the recipient.

These frictions are pushing many gig workers in the Philippines toward stablecoin payouts. Stablecoins like USDC and USDT can settle in seconds, whether the transaction is domestic or international. Since they are pegged to the U.S. dollar, recipients can avoid immediate currency conversions, and blockchain-based transfers bypass many of the fees embedded in the traditional correspondent bank model.

Ramping Up the Comfort Level

While some companies have hesitated to add stablecoins to their payment repertoire due to regulatory uncertainty, those concerns have begun to ease. The implementation of the EU’s Markets in Crypto-Assets (MiCA) framework and the proposed GENIUS Act in the U.S. have helped ramp up global comfort with regulated stablecoin usage.

User expectations are another powerful driver. As consumer payments move closer to real-time settlement, that expectation is bleeding into commercial payments and platform payouts.

Unlocking the Digital Economy

Stablecoins are well positioned to meet these demands across a range of use cases. Payouts in particular—whether marketplaces paying sellers, gaming platforms issuing winnings, or YouTube paying its creators—represents a strong fit.

In countries such as the Philippines, where a growing share of the workforce is reliant on cross-border income, stablecoins are about more than speed and lower fees. For many workers, they offer a direct on-ramp to the global digital economy.

The post Stablecoins Power Philippines’ Thriving Gig Economy appeared first on PaymentsJournal.

Daiso has become South Korea’s leading discount retailer by offering a wide array of goods, many priced at an attractive 1,000 won (approximately $0.69). This approach has made the chain a mainstay for millennial and Gen Z consumers, as well as a popular tourist destination.

Now, Daiso is joining the next phase of trials for the digital won, a critical step in testing South Korea’s central bank digital currency (CBDC). In this model, the Bank of Korea issues the CBDC to participating banks, which act as intermediaries.

These banks then create deposit tokens that customers can add to digital wallets. When a user makes a purchase at Daiso, the bank deducts tokens from the customer’s wallet, and the Bank of Korea transfers the corresponding amount of digital won from the bank to Daiso via blockchain.

Lacking Consumer Fervor

The Daiso integration marks a milestone for a CBDC that has faced its share of challenges. The first trials of the digital won were conducted at brick-and-mortar stores like Kyobo Book Centre, 7-Eleven, and Ediya Coffee, as well as through the Ddangyo delivery app. Seven major banks participated in the pilot, including KB Kookmin Bank, Shinhan Bank, Hana Bank, and Woori Bank.

However, only about 42% of converted deposit tokens were used during this initial trial, and roughly half of those transactions occurred via Shinhan Bank’s Ddangyo platform. This limited  consumer uptake, combined with the costs of running the trial, led the Bank of Korea to pause further CBDC pilots and explore issuing a won-backed stablecoin instead.

Understanding the Flows

Globally, the rollout of CBDCs has often been hampered by similar challenges. The rapid adoption of stablecoins has offered a faster, cheaper alternative, though these are typically issued by private companies like Circle and Tether and backed by the U.S. dollar. This reliance on foreign-backed private stablecoins has prompted many countries to explore ways to strengthen their own currencies.

South Korea, in particular, has raised concerns about private stablecoin issuance, including the potential for money laundering or abuse. The central bank has suggested that any won-backed stablecoin should only be issued by licensed domestic banks. Regulatory disputes over this model have delayed its approval—likely contributing to the renewed interest in a CBDC.

If participation in the new round increases, the Daiso trials could provide regulators with a better understanding of CBDC usage. Bank of Korea officials noted that the frequent, small-ticket purchases at Daiso may offer valuable insights into deposit token flows and consumer behavior.

The post South Korea Reignites CBDC Program with Daiso’s Buy-In appeared first on PaymentsJournal.

After regulators in the European Union forced Apple to scale back its App Store payment rules, could Japan be next?

Apple recently announced changes to its app distribution rules and payment options in Japan, ostensibly to comply with the country’s Mobile Software Competition Act (MSCA), according to 9to5Mac. But now a consortium of seven IT-related groups, representing more than 600 companies, has issued a statement arguing that Apple’s commissions remain so onerous that using external payment sites is not economically viable.

Apple Takes Its Cut

The new Japanese regulations allow developers to use alternatives to standard in-app systems. The goal was to allow companies to avoid paying commissions to Apple and Google, which take a percentage of app sales as well as in-app purchases. Prior to the MSCA, those commissions could reach as high as 30%.

Allowing outside payment methods was intended to let app developers sidestep those fees. However, Apple has continued to charge commissions of 15% to 20% even when purchases are made outside its own payment system. Developers argue that there is therefore “no economic incentive” to adopt the newly permitted payment methods, according to The Japan Times.

They also contend that in the U.S., similar external payment options are offered without additional commissions, placing Japanese consumers and businesses at a disadvantage. Since May 2025, Apple has been barred from imposing commissions or fees on purchases made outside its App Store in the U.S., following an injunction issued by a judge who found that Apple had imposed unlawful restrictions on developers. That ruling is currently under appeal.

The EU Took on Apple

Apple faced similar scrutiny in Europe. Previously, customers could only make purchases through its App Store, with Apple taking up to a 30% cut. After the EU required Apple to allow alternative app marketplaces, the company introduced a Core Technology Fee, which applied even to apps distributed outside the App Store, and imposed commissions of up to 17% on certain off-platform transactions.

Epic Games, the creator of the popular online game Fortnite, attempted to bypass Apple’s byzantine payment directives by offering discounted direct payment options within the game. After Fortnite was removed from both Apple’s App Store and Google Play, Epic’s legal and regulatory challenge contributed to EU action requiring Apple and Google to permit developers to alternative storefronts and payment options.

Japanese developers are now looking for a similar intervention from the Japan Fair Trade Commission, which is responsible for enforcing the new law.

The post The Battle Between Apple and App Developers Reaches Japan appeared first on PaymentsJournal.

Germany is bidding farewell to the paper check. Once a staple of everyday payments, checks are now all but obsolete, and the government plans to eliminate them completely by the end of 2027—a glimpse of a check-free world that’s unfolding in the U.S.

A report from the Library of Congress underscores just how far Germany has come: checks now account for a mere 0.01% of cashless payments. As recently as 2007, more than 75 million checks were processed annually; by 2024, that figure fell to 2 million.

In response to this steep decline, the Bundesbank, Germany’s central bank, has announced it would switch off the technical infrastructure for automated interbank check processing, reserving checks only for rare, exceptional cases.

Alternative Payment Methods

What caused the demise of paper checks? It wasn’t credit cards, which have never been especially popular in Germany. According to Statista, Germany had just 6.58 million credit cards in circulation in 2023, compared with 143 million debit cards.

Cash usage also remains popular in Germany, although it too has been declining. In 2008, the Bundesbank found that cash was used in 82.5% of all transactions. By 2023 that share had fallen to around half of all payments.

Instead, the Bundesbank attributes the shift to the increasing use of alternative payment methods—chiefly SEPA (Single Euro Payments Area) real-time transfers. In 2024, about 335 million SEPA instant transfers were made in Germany. At the same time the German government is busy dismantling the check-processing apparatus, it has become mandatory for payment service providers in the EU to offer SEPA instant transfers.

As in the U.S., government services in Germany have also moved away from issuing paper checks. Germany’s Federal Employment Agency recently introduced prepaid SocialCards to pay benefits to citizens without a bank account, replacing previously issued government checks.

Similar Moves in the U.S.

The U.S. may be looking to Germany as a model as it transitions away from paper checks. From 2015 to 2024, check payments dropped from 6% to 2.5% of consumer transactions, according to the Atlanta Fed.

That decline preceded the federal government’s decision—effective September 30—to stop issuing checks for tax refunds and other payments, a move that will only accelerate their disappearance. Some government agencies, such as FEMA, have already begun issuing payments through alternative rails like FedNow.

The post Germany Plans to Eliminate Checks Entirely by 2027 appeared first on PaymentsJournal.

Retailers across Japan have begun alerting customers that they will stop accepting WeChat Pay and Alipay, China’s two largest digital payment systems. While political friction is contributing to the growing economic separation between the two countries, the shift also reflects heightened concern over money laundering.

Chinese media outlet Vision Times also reports that several Japanese supermarkets have posted signs stating they will stop accepting the Chinese payment platforms starting February 13. The once-ubiquitous WeChat Pay signage had already noticeably declined by the end of January.

Japanese merchants initially embraced these payment systems following a surge in Chinese tourism. In fact, by 2019, more than 300,000 retailers across Japan had signed up to accept Alipay.

As Vision Times points out, relations between the two nations have since cooled. After the Japanese government warned China against military action in Taiwan last December, Beijing urged its citizens to avoid travel to Japan. According to Tripla, hotel bookings from China decreased by 57% following the announcement.

Japan’s AML Crusade

There is also a more prosaic factor at play: Japan’s tightening anti-money laundering regulations. Authorities are concerned that Chinese criminal groups have been using digital payment platforms to purchase high-value goods in Japan for resale, effectively converting yuan into yen or U.S. dollars.

This crackdown has manifested in several areas. In October, the government dismantled a ring of Chinese nationals accused of money laundering through luxury condominiums purchases. Last week, police called for harsher penalties to address the illegal trading of bank accounts under Japan’s Act on Prevention of Transfer of Criminal Proceeds.

Big Business in China

Meanwhile, money laundering has become a lucrative industry in China. In recent years, the government has made it increasingly difficult for ordinary citizens to move money out of the country, fueling a boom in illicit cross-border activity. The U.S. Treasury estimates that Chinese networks launder as much as $150 billion annually.

According to Chainalysis, Chinese-language money-laundering networks processed nearly $40 million in crypto per day in 2025. The firm estimates that these networks now launder more than 10% of the funds stolen worldwide through so-called “pig butchering” scams.

The post Japan Retreats from Chinese Payment Apps Amid Money Laundering Concerns appeared first on PaymentsJournal.

Crypto money laundering has surged at a staggering pace, reaching at least $82 billion last year, up from just $10 billion in 2020. As crypto markets have become more liquid, laundering operations have grown more sophisticated and more brazen, operating openly across messaging platforms and blockchains while governments struggle to keep up.

Much of the growth in crypto laundering has come from Chinese-language money-laundering networks, according to the report from Chainalysis. Those groups processed nearly $40 million worth of crypto per day in 2025. Chainalysis estimates that Chinese networks now launder more than 10% of the funds stolen worldwide in so-called “pig butchering” scams.

Moving to Social Media

These networks rely heavily on social media messaging platform Telegram, which is headquartered in Dubai. Telegram not only connects buyers and sellers of laundering services but also functions as an escrow hub.

Services such as money mules, OTC desks, and gaming sites began appearing on the platform in early 2020, during the onset of COVID-19. Over time, these social platforms have largely supplanted centralized crypto exchanges, many of which have tightened security controls in recent years.

The international nature of these scams, and the movement of funds across borders, has complicated law enforcement efforts. China, for its part, says it prosecuted more than 3,000 individuals for crypto laundering in 2024. There have also been some successful attempts at international collaboration. In October, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) and Financial Crimes Enforcement Network (FinCEN), announced they had worked with the UK’s Foreign, Commonwealth, and Development Office to dismantle the Huione Group, which laundered roughly $4 billion from digital currency scams.

Anatomy of a Scam

Just this week, the U.S. Justice Department announced that Chinese national Jingliang Su was sentenced to 46 months in prison for his role in laundering millions of dollars in crypto. According to prosecutors, the criminals first contacted victims through social media, text messages, and online dating services to build trust. Su’s group then steered them into fraudulent crypto investments, using fake websites designed to mimic legitimate trading platforms. 

More than $36.9 million in victim funds was ultimately transferred from U.S. bank accounts to a single account at Deltec Bank in the Bahamas. Deltec converted the funds into the stablecoin Tether before transferring the assets to a digital wallet controlled by Su’s group in Cambodia.

The post As Crypto Money Laundering Soars, Governments Seek Ways to Fight Back appeared first on PaymentsJournal.

After years of uncertainty, crypto and digital assets have finally reached mainstream acceptance. However, growing pains continue.

Research from the UK Cryptoasset Business Council (UKCBC) found that 40% of transfers between UK crypto exchanges and bank accounts are often blocked or delayed.

These issues frequently arise due to blanket bans or transaction caps that financial institutions have implemented to protect against fraud. Yet, these problems still occur even when customers use crypto platforms licensed by the UK’s Financial Conduct Authority.

As crypto adoption grows, the issue appears to be worsening. After analyzing transactions at 10 of the UK’s largest exchanges, UKCBC found that eight firms reported a measurable increase in customers experiencing blocked or limited transfers last year, while none saw a decrease.

Stymied Innovation

While fraud is a persistent concern for financial institutions worldwide, crypto advocates argue that blanket blocks and limits could stifle innovation and reduce the competitiveness of UK banks.

Thanks to the capabilities of digital assets, many leading financial institutions have invested in technologies like blockchain, tokenization, and stablecoins to varying degrees.

For example, top UK bank Barclays recently acquired a substantial stake in U.S.-based stablecoin settlement platform Ubyx, a move designed to integrate digital assets with the financial services industry’s regulatory standards.

Mirroring Obligations

This is just one example of the substantial institutional investment in crypto and digital assets in recent years. In response, many crypto companies have overhauled their compliance standards and fraud defenses to align with the obligations of their banking partners.

As crypto exchanges and fintech companies assume a greater role in the industry, the U.S. Federal Reserve has even considered creating dedicated “skinny” master accounts that would give these firms direct access to Federal Reserve services without requiring a bank intermediary.

This growing acceptance of crypto platforms by banks, fintechs, and regulators suggests that imposing broad limits and blocks on crypto companies is counterproductive. At minimum, the UKCBC recommends that UK banks adjust their policies to differentiate between licensed and unlicensed crypto companies.

The post Crypto Transfers to UK Financial Institutions Often Face Settlement Issues appeared first on PaymentsJournal.

After nearly a decade of effort, Apple Pay finally plans to enter India’s digital payments market by the end of the year—one of the few major developed markets it has yet to penetrate. But the company faces an uphill battle, as its service will initially not connect with India’s massively popular UPI payments interface.

The launch will focus on card-based contactless payments, allowing iPhone users to tap and pay at stores, restaurants, fuel stations, and other points of sale. This offering is likely aimed at credit card users and international payments, targeting a more upscale customer base in a market where India’s share of global cross-border payments market is estimated at $300 billion.

Apple’s hardware business is already strong in India, recording its highest-ever quarterly shipments in Q3 2025 with 5 million units sold, accounting for roughly a fifth of its total iPhone sales.

Head-to-Head with UPI

However, UPI dominates India’s everyday digital payments, controlling 85% of all digital transactions. Apple will not initially pursue integration with UPI due to complex regulatory and technical hurdles, putting it behind competitors. Google Pay, for example, processes about 7 billion UPI transactions per month, second only to the PhonePe payments app, and recently launched a credit card in the region—another foothold Apple has yet to establish.

Outside the UPI ecosystem, digital payments are scarce and shrinking. RuPay, the card network run by the National Payments Corporation of India (NPCI), processed 1.2 billion transactions in 2023, falling to 938 million in 2024 and 664 million through November 2025.

Stumbling Blocks

Apple has eyed the Indian market since at least 2017, but bureaucratic and technical obstacles have consistently stood in the way.

India’s central bank requires data localization, meaning Apple must either build local data centers or partner with compliant Indian financial entities. Biometric identification, heavily regulated in India, has also posed challenges.

The post Apple Pay Plans India Launch, but Without UPI Integration appeared first on PaymentsJournal.

Mobile payments are thriving in China, and now Visa cardholders will be able to add their cards to Apple Pay to make purchases at overseas merchants, both in-store and online.

Initially, this feature will be available only to consumers holding cards issued by some of China’s largest banks, including the Industrial and Commercial Bank of China, Bank of China, and Agricultural Bank of China. However, Visa is already planning to expand this capability to include cards issued by other institutions.

As a result, users in Mainland China will have another mobile payment option when traveling and shopping internationally. What’s more, Apple noted that Mastercard is preparing to launch similar cross-border functionality in Apple Pay.

Widespread Cultural Acceptance

Apple Pay is the leading mobile wallet in the U.S. by a substantial margin, with over 65.6 million users. This success is largely driven by the continued popularity of the iPhone in its home market.

While Apple has also led China’s smartphone market—until recently being edged out by Huawei—Apple Pay still accounts for only has a sliver of the country’s mobile wallet market, which is dominated by Ant Group’s Alipay and Tencent’s WeChat Pay.

These all-encompassing super apps each have user bases of approximately 1 billion users, driven in large part by China’s widespread cultural acceptance of mobile payments.

The Central Hub

Building on this success, both Alipay and WeChat Pay have expanded their service offerings and begun pushing beyond Mainland China. For example, Alipay+ is a merchant payment acceptance solution with reach across the Middle East and Latin America. Last year, Alipay+ supported roughly 2 billion cross-border payments for a customer base made up largely of small- to medium-sized businesses.

Ant International also noted that it is working to integrate with additional domestic payment systems—such as the mobile payments services in Thailand, Indonesia, and the Philippines—and to export the Alipay super app model to these regions.

Although mobile payments systems like Alipay, WeChat Pay, and Apple Pay are not often mentioned among the players poised to reimagine cross-border payments, they could ultimately serve as central hubs for international transactions, much as they already connect payments, identification documents, and even tickets within a single platform.

The post Visa Brings Cross-Border Apple Pay Transactions to China appeared first on PaymentsJournal.

Instant payments have gained rapid traction in Greece, and regulators are now moving to both increase the transaction limits and integrate the domestic IRIS payments system with other platforms across the European Union.

Under the new rules, consumers, freelancers, and sole proprietors will be able to transfer up to 1,000 euros (roughly $1,167) per day via IRIS, doubling the previous limit of 500 euros. Additionally, Greece will also introduce a monthly cap of 5,000 euros ($5,841) for peer-to-peer transfers. However, there is no monthly cap on payments made to businesses.

The objective of these enhancements is to grow IRIS’ market share and reduce dependence on card payments, which tend to settle more slowly and carry higher transaction fees. Regulators expect these changes to ease cost pressures on merchants and help stimulate the broader  economy.

A Common Theme

Demand for instant payments in Greece is already substantial. In the early weeks of December, real-time payments accounted for roughly 40% of transfers in the nation, far exceeding the average for instant payments usage in the Eurozone.

Greece has also become the first European country to achieve near-ubiquitous real-time payments acceptance at points of sale. This feat was driven in part by regulatory action, as the government recently mandated that all businesses support IRIS instant transactions.

Such mandates have been a common theme behind the emergence of many of the world’s leading real-time payments systems, including India’s UPI and Brazil’s Pix.

At Home and Abroad

Looking ahead, Greece is planning to further expand IRIS’ reach. Early this year, IRIS is expected to connect with other European instant payment systems through the EuroPA and EPI networks. The goal is to facilitate cross-border transfers, an area that has often presented challenges across the region.

The EuroPA alliance—a group of mobile payments leaders—has already partnered with banking consortium the European Payments Initiative (EPI) to explore interoperability across systems in 15 European countries. This initiative is largely centered on the Wero digital wallet, which is designed to function as a universal payments hub.

Ultimately, the goal is to allow EU consumers to pay using their preferred system—such as IRIS—both domestically and abroad.

The post Greece Ups Transaction Limits on IRIS Real-Time Payments System appeared first on PaymentsJournal.

Morgan Stanley has filed with the SEC to launch its own spot bitcoin and Solana exchange-traded funds (ETFs). While somewhat late to the party, the firm—an asset manager with a wealth management division—is well suited to develop its own crypto-focused vehicles. It would become the first major U.S. bank to issue an ETF tied to bitcoin.

The new funds would be called the Morgan Stanley Bitcoin Trust and the Morgan Stanley Solana Trust. They are designed to hold the crypto assets directly, rather than using derivatives or leverage, and will operate as passive investments rather than making trades based on market conditions.

Bringing the Revenue In-House

Morgan Stanley has been distributing third-party crypto products to its wealth management customers for some time. Initially, financial advisors were allowed to offer crypto investments only to clients with at least $1.5 million in assets. Last October, the bank expanded access, making crypto products available to all clients across all account types, including retirement plans.

The current expansion suggests the strategy was successful. By creating its own crypto investment vehicles, Morgan Stanley can vertically integrate these products into client portfolios, keeping management fees in-house rather than paying them to outside firms like Coinbase.

Since the SEC first approved crypto ETFs two years ago, the category has grown to $120 billion. BlackRock’s spot bitcoin ETFs have become a top revenue source, with allocations exceeding $70 billion. With its wealth management division positioned to help drive sales, Morgan Stanley could compete with these numbers and potentially pave the way for other banks to offer their own crypto products.

Betting on Solana

Morgan Stanley is also betting big on Solana, a blockchain, that, while less well-known than bitcoin, is poised for growth. Solana funds have grown to more than $1 billion in total net assets, aided by technical improvements that have expanded its use cases beyond bitcoin.

Last year, Solana upgraded its blockchain, making it much faster than bitcoin and 10-15 times faster than credit card rails like Visa and Mastercard. The combination of speed, security, and low transaction costs make Solana an attractive option for financial services applications. PayPal, for example, chose to transfer its stablecoin from Ethereum, the leading blockchain provider, to Solana. 

The post Morgan Stanley Is Building Its Own Crypto ETFs appeared first on PaymentsJournal.

The costs of debit card fraud have increasingly tilted toward merchants, with retailers now bearing nearly half of the overall burden rather than banks or payment networks.

That shift is documented in biennial data from the Federal Reserve, which publishes its debit card fraud report every other year as a snapshot of transaction costs across the debit ecosystem.

Under the Dodd-Frank Act, the Fed is required to limit price-fixed debit interchange fees to levels that are “reasonable and proportional” to the cost of each transaction, including anticipated fraud losses. As a result, the report serves not only as a measure of fraud trends but also as a benchmark for how those costs are allocated among merchants, banks, and other participants.

The data shows that merchants were responsible for 49.9% of debit card fraud costs in 2023, up from 46.9% in 2021. Over a longer time horizon, the shift away from banks is even starker. Banks’ share of debit fraud losses fell from 59.8% in 2011 to 28.3% in 2023.

A Growing Concern

At the same time, overall debit card fraud has risen over the past decade. In 2023, fraud losses across all parties amounted to $17.63 per $10,000 in transaction value, up from $7.80 in 2011. A separate 2024 study from Federal Reserve Financial Services found that nearly three-quarters of financial institutions said debit card fraud was their most common type of fraud and one that resulted in the greatest losses.

The nature of debit card fraud has also evolved. After the introduction of chip-based EMV cards, fraud shifted away from in-person transactions toward card-not-present, or remote, fraud, changing both how losses occur and who ultimately absorbs them.

Despite these trends, merchants continue to pay interchange fees intended to cover banks’ expected fraud losses. Since Dodd-Frank took effect, merchants have paid banks roughly 0.05% of debit transaction value in interchange fees for that purpose. The Fed’s report also highlights that banks subject to debit interchange regulation continue to earn strong returns on debit transactions, garnering about 24 cents in revenue on costs of roughly 4.1 cents.

Merchants Take Action

As the burden has moved toward retailers, they are fighting back. The day before the Fed’s report was released, the Merchant Payments Coalition sent a letter urging the Fed to finalize new regulations that would reduce fixed debit interchange fees.

Chargeback fees—incurred when payments are reversed following customer disputes—were at the center of a recent settlement in which Visa and Mastercard agreed to pay merchants $199.5 million to settle a class-action lawsuit. Retailers alleged that Visa and Mastercard violated antitrust laws by coordinating to make merchants responsible for chargeback costs unless they updated their point-of-sale systems to include chip readers.

The post Merchants Are Bearing the Burden of Debit Card Fraud appeared first on PaymentsJournal.

China is stepping up its push for digital currency adoption. Starting January 1, users of the e-CNY—the country’s central bank digital currency (CBDC)—will be able to earn interest, and their holdings will be protected under the country’s deposit insurance system, giving consumers more confidence in embracing the digital yuan.

The move is intended to spark wider use, from payroll and loans to investments, and could be a game-changer for underbanked populations. By making the e-CNY a staple of everyday transactions, the government not only hopes to modernize payments but also gain tighter control over monetary policy and track currency flows.

A Battle Against the Payment Apps

China’s CBDC is already the most widely used in the world. As of November, the government had processed more than 3.4 billion transactions worth nearly 16.7 trillion yuan, or about $2.38 trillion.

However, adoption of the e-CNY has been frustratingly slow, as traditional payment apps continue to dominate the market. WeChat Pay, one of the two leading platforms alongside AliPay, processed $15.4 trillion in transactions in 2024.

Chinese officials have pushed WeChat to integrating the digital yuan into its platform, aiming to boost consumer usage. The government has also asked WeChat to reduce its share of the mobile payments market to create more room for the digital currency.

China is positioning the CBDC as a tool to bring people into the economy. Holders of the e-CNY can earn interest even without a traditional bank account. Officials are also hoping that adoption will spread beyond urban centers to rural areas of the country.

Reaching Across Borders

In the B2B landscape, the Chinese government has been exploring the use of its CBDC for cross-border payments. Last month, China and the United Arab Emirates completed their first-ever cross-border payment using a CBDC. The government also announced that South Africa’s Standard Bank had become the first institution in Africa to join its CIPS payment network.

Meanwhile, China’s government has continued cracking down on the use of stablecoins, encouraging businesses to adopt the digital currency instead. Several financial entities in the region, like Ant Group and JD.com, had planned to launch stablecoins for use in Hong Kong but ultimately reversed their plans under regulatory pressure.

The post Why China Is Offering Interest on Its CBDC appeared first on PaymentsJournal.

In a proposal that has drawn both interest and concern, the Federal Reserve is exploring whether crypto exchanges and fintechs should be granted limited access to its payments system through a type of “skinny” master account.

Currently, these companies rely on intermediary banks that already hold master accounts at Federal Reserve Banks to process transactions on their behalf. The Fed is accepting public comments on the proposal through the end of January.

The strongest argument in favor of the accounts is that they would allow for a faster approval process, enabling transactions to settle more quickly. Payments would be settled following a streamlined review, while safeguards imposed by the Fed would aim to reduce risks to the broader payment system.

Useful in Stablecoin Transactions

At the Payments Innovation Conference in October, Fed Governor Christopher Waller floated the idea of a skinny account as a way to give payment services companies more direct access to the Federal Reserve’s payment rails. The accounts could be especially useful for the growing number of stablecoin issuers involved in cross-border payments.

Fintech platforms like Stripe or Block, which currently rely on partner banks for access to the payment system, could also streamline their operations and transaction processing through these accounts.

The skinny accounts would not earn interest or have access to the Fed’s credit facilities. They would also be capped at overnight balances, limited to the lesser of $500 million or 10% of an institution’s total assets.

Concerns and Challenges

Master accounts at the Fed have traditionally been the sole domain of banks, which could lose business if the proposal is adopted—particularly given their intermediary role in processing stablecoin and fintech transactions.

In addition, faster clearing times raise concerns about fraud. Critics have also voiced worries about money laundering, noting that the proposal doesn’t spell out detailed  safeguards to prevent the accounts from being used for illicit activity by institutions the Fed does not supervise.

Those concerns are partly mitigated by the fact that the Fed would retain discretion to impose restrictions and risk controls on a case-by-case basis. It could also require periodic reporting from account holders. Moreover, the proposal limits the accounts to settling only the holder’s own transactions, barring firms from offering correspondent banking services or settling payments on behalf of third parties.

The post Who Would Benefit from the Fed’s “Skinny” Crypto Accounts? appeared first on PaymentsJournal.

UK regulators floated the idea of removing the current £100 transaction limit for contactless payments with physical cards earlier this year. Now, the UK is moving forward with these plans, allowing financial services providers to set their own payment thresholds—or remove them entirely.

These limits were established by the Financial Conduct Authority (FCA) and currently apply only to physical cards, which have not only had transaction caps but often required four-digit PIN authorization. The elimination of both the cap and the PIN requirement is scheduled for March 2026.

In setting the transaction caps, the FCA aims to respond to evolving consumer expectations and the impacts of inflation. Removing both the limits and the PIN requirement could also reduce friction at checkout, enhancing convenience and potentially driving economic growth—a longstanding goal for the region’s leaders.

The Overarching Strategy

As part of its broader economic strategy, the UK recently unveiled plans to launch a licensing program that could reduce the regulatory red tape that has hindered many fintechs. Fintechs play a crucial role in the modern financial services landscape, and this program would allow them to accelerate progress toward full authorization.

There have also been calls from UK leaders to modernize the country’s approach to dynamic technologies, such as cryptocurrencies, and to better harness the potential of artificial intelligence in the financial services sector.

Stepping Up Protections

Amid these efforts, contactless payments have become a staple in the UK. A significant portion of these transactions are conducted via mobile phones. A recent study by UK Finance found that more than half of UK adults surveyed now use mobile wallets for both online and in-store purchases.

Currently, there are no transaction caps for payments made via mobile phones, as these devices typically include built-in security features like PINs or biometric authentication.

Cards, in contrast, do not have these inherent defenses, which is one reason transaction limits were implemented in the UK. Nevertheless, consumers are still protected, as card issuers will reimburse funds in case of fraudulent use.

The FCA also anticipates that removing transaction caps will encourage financial services companies to enhance their own fraud protections measures.

The post UK Scraps Transaction Caps on Contactless Card Payments appeared first on PaymentsJournal.

While ransomware remains a billion-dollar problem, total payments actually declined between 2023 and 2024, according to a data from the Financial Crimes Enforcement Network (FinCEN).

The Financial Trend Analysis shows that ransomware incidents dipped slightly in 2024 to 1,476 individual reports, with total payments amounting to $734 million. That’s down from the 1,512 reported attacks and $1.1 billion in payments recorded in 2023—both all-time highs. The median ransom payment size also fell, dropping to $155,257 in 2024.

Still, ransomware continues to be a costly threat. Across the three years covered by the FinCEN report, entities paid out more than $2 billion in ransom payments.

Governments Team Up

The drop appears to stem from governments around the world taking a more aggressive action against ransomware operations. The report specifically credited disruptions to two major hacking groups: ALPHV/Blackcat in December 2023 and LockBit in February 2024.

Since then, several government entities have taken additional steps to curb the ability of ransomware criminals to get paid. Last month, the U.S. Treasury Department, in partnership with Australia and the UK, announced sanctions against Media Land for supporting online ransomware operations. At the same time, the U.S. and UK sanctioned individuals affiliated with Aeza Group, which was charged with providing web hosting services to ransomware groups.

The UK is also moving forward with plans to make it a criminal offense for public entities to pay cybercriminals who are holding their data hostage, and to require businesses to notify the government before making any ransom payment. However, the exemptions would apply in cases involving national security.

Local Efforts

Smaller governments are also taking steps to fight the problem. In August, a year after the city of Columbus fell victim to a massive ransomware attack, the state of Ohio mandated that local governments establish cybersecurity training requirements for all employees and report cyberattacks to the Ohio Department of Public Safety. Additionally, officials may only pay a ransom with the approval of the government’s legislative body.

Similarly, the state of New York adopted new rules requiring municipal and public authorities to report any cybersecurity incidents within 72 hours. Any ransomware payment must be reported within 24 hours to the New York State Division of Homeland Security and Emergency Services.

The post Ransomware Payments Dwindle as Governments Fight Back appeared first on PaymentsJournal.

The lion’s share of cross-border stablecoin transactions now flow from advanced economies into emerging nations—a shift that may be undermining those nations’ local currencies. New data from the IMF warns that the growing embrace of stablecoins comes with under-acknowledged risks.

According to the IMF, stablecoins have revolutionized cross-border payments by reducing friction and making transactions more seamless, particularly in poorer countries. Total stablecoin total volume has more than doubled over the past two years to roughly $312 billion. The passage of the GENIUS Act accelerated this trend: U.S. stablecoin usage rose from $6 billion in February to $10 billion in August.

But the surge in adoption is having an outsized effect on developing economies. The IMF found that stablecoin flows between emerging market and developing economies now account for the largest share of the market by value—a stark departure from traditional cross-border transfers routed through systems such as SWIFT, where most activity occurs between advanced economies.

Warning Signs

The use of dollar-backed stablecoins—which constitute roughly 97% of all stablecoins in circulation—has surged especially in countries facing high inflation, such as Lebanon, Nigeria, Turkey, and Argentina. This currency substitution, in which businesses and individuals forego their national currency in favor of a foreign one, is a rational response for those operating in an environment of inflation or broader economic instability.

However, the influx of U.S. dollar-denominated digital currencies has had the unintended result of further weakening local currencies. In the past, so-called dollarization required physical cash or bank accounts denominated in U.S. Today, foreign currency can enter an economy instantly via the internet and smartphones. This shift also reduces a country’s central bank ability to conduct effective monetary policy, per the IMF.

Cooperative Regulatory Efforts

Overall, there is pressing need for more cooperative global regulation of stablecoin usage. The issue extends beyond just safeguarding the ability of weaker nations to control their currencies. Without international standards, issuers have begun exploiting arbitrage opportunities, digging into the gaps between jurisdictions by domiciling their stablecoins in regions with weaker oversight.

The European Union has already taken steps in this direction, implementing the Markets in Crypto Assets (MICA) regulations earlier this year. The EU has expressed increasingly concern that the growing dominance of dollar-backed stablecoins could heighten the region’s dependence on foreign currencies and companies.

The post Are Stablecoins Weakening Emerging-Market Currencies? appeared first on PaymentsJournal.

After more than a decade of war and sanctions that left the nation’s financial system largely frozen, Visa will begin operations in Syria, working with the Syrian Central Bank to help establish a modernized payments ecosystem.

Visa stated that its initial efforts will involve collaborating with licensed financial institutions to develop a secure payments foundation. This includes introducing payment cards with global standards such as EMV chips, enabling digital wallets, and supporting tokenization.

For merchants, Visa will assist in enabling acceptance methods like tap-to-phone and QR codes. The aim is to develop an accessible payment network through the Visa Acceptance Platform that maintains low costs and fosters open acceptance. These capabilities are expected to be particularly useful for micro, small, and medium-sized businesses, which make up a sizable share of Syria’s economy.

A Clean Slate

Visa also plans to support targeted programs for local entrepreneurs working to build and scale new payment processes. These initiatives will connect local innovators with broader network of regional and global fintech partners.

“Syria can leapfrog decades of legacy infrastructure development and immediately adopt the secure, open platforms that power modern commerce,” said Leila Serhan, Visa’s Senior Vice President, for North Africa, Levant and Pakistan.

Rebounding from War and Sanctions

President Bashar al-Assad’s crackdown on anti-government protests in 2011 prompted sweeping sanctions from Western states, including measures against the central bank. The sanctions, paired with the effects of the conflict, damaged key elements of the country’s infrastructure and industrial base, reducing the economy to less than a third of its 2011 value. As a result, banks in the region became largely isolated from the global financial system.

Following Assad’s removal from office last year, both the U.S. and European governments eased their economic restrictions on Syria. Recently, the International Monetary Fund announced it would provide technical assistance on financial sector regulation and help rehabilitate the country’s payment and banking systems.

Syria is now moving to catch up broader developments in the Middle East. Last year, the BRICS economic alliance expanded to include Egypt, Iran, Saudi Arabia, and the United Arab Emirates, aiming to deepen economic cooperation and extend cross-border payment capabilities across member countries.

The post Visa to Build a Payments Ecosystem in Syria appeared first on PaymentsJournal.

Continuing China’s push to become a leader in cross-border payments, the Chinese government has introduced new programs with Vietnam and Indonesia to enable seamless QR code transfers between the countries.

UnionPay International (UPI), China’s state-owned financial services corporation, detailed the collaborations with the National Payment Corporation of Vietnam (NAPAS) and Indonesia’s national payment institutions. The goal is to allow merchants abroad to accept payments from Chinese consumers while deepening economic, trade, and cultural ties.

Vietnam is expected to have more than 30,000 merchants able to accept QR code payments by the end of this year, according to NAPAS. The organization plans to expand participation in 2026 to all the member institutions, including banks, payment institutions, and major local e-wallets.

The Rise of QR Codes

QR codes have become increasingly important across Southeast Asia as countries expand their digital financial systems. According to the e-Conomy SEA 2025 report from Bain & Company, all 10 ASEAN member states now operate national QR payment systems, and eight have enabled cross-border QR interoperability. 

The pilot in Indonesia, developed with guidance from both nations’ central banks, also relies on QR codes. The initiative connects local switching networks and payment service providers in each country.  

Moving Away from the Dollar

Just as important, both efforts eliminate the need for currency conversion. China has been seeking ways to reduce reliance on the U.S. dollar for cross-border transactions, a goal that helped drive the creation of CIPS, a system that allows foreign businesses to pay Chinese suppliers in yuan.

Earlier this week, CIPS announced that South Africa’s Standard Bank had become the first institution in Africa to join the network. The bank emphasized that the new system will help African businesses that import Chinese materials by reducing their exposure to fluctuations in the dollar exchange rate.

CIPS was established more than a decade ago as a yuan-based settlement and clearing system for transactions. Positioned as an alternative to the dominant Swift payments system, it is overseen by China’s central bank and operated by the private company CIPS Co. Ltd.

The post In Cross-Border Push, China Eases Payments with Vietnam, Indonesia appeared first on PaymentsJournal.

As the race to compete in cross-border payments increasingly shifts toward stablecoins, Klarna has announced its own version, the KlarnaUSD. Despite Klarna’s CEO previously saying the company would be the last major fintech to enter crypto, it appears Klarna felt it had little choice if it wanted to keep pace with competitors in the cross-border arena.

Best known for its buy now, pay later offerings, Klarna will issue the new token on a blockchain developed by Stripe. For now, KlarnaUSD will be used solely for the company’s settlement flows. The stablecoin is expected to be available for both merchant and consumer payments sometime next year.

Klarna said the move to a stablecoin will allow it to send money more cheaply by avoiding intermediaries like Swift. Cross-border transactions currently incur more than $120 billion in fees annually.

The partnership builds on an already extensive relationship between Klarna and Stripe, which provides payment infrastructure for Klarna in 26 global markets. Klarna will become the first bank to use Stripe’s stablecoin stack to power blockchain-based payments. The company also said it expects to bring on additional crypto partners in the coming weeks.

An About-Face on Crypto

Klarna had long resisted entering the world of cryptocurrency, but its CEO Sebastian Siemiatkowski relented in July when the company announced it would let customers pay with Bitcoin and other cryptocurrencies.

“Ok. I give up. Klarna and me will embrace crypto! More to come,” Siemiatkowski posted on X at the time. “Someone had to be last. And that’s a milestone as well of some sort.”

Siematkowski returned to X this week following the announcement of the Klarna stablecoin, posting: “We were wrong on crypto and on bitcoin, must rethink!”

Keeping Up with the Major Players

Earlier resistance in the payments sector has become untenable as even legacy providers have moved into stablecoins. PayPal issued its stablecoin last year, stating that it intended to use the asset to accelerate cross-border transactions. In October, the venerable Western Union rolled out a stablecoin on the Solana network in connection with Anchorage Digital.

More significantly, Visa launched a pilot program last month that allows businesses to prefund Visa Direct transactions in stablecoins rather than fiat currency. This marked the first adoption of a stablecoin by a major payment rail that already handles the lion’s share of international transactions—potentially signaling a point of no return for the industry.

The post Once a Crypto Skeptic, Klarna Announces Its Own Stablecoin appeared first on PaymentsJournal.

The market correction in bitcoin this month has been fueled by a retreat from exchange-traded fund (ETF) investors, who have pulled billions of dollars from their funds as the asset’s price has fallen. The pullback suggests that investors are now treating crypto ETFs less like a meme and more like any other long-term investment vehicle.

Roughly $4 billion has been withdrawn from digital asset ETFs so far this month—a record amount. BlackRock’s IBIT ETF, the most popular U.S. bitcoin ETF, saw a single-day outflow of more than half a billion dollars.

According to The Block, JPMorgan analysts noted that the continuation of the crypto market correction in November appears to have been driven primarily by non-crypto investors—mostly retail participants—who tend to use spot bitcoin and Ethereum ETFs as their entry point into the market.

Going Underwater

After peaking above $125,000 in October, bitcoin’s recent decline has pushed it below JPMorgan’s support level of $94,000. Short-term holders—defined as those holding the asset for fewer than 155 days—are almost entirely underwater on their recent purchases, according to CoinDesk.

Investors new to digital assets tend to trade them much like equities, showing little patience for price dips. As bitcoin has fallen, retail investors have nonetheless poured nearly $100 billion into equity ETFs in November. Analysis from JPMorgan notes that this group has behaved similarly in the past, selling off crypto assets while heavily buying stocks in February and March.

Knocking on the Door

Still, the recent outflows are only a fraction of the total capital allocated to crypto funds. Net inflows still stand at nearly $60 billion.

The crypto fund industry is less than two years old, since the SEC approved 11 bitcoin-based funds in January 2024, followed a few months later by the authorization of five ether-based funds.

Many more funds are hoping to gain access to this market. As of last month, 92 additional crypto funds remained in the approval pipeline, many of them tied to lesser-known assets like Avalanche and Bonk. The SEC has already approved Grayscale’s multi-asset crypto exchange-traded product, Digital Large Cap Fund (GDLC)—the crypto world’s first equivalent of a mutual fund. 

The post Investors Pulling Back on ETFs Are Fueling the Bitcoin Rout appeared first on PaymentsJournal.

One concerning trend heading into the holiday shopping season is the rise in credit card delinquencies among the lowest-income households, even as consumers anticipate putting more spending on their cards.

Since July, 60-day delinquency rates have climbed 11% year-over-year for lower-income households, according to data from VantageScore. Middle-income groups have seen a smaller increase of 6%, while delinquency rates among high-income households have declined.

VantageScore classifies lower-income households as those earning less than $45,000 annually and high-income households as those earning more than $150,000. The company also reported a continued gradual shift toward lower credit tiers: subprime and near-prime segments have both edged higher over the past year, while prime and super-prime segments have contracted slightly.

Across all borrowing categories, late-stage delinquencies—accounts more than 90 days past due—inched up to 0.23% in October, marking their highest level since before the pandemic.

More Holiday Credit Spending

The problem may worsen over the holidays, especially given that borrowing is already at a five-year peak. While VantageScore reported that the average credit card balance held steady at $6,400 in October, the average overall credit balance inched up to $106,700. That figure is more than $1,000 higher than last October, signaling that consumers are increasingly relying on credit to cover everyday expenses.

Separate research from TransUnion indicates that shoppers intend to lean even more heavily on credit cards this holiday season. Nearly half of respondents say credit cards will be their preferred payment method this year, up from 38% during the same period in 2024. More than half also expect to spend more over the holidays.

Risk for Younger Borrowers

VantageScore attributes the rise in delinquencies to persistent inflation and a softening labor market, both of which are having an outsized impact on financially vulnerable households. Tighter access to credit may also be playing a role. While credit card originations were flat in October, they declined among Gen Z borrowers, who remain particularly susceptible to lending constraints.

The latest statistics compiled by Javelin Strategy & Research show that nearly 10% of credit card holders in the younger segment are now 90-plus days delinquent—almost double the rate for those ages 60 to 69.

The post Holiday Season Brings Added Pressure for the Lowest-Income Borrowers appeared first on PaymentsJournal.

Peru plans to implement a real-time digital payments system based on India’s UPI sometime next year. Notably, Peru chose not to model its system after Pix, the highly successful payment platform adopted by neighboring Brazil. That choice may have less to do with South American politics or financial strategy and more to do with India’s aggressive promotion of its own technology.

The new system will stem from a partnership announced in 2024 between India’s NPCI International Payments Limited (NIPL) and the Central Reserve Bank of Peru (BCRP). In recent years, India has worked with countries such as France, Singapore, and the UAE to enable UPI-based payments using its underlying infrastructure. NIPL has also held discussions with several other nations in South America and Africa to help them develop similar systems modeled on UPI.

Meanwhile, the Central Bank of Brazil has been exploring global opportunities for Pix. At 2024’s G20, the central bank highlighted efforts to allow Pix to interact with foreign platforms, with Italy expressing interest in a bilateral agreement. That same year, Spanish payment processor Wipay opened Europe’s first Pix outlet at Barcelona-El Prat airport.

India Wins Out

UPI continues to be the global leader in instant payments, and NPCI has expanded to the point where it now handles almost half of the world’s digital transactions—driven primarily by the UPI platform. It has also secured partnerships with leading payments players such as Google and PayPal.

Another advantage for UPI is its comprehensive initiative to bring more consumers in India into the digital payments mainstream. This includes not only expanding smartphone-based services but also offering adjacent products like basic insurance. Peru may view UPI not just as a payments layer but as a potential catalyst for broader economic transformation.

Ripe for Growth

South America is emerging as a ripe landscape for payments growth, even apart from the exemplar of Brazil’s Pix. According to 2024 data from Beyond Borders, seven in 10 Latin American adults have made or received digital payments—up from just four in 10 a decade ago.

At the same time, cash usage in the region has declined. Mastercard research across seven countries in Central and South America found that only 15% of respondents rely on cash for more than 75% of their monthly expenses, down from 25% before the pandemic. Nearly all small businesses in the region now accept at least one form of digital payment. 

The post Peru’s Instant Payment System Will Rely on India’s UPI appeared first on PaymentsJournal.

The long-running dispute between JPMorgan Chase and the third-party apps that rely on its data has finally reached a resolution.

According to CNBC, JPMorgan has signed contracts with fintech firms that account for more than 95% of the data requests made to its systems, agreeing to sell them customer information for a negotiated fee.

The settlement ends a lengthy legal battle over who actually owns customers’ financial data. For years, intermediaries like Plaid were able to tap into bank systems at no cost whenever a customer used a fintech app to move money or make a payment. This has long been the norm in Europe, where regulators require banks to share data with third parties for free.

The United States, by contrast, left banks and fintechs to negotiate their own terms. That changed when the Consumer Financial Protection Bureau (CFPB) interpreted Section 1033 of the Dodd-Frank Act as requiring banks to share customer data with other financial services providers at no cost. The reasoning was that the data belongs to consumers, who benefit when it can be freely shared.

Retrenching on Section 1033

The Trump administration tried to rescind Section 1033 and allow larger financial institutions to charge fintechs for customer data access. In June, JPMorgan announced plans to impose access fees on its customers’ banking data, with higher charges for entities involved in payment processing.

Plaid became the first major fintech to accede to JPMorgan’s wishes. In September, it agreed to begin paying for access to the data.

Following that agreement—and with the future of the CFPB in doubt—the parties involved began working to resolve the issue independently. After weeks of negotiation, JPMorgan accepted a lower pricing model than it had originally proposed. In return, the fintechs agreed to make certain concessions related to the servicing of data requests.

Moving Markets

The volume of data involved is substantial. At one point, JPMorgan reported receiving 1.89 billion data requests in a single month, and the fees it has proposed could total as much as $300 million per year.

Although the dispute and resulting settlement have centered on JPMorgan, the largest bank in the U.S., the implications are likely to cascade down to other banks as well.

The post JPMorgan, Fintechs Agree on Payments for Customer Data appeared first on PaymentsJournal.

As more consumers feel the impact of holiday spending on their budgets, PayPal is launching its buy now, pay later service in Canada.

Customers will be able to split purchases between $30 to $1,500 into four installments, as long as the merchant is a PayPal partner. One of the goals of the launch is to give consumers another payment option during tough economic times, as many have turned to installment loans to navigate financial quandaries.

However, PayPal is entering a market already served by Affirm, Klarna, and Afterpay, which have established BNPL offerings in Canada. Still, PayPal has managed to achieve approximately 20% quarter-over-quarter volume growth in the highly competitive U.S. market, where these same rivals operate.

A Need for Alternatives

PayPal recently expanded its U.S. offering to let customers make in-store purchases using BNPL—previously available only for e-commerce transactions. To encourage adoption during the holiday season, the company is also offering 5% cash back on all BNPL purchases through the end of the year.

Consumers have shown growing interest in alternative payment methods. PayPal highlighted this in its research, which found that roughly 60% of U.S. consumers are more concerned about holiday spending this year, while over 80% of shoppers who have used or considered BNPL plan to use it for holiday purchases.

A Popular Refuge

BNPL has become a popular lifeline for consumers, largely because these products typically involve low or no fees and often don’t require credit checks.

While concerns persist about potential misuse and the need for stronger regulatory oversight, BNPL loans seem destined to play a substantial role this holiday season. According to Adobe, BNPL purchases on Cyber Monday are projected to reach $1 billion for the first time.

This trend could benefit merchants who view BNPL as a tool to increase average order value. And for Canadian customers, it could enhance cross-border purchasing power, as they’ll now be able to use BNPL at U.S. based-merchants within PayPal’s ecosystem.

The post PayPal Brings BNPL to Canada as Holidays Approach appeared first on PaymentsJournal.

Experian is rolling out a new version of its credit scoring model in the UK that, for the first time, takes rental payments into account. Renters who consistently make payments will now see this reflected in their credit assessment, potentially improving their prospects for future mortgages.

The updated model also considers other behaviors increasingly valued by lenders, such as reducing overdraft use, avoiding credit card cash advances, and making regular payments on phone contracts, in addition to rent.

The changes include an expanded score range, from the previous 0-999 scale to a new maximum of 1,250. Experian has also revised the score bands and removed labels such as “poor” and “very poor.”

The changes are not expected to have much of an impact on the average credit score. Experian estimates that about 44% of borrowers may move down a score band, while 42% could move up.

The new scoring model will initially only apply to borrowers in the UK and Ireland. Although Experian has not commented on plans to introduce it in the U.S., it could be considered if the model proves effective overseas.

Tweaking the Model

Credit rating agencies have recently experimented with changes to their scoring models to better reflect modern consumer economics. FICO introduced two new credit score models that incorporate buy now, pay later (BNPL) data into their calculations.

As Experian expects with its rental model, incorporating BNPL information had minimal impact on overall scores. After examining BNPL loans taken out through Affirm, FICO found that these loans affected credit scores by around 10 points for more than 85% of the customers surveyed.

Medical Debt Goes Out and In

Earlier this year, the Consumer Financial Protection Bureau (CFPB) banned medical bills from being considered on credit reports. Its research found that medical debts have little correlation with a borrower’s ability to repay other types of debt. The research also highlighted that consumers frequently receive inaccurate bills or are asked to pay charges that should have been covered by insurance or financial assistance programs.

The decision would have removed roughly $49 billion in medical debt from the credit reports of about 15 million Americans. However, the Trump administration reversed that decision and has sought to prevent individual states from excluding medical debt in credit scores.  

The post Experian Adds Rental Payments to Its UK Credit Scores appeared first on PaymentsJournal.

A study from UK Finance found that criminals stole £629.3 million (roughly $826 million) during the first half of the year, a 3% year-over-year increase.

What’s more, there were over 2 million reported fraud cases through Q2 2025, a 17% rise from the previous year, with the average scam costing victims £300 ($394).

Most of these cases originated online, and social media is playing a role. The study found that purchase scams—where consumers are manipulated into paying for fake products or services—were the most common, with many stemming from social media posts.

Investment scams were the next most frequent and often the costliest type of fraud in the UK. Romance scams also remained prevalent, with victims losing an average of £6,500 ($8,547) to criminals who preyed on their emotions.

The Most Prevalent Form

The continued rise in fraud in the UK mirrors a broader global trend. Consumers are being flooded with fraudulent emails, phone calls, texts, and messages—many of which are difficult to distinguish from legitimate communications.

These scams peaked during the pandemic, when most shopping and messaging moved online. However, even as consumers return to physical stores, scams remain a persistent threat, now surpassing traditional identity fraud to become the most prevalent form of fraud.

An Effective Combination

Criminals are increasingly relying on social engineering tactics to manipulate their victims. High-pressure communications, coupled with realistic-looking messages, can be especially effective combination when targeting vulnerable populations like children or the elderly.

Worryingly, many victims who are tricked into sending payments aren’t reimbursed, even when they use legitimate channels.

UK Finance found that 98% of victims whose credentials were stolen were reimbursed by their banks. In contrast, when consumers are tricked into sending a payment—such as in authorized push payment (APP) fraud—only about 62% are refunded.

This is a growing global problem. According to LSEG Risk Intelligence, worldwide APP fraud losses could reach $331 billion by 2027.

The post Fraud Losses and Incidence See Uptick Through Q2 in UK appeared first on PaymentsJournal.

Consumers are expected spend more on holiday shopping this year—as usual—but much of that apparent gain will be offset by inflation.

Shoppers plan to spend an average of $736 on holiday gifts, according to data from Visa’s 2025 Holiday Spending Outlook. Nominal holiday spending is expected to reach 4.6%, but after adjusting for inflation, real growth is just 2.2%—down from last year’s 2.5% increase. In other words, inflation is driving most of the apparent sales growth this season.

To evaluate this trend, Visa developed a “holiday CPI,” a tailored index that reflects the typical basket of goods sold during the season. According to the index, inflation for holiday-related items is just slightly below the overall inflation rate. Prices for recreational goods, which make up about 30% of the holiday CPI basket, are up 3.1% over the past year.

The good news for retailers: despite inflation and waning consumer confidence, shoppers are still spending. In April, consumer confidence fell to its lowest level since the pandemic, yet Visa reports that real spending growth continued to rise, reaching 2.7% in August, the latest month with available data.

Holiday Shopping Starts Early, Goes Mobile

In a potentially related development, the holiday shopping season is kicking off earlier than ever, and Visa is now tracking it across the entire fourth quarter to capture the extended buying period. As a result, Visa found that more than 15% of consumers started their holiday shopping in September or earlier, with an even higher share among millennials. It found that more shoppers are looking to secure gifts before prices climb further.  

At the same time, holiday spending continue to shift online, particularly to mobile devices. More than 45% of consumers say they plan to use their mobile devices for most or all of their holiday shopping, per Visa.

That aligns with an earlier forecast from Adobe for Business, which estimates that mobile revenue will reach a record 56.1% share of total holiday sales—the first time mobile will account for more than half of overall spending. Roughly $142.7 billion is expected to be spent via mobile this season, up 8.5% from last year, with seven in 10 online retail visits occurring on mobile devices.

The post Inflation Will Put a Dent in Holiday Shopping This Year appeared first on PaymentsJournal.

After its appeal was denied by the Supreme Court, Google has finally complied with earlier rulings from the past few years and opened its Google Play app store to third-party payment options. App developers can now process payments outside of Google’s ecosystem and inform users about alternative pricing options.

The move marks the latest chapter in the long-running legal battle between Google and Epic Games, whose flagship product is Fortnite. Epic Games sued Google in 2020, alleging that the company maintained an illegal monopoly through its in-app payment system. Earlier this month, the Supreme Court rejected Google’s final attempt to block a District Court ruling requiring it to open up its app store.

A Wealth of Options

Under its previous policy, Google had long barred developers from directing users to cheaper payment options outside its app store and required most apps to use Google Play Billing. As a result, Google collected a commission on nearly every in-app purchase. For subscription-based models, it typically took a cut of recurring payments as well.

Developers now have more freedom to promote offers and handle in-app payments outside Google’s system. They can inform users about external pricing options and include direct links to external checkout pages within their apps. They can also offer alternative payment methods beyond Google Play Billing, such as credit card, PayPal, or their own payment systems.

The District Court order is set to expire on November 1, 2027, and Google has said it may revise the rules again at that time. The new billing options currently apply only in the U.S.

Following the Apple Ruling

Earlier this year, Apple lost a similar battle with Epic Games and was required to loosen its grip on its App Store. After a U.S. district judge ordered Apple to allow developers to direct users to alternative payment options, the company introduced new hurdles—including a 27% fee on external purchases and warning screens cautioning users about third-party payment links.

That suit was finally settled in May, but the terms imposed on Apple were far less stringent than those Google is now subject to. The main restriction bars Apple from charging commissions or fees on purchases made outside its App Store. Still, Apple continues to seek commissions from Fortnite users, even when their purchases occur outside its platform.

The post Google Opens App Store to Third-Party Payment Systems appeared first on PaymentsJournal.

In a step forward for agentic commerce, PayPal has signed a deal with OpenAI to embed its digital wallet into ChatGPT, enabling users to pay for items they discover through the AI tool. 

Set to launch next year, the offering will encompass the entire shopping experience—from product discovery to checkout. Merchants will be able to make their products discoverable on ChatGPT, while shoppers can use the agentic AI tool to identify suitable items and purchase them on preferred terms. OpenAI has noted that product results will remain organic, not sponsored, and ranked by relevance, meaning shoppers will not necessarily be directed to ChatGPT’s partners.

Consumers will be able to complete purchases through ChatGPT using their PayPal accounts or alternative payment methods such as linked bank accounts and credit cards. PayPal also promises value-added features including fraud protection, package tracking, and dispute resolution.

For sellers, the process will be seamless: merchants will not need to build any integrations or interact directly with OpenAI, as PayPal will handle routing, payments, and all back-office functions.

Building a Payments Process

OpenAI announced earlier this year that it was integrating a payments checkout system into ChatGPT. The collaboration with Spotify enabled users who searched for a product on ChatGPT to view top results with prices, reviews, and links to relevant sites. However, users were still directed to the merchant’s platform to complete their purchase—an extra step that the PayPal offering avoids.

OpenAI’s instant checkout feature, launched in September, lets users confirm their order, shipping, and payment details and complete purchases without leaving ChatGPT. With a single tap, users can buy directly from the search results page.

The Technology Behind It

PayPal will leverage the Agentic Commerce Protocol (ACP), an open-source specification developed by OpenAI in collaboration with Stripe. ACP lets merchants make their products available within AI apps, allowing users to shop via AI agents. The goal of ACP is to create an infrastructure that connects merchants, consumers, and developers, facilitating the integration of AI agents into the shopping experience.

Additionally, the ACP integration will make product catalogs from both small businesses and large retail brands available to PayPal shoppers.

The post PayPal, OpenAI Team Up for Agentic Shopping appeared first on PaymentsJournal.

The Better Business Bureau has issued a new warning about a scam targeting tap-to-pay chips in credit cards and mobile wallets.

So-called ghost tapping abuses the near-field communication (NFC) technology embedded in contactless payment chips and digital wallets, which allows devices to exchange data at very close range. The scam can happen without the victim noticing. In crowded spaces like a festival or train stations, a criminal may get close to a victim—and sometimes even bump into them—then use a wireless payment reader to access a tap-enabled card or phone without the victim realizing it.

In other instances, the criminal poses as a vendor or charity fundraiser and convinces the victim to make a small tap payment. That minor charge may not be enough to trigger fraud detection systems, so victims might not notice the theft right away. The criminal can then use the stolen data to make additional unauthorized charges.

Widespread Operations

Even more insidious, once payment card information is stolen and loaded into mobile wallets, criminals can transfer those credentials to other phones to scale the operation. Although these scams may appear to be the work of small-time criminals, a substantial infrastructure supports them.

Recorded Future’s Insikt Group has identified organized networks that disseminate both the phones and the phishing software used in ghost-tapping fraud. Insikt also found advertisements and recruitment messages on messaging platforms, indicating a burgeoning market for goods obtained through ghost-tapping.

Protection Against the Scam

The BBB recommends that consumers use an RFID-blocking wallet or sleeve on their credit cards to help stop wireless skimming. For less than $10, these sleeves prevent others from detecting the radio signals emitted by the card’s chip.

Before tapping a card or phone, consumers should verify the merchant’s name, amount, and terminal screen to make sure everything looks correct. The BBB also advises limiting tap-to-pay use in high-risk areas, like at a farmers market or crowded retail stored. In these cases, swiping or inserting the card is generally a safer option.

Finally, consumers should set up transaction alerts with their bank and regularly monitor their accounts. If they suspect fraud or discover unauthorized charges, they should contact their bank or card issuer immediately to report the issue and cancel the card.

The post Ghost Tapping Preys on Credit Card Chips and Digital Wallets appeared first on PaymentsJournal.

The legacy asset management and mutual fund company T. Rowe Price is jumping into the crypto landscape with the launch of the first actively managed exchange-traded fund (ETF) focused on digital assets.

Whereas most existing crypto ETFs invest in a single asset—typically bitcoin—the T. Rowe Price Active Crypto ETF will hold a diversified basket of five to fifteen cryptocurrencies, including ether, Solana, XRP, and Cardano, among others. To maintain liquidity, the fund will also allocate a portion of its assets to cash, stablecoins, or U.S. Treasury bills.

Firms like Grayscale have applied to the SEC for approval of crypto index ETFs that hold multiple cryptocurrencies. However, the T. Rowe Price fund would go a step further by moving in and out of positions based on market conditions, requiring constant analysis and management. Other established asset managers, including BlackRock and Fidelity, have already entered the crypto ETF space, but with passive funds that track a single asset or index.

The Challenge of Active Management

T. Rowe Price is fairly new to ETFs, having marketed its first such fund in 2020, though active management has been its bread and butter for decades.

“The highly successful launch of several spot bitcoin exchange‑traded funds (ETFs) in early 2024 has shown that traditional investor interest in [digital assets] is substantial,” T. Rowe Price noted in a paper published earlier this year. “For us, the key question is whether the investment returns potentially available to passive DA holders merit their inclusion in diversified portfolios.”

The T. Rowe Price Active Crypto ETF answers that question by asserting that the best way to hold crypto within a diversified portfolio is through an actively changeable basket of cryptocurrencies. The question now is whether a legacy mutual fund firm has the analytical chops to make consistently profitable trades in and out of digital assets.

The Road to the Market

The product could reach the market fairly quickly. The SEC recently approved new listing standards that effectively shorten the timeline for crypto ETFs to begin trading. At that time, nearly 100 crypto ETF applications were awaiting regulatory approval.

However, the processing of these applications is currently on hold while the U.S. government remains shut down. The SEC is unlikely to review or approve any new crypto ETF filings until the government reopens.

The post T. Rowe Price Proposes First Actively Managed Crypto ETF appeared first on PaymentsJournal.

Ant Group and JD.com, among others, had been gearing up to launch stablecoins in Hong Kong, but those plans are now on hold.

The tech giants had intended to move forward after Hong Kong’s legislature passed a stablecoin bill in May. The framework governs fiat-backed stablecoin issuers in Hong Kong, requiring these companies to obtain a license from the Hong Kong Monetary Authority.

Initially, Chinese regulators viewed the program as a springboard to expand the reach of yuan-backed stablecoins, and Hong Kong began accepting applications for stablecoin issuers as recently as August. However, the Financial Times reported that now the People’s Bank of China (PBOC) and Cyberspace Administration of China had instructed Ant Group and JD.com to suspend their stablecoin plans.

Leveraging the Hype

After the passage of the stablecoin bill, concerns were raised about stablecoins’ heightened potential for fraud. Ye Zhiheng, Executive Director of the Intermediaries Division at the Hong Kong Securities and Futures Commission, said that many companies appeared to have leveraged the hype around stablecoins for financial gain.

Zhiheng emphasized that organizations often saw their stock prices soar after posting any stablecoin-related news on social media, such as announcing plans to apply for a license.

Questioning the Coinage

The potential for fraud and manipulation isn’t the sole reason PBOC officials are now suspending Hong Kong stablecoin launches. One of China’s main concerns is the growing influence of private companies in the financial sector, and whether tech firms like Ant Group or JD.com should even have the authority to issue currencies.

Some argue that this should remain the domain of central banks, and that central bank digital currencies (CBDCs) backed by the government would be more regulated and stable than company-issued stablecoins.

China has already made strides in piloting its digital yuan. However, like many CBDCs, the token has yet to gain traction because its use cases are limited and it doesn’t accrue interest like other funds.

Still, China continues to promote the digital yuan as an alternative to stablecoins. For example, regulators recently asked Tencent to reduce WeChat Pay’s substantial mobile payments market share to make room for the digital yuan.

The post China Asks Tech Firms to Suspend Hong Kong Stablecoin Plans appeared first on PaymentsJournal.

In a challenging economic climate, more merchants are turning to their payments providers for guidance on how to be more efficient with their payment operations. Many are also exploring ways to lower costs by encouraging customers to use cash or debit cards instead of credit.

Nearly half of the merchants surveyed by Wind River report that their processing rates have increased over the past year. As a result, nearly 70% say they have adjusted how they accept or manage customer payments.

Today, 69% of merchants process payments through their software provider—an indication that many are relying on independent software vendors (ISVs) to help turn payments from a cost center into a revenue opportunity. Vendors are responding: nearly all ISVs working in payments either offer integrated solutions already or plan to introduce new monetization strategies this year.

Seeking Cash, Raising Prices

To counter higher processing fees, merchants are increasingly steering consumers toward lower-cost payment methods such as debit and ACH. Some are offering cash discounts, while others have added surcharges for credit card transactions.

These decisions inevitably affect the end consumer. Nearly half of merchants say they’ve raised prices to offset increased costs, while two-fifths have chosen to absorb the impact themselves.

Headwinds in Fighting Fraud

Fraud is another area where merchants are turning to their payments providers for support. Nearly two-thirds of respondents said they experienced fraud in the past year, and a large share indicated they’re willing to pay more for stronger prevention methods. Key areas where merchants want help include setting custom rules for transaction amounts, stopping fraudulent attempts before funds are moved, and accessing chargeback guarantees for high-risk industries.

Chargebacks—where customers dispute legitimate transactions—continue to be a top concern. More than a quarter of merchants reported experiencing fraudulent chargebacks.

This challenge has been exacerbated by decisions made by Visa and Mastercard, which held merchants responsible for chargeback costs unless they updated their point-of-sale systems to include chip readers. The two payment giants were recently ordered to pay merchants nearly $200 million in class-action lawsuit over these chargeback policies.

The post Merchants Look to Save On Payments Amid Rising Costs appeared first on PaymentsJournal.

Officials in Germany have shut down more than 1,400 illegal domains in Eastern Europe linked to cybertrading fraud, marking a potential dent in the fast-growing international problem.

Dubbed Operation Heracles, the probe was led by Germany’s financial watchdog BaFin, alongside law enforcement agencies in Germany and Bulgaria. Users visiting the fraudulent websites were directed to brokers operating from overseas call centers, where they were subjected to high-pressure tactics encouraging them to invest large sums. Authorities said many investors only realized months later that their money had never been placed in legitimate accounts.

The criminals behind the fraudulent domains have not yet been identified, though the sites now redirect visitors to a seizure page. A similar operation last year took down around 800 illegal domains, yet authorities recorded 20 million subsequent attempted visits to those addresses—underscoring the scale and persistence of such scams.

Dangerous Websites

Fraud is growing rampant worldwide. In the U.S., social media remains the primary avenue for investment scams, while fake websites rank as the second-most common channel, with 6,007 fraud reports and $266 million lost, according to a report from BrokerChooser. Investment scams are the fifth most common type of fraud in the U.S., with 66,703 reports recorded in the first half of 2025. Overall, Americans lost $3.5 billion to investment scams during that period.

Artificial intelligence has enabled criminals to create realistic, sophisticated platforms in minutes, tricking victims into depositing funds that are then stolen. According to Authority Hacker, scams involving artificial intelligence cost Americans more than $108 million, with an average loss of $14,600 per victim. 

The Invesco Scam

Similar scams have been uncovered in Europe. Bafin recently reported that criminals posing as Invesco employees were contacting individuals by phone and email, offering the chance to open trading accounts that appeared to be linked to Invesco’s German branch. It is unclear whether these criminals were connected to the domains that were shut down this week.

“The impression is given that the trading accounts offered are connected to the Invesco branch in Germany, which is supervised by BaFin,” a regulator told the website Finance Magnates. “This is not the case. This is a case of identity theft. No Invesco employee would call consumers unsolicited or try to persuade them to invest in Invesco products via email or WhatsApp.”

The post Germany Shuts Down Investment Fraud Network appeared first on PaymentsJournal.

India’s Unified Payments Interface (UPI) is launching a feature that allows users to approve payments using a fingerprint or facial scan.

Previously, shoppers were required to enter a PIN to authorize transactions. However, the Reserve Bank of India (RBI) has requested an alternative authentication method to make UPI transactions faster and more secure for users of its real-time payments system.

Biometric authentication will be available to users who choose to opt in, and their data will be stored in Aadhaar—a system operated by India’s government.

Benefits and Challenges

The biometric verification movement has gained traction as consumers have grown comfortable with the technology through frequent use on mobile devices. Biometrics can also greatly reduce friction at checkout, streamlining the payment experience.

Beyond convenience, biometric authentication offers the potential to reduce fraud—a key factor driving its launch in UPI. The RBI noted that numerous UPI scams have cropped up to exploit the existing PIN-based authentication system, underscoring the need for stronger security measures.

Despite these advantages, several challenges remain. Consumers must first be made aware of the program and choose to opt in. Additionally, merchants and payment processors need to have the proper infrastructure in place to support biometric transactions.

There are also ongoing concerns about the protection of consumer data. The National Payments Corporation of India (NPCI)—which operates UPI—emphasized that each transaction will be “independently verified by the issuing bank using robust cryptographic checks.”

The NPCI further noted that while creating a PIN for UPI previously required entering debit card details, no card will be needed when opting into the new biometric program.

Moving Beyond Pilots

At this stage, many biometric pilots and projects have been launched around the world, but few have reached widescale implementations.

This is why the UPI launch represents a significant step for biometric authentication in payments. UPI processes roughly 20 billion transactions per month, and the NPCI accounts for nearly half of the world’s payments.

One of the main reasons UPI has grown into such a global powerhouse in just seven years is its relentless drive to introduce new features and functionalities—and to expand into new regions.

The post UPI Is Set to Add Biometric Authentication for Real-Time Payments appeared first on PaymentsJournal.

Colombia’s new instant payment system, Bre-B, is now live—modeled closely on Brazil’s highly successful Pix and developed in part by the same Latin American payments firm, EBANX.

Early results are promising: more than 30 million people have already registered, representing 76% of Colombia’s adult population. The system also has strong federal backing. Soon, Bre-B will be integrated with Cajas de Compensación Familiar (Family Compensation Funds), which provides social benefits and subsidies to Colombian citizens.

A Favorable Economic Landscape

Colombia’s economy is well-positioned for this new payment method. Its digital economy has been growing at double-digit rates since 2019 and is expected to reach $52 billion this year, making it the third-largest Latin American market after Brazil and Mexico. Latin America, more broadly, is receptive to digital payments: according to Beyond Borders, seven out of 10 Latin American adults have made or received payments through digital channels.

Another factor points to Colombia’s potential for success. It has one of the lowest credit card penetration rates in Latin America, with only 18% of adults having access to credit cards. This could give it an advantage similar to Pix in Brazil, which grew from 68% penetration among adults in 2020 to 90% by 2023. By comparison, credit cards account for roughly 40% of Brazil’s payments market.

Compare and Contrast with Pix

Many of Bre-B’s features were inspired by the Pix rollout, starting with user identification through basic keys like phone numbers and emails. Bre-B has already issued over 80 million of these payment keys. Other similar features include QR code payments, mandatory interoperability for instant transfers, and time-based transaction limits to prevent fraud. 

However, there are key differences as well. While Brazil built a single rail between financial institutions to make Pix interoperable, Colombia developed a new ecosystem for Bre-B on top of its existing payments infrastructure. This approach allowed it to connect established account transfer services while also providing flexibility for new integrations in the future.  

Currently, Bre-B supports only peer-to-peer transfers and consumer-to-business payments. The next step will be onboarding government entities like Cajas de Compensación Familiar, allowing citizens to pay taxes and receive government disbursements through Bre-B. Future plans include recurring payments for subscription-based services and batch transfers for payroll and high-volume payments.

The post Colombia’s Instant Payments System Aims for Pix-Like Success appeared first on PaymentsJournal.

Global messaging hub Swift has spent decades building a global system for cross-border payments, and now it plans to launch a blockchain-based solution incorporating digital assets.

In collaboration with roughly 30 global financial institutions, Swift is developing a shared digital ledger designed to be interoperable with existing blockchains, including those supporting stablecoins, tokenized deposits, and central bank digital currency (CBDC) transactions.

The platform is envisioned as a secure, real-time record of bank transactions, leveraging smart contracts to enforce compliance. Its ultimate goal is to enable real-time cross-border payments.

Checks and Balances

The costs and inefficiencies of cross-border payments have long been a challenge—one of the key reasons Swift has achieved such a strong global presence. The organization has built a network that connects over 11,000 banks across 200 countries.

By providing a critical layer of communication, Swift helps streamline a cross-border payments model that has traditionally depended on manual checks and balances. While Swift has improved the correspondent banking system, persistent challenges remain. Regulatory nuances, currency conversions, and compliance requirements continue to drive up costs, cause delays, and heighten fraud risks.

A Stronger Solution

Due to these issues, digital assets are increasingly seen as a stronger solution for international transactions. Among them, fiat-based stablecoins have emerged as the leading contender, since most cryptocurrencies are highly volatile, while CBDCs and tokenized deposits have yet to gain meaningful traction .

Blockchain-based stablecoins enable secure transactions, and their decentralized infrastructure allows payments to be sent globally in real time. Another key differentiator is that they don’t require a bank account—unlike many cross-border networks, including Swift’s.

Although Swift’s network is designed to connect with—rather than compete against—stablecoins and existing blockchains, the cross-border payments landscape is becoming increasingly crowded.

For example, PayPal and Circle now offer both stablecoins and cross-border payments networks that connect financial services firms. Additionally, Visa and Mastercard have launched substantial cross-border payments networks that leverage their global presence.

Many banks are also developing their own digital assets solutions with potential cross-border capabilities. This includes JPMorgan Chase, which has considered issuing its own stablecoin and has launched a digital assets division under its Kinexys brand.

Despite this growing competition, Swift hopes to leverage its established network to maintain a prominent role in the ecosystem. The organization is also relying on its many partner banks to drive continued innovation. For example, several banks collaborating on its new blockchain-based system include HSBC, Deutsche Bank, and JPMorgan Chase.

The post Swift Is Creating a Blockchain-Based Platform for Cross-Border Payments appeared first on PaymentsJournal.

In the race to handle payments, banks are increasingly losing ground to smaller, nimbler paytechs—companies that provide not only end-to-end payment solutions but business accounts and operational tools.

Data from Capgemini highlights how these companies are challenging banks with faster services, more cost-efficient services. Onboarding a merchant through a bank can take up to seven days and cost as much as $496. Paytechs, by contrast, can activate a merchant in less than an hour for as little as $214.

Paytechs are also leading in innovation. More than two-thirds already offer payment orchestration, which consolidates a merchant’s payment operations and delivers a comprehensive view of the entire ecosystem. Fewer than half of traditional banks provide such services. Paytechs have further distinguished themselves by adopting emerging technologies— such as generative AI and stablecoins—at a much higher rate than banks.

According to Capgemini, these findings reflect how banks have deprioritized merchant services, leaving a gap that paytechs have readily stepped in to fill. Merchants, meanwhile, are focused on achieving high payment success rates and dependable infrastructure—yet only 19% of banks surveyed expressed confidence in their ability to deliver on these needs.

The pressure is especially pronounced among smaller and mid-sized merchants, nearly half of whom say they plan to switch to paytechs within the next year.

Still Looking for Stability

Interestingly, the majority of merchants still prefer traditional providers for their financial services needs. They point to banks’ strong brand reputation, perceived stability, and broader suite of financial products as key advantages over paytechs.

At the same time, merchants indicate a willingness to return to traditional payment providers if they can deliver industry-specific, value-added services—such as loyalty programs tailored for retailers. In fact, most surveyed merchants said they would consider switching back if a bank offered comparable services at similar costs to a paytech.

Room for Improvement

Customized services are one of the strongest opportunities for improvement. While paytechs have proven more agile in tailoring solutions to specific segments, fewer than a quarter of merchants surveyed said they receive meaningful, personalized value-adds from banks.

Fraud prevention is another critical area where banks can regain ground. Merchants reported losing nearly 2% of their total revenue to payment fraud, yet only about a quarter of bank executives expressed confidence in their institutions’ ability to deliver advanced fraud prevention and data security.

The post How Banks Can Regain the Ground They’ve Lost to Paytechs appeared first on PaymentsJournal.

The digital euro, first proposed in 2020, is now looking at a potential launch date of mid-2029.

“The middle of 2029 could be a fair assessment,” European Central Bank Executive Board member Piero Cipollone said this week. “We should arrive at a general approach, as they call it, an agreement among member-states by the end of the year.”

The ECB’s Governing Council began advance work on the digital euro, envisioning it as a digital currency issued by the central bank to supplement cash, not take its place. It entered a preparation phase in 2023, focusing on technical development and devising EU-wide legislation to ensure compliance with privacy and anti-money laundering rules. As of March, there was speculation that the digital euro might be ready by the end of the year.

Roadblocks Are Piling Up

But roadblocks continue to pile up. Many lawmakers question the necessity of the digital euro in the first place and remain skeptical that it would justify the costs involved.

The European Parliament must pass legislation to move the project forward, but it continues to drag its feet. The former central banker leading negotiations on the digital euro’s legal framework with Parliament, Fernando Navarrete, has long been a skeptic of digital currencies. Navarrete recently published a paper, “Do We Really Need a Digital Euro: A Solution to What Problem Exactly?”

A major obstacle has been disagreement among EU nations over how the digital euro should be issued and how much each resident should be allowed to hold. The latter is especially sensitive, as governments fear that unlimited CBDC holdings could trigger destabilizing bank runs.

Last week, EU finance ministers reached a potential compromise by agreeing to impose limits on digital euro holdings. For now, domestic officials will be allowed to set caps on individual holdings, though ministers emphasized that the Council of Ministers will have an opportunity to revisit the rules before they are finalized.

Concerns Over Privacy

The framework would allow the ECB to track ownership of digital euros, helping protect against fraud and money laundering. However, this has raised privacy concerns in countries such as Germany and the Netherlands, which are seeking safeguards against potential payment surveillance.

Discussions have also centered on whether banks should be allowed to charge for distributing digital euros, and how to ensure the currency remains compatible across various payment rails. The ECB has recommended that legislation require all payment services providers to support the digital euro.

The post Why Is the Digital Euro Taking So Long to Develop? appeared first on PaymentsJournal.

The National Payments Corporation of India (NPCI) handles almost half of the world’s digital transactions, primarily through its Unified Payments Interface (UPI) platform, and its reach continues to expand.

According to India Today, there were just over 20 billion UPI transactions in August alone—far surpassing Brazil’s formidable real-time payments system, Pix, which processed roughly 6 billion monthly transactions last year. Overall, UPI now handles more daily transactions than Visa’s global network and China’s Alipay super app.

A key reason for UPI’s rapid growth—considering the platform was only launched in 2018—is the bold strategy implemented by India’s officials. The platform has secured partnerships with leading payments players such as Google and PayPal, while continuously enhancing its functionalities.

Interoperable and Global

UPI is now accepted in various forms in France, United Arab Emirates (UAE), and Singapore, among other countries. The latest expansion comes through a partnership with Qatar National Bank (QNB), enabling UPI acceptance at point-of-sale terminals operated by QNB-acquired merchants.

This partnership means travelers from India—the second-largest group of foreign tourists to Qatar—can pay with UPI at major tourist attractions and Qatar Duty Free outlets, the first merchant to go live on the platform.

While this expansion will likely ease travel-related issues like currency exchange for travelers, the move represents UPI’s ongoing strategy, with the ultimate goal of creating a truly interoperable global payment network, per Ritesh Shukla.

A Muted Reception

Although real-time payments have taken off in regions like India and Brazil, they have received a more muted reception in the United States. Both RTP and FedNow have made strides since their respective inceptions, but still process only a fraction of UPI’s volume.

One of the main hurdles to broader adoption is that the networks are still largely receive-only, meaning they aren’t fully suited for widescale merchant applications. While in India it is common for users to scan QR codes to purchase everyday items using UPI, the use cases for FedNow and RTP have largely been relegated to business-to-business transactions.

The post UPI Strengthens Global Payments Dominance appeared first on PaymentsJournal.

As the federal government nears its deadline for sunsetting paper checks, the U.S. Treasury has begun sending disaster relief payments through FedNow.

The Treasury Department was among the first organizations to go live with FedNow when the service launched two years ago. Now, with the Trump administration’s goal of eliminating paper checks by the end of this month, alternative ways of moving money are essential. Given the urgency of delivering relief as quickly as possible, FEMA checks are a natural fit for the service.

In a prepared statement, Mark Gould, Chief Payments Executive at Federal Reserve Financial Services said: “The ability to receive these types of federal agency disbursements instantly via the FedNow Service will be a game-changer for individuals and businesses, especially in disaster or emergency situations where speed really matters to the recipient.”

The first financial institution to receive an instant disaster relief payment was CB&S Bank in Russellville, AL. A spokesperson for the Fed told PaymentsJournal they could not disclose the timing or amount of the payment, or specify which disaster the funds were intended to address.

Sparking Growth in FedNow

Participation in FedNow will increasingly serve as a key differentiator for financial institutions. Banks that participate will enjoy greater access to emergency funds than those that do not.

To support this transition, the federal government has asked vendors to update their SAM.gov registration with valid bank account information, ensuring that payments are not disrupted as paper checks are phased out. What’s more, individual taxpayers can sign up for Direct Express, a Treasury-sponsored debit card that allows monthly benefit payments to be received electronically.

Getting Up to Speed

The FedNow initiative may help ease some concerns over an administration that has faced criticism for slow disaster relief. Earlier this month, the Associated Press reported that the federal government has been taking more than a month to declare federal disaster areas. By contrast, in the 1990s and early 2000s, it took less than two weeks for a governor’s request for a presidential disaster declaration to be granted.

Local communities have begun taking such matters into their own hands. Earlier this week, the Mississippi River Cities and Towns Initiative, a cooperative of more than 100 river communities from Minnesota to Louisiana, announced a program to deliver assistance to its members within 72 hours of a disaster event.

The post FEMA Moves to FedNow Payments as Government Shifts Away from Paper Checks appeared first on PaymentsJournal.

In a deal that could have far-reaching ramifications for the U.S. financial service industry, Plaid will pay JPMorgan Chase (JPMC) fees to access consumers’ banking data.

Plaid’s aggregation platform connects banks and their customers with third-party services, ranging from peer-to-peer payments and credit score monitoring to crypto trading.

Until now, fintech companies have had unfettered access to banks’ customer data. That will change for Plaid under its updated agreement with JPMC, which establishes a pricing structure for data access and sets clear guidelines for how both parties will protect consumer information.

A Foregone Conclusion

This shift in the financial services paradigm seemed almost inevitable after JPMorgan Chase recently highlighted the increasing number of API requests it receives from fintechs.

JP Morgan Chase reported receiving 1.89 billion requests in a single month, most of them from aggregators. Only a small fraction of these requests were initiated by customers; the rest came from fintechs pulling data for various purposes, including improving their products and marketing.

In addition to the strain on banks’ systems caused by the flood of API calls, JPMorgan Chase has also raised concerns about how some fintechs exploit consumer data. The company noted that opening access to fintechs not only creates potential privacy issues but also exposes banks to increased fraud risks.

The Insights into Why

There has been substantial resistance to both JPMC’s stance on fintechs and its decision to charge fees. The current system—which represents a shift toward the open banking model—has been built on free access to information. Charging fintechs fees could severely hinder many smaller companies’ ability to innovate and compete, potentially leading to greater centralization in the financial services industry.

In an email to PaymentsJournal, Plaid offered insights into why it agreed to pay fees to JPMC. One of the main reasons was continuity—the deal will cement the firm’s long-standing relationship with JPMC and ensure that all of Plaid’s services remain available to the bank’s customers.

While Plaid didn’t provide specifics regarding pricing, it confirmed that there will be no changes to current contracts or pricing as a result of this agreement, and customers won’t face additional fees at this time.

Finally, Plaid emphasized that it still believes consumers deserve the right to freely access and share their own information with whomever they choose. It noted that it will continue advocating for a regulatory framework to be created under Section 1033, even though that rule faces significant challenges.

The post Plaid Agrees to Pay JPMorgan Chase Fees to Access Data appeared first on PaymentsJournal.

After years of gradually increasing the limits on contactless card payments, the UK is now considering removing transaction caps entirely.

The current limit on contactless card payments is £100 ($136), and many transactions still require four-digit PIN authorization. If the Financial Conduct Authority (FCA) moves forward with its proposal, both the cap and the PIN requirement could be eliminated as soon as next year.

According to the BBC, the FCA is considering this change to reduce friction at checkouts and to help consumers cope with rising costs of goods and services. Additionally, the regulator noted that removing transaction limits could drive economic growth in the UK—an objective Prime Minister Keir Starmer set when he called for cuts to the country’s red tape last year.

Gauging the Impacts

It is difficult to gauge the impact that eliminating transaction limits on contactless card payments could have on the UK economy. Although contactless payments have become the predominant payment method in the UK, there has been a growing preference for phone-based payments over cards.

Payments made from digital wallets via phones don’t have a transaction limit in the UK. This is because phones have an extra authentication layer, provided the user enables a PIN or biometric authentication on their device.

Since cards lack these protections, regulators have been concerned about the potential for fraud or theft in contactless payments.

These concerns aren’t unfounded, as evidenced by the series of fraudulent purchases at New York-based convenience store chain Stewart’s Shops. After criminals made numerous sizable transactions with stolen cards, the retailer even shut down its contactless payments system across 350 stores.

Carrying the Burden

While some experts noted that a systemwide shutdown at Stewart’s may have been an overreaction, the rising frequency and sophistication of fraud attacks is well-documented. There have even been cases in which bad actors stole card data, added it to digital wallets, and made contactless payments in-store.

Although fraud is always a concern, the FCA emphasized that card issuers—not consumers—would bear the burden of fraudulent transactions. The regulator also said that many lenders allow their cardholders to set their own transaction limits, an option the FCA expects to become more widely adopted.

The post UK Considers Scrapping Transaction Caps on Contactless Card Payments appeared first on PaymentsJournal.

Ireland’s three largest banks are once again joining forces to develop a rival instant payments app to counter Revolut. The new service, Zippay, will launch early next year and be available to the banks’ five million eligible customers.

AIB, Bank of Ireland, and PTSB are backing the initiative, and other financial institutions—such as credit unions—are being encouraged to join the system as well.

Zippay will allow customers to send, request, and split payments of up to €1,000 per day using their contacts’ mobile numbers. The underlying infrastructure will be developed by Italian payment technology provider Nexi.

Skirting Regulatory Issues

Customers will not need to download a new app to use the service. By integrating it into the banks’ existing apps, the project avoids the regulatory complications that scuttled the previous attempt.

In 2020, the same three banks, together with KBC Bank Ireland, launched a project called Synch to develop a standalone payments app, Yippay. That effort was abandoned in 2023 after KBC Bank Ireland’s closure and additional requirements from the Irish Central Bank, which would have delayed the rollout by at least a year. By relying on the banks’ existing apps, Zippay will not require new approvals.

The initiative mirrors the evolution of payment apps in the U.S. After Venmo’s launch and subsequent acquisition by PayPal, seven major U.S. banks collaborated to create Zelle. The three main Irish banks now hope to replicate that model’s success.

Revolut’s Ambitious Plans

In Ireland, the banks’ fintech competitor is Revolut, which has more than 10 million customers in the UK alone and operates in over 40 countries. It holds a significant share of the local payments market, but that hasn’t been enough to satisfy its ambitions.

Revolut was granted a banking license last year, yet it still hasn’t received approval to operate as a full-fledged financial institution. It’s limited to holding £50,000 in total customer deposits and operates as an e-money entity rather than a bank. This means the fintech’s UK customers aren’t protected by the government’s Financial Services Compensation Scheme, which insures deposits up to £85,000 if a bank fails.

Another potential competitor for Zippay is SEPA Instant, which has been available to consumers in Ireland since January. Developed by the European Commission and European Central Bank of their own solution, SEPA Instant offers cross-border money transfers of up to €100,000 in 10 seconds or less.

The post Irish Banks Announce Payment App to Compete with Revolut appeared first on PaymentsJournal.

The 92 cryptocurrency exchange-traded funds awaiting approval from the SEC will test the depth of investor appetite for more specialized digital assets. Following the success of bitcoin and ether ETFs launched last year, crypto firms are betting that investors will show similar interest in lesser-known entities such as Avalanche and Litecoin. Whether the demand materializes will depend on how quickly the SEC breaks through the logjam of products awaiting approval.

The list of pending applications surfaced through research by James Seyffart, an analyst at Bloomberg. Eight of the potential offerings are invested in Solana, while another seven would hold XRP. Additional offerings include Dogecoin, Melania, and Cardano.

Many of these funds have been awaiting approval for some time. In April, Bloomberg reported that 72 crypto-related ETFs were pending approval, indicating that 20 more ETFs have been filed over the past four months.

The queue continues to grow. Earlier this week, 21Shares sought approval from the SEC to launch the first ETF invested in SEI, the token used by the Sei blockchain.

Slow Movement from the SEC

There’s no telling when these approvals might come, if at all. Grayscale filed for approval of its Cardano ETF in February and was initially told that it would receive a decision by August. This week, the SEC informed Grayscale that a decision would now come at the end of October. Grayscale is also seeking approval to convert five existing trusts into ETF structures.

The delay may be due to a lack of personnel. The SEC has lost roughly 15% of its staff this year after the Trump administration offered buyout packages to all employees.

The markets are taking steps to address the backlog and prevent it from happening again. In July, the New York Stock Exchange, Chicago Board of Exchange, and Nasdaq proposed listing standards for crypto ETFs that would expedite the process for these vehicles to trade publicly.

A Lucrative Niche

The market for crypto funds remains lucrative. Last year, the world’s largest asset manager, Blackrock, launched the iShares Bitcoin Trust ETF. It now generates more in fees from that fund than from its flagship S&P 500 fund.

Blackrock has since launched similar funds in Canada and Europe and has begun offering options trading on its bitcoin ETF. However, Blackrock currently has no other crypto ETFs pending before the SEC.

The post Nearly 100 Crypto ETFs Are Waiting for SEC Approval appeared first on PaymentsJournal.

When a financial institution detects potential criminal activity, it is required to file a suspicious activity report (SAR) with Financial Crimes Enforcement Network (FinCEN). Tracking these incidents is critical in the fight against fraud, but preparing and filing SARs if often a time-consuming process.

To help streamline this effort, a reporting solution from DataVisor is being introduced that incorporates artificial intelligence to assist with drafting SAR narratives, populating report fields, and submitting reports electronically. Integrated into an anti-money laundering platform, the tool is designed to give organizations more efficient ways to track and report fraud.

There is a significant demand for a more efficient SAR process, as FinCEN reported that financial institutions filed roughly 4.6 million SARs last year. Each requires detailed information and supporting documentation, and according to DataVisor, preparing a single SAR can take an average of 21 hours.

Weighing on Institutions

Due to the recent surge in fraud, the SAR process will continue to weigh on financial institutions, who already face substantial compliance requirements.

According to FinCEN, the trends in SAR filings echo the overall fraud landscape. Check fraud remains prevalent as more criminal groups targeting the mail. Additionally, more SARs have been submitted due to elder fraud, as older adults have become frequent targets of impersonation scams.

The emergence of the digital economy has also created new avenues for fraud, with significant increases in identity theft, account takeovers, and ACH fraud stemming from e-commerce and online financial services.

Covering Their Bases

The pervasiveness of fraud means the SAR filing process will continue to be a drain on banks. Even more so because SARs aren’t just filed when fraud is verified—they are also filed when there is suspicion of illicit activity.

However, there is another reason why many financial institutions are filing more SARs: to cover their bases. FinCEN uncovered a trend of defensive filing, where financial institutions submit a SAR if there is any possibility that fraud occurred. While this may require more work on the organization’s part, this trend is likely to continue.

Although an organization isn’t likely to be fined for filing too many SARs, an error or a lapse in reporting can be costly. For example, U.S. Bancorp Investments was fined $500,000 because it failed to file 42 SARs over a three-year period after misjudging the transaction threshold for reporting.

The post DataVisor Aims to Use AI to Optimize SAR Filings appeared first on PaymentsJournal.

The Consumer Financial Protection Bureau is pulling back further from the role it has played in recent years, proposing a rule that would limit its ability to supervise nonbanks. Entities ranging from buy now, pay later services to digital wallets would continue to be exempt from the CFPB’s oversight.

“It is essential that the Bureau focus only on the specific categories of products and services that Congress charged the Bureau with overseeing,” the CFPB’s proposal reads. The CFPB was established by the Consumer Financial Protection Act of 2010, before Venmo, Zelle, and Affirm even existed.

The rule specifically limits the types of businesses the CFPB can regulate. As a result, it expects  to designate fewer entities for supervision. The public is invited to submit comments on the proposal by September 25.

Rolling Back the Agency

This move aligns with the Trump administration’s efforts to roll back the CFPB’s powers. Earlier this month, a federal appeal court allowed the administration to proceed with plans to cut more than 80% of the agency’s workforce and cancel the lease on its headquarters.

The CFPB currently has the legal authority to supervise any nonbank deemed to engage in conduct that poses risks to consumers through financial products or services. The Biden administration sought to expand that authority by issuing a rule that would have covered products and services such as digital wallets and payment apps. In the past, the CFPB has argued that entities such as payment apps, which offer services similar to traditional banks, should be subject to the same consumer protections.

Bringing Tech Giants into the Mix

The CFPB always had the authority to oversee firms engaged in international money transfers, like PayPal and CashApp. The Biden proposals would have made Apple and Google subject to CFPB oversight for the first time.

These proposals aimed to ensure that nonbank financial companies handling more than 5 million transactions per year adhered to the same rules as large banks, credit unions, and other financial institutions already supervised by the CFPB. The principal concerns were mounting consumer complaints regarding difficulties in resolving fraudulent charges or recovering missing balances linked to their payment methods. 

A coalition of tech companies filed suit in January, arguing that the likes of Google Pay and Apple Pay were not actually making payments themselves, but rather facilitating them through credit cards stored on the apps. For now, those arguments appear to have prevailed.

The post CFPB Pushes Rule to Stop Oversight of Nonbanks appeared first on PaymentsJournal.

A gig economy marketplace seeking to pay a creator could soon issue payouts via text message, thanks to a new platform from Visa Direct and messaging commerce company Authvia.

However, the potential applications go far beyond the gig economy. According to Authvia and Visa, the platform could allow organizations across industries to send refunds, payments, incentives, and reimbursements.

The platform expands Authvia’s TXT2PAY functionality to include real-time payouts to Visa cards in select markets. Once a recipient verifies their identity and payment details, they can receive funds by SMS directly to their Visa card.

A Critical Operation

Payouts are the lifeblood of many businesses and a critical operation across countless industries. Yet, they’ve often been deprioritized in favor of payment acceptance—especially as new payment methods have emerged.

In healthcare and insurance, this imbalance has left reimbursements and claims heavily reliant on manual, time-consuming processes.

Many of these payouts are still issued by paper check, which can delay funds for weeks. On top of that, paper checks introduce risk: they can be lost in transit, sent in error, or highly susceptible to fraud.

Where Payouts Are Prevalent

For these reasons, many companies in sectors where payouts are prevalent—including healthcare, insurance, automotive services, and the gig economy—are actively seeking ways to make the process more efficient.

This often means shifting away from checks to real-time payment methods. Not only does this reduce time spent on administrative tasks, but it can also positively impact a company’s brand. For example, a real-time payout to a gig worker could go a long way toward keeping that worker loyal and engaged.

However, there are still risks that come with real-time payments, as faster payment often mean faster fraud. SMS and other messaging protocols have been common attack channels for bad actors. There are already many SMS-based “smishing” scams where criminals attempt to manipulate users into sending their payment data or accepting a fraudulent payout.

Despite these threats, real-time payouts could revitalize many industries. This means platforms like Visa and Authvia’s will likely continue to gain traction.

The post Authvia Adds Visa Direct to Its SMS Payments Platform appeared first on PaymentsJournal.

Gemini, the crypto exchange founded by the billionaire Winklevoss twins, has launched a new credit card that offers rewards in the cryptocurrency Ripple (XRP). This card follows an earlier release from Gemini that provides rewards in bitcoin, other crypto assets, and the exchange’s own stablecoin, the Gemini Dollar.

The launch comes shortly after Gemini filed for its initial public offering earlier this month. Among the companies financially backing the offering is Ripple, which has extended the exchange a credit line of up to $150 million.

Ripple’s Returns

For its part, Gemini is touting the growth of its crypto asset, noting that investors who held XRP rewards for the year ending in July saw gains of 453%. That’s the highest percentage increase among all rewards currencies available to Gemini credit cardholders.

The card’s cashback structure allows users to earn up to 4% back in Ripple for fuel or electric vehicle charging, 3% for dining, 2% for groceries, and 1% on general spending. Cardholders also have the option to earn bitcoin or choose from more than 50 other cryptocurrencies.

The Struggle for Profitability

Despite hopes for the upcoming IPO, Gemini has struggled to achieve profitability. The latest filing with the SEC revealed a net loss of $282.5 million in the first half of the year. In 2024, Gemini reported $142.2 million in revenue but still recorded a $158.5 million net loss. Its cash and cash equivalents declined from $341.5 million at the end of 2024 to $161.9 million by mid-2025.

Since its founding in 2014 as a platform for buying, selling, trading, and storing cryptocurrency, the company has experimented with several new products, most of which have stumbled out of the gate. In 2021, for instance, the company introduced Gemini Earn, which allowed users to earn interest of up to 7.4% by lending crypto assets to cryptocurrency lender Genesis Global Capital LLC.

The program grew to about 200,000 members before it was forced to suspend trading during a crypto crash in November 2022. Genesis Global Capital filed for bankruptcy just a few months later, and Gemini ultimately agreed to repay more than $1 billion to its customers.

The post Ahead of Its IPO, Gemini Unveils a Ripple Credit Card appeared first on PaymentsJournal.

Meal kit delivery company HelloFresh will pay $7.5 million to settle a civil lawsuit in California, which alleged the company deceptively enrolled consumers into auto-renewing subscription plans without proper disclosure or consent. These actions were found to violate the state’s Automatic Renewal Law and False Advertising Law.

Considered some of the strongest subscription regulations in the nation, California’s Auto Renewal Law has expanded significantly in recent years. Businesses using subscription models across the country will need to stay on top of these developments.

The complaint alleged that HelloFresh failed to clearly disclose subscription terms before collecting payment, did not obtain affirmative consent before charging customers’ credit or debit cards, and neglected to offer a simple and accessible cancellation mechanism.

In settling the suit, HelloFresh admitted no liability. “We take our commitment to customer transparency very seriously, and our subscription model and cancellation policies have been consistently clear to customers throughout the whole customer journey,” the company said in a statement.

A Law Grows Even Tougher

California’s Auto Renewal Law has long been one of the most comprehensive laws on subscription payments in the U.S. Over the years, it has led to settlements with businesses ranging from Peacock to SeaWorld.

Importantly, California keeps revisiting the law to add more teeth to it. Notable updates in recent years include measures that went into effect in July.

Among the changes: consumers must now receive an annual reminder that clearly states the renewal frequency, the amount to be charged, and step-by-step instructions for cancellation. In addition, businesses must offer cancellation options through the same channel the subscription was initiated—for example, if sign-up happened online, cancellation must also be available online, not just over the phone. 

Changes Around the Country

Other states have begun to follow California’s lead. In November, new restrictions will take effect in New York that are, in some ways, even stricter than those in California. For example, businesses operating in New York will be required to clearly disclose the price and terms of any automatic renewal offer—including detail cancellation instructions—before they can even request a consumer’s consent.

These state-level protections are being strengthened at a time when the federal government is pulling back. Just last month, a federal appeals court blocked a “click-to-cancel” subscription rule issued by the Federal Trade Commission during the final months of the Biden administration.

The post California’s Subscription Laws Gain Another Victory appeared first on PaymentsJournal.

Amid a post-pandemic tourism slowdown, Thailand is launching an 18-month program to test whether crypto payments can help draw more foreign visitors.

Before COVID-19, Thailand welcomed about 39.9 million foreign international arrivals, generating roughly $58.86 billion in revenue. However, Southeast Asia’s second-largest economy has struggled to attract visitors in the subsequent years. Thailand’s state-planning agency recently lowered its 2025 forecast by 10%, to 33 million visitors.

To boost momentum, Thailand is preparing to launch a “TouristDigiPay” program, which will allow foreign tourists to convert cryptocurrencies into Thai baht when making purchases in the country.

The project is a joint effort between Thailand’s Finance Ministry, Anti-Money Laundering Office (AMLO), and Securities and Exchange Commission (SEC), which recently completed a study on how financial innovation and digital assets could foster both economic and tourism growth.

A Welcome Addition

Although crypto conversion will likely be a welcome addition for many tourists, using the system will require some prior planning.

Those who want to utilize TouristDigiPay must open an account with both a crypto firm and an e-money provider, each regulated by the appropriate agencies. These firms must also undergo Know Your Customer and customer due diligence checks as set forth by the AMLO.

To provide additional safeguards, TouristDigiPay will operate in a sandbox environment with monthly spending limits and no direct cash withdrawals. These guardrails are designed to prevent digital assets from being used to directly pay for goods or services. The SEC noted that merchants will receive all payments in baht.

Only foreign tourists who are staying in Thailand temporarily can use the service. Once approved, they will be able to exchange their digital assets for baht and make electronic payments, including those that use QR code scanning.

Relieving Travel Stressors

Being able to complete accurate and secure payments is one of the common stressors for travelers abroad. Offering these visitors a way to pay in the local currency can make an impact. China’s Alipay reported a tenfold increase in foreign tourists after the popular digital wallet announced integration with other wallets in the region.

Digital assets have long been a contender a potential solution to improve cross-border payments because they are decentralized and secure. However, the volatility associated with crypto has hindered it from becoming a more widespread option. Programs like TouristDigiPay address this issue by converting crypto to baht immediately, but it remains to be seen whether they will have enough impact to help turn around Thailand’s tourisms struggles.

The post Thailand Pilots Crypto-to-Baht Conversion to Drive Tourism appeared first on PaymentsJournal.

Zelle faces a new lawsuit over allegations that it lacked critical safety features, enabling criminals to steal more than $1 billion from consumers. The suit builds on an earlier complaint from the U.S. Consumer Financial Protection Bureau, which was dropped in March. Although Zelle has since implemented protective measures, the lawsuit seeks to compel the company to further enhance its anti-fraud protections and provide restitution to victims.

Zelle is owned by seven of the country’s largest banks, including JPMorgan Chase, Bank of America, and Wells Fargo. The suit claims that these parent banks, operating under the name Early Warning Services, knew for years that the platform was vulnerable to criminal activity but resisted implementing basic safeguards. The result was widespread fraud, which Zelle at times allegedly failed to address.

According to the complaint: “EWS knew from the beginning that key features of the Zelle network made it uniquely susceptible to fraud, and yet it failed to adopt basic safeguards to address these glaring flaws or enforce any meaningful anti-fraud rules on its partner banks.”

A Hasty Rollout

The New York State Attorney General’s office said the problems started when EWS hastily rolled out an electronic payment platform to allow the major banks to compete with new payment apps like Venmo and PayPal. “In their rush to launch,” the complaint says, “EWS prioritized attracting new users through a simple registration process and quick transfers that left consumers vulnerable to scammers.”

As early as 2018, published reports indicated that scams were already a problem on Zelle. The platform’s rapid payment resolution became a boon for criminals, who could withdraw money quickly and irretrievably, then disappear. The New York complaint cites a victim who was told his electricity would be shut off unless he paid “Coned Billing” $1,477 via Zelle, and another who said Zelle refused to help him after he sent $2,600 in two installments via Zelle to buy a puppy.

Addressing the Problem

Zelle’s position is that scams result from criminals tricking individuals into sending money, rather than from issues with the platform itself. Zelle also stated that more than 99.95% of transactions are completed without any reported fraud.

The member banks have already taken steps to address the fraud problem. In March, JPMorgan Chase updated Zelle’s terms of service to grant Chase the right to delay, block, or cancel payments, specifically flagging social media as a high-risk area. The complaint acknowledges that Zelle adopted basic safeguards starting in 2023, but only after the CFPB and several members of Congress began investigating the service.

The post New York State Launches New Suit Against Zelle appeared first on PaymentsJournal.

Bullish has completed its initial public offering, with the company valued at more than $5 billion. The strong debut signaled that digital assets have firmly established a place on Wall Street.

Bullish operates a crypto exchange focused on institutional investors, as well as the trade publication CoinDesk. The IPO was led by Wall Street heavyweights JPMorgan and Citigroup. Asset manager BlackRock and Cathie Wood’s investment fund Ark Invest each expressed interest in purchasing up to $200 million worth of shares in the offering.

A Solution for Crypto Custody

Bullish holds roughly $2 billion in cryptocurrency assets, primarily in bitcoin, with smaller holdings in ether and some stablecoins.

The company has also established itself as a leading custodian for crypto assets. In large part because of regulatory hurdles, custody has been a sticking point for the industry, and most of the asset managers that launched bitcoin ETFs did so with outside custodians. Bullish will now be providing a Wall Street-approved holding mechanism for banks and asset managers that do not want to develop their own custodial infrastructure.

Expanding Crypto Investing

The appetite for an institutional crypto exchange has surged since the SEC approved bitcoin ETFs in January 2024, with nine funds from major players like BlackRock and Fidelity quickly gaining traction. That momentum continued in June, when five ETFs tied to ether—the world’s second-largest cryptocurrency—launched.

The Trump administration has also taken a crypto-friendly stance, lifting regulations that prevented banks from holding digital assets. Most recently, it has floated the idea of letting future retirees allocate a portion of their 401(k) savings to crypto.

These developments have fueled record inflows into both bitcoin and ether ETFs. Ether funds alone saw over $1 billion invested in a single day this week—smashing the previous single-day record of $726.6 million set in July.

Meanwhile, public companies are adding to the wave by increasing their crypto holdings. According to data from Bitbo Treasuries, ETFs and public and private companies together now control more than 13.5% of the total bitcoin supply.

The post Wall Street Welcomes Institutionally Focused Crypto Exchange appeared first on PaymentsJournal.

Payments company Thredd is leveraging Mastercard’s network to give its travel agency clients a more efficient way to conduct international transactions.

Online travel agencies (OTAs) such as Expedia or Airbnb face unique payments hurdles due to the nature of the industry. These companies often reserve hotel rooms or airline seats based on partial payments—transactions that carry a substantial risk of changes or cancellations.

These challenges are compounded in global travel, where cross-border payments bring their own complications: higher fees, longer payment settlements, and regulatory roadblocks have been longstanding pain points.

To solve for these issues, Thredd’s platform enables OTAs to make virtual card payments tailored by geography, payment type, or transaction volume. Using product codes facilitated by the Mastercard Wholesale Program (MWP), travel companies can streamline payments and build trust with their global partners.

Challenging Trust

Establishing trust in the travel industry can be a substantial challenge because OTAs have thousands of suppliers—every hotel, airline, cruise line, and rental car company is a potential client.

OTAs also have to build trust with their customers. Global travelers are increasingly concerned about the security of their payments. Data from Outpayce found that more than 70% of respondents prefer to book with travel companies known for secure payment processes.

Struggling to Support

These security concerns are driven by both cross-border complexities and the rising threat of fraud. However, there is another issue for travel companies: the sheer number of payment types that have emerged in recent years. In addition to the many local currencies, there are now real-time payments systems, stablecoins, CBDCs, and other digital payment methods.

This has led to a fragmented cross-border payment landscape, where many consumers have been forced to rely on multiple payment types to make global transactions.

This is also an issue for travel companies. A separate survey from Airwallex and Skift found that travel agencies struggle to support the wide range of payment methods available to their customers. Additionally, many respondents said their profit margins had been impacted by inefficient payment systems—a factor that is driving most travel companies to explore payments modernization.

The post Thredd and Mastercard Launch Custom Cross-Border Payments for Travel appeared first on PaymentsJournal.

The UK’s Financial Conduct Authority (FCA) has introduced rules stipulating that payments firms must keep company funds separate from customer funds.

The FCA cited several instances where fintechs became insolvent, noting that customers were left with an average shortfall of 65% in these cases. The new safeguarding rules are intended to ensure that, if a company fails, customers are more likely to receive a full refund and face fewer delays.

Under the new rules, payments companies are required to conduct annual audits and submit monthly reports. Fintechs must also perform daily checks to ensure adequate resources are safeguarded to protect their customers and must create plans to prevent delays in reimbursement.

Safeguarding Vs. Commingling

The scrutiny of financial technology firms intensified following the failure of Synapse last year. After the fintech’s bankruptcy, it emerged that the company had commingled the funds it was safeguarding for many banking clients.

There was speculation that Synapse had tapped into customer funds to keep the business running after the loss of a critical client. Once the company went under, however, its records offered no clear way to separate individual accounts—leading to roughly $85 million in frozen customer funds.

Tightening Regulations Appropriately

In the aftermath, regulators worldwide pushed for clearer rules governing how fintechs and banks work together. However, JPMorgan Chase has proposed a different approach, suggesting that fintechs be charged fees to access its customers’ data.

This would represent a shift in the U.S. banking paradigm, where fintechs have historically had free access to consumer banking data. Many argue that charging fintechs fees could be a step backward for the open banking model, which is built on third-party connections.

However, the UK has taken a more regulatory-first approach to open banking than the U.S.—one reason why the model has gained more traction in the region.

Although the FCA may be tightening regulations around fintechs, there is still some leeway. The regulator stated that its rules would be adjusted based on the size of the company. For example, the FCA could remove the audit requirement for a fintech holding less than £100,000 in customer funds.

The FCA also noted that the new rules won’t take effect for nine months, giving fintechs enough time to reach compliance.

The post UK Regulator Tightens Rules on Payment Processors appeared first on PaymentsJournal.

As first-party fraud continues to surge, data from FICO reveals that nearly a third of respondents believe that lying on credit applications is either justifiable in certain situations or simply common practice.

Inflation and high interest rates have placed increasing pressure on consumers in recent years, leading to a surge in credit card debt. In response, many lenders have reduced credit limits, tightened lending standards, and shifted their focus toward more affluent customers.

FICO notes that many consumers are deliberately inflating or misrepresenting details on credit applications in an effort to secure financing—often without fully grasping how these “so-called liar loans” can strain their budgets or expose them to the legal and financial repercussions of committing fraud.

For the average consumer struggling to stay afloat, fraud may be a viable solution—but as FICO highlights, it often just adds fuel to the fire.

Muddying the Waters

First-party fraud, also known as consumer-engaged or friendly fraud, has become the most prevalent type of fraud worldwide. A separate report from Lexis-Nexis shows it accounted for more than a third of all reported fraud cases in 2024—up from 15% the year prior.

One of the biggest challenges for financial institutions is the variety of forms this fraud can take. In one common scenario, a consumer orders a big-ticket item and later files a false fraud claim. In another, the buyer claims that an item was never delivered or falsely reports it as damaged in transit.

Further muddying the waters are the instances in which a legitimate first party is manipulated by an outside bad actor into commiting fraud.

A Strange Dichotomy

Because of the increasing prevalence of first-party fraud, the first step for financial institutions is to classify fraud accurately. Only then can banks and credit unions begin to deliver the fraud defenses that customers expect.

This reveals a strange dichotomy: FICO found that even as more consumers commit fraud themselves, they are increasingly searching for stronger fraud protections.

According to its survey, nearly a third of respondents ranked fraud protection as their top priority when opening a new account—placing it above value and customer service. More than half said that solid fraud protection was a top three consideration when selecting a new account.

The post More Americans Think First-Party Fraud Is Justified appeared first on PaymentsJournal.

The UK’s most valuable fintech was granted a banking license a year ago, yet Revolut still hasn’t been given the green light to operate as a fully fledged financial institution.

Instead, Revolut remains in a holding pattern, limited to holding £50,000 in total customer deposits—billions of pounds lower than leading UK banks like Barclays, HSBC, or Santander.

In this mobilization phase, Revolut operates as an e-money unit rather than a bank. This means the fintech’s UK customers aren’t protected by the government’s Financial Services Compensation Scheme, which insures consumers up to £85,000 if their bank goes under.

One of the main reasons Revolut’s evolution has been delayed is the company’s size. Revolut has over 10 million customers in the UK alone and operates in over 40 countries. In contrast, no other organization has ever pursued the UK’s banking license process with more than 500,000 customers.

Getting the Transition Right

In addition to Revolut’s scope, UK regulators have had compliance concerns regarding the fintech. Last year, the company was found to have far more fraud complaints than traditional UK lenders like Barclays. The high incidence of fraud—mostly carried out through automated push payment fraud tactics—called Revolut’s fraud defenses into question.

The combined concerns about scale and compliance measures have made the fintech’s transition into a bank a daunting process for regulators, who are focused on getting the transition right. However, according to CNBC, Revolut still believes it is on track to become a fully regulated bank this year.

Buying Into the Market

The issues that have dogged Revolut’s banking transition have caused it to consider a different tack in the U.S. According to the Financial Times, Revolut could bypass the lengthy banking charter application process by buying its way into the U.S. market.

In this scenario, Revolut would target an inexpensive bank that already holds a U.S. banking license, unlocking a substantial new customer base for the fintech. This is a real possibility for Revolut: the company currently has a $45 billion valuation but is considering a deal that could both substantially increase its valuation and provide the funds needed for global expansion.

The post Revolut Faces Roadblocks on Its Journey from Fintech to Bank appeared first on PaymentsJournal.

In the latest convergence of digital assets and mainstream financial services, PayPal is launching a platform that enables merchants to accept payments in over 100 cryptocurrencies.

The service, Pay with Crypto, allows consumers to connect their existing crypto wallets from major platforms like Coinbase Wallet, MetaMask, Kraken, and OKX—unlocking access to a market of 650 million crypto users. At launch, the platform will be available to all U.S. users except those in New York.

One of the key drivers behind PayPal’s launch is the need to address inefficiencies in cross-border payments, which are often plagued with payment delays and high fees. PayPal noted that the platform will charge merchants a 0.99% transaction fee on crypto payments—a rate it claims is 90% lower than the average credit card processing fee.

Inclusive, Borderless Commerce

The crypto launch follows last week’s unveiling of another cross-border-focused solution from PayPal: PayPal World. With this platform, PayPal and Venmo wallets can connect to leading global wallets, including India’s Unified Payment Interface (UPI), China’s WeChat Pay, and potentially Latin America’s Mercado Pago.

This means PayPal and Venmo users can send payments to users of these other systems—even if the recipient doesn’t have a PayPal account—and vice versa. While PayPal World and Pay with Crypto are currently two disparate systems, Alex Chriss, President and CEO of PayPal, noted how both launches are indicative of the “the future of inclusive, borderless commerce.”

Yields for Merchants

Digital assets have long been considered one of the driving forces behind the emerging payments paradigm. A key component of this shift is PayPal’s stablecoin, PYUSD, as all transactions on the platform are automatically converted into PYUSD or fiat currency at checkout.

Though PYUSD was launched roughly two years ago, it has yet to gain substantial ground in a market where Tether holds a commanding lead. However, PYUSD’s market cap has increased roughly 80% since the beginning of the year.

This momentum is expected to continue due to PYUSD’s central role in PayPal’s crypto platform. However, it also coincides with a wave of new stablecoins entering the market, including one from payments competitor Stripe.

The immediate conversion to PYUSD also benefits merchants by allowing them to accept crypto payments without exposure to volatility—and potentially earn a yield.

In a statement, Chriss also noted that “the business can accept crypto for payments, increase their profit margins, pay lower transaction fees, get near instant access to proceeds, and grow funds stored as PYUSD at 4% when held on PayPal.”

The post PayPal Brings Crypto Payments to Checkout appeared first on PaymentsJournal.

As financial institutions face increasing compliance pressures, Nasdaq Verafin has introduced a platform that applies agentic artificial intelligence to assist with certain anti-money laundering (AML) processes.

Verafin, known for its cloud-based financial crime management solutions, recently unveiled its Agentic AI Workforce platform. The platform leverages AI agents to automate common compliance tasks with minimal human oversight. Two key focus areas are sanctions screening and enhanced due diligence (EDD) reviews.

Verafin’s Digital Sanctions Analyst is designed to help financial institutions manage false positive alerts—a persistent challenge in traditional fraud detection systems that often overwhelm compliance teams with manual checks.

The platform also addresses another resource-intensive area: periodic EDD reviews. Its AI agents are built to assess and close low-risk cases automatically, allowing compliance staff to concentrate on higher-risk accounts.

Significant Tech Resources

Technology-based solutions for fraud mitigation and compliance have become essential, as bad actors now have significant tech resources at their disposal.

For example, security firm Okta found that cybercriminals have exploited Vercel’s v0 generative AI tool to create full-scale phishing websites from simple prompts. It has been used to create convincing clones of sign-in pages for brands like Microsoft 365—sites that can be created in seconds.

Cybercriminals have also begun deploying AI agents. Symantec recently reported how OpenAI’s Operator agent could be used to carry out a phishing attack from start to finish.

A Double-Edged Sword

While AI can be a powerful tool for bad actors, it can be just as powerful in the hands of organizations.

A recent study from the Bank for International Settlements (BIS) and the Bank of England found that AI models are highly effective for fraud detection—particularly in identifying novel patterns of financial crime. BIS reported that AI outperformed traditional fraud defenses by roughly 26% in detecting suspicious activity.

Although AI’s potential applications come with inherent risks, financial institutions often see it as a double-edged sword. Still, with rising fraud and compliance pressures, increased AI investment seems all but inevitable.

The post Nasdaq Verafin Deploys AI Agents for AML Compliance appeared first on PaymentsJournal.

A bug in Google Gemini is allowing criminals to exploit the artificial intelligence itself, using summarized emails to launch phishing attacks. Although Google has reportedly known about the issue since last year, cybersecurity experts say it still hasn’t been fixed.

By slipping invisible text into an email—hidden with HTML tricks like white text or concealed formatting—criminals can plant a message the recipient never sees. The email appears harmless when opened, but Gemini reads everything, including what’s hidden.

If the recipient asks Gemini to summarize the email, the AI agent unwittingly includes the hidden text in its summary. That text might tell Gemini to produce a warning that the user’s Gmail password was compromised.

Since the notification appears to come directly from Gemini itself, the recipient is more likely to trust it—and to follow urgent instructions, like changing a password or calling a supposed support number.

Google’s spam filters tend to flag suspicious links or attachments, so criminals leave those out. That helps these messages slip past defenses and into inboxes, giving the criminals a way to redirect their victims to phishing sites without using obvious red flags.

Challenges for Detection

Detecting these malicious messages is a highly technical challenge. Some filters scan Gemini’s output for urgent messages, URLs, or phone numbers, flagging the content for further review. Other methods can remove, neutralize, or ignore content designed to be hidden within the body text.

As with most phishing attacks, one of the most effective defenses is education. Organizations need to ensure employees are trained to be suspicious of any urgent requests to take action—even if those requests appear to come from their AI client.

Turning AI Against Users

This isn’t the first attempt to leverage AI in phishing attacks. A technique called polymorphic phishing incorporates AI to randomize components of fraudulent emails—such as sender names, subject lines, and even the content. That helps the messages circumvent fraud detection systems trained to identify patterns in blanket emails.

Ironically, Google has long touted the abilities of Gemini to assist in cybersecurity efforts. It plays a pivotal role in the Google Threat Intelligence cybersecurity platform, which is designed to give users a more comprehensive understanding of the threat landscape and smarter insights into attacks. 

The post Phishing Attacks Target Vulnerability in Google Gemini appeared first on PaymentsJournal.

Three major federal bank regulatory agencies issued a joint statement warning banks about the risks associated with taking custody of cryptocurrency assets. While the statement does not impose new regulations on crypto custody, it signals a significant shift—indicating that the federal government is now fully engaged on this issue, a notable departure from the previous administration’s stance.

The statement, issued by the Federal Deposit Insurance Corporation, the Federal Reserve, and the Office of the Comptroller of the Currency, reiterates that existing risk management principles apply to the safekeeping of crypto assets and reminds banks of their obligation to comply with applicable laws and regulations. It also clarifies that banks may provide safekeeping services for crypto assets, whether in a fiduciary or non-fiduciary capacity.

The statement highlights the legal and compliance risks related to crypto assets, especially concerning anti-money laundering and the Bank Secrecy Act. It calls on institutions to carefully assess operational, legal, and technological risks before launching crypto-related services. The regulators also emphasize the importance of employee training, stating that all personnel involved in crypto asset safekeeping must have adequate knowledge and understanding of the associated risks and requirements.

The Legacy of SAB 121

The statement marks the final rollback of a previous SEC rule, Staff Accounting Bulletin 121, that had limited financial institutions from holding crypto directly. That rule required banks maintaining custody of crypto to record those holdings on their own balance sheets.

The requirement originated from a staff bulletin intended as guidance on existing accounting standards, but many lawmakers viewed it as regulatory overreach. It led Senator Cynthia Lummis, (R-Wyo.), a crypto supporter, to describe SAB 121 as “a rule under the administrative procedure act, disguised as an accounting guidance.”

ETFs Raise the Issue

Despite the restriction, banks continued offering crypto custody services, and by mid-2024, U.S. banks collectively held nearly $16 billion in digital assets. The issue gained further prominence following the introduction of exchange-traded funds in early 2024. Since SAB 121 deterred banks from holding bitcoin, those assets were concentrated in a small number of institutions. Overturning the rule opens the door for more banks and other organizations to hold digital assets directly.

Last year, the Senate voted in a bipartisan effort to overturn the rule, though President Biden opposed the new regulation. SAB 121 was eventually rescinded just four days after President Trump took office. Shortly after, the SEC published SAB 122, stating that institutions should assess the risk of loss associated with crypto custody and record that amount as a contingent liability on their balance sheet.

The post Bank Regulators Outline Expectations for Crypto Custody appeared first on PaymentsJournal.

A federal appeals court has blocked a “click-to-cancel” subscription rule issued by the Federal Trade Commission during the final months of the Biden administration.

The rule, which was scheduled to take effect next week, aimed to make it easier for consumers to cancel unwanted subscriptions and memberships. Under the rule, businesses would have been required to obtain consent from customers before charging for memberships or auto-renewals. They also would have had to disclose when free trials or promotional offers end and ensure that canceling a recurring subscription is as simple as signing up for one.

The U.S. Court of Appeals for the Eighth Circuit said that the FTC made a procedural error when it established the rule. A preliminary regulatory analysis is required for rules with an annual impact on the U.S. economy exceeding $100 million, and the FTC had not completed one in this case.

One estimate puts the value of the subscription economy at more than half a trillion dollars this year. It stands to reason that any tweaks to that model would have an impact of at least $100 million.

Will the FTC Accept the Ruling?

The FTC declined to comment on the outcome, but the court’s decision aligns closely with many of the Trump administration’s regulatory policies, which have generally favored granting significant leeway to businesses.

When the rule was first introduced, industry groups pushed back forcefully. The cable industry, home security companies, and advertisers joined forces to challenge it in court, arguing the FTC was trying to “regulate consumer contracts for all companies in all industries and across all sectors of the economy.” Given the strong opposition—and the recent court ruling—the FTC may be unlikely to pursue the matter further.

The Framework for the Rule

The rule was derived from the FTC’s Negative Option Rule and aimed at curbing deceptive recurring billing tactics, including friction-laden opt-out processes, obscure cancellation policies, and automatically renewing subscriptions without explicit consumer consent.

Under the Biden administration, the FTC also undertook a series of enforcement actions under the Restore Online Shoppers’ Confidence Act. This law has been used to pursue organizations accused of extracting unwarranted payments and violating subscribers’ rights.

In 2023, the FTC filed a complaint alleging that Amazon enrolled millions of consumers into its Prime service without their consent and made it intentionally difficult to cancel the service. The FTC is currently preparing for a trial in the Amazon case, which is expected to take place next year.

The post FTC’s “Click-to-Cancel” Subscription Rule Won’t Go into Effect appeared first on PaymentsJournal.

The federal government’s efforts to phase out checks comes at a time when check usage is already in sharp decline. From 2015 to 2024, check payments dropped from 6% to 2.5% of consumer transactions, according to data from the Atlanta Fed.

The study underscores how broad and consistent the decline has been. Consumers across all demographics are using fewer checks, and they’re used less frequently across nearly every type of payment.

Consumers gave checks low marks for convenience, security, and speed. Only cash was rated lower for security, while money orders scored worse in the other categories. More than 90% of consumers reported that they prefer not to use checks to pay bills—only 6% actually did.

New Options for Businesses

The decline in check usage has had ramifications across a wide range of payment environments. From 2015 to 2024, the share of payments by check made to contractors dropped by half, from 53% to 27%, as more began accepting payments via mobile apps. When many churches introduced electronic collection baskets with automatic weekly contributions, checks written to charities fell from 33% in 2015 to 20% in 2024.

The federal government remains a significant source of check usage, with 23% of benefit recipients still receiving assistance in the form of checks or vouchers as of last year. However, the Trump administration has set September 30 as the target date to eliminate paper checks for government disbursements.

The Personal Touch

The shift is even more pronounced in personal transactions. Not long ago, it was common to write a check to a babysitter or tuck one into a birthday card. A decade ago, 17% of person-to-person payments were made by check. By 2024, that figure had dropped to 6%.

This decline is part of a larger trend toward digital P2P apps. In 2015, 87% of P2P payments were made using cash, checks, or money orders. By last year, that share had fallen to 45%. Today, more than half of all P2P payments are completed using a card, bank transfer, or funds stored in an app.

Although baby boomers are often seen as the last generation loyal to checks, even their usage is waning. In 2015, consumers over 65 made more than 10% of their payments by check. As of 2024, that number has dropped to just 5%.

The post Paper Check Usage Is in Freefall appeared first on PaymentsJournal.

With the federal government’s self-imposed September 30 deadline to eliminate paper checks approaching, several organizations are stepping in to both support the initiative and potentially position themselves for new business opportunities. Nacha—which runs the ACH payment network—and Early Warning, parent company of Zelle, have submitted comments in support of the executive order, as well as a consortium of banking associations.

Executive Order 14247, titled “Modernizing Payments To and From America’s Bank Account,” outlines a full transition to electronic payments for all federal disbursements. It states that the federal government will cease issuing paper checks for benefits, intragovernmental transfers, vendor payments, and tax refunds—and will stop accepting paper checks for payments—as soon as practicable.

Nacha’s Argument

Nacha’s support letter emphasized that transitioning away from checks is a matter of policy, not technical readiness. The organization noted that anyone writing a check to the federal government must have a bank account, and therefore could make an electronic payment instead. Nacha also urged Treasury to minimize hardship exceptions that would require the continued issuance of paper checks.

Last year, the Treasury Department originated more than 1.86 billion ACH payments totaling more than $8.5 trillion. In the same period, the federal government issued approximately 36 million paper checks. Nacha pointed out that if the Treasury Department had used ACH payments in place of those checks, the federal government would have saved more than $68 million.

Nacha also recommended that the Treasury shorten its ACH credit settlement times to align with standard ACH timing in the private sector.

Zelle Offers Its Services

Early Warning Services’ comments emphasized that transitioning away from paper checks would strengthen the government’s capabilities to detect improper payments and prevent fraud. Early Warning’s letter also positions Zelle as a viable replacement service for government payments.

The company notes that Treasury checks are 16 times more likely than digital payments to be reported as lost or stolen, returned undeliverable, or altered. In contrast, more than 99.95% of all Zelle transactions are completed without any reported incidents of scam or fraud. Since 2021, Early Warning has been working with the Treasury, which has used its Verify Account solution to help prevent an estimated 179,000 improper payments across various government agencies.

Finally, The Bank Policy Institute, The Clearing House Association, and the Consumer Bankers Association jointly filed a letter supporting the executive order, describing the effort as “a critical opportunity to modernize America’s payment infrastructure, reduce fraud, and increase financial security for American taxpayers.”

The post Nacha, Early Warning Urge Government Away from Paper Checks appeared first on PaymentsJournal.

After three months of testing, South Korea’s central bank has postponed further development of its central bank digital currency (CBDC), as both the government and local banks increase their support for stablecoins.

The Bank of Korea has suspended the second round of CBDC trials, originally scheduled for later this year. Meanwhile, eight South Korean banks are collaborating on a stablecoin backed by the Korean won, which they hope to launch by next year.

This shift may signal a broader trend among central banks globally, moving away from CBDCs in favor of stablecoins. A senior official at one of the participating banks told South Korea’s Yonhap News Agency that the coexistence of CBDCs and stablecoins remains uncertain.

Unhappiness with the First Tests

There are signs that the CBDC tests soured the banks on its potential. One senior banking official said that seven participating banks became unhappy with the cost of the second phase of the CBDC trials. Half of the banks involved in the stablecoin project also took part in the CBDC trials.

The first stage of the CBDC tests involved 100,000 participants testing payments using the central bank-issued currency, which ran from April 1 through June 30. During this period, up to 100,000 citizens ages 19 or older, and holding an account at a participating bank, could convert their deposits into the CBDC for use at stores like 7-Eleven. The second phase would have expanded the number of merchants involved.

Even when the program was introduced, some worried that CBDCs could grant governments too much insight into their citizens’ transaction histories. They instead advocated for stablecoins as a better solution, combining the stability of fiat currencies with the efficiency of cryptocurrencies.

A New Governmental Direction

Dissatisfaction with the CBDC testing isn’t the only reason for the shift in priorities. The newly inaugurated South Korean President Lee Jae-myung is a strong supporter of crypto. During his campaign, he promised to support a won-based stablecoin market. His Democratic party has already submitted a bill that would allow qualifying companies, including nonbanks, to issue stablecoins.

“We don’t know whether the issuing entity of stablecoins will be banks, big tech, or fintechs,” a Korean bank official told Yonhap. “We have no choice but to prepare for both situations before they become legislative.”

The post South Korea Dials Back CBDC Testing in Favor of Stablecoins appeared first on PaymentsJournal.

Interoperability has long been a goal for payment systems, which are often siloed and operate in parallel. In addition to increasing efficiency and boosting digital payment adoption, data from the International Monetary Fund (IMF) shows that an interoperable ecosystem stimulates commerce, reduces transaction costs, and expands access to credit.

The Growing Retail Digital Payments: The Value of Interoperability study highlights data from India’s Unified Payments Interface (UPI)—an interoperable platform that has become the world’s largest retail fast payment system. Unlike closed-loop systems, UPI enables seamless transactions between users of different payment providers.

Supporting Digital Payments Adoption

Unsurprisingly, interoperability plays a key role in driving digital payment adoption. Enabling different payment apps to work seamlessly with one another expands the reach of digital payments by giving users the freedom to choose their preferred app. The IMF encourages other countries seeking to reduce reliance on cash transactions to prioritize interoperable payment systems.

“Regions where interoperability increased by more indeed saw a significant increase in adoption of digital payments, both in absolute terms and relative to cash,” the study concluded.

But the benefits don’t stop there. Allowing users to access payment methods through multiple apps lowers barriers to entry and paves the way for more innovative offerings in the payments ecosystem. Interoperability also incentivizes existing providers to enhance the quality of their services as a means of retaining users.

Contrast with Traditional Fintechs

Interoperability has long been a challenge for payment systems in many countries, including the U.S., because different rails operate on separate systems. If a U.S. company wants to send a real-time payment, the sending institution might be set up for FedNow, while the receiving one might default to ACH.

The IMF study compared UPI transactions with data covering all transactions from an unnamed major fintech firm. This provider processed payments over a closed network, where both parties had to use the same wallet app. Researchers then analyzed users’ app choices after their first experience with digital payments.

The report noted: “After sampling both, users increasingly chose the interoperable UPI system over the closed-loop alternative. Crucially, transactions that would not be possible without interoperability—those where the sender and recipient use different apps—were a substantial part of this growth.”

The kicker? The fintech soon decided to join UPI.

The post IMF Study Highlights Benefits of Interoperability in Payments Innovation appeared first on PaymentsJournal.

Xero, a New Zealand-based platform for small businesses, is making a major move into the U.S. market with plans to acquire Melio Limited, a bill pay platform that serves small and medium-sized businesses. The acquisition, valued at $2.5 billion, will be a mix of cash and equity.

Melio currently serves 80,000 customers and processes more than $30 billion in payments annually. While it will continue to operate as a standalone company, Xero plans to integrate Melio’s bill pay capabilities with its cloud-based accounting solutions, creating a unified platform tailored to the needs of U.S. small businesses.

According to Xero’s research, 78% of U.S. small businesses place a high priority on having integrated accounting and payment software. One of the key benefits for Xero in this partnership is that Melio provides access to customers who may not yet be using formal accounting solutions. The two companies will work together on a differentiated payments syndication offering, targeting banks and vertical SaaS partners, with the goal of expanding the initiative over time.

Building a Presence in the U.S.

Xero has long employed a “3×3” strategy, focusing on improving its core accounting, payroll, and payments solutions across three key markets: Australia, the UK, and the U.S. However, its presence in the U.S. has been limited until now, with the company generating most of its earnings from sales in Australia and New Zealand.

“This makes a lot of sense for Xero,” said Hugh Thomas, Lead Analyst of Commerical and Enterprise at Javelin Strategy & Research. “At a stroke they replicate some key differentiating capabilities of probably their biggest competitor, Quickbooks.

“The choice to acquire a U.S. payments provider also makes a lot of sense,” he added. “Xero’s current user base is mostly outside of the U.S., so with this move they get both a more competitive offer, and an installed client base of payers and payees, all new potential Xero users, in a huge market where they’re not yet a big player.”

The Future of Mom-and-Pop Shops

In the past, Melio has partnered with major firms such as Fiserv and Capital One to bring its products to U.S. small businesses. Its white-label service provides vertical SaaS platforms to larger merchants such as Shopify.

But Melio has also long focused on bringing mom-and-pop shops into the modern world of payments technology.

In fact, in 2022, Matan Bar, CEO and Co-founder of Melio, noted: “Now more than ever, mom and pop shops must adopt the lessons learned of the pandemic and embrace digital payment solutions. “With the help of digital payment platforms, small businesses can spend more time serving customers and less time invoicing—allowing their business to thrive even in the face of unprecedented challenges.”

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The EuroPA alliance is partnering with the European Payments Initiative (EPI) to explore opportunities for connecting European consumers and merchants across 15 countries. The initiative aims to support all payment types—from peer-to-peer (P2P) payments to enterprise-level transactions.

Under this model, users will be able to use their preferred digital payment solutions both locally and across Europe. Provisions will also be made for countries that don’t yet have established systems of their own.

An Alliance and a Consortium

The EuroPA alliance includes mobile payment players across Europe, such as Bancomat, Bizum, Blik, MB WAY (SIBS), and Vipps MobilePay. Its goal is to create an interoperable mobile platform built on the Single Euro Payments Area (SEPA) real-time payments protocol. Support for SEPA was mandated in the region at the beginning of this year.

EPI, for its part, is a consortium of 16 European financial services companies whose initial focus has been the Wero digital wallet—a product designed to serve as a unified mobile payment solution for retail transactions.

Wero launched last year in Germany before expanding to Belgium and France. One of its initial use cases was to allow users to complete P2P transactions in seconds using a QR code, email address, or phone number.

Functionality for cross-border and merchant payments is in development for Wero, and EPI plans to evolve the wallet into an all-encompassing platform—supporting everything from recurring payments to buy now, pay later.

A Eurocentric Solution

Combining EPI’s digital wallet with the mobile platforms of EuroPA’s members is a logical step, given the organizations’ agenda—to enhance Europe’s sovereignty in payments by building a better cross-border solution.

Concerns have been growing in Europe over the dominance of Visa and Mastercard, especially  as USD-backed stablecoins gain traction in the region.

This reliance on both U.S. companies and the dollar has drawn criticism in Europe, prompting calls for a more Eurocentric solution. Both the European Commission and the Eurosystem have stated that one of the fastest ways to strengthen the payments system is by interconnecting existing payment solutions.

The post EuroPA, EPI Aim to Strengthen European Cross-Border Real-Time Payments appeared first on PaymentsJournal.

As trade wars escalate globally, an African payment system is accelerating its efforts to enable businesses across the continent to conduct cross-border transactions in local currencies.

The Pan-African Payments and Settlements System (PAPSS) allows companies in different African nations to trade without relying on the dollar. Amid ongoing tariff disputes involving the U.S., China, and other countries, PAPSS says many African nations are ramping up their use of alternative global currencies to reduce trade costs and minimize the exposure to dollar volatility.

Lower Costs, Faster Speeds

PAPSS’ internal estimates show that a $200 million intra-African trade transaction would typically incur 10% to 30% in costs through dollar settlements. By using local currencies such as the Nigerian naira, Ghanaian cedi, or South African rand, these fees could be reduced to just 1% per transaction.

As a result, the potential savings for Africa are substantial. PAPSS estimates that Africa could retain up to $5 billion annually in hard currency by adopting regional currency settlements.

Payments are completed in near real time, typically processing within 120 seconds. To meet these settlement times, PAPSS must ensure that funds are available to complete the originator’s transaction before transferring funds between the buyers and sellers’ accounts. Participants are therefore required to agree to a pre-funding arrangement, maintaining balances with PAPSS.

Towards the World’s Largest Free Trade Zone

PAPSS launched commercially in January 2022. The system was developed by Afreximbank as one of the foundational components toward the full realization of the African Continental Free Trade Area, an agreement reached in 2018 among African Union nations.

Expected to be fully operational by 2030, the continent-wide trade zone would be the world’s largest free trade area by land area, encompassing a potential market of 1.2 billion people and a combined gross domestic product of $2.5 trillion. PAPSS is currently operational in 15 African countries, including Kenya, Malawi, Tunisia, and Zambia, with over 150 commercial banks now participating.

Tariff wars have significantly impacted Africa. According to the Carnegie Endowment for International Peace, 20 African countries are currently facing elevated tariffs from the Trump administration, ranging from 11% on imports from Cameroon and the Congo to 50% on goods from Lesotho. Another 29 African countries are subject to the baseline tariff of 10%, including Egypt, Ethiopia, and Kenya.

The post African Trade Turns Inward Amid Growing Tariff Disputes appeared first on PaymentsJournal.

After bringing Shopify on board, Coinbase will roll out its stablecoin acceptance platform to merchants at scale.

The platform, dubbed Coinbase Payments, provides the infrastructure where merchants can receive payments in Circle’s USDC. It runs on Coinbase’s layer-2 network, Base, and supports hundreds of wallets, including MetaMask, Phantom, and Coinbase Wallet.

On the back end, the solution is designed to handle standard merchant operations such as refunds and subscriptions, leveraging Coinbase’s APIs.

Benefits and Rewards

Shopify is already live on Coinbase Payments, a partnership which brings stablecoin payments to a wide array of merchants and creators. While stablecoin acceptance gives customers another way to pay how they prefer, it also offers substantial benefits to merchants.

Stablecoin payments are borderless, secure, nearly instant, and free from the transaction fees typically associated with credit cards. These advantages are part of the reason why the two largest retailers in the world—Amazon and Walmart—have considered launching brand-specific stablecoins.

In addition to reducing transaction costs—which could translates to billions of dollars in savings for major retailers—there is also the potential for merchants to offer incentives for using branded coins. Coinbase hopes to bring this capability to Coinbase Payments by adding support for programmable rewards to the platform soon.

The Deluge of Stablecoins

The deluge of stablecoin-centric launches in recent months shows no sign of slowing—especially now that the U.S. has reached a key milestone. The Senate recently passed the GENIUS Act, a bipartisan bill aimed at establishing a regulatory framework for stablecoins in the U.S.

This marks the first time such legislation has moved forward at the federal level. However, the Act still faces obstacles: The U.S. House of Representatives must pass it, and lawmakers may need to reconcile it with its own STABLE Act.

Despite differences between these two bills, the development represents a significant step forward for the digital assets industry. The lack of regulatory clarity has long drawn criticism,  and more certainty provide a tailwind for the already accelerating stablecoin market.

The post Coinbase Launches Stablecoin Platform for E-Commerce appeared first on PaymentsJournal.

After making strides toward its stablecoin launch, Stripe will acquire crypto wallet provider Privy.

Although Privy is not yet a leading player in the crypto wallet space, it has 75 million accounts and partnerships with brands like trading platform Hyperliquid and NFT marketplace OpenSea.

Privy’s protocols allow clients to build crypto wallets embedded directly into their platforms. The Stripe acquisition—details of which have yet to be disclosed—should vastly expand Privy’s ecosystem.

Though the brand will come under Stripe’s umbrella, Privy will continue to operate as an independent product. In a social media post, Privy said that both companies share the goal of bringing crypto and fiat closer together to transform how value moves digitally.

Crypto Stops and Starts

The deal represents Stripe’s continued investment in the digital assets space following its blockbuster acquisition of stablecoin issuer Bridge. Shortly after the $1.1 billion deal, Stripe announced it was going ahead with trials of its dollar-backed stablecoin overseas.

The long-awaited launch follows a series of crypto-related stops and starts for the fintech. Stripe made an early foray into bitcoin payments years ago, but the demands of processing crypto proved too intensive. Additionally, the company has been working toward launching a stablecoin for over a decade.

Beaten to the Stablecoin Punch

Momentum has been building for Stripe in recent years, after the fintech partnered with Coinbase to allow users to receive payouts and convert fiat into stablecoins like Circle’s USDC and Pax Dollar.

The launch of its own stablecoin will place Stripe in a highly dynamic $250 billion market. Payments competitor PayPal has already taken an early lead with the launch of its PYUSD coin two years ago.

While PYUSD has yet to capture significant market share of companies like Tether and Circle yet, PayPal is betting that its well-established customer base and strong relationships with institutional investors will help its offering gain ground.

Stripe is likely aiming to leverage its customer base in a similar way. It stands apart from other crypto platforms through enterprise-grade, compliant products. The addition of an embedded crypto wallet should further solidify Stripe’s position in the digital assets space.

The post Stripe Continues Digital Assets Push with Privy Acquisition appeared first on PaymentsJournal.

Brazil’s instant payment system Pix is set to launch a new recurring payments feature, designed to compete directly with credit and debit cards.

Pix Automatico will go live on June 16, allowing users to authorize recurring charges with a single consent, according to the Central Bank of Brazil, which developed and operates Pix. This will facilitate automatic payments for subscription-based services such as utilities, gym memberships, and streaming services. Pix Automatico was originally announced to launch last October, though no reason was given for the delay.

Data from EBANX estimates that Pix Automatico could process at least $30 billion in e-commerce transactions within its first two years.

Since its launch in 2020, Pix has become Brazil’s most popular payment method, used by more than 90% of the adult population and more than 15 million businesses. Last year, Pix’s transaction volume was 80% higher than the combined total for credit and debit card transactions. Overall, there were roughly 64 billion Pix transactions last year, a 53% year-over-year increase. 

Weakening the Card Market

Many recurring subscription payments rely on storing credit cards on file, yet nearly 60 million consumers in Brazil do not own a credit card. Pix Automatico not only draws business away from credit card issuers but may also prevent many consumers from ever needing to acquire a card. Compared to traditional recurring payments, Pix Automatico also offers lower processing fees.

Pix plans to further disrupt the credit card market by introducing a buy now, pay later option for its customers, a feature expected to launch in September.

New Architecture

Pix Automatico is set to replace the legacy Boleto system, a bank-slip payment method that predates Pix by about 25 years. The new system aims to streamline the subscription process for small merchants looking to offer recurring payments. Under the previous setup, businesses in Brazil were required to establish bank agreements with banks to provide automatic debit services.

The technical underpinnings behind Pix Automatico will be powered by PagStream, a subscription management platform developed by PagBrasil, a fintech that processes payments in Brazil for multinational e-commerce businesses.

Using PagStream, merchants can create and manage subscription plans, set billing frequencies, and automate customer communications around payment cycles. While recurring charges are scheduled through PagStream, the actual transactions are executed via Pix, based on buyer authorization.

The post Pix to Offer Recurring Payments to Further Compete with Credit Cards appeared first on PaymentsJournal.

Just nine years into its existence, India’s Unified Payments Interface (UPI) has surpassed Visa as the world’s largest real-time payment system in both the number of transactions and total transaction volume.

On June 1, UPI processed 644 million transactions. In comparison, Visa’s average daily transaction volume in 2024 was 639 million.

UPI has also far outpaced its rivals in the total value of those transactions. In May 2025, UPI transaction value was 12 times greater than the combined total of all card transactions. Overall, India now accounts for nearly half of all global digital payments, per News18.

This trend isn’t likely to reverse anytime soon. UPI continues to grow at an annual rate of roughly 40%, while Visa reports just 10% annual growth in transactions. The Indian government has set a target to increase UPI’s daily transaction volume to one billion.

Aggressive Growth

How did UPI get here in less than a decade? Most of the answer lies in the aggressive decisions made by the Royal Bank of India, the country’s central bank. In 2011, RBI found that in India, individuals conducted only six non-cash transactions per year on average. As a result, the National Payment Corporation of India was tasked with simplifying digital transactions and creating a unified interface that could be used across all payment systems.

Its solution was UPI, launched in April 2016. By 2018, Visa and Mastercard were already responding to the rapid growth of the new system. Today, 83% of all digital transactions in India take place via UPI, up from just 34% in 2019.

UPI has benefited from developing within a relatively mature technological landscape. In addition to integration with India’s major banks, UPI is also embedded in third-party applications such as Google Pay. The service has easily adapted to modern features like recurring payments and QR code-based transactions. 

Still Innovating

All along, the government has kept UPI transactions largely free or subject to minimal charges, in contrast to the fees typically associated with traditional credit and debit card payments. In May, the Indian government said it was considering offering direct discounts to consumers who use UPI. Under the proposed plan, UPI users would automatically receive a 2% discount compared to the credit card price.

RBI has also announced plans to lift the transaction limits on UPI, which would open up the system to more business-to-business payments. Previously, UPI transactions were capped at approximately $1,162 for merchant transactions, forcing many users to either split larger purchases into multiple transactions or opt for alternative payment methods.

The post How India’s UPI Rose to Dominate Real-Time Payments appeared first on PaymentsJournal.

Circle recently launched a network designed to harness the potential of stablecoins in cross-border payments, and the network has now added another integration.

The Circle Payment Network (CPN) was first announced in April, with the company’s ambitious goal of creating a global rail to rival those operated by Visa and Mastercard. As the issuer of the world’s second-leading stablecoin, USDC, it was clear that stablecoins would play a key role in CPN.

The network aims to bring digital assets transfers—previously the domain of crypto exchanges—directly to financial institutions. To this end, Circle is integrating with RedotPay to allow users in Brazil to send payment using leading stablecoins, such as USDT and USDC, with funds automatically converted to Brazilian Real in the recipient’s account.

Circle had previously unveiled a similar solution with Tazapay in Hong Kong. CPN also has integrations with Conduit and Alfred Pay, with the latter planning to use the network to enable stablecoin-to-fiat transfers through Brazil’s PIX instant payment system and Mexico’s similar SPEI system.

Changing the Game

These solutions could be a gamechanger in cross-border payments, which have frequently faced issues like payment delays, regulatory barriers, and high fees. Many consider cryptocurrencies uniquely suited to solve to address these challenges because they are decentralized, and their blockchain underpinning enables transactions that are efficient, transparent, and cost-effective.

This is a use case where digital assets are beginning to gain traction—the Bank for International Settlements (BIS) recently reported that bitcoin, Ether, and the leading stablecoins facilitated roughly $600 billion in cross-border payments in Q2 2024.

BIS also noted that Circle’s USDC and Tether’s USDT stablecoins—along with low-value bitcoin payments—are seeing increasing adoption in everyday cross-border transactions.

Gaining Global Traction

The proliferation of stablecoins is accelerating, and this is not driven solely by crypto players. PayPal’s stablecoin has been on the market for over a year, and Stripe has its own option in the works.

More financial institutions—both in the U.S. and abroad—are also considering their own options to keep up with the demand for digital assets. If Circle Payment Network continues to gain traction, it could become an additional driver in the global stablecoin push.

The post Circle’s Cross-Border Payments Network Gains Traction appeared first on PaymentsJournal.

Amid a flurry of initiatives, PayPal has received an in-principle nod to become a cross-border payments aggregator in one of the world’s largest markets.

In recent years, the Reserve Bank of India (RBI) has brought cross-border payments under a tighter regulatory framework, requiring all companies to obtain a payment aggregator cross-border (PA-CB) license.

Due to the stringent guidelines, only a handful of organizations were permitted to operate as cross-border payments providers a year after the proposal was introduced: Adyen, Amazon Pay, BillDesk, and Cashfree Payments. Earlier this year, India’s Skydo was added to that list.

According to the Times of India, PayPal will now enter a market that processed $73.8 billion in outbound shipments in April alone, spanning roughly 200 international markets.

A Surging Market

Although India is a hotbed for cross-border payments, the market has surged worldwide. As a result, numerous solutions have cropped up to process these transactions.

A recent report from Visa found that 77% of consumers still rely on multiple payment methods for international transactions. The study also revealed that the average consumer uses four different payment methods for cross-border payments, and most respondents are actively seeking a single provider to meet their needs.

Significant Launches and Promotions

This has been a tall order, as cross-border transactions continue to face challenges like regulatory barriers, high transaction fees, slow processing times, and a lack of transparency. Although PayPal is not yet a unified cross-border payments solution, the company has introduced a series of initiatives that may enhance its global reach.

For example, PayPal recently inked a deal with Coinbase to remove fees for purchases of its PYUSD stablecoin, aiming to encourage broader adoption. The company also announced that customers will be able to earn 3.7% interest when holding the stablecoin in their PayPal or Venmo accounts.

Additionally, PayPal launched its first mobile wallet, positioned to compete with Apple Pay and Google Pay for in-store payments. The company also entered the agentic commerce space through a new deal that integrates PayPal payments into Perplexity’s AI chat.

Should all these efforts gain traction, PayPal could strengthen its standing in an increasingly dynamic market.

The post PayPal Gets Approval to Facilitate Cross-Border Payments in India appeared first on PaymentsJournal.

Despite concerns about bad actors using artificial intelligence to perpetrate fraud, there are encouraging signs that AI is helping organizations combat it.

In an FIS survey of business and tech leaders, 78% of respondents said that AI has improved their company’s fraud detection and risk management strategies. Nearly half reported that, as a result, their company plans to increase investment in AI over the next two years.

Perhaps more importantly, more companies are entrusting AI with complex tasks. Roughly 56% of respondents said their organizations are either scaling or fully implementing AI to support financial processes.

According to Firdaus Bhathena, Chief Technology Officer at FIS, this is a sign that organizations are “moving from acknowledging AI’s value to embedding it into the fabric of daily business operations.”

The Agentic Boom

The largest financial services companies have made significant strides in incorporating AI, as evidenced by the recent boom in agentic commerce.

Mastercard and Visa have launched new platforms that turn AI agents into autonomous shopping bots that can search for items and make payments with little customer interaction.

Additionally, PayPal has embedded payments directly into Perplexity’s chat, so that after conversing with an AI agent about a product or service, the user can purchase it directly on the platform.

Removing the Barriers

Amid all these innovations, fraud remains a constant concern. It is a given that bad actors will attempt to manipulate AI agents—especially now, as cybercriminals in many cases possess a greater understanding of the technology.

Criminals have already deployed artificial intelligence, including AI agents, across multiple use cases and on a wider scale, unimpeded by the regulations and obligations that have stifled businesses.

FIS report spotlighted several barriers to broader AI adoption. The top concern among business leaders was the high cost of implementing and maintaining AI-powered systems. The next most frequently cited challenges were a lack of in-house expertise and potential difficulties integrating the technology with existing systems.

Until organizations can move past these obstacles, bad actors will still be one step ahead.

The post AI Is Making an Impact in the Fight Against Fraud appeared first on PaymentsJournal.

The Credit Card Competition Act may face a vote on the floor of Congress next week, after Sen. Roger Marshall (R-Kan.) filed an amendment attaching it to the stablecoin bill currently advancing through the Senate.

The GENIUS Act would create the first regulatory framework for stablecoin issuers. The bill is still undergoing amendments ahead of the expected vote.

The credit card amendment is likely to be one of many considered before a final decision. Republican leaders, including Senate Majority Leader John Thune (R-S.D.), told Semafor it was not yet clear whether Marshall’s amendment would be one of the measures brought forward.

Opening Up the Competition

The Credit Card Competition Act, which has been kicking around the halls of Congress since 2022, “would require banks with at least $100 billion in assets to enable credit cards to be processed over at least one unaffiliated network like Star, NYCE or Shazam in addition to Visa or Mastercard,” reports Convenience Store News. Its stated aim is to open up the current situation, where Visa and Mastercard control 80% of all payments, ultimately reducing costs for consumers.

If enacted, the legislation is expected to foster competition that could save merchants and their customers more than $16 billion a year in swipe fees, per Convenience Store News. However, critics argue that it may also have the unintended consequence of reducing or eliminating credit card reward points.

The act has gained support from retail organizations like the Merchant Payments Coalition and the National Retail Federation, but faces significant opposition from financial institutions and the credit card industry.

Strange Bedfellows

Marshall and Dick Durbin (D-Ill.) have been the Senate’s longtime bipartisan supporters of the credit card bill. Durbin, who is on record as opposing the stablecoin bill, said that appending his pet cause to the larger legislation “puts me on the spot.”

Adding the swipe fee bill would draw in Democratic senators like Durbin, who are unsure about the stablecoin legislation but support the credit card law. However, it also risks losing support from Republicans.

“It’s awful policy,” said Sen. Thom Tillis (R-N.C.) told Semafor. “I’d go from being a co-sponsor to trying to figure out how to tank the [stablecoin] bill. 

The post Credit Card Legislation May Be Amended to Stablecoin Bill appeared first on PaymentsJournal.

For over 140 years, Marks & Spencer (M&S) has been a fixture of Britain’s retail landscape, but the department store has faced sharp losses and operational issues following a devastating cyberattack.

Shortly after the April ransomware incident, M&S halted online and in-app order—services the retailer has yet to restore. According to Reuters, Marks & Spencer hasn’t resumed its online operations out of an abundance of caution.

A group of hackers gained access to the store’s systems and threatened to shut down the company’s network if a ransom wasn’t paid. M&S refused to succumb to the threat actors’ demands and is now working to restore all its systems.

The attack is estimated to have cost Marks & Spencer $80 million, but the impacts could go beyond monetary losses. While M&S said it was surprised by customers’ willingness to shop in-store, store-sourced voices raised concerns that customers could eventually lose patience with the lack of digital options—potentially leading to reputational ramifications if the outage persists.

Aggressive, Creative, and Effective

The M&S attack was the handiwork of a loosely affiliated network of hackers known as Scattered Spider, which has carried out attacks around the globe. A smaller group within the network, called DragonForce, is behind the M&S hack as well as similar efforts against UK retailers Harrods and the Co-op.

Though British merchants have been the initial targets, Google recently warned that Scattered Spider could be just as likely to target their U.S. counterparts.

“US retailers should take note,” John Hultquist, Cybersecurity Analyst at Google, told The Independent. “These actors are aggressive, creative, and particularly effective at circumventing mature security programs.”

The Magnitude of These Attacks

Bad actors targeting large organizations is not a novel phenomenon, but the scale of damage is broadening. For example, crypto exchange Coinbase was recently hacked in an incident that could cost the company up to $400 million, after cybercriminals bribed Coinbase contractors to divulge protected customer data.

Similarly, the M&S breach derived from a contractor relationship. At least two logins used in the hack were linked to Tata Consulting Services, a company that provides IT and help desk services for the retailer.

The magnitude of these attacks will likely prompt many organizations to reevaluate their partnerships and reassess their security measures. However, as criminals become increasingly innovative, businesses will also need to find creative ways to defend themselves.

The post One Month Later, Marks & Spencer Is Still Reeling from a Cyberattack appeared first on PaymentsJournal.

In its latest move to promote wider adoption of the Unified Payments Interface (UPI) instant payment system, the Indian government is considering offering direct discounts to consumers who use it.

Under the proposed plan, UPI users would receive an automatic 2% discount compared to the credit card price, effectively rewarding those who choose instant digital payments.

UPI already offers consumers an edge over credit card payments. Currently, when a credit card is used, merchants pay a Merchant Discount Rate (MDR) of two to three rupees for every 100 rupees spent. As with swipe fees in the U.S., this cost is sometimes absorbed by merchants but can also be passed on to customers. The government is reportedly exploring ways to more directly pass these cost savings to consumers who opt for UPI payments.

Before finalizing the decision, the consumer affairs ministry plans to consult e-commerce platforms, payment service providers, the National Payments Corporation of India  (NPCI), Department of Financial Services (DFS), and various consumer rights groups. The final plan is expected to be ready following a stakeholder meeting next month.

A Reversal of Earlier Costs

Prior to 2022, merchants in India were required to pay a MDR of less than 1% of the transaction amount to the processing bank, even for UPI payments. To encourage digital payments, the government eliminated these charges. This move helped boost UPI adoption, making it the most widely used payment method in the country, but it also removed a key revenue stream for banks and payment service providers.

That’s not the only way in which the government is working to reduce costs for consumers. According to India Today, major retail merchants process more than 50% of their transactions through credit cards. Earlier this year, the Indian government announced plans to introduce a tiered pricing system for such payments, where larger businesses would pay higher charges than smaller ones.

Faster as Well as Cheaper

India’s government is also taking steps to accelerate UPI transactions. Starting June 16, the NPCI has mandated that transaction times for UPI be reduced from the current 30 seconds to just 15 seconds.

Even before these changes, UPI has remained the dominant method for digital payments in India. In FY25, UPI was used in 185.85 billion transactions—an increase of about 42% over the previous year. The total value of UPI payments reached 260 trillion rupees during that period.

The post India Considers a Discount for Instant Payment Users appeared first on PaymentsJournal.

Even though the European Commission (EC) fined Apple €500 million last month over its anti-competitive App Store practices, the tech giant is still sending “scare notices” to users who opt for third-party payment methods.

One of the EC’s concerns was that Apple was actively dissuading users from using alternative payment channels. In one specific complaint, developers who implemented payment methods outside of Apple’s in-app purchase system were required to display warning messages—commonly referred to as scare screens—that discouraged users from continuing. Apple was given 60 days to “remove the technical and commercial restrictions on steering” or face additional fines.

Nevertheless, Apple still appears to be warning users not to use iOS apps that support alternative payment options by making them look scary. A blogger found that the App Store listing for Instacar, a Hungarian used-car app, had a big red exclamation mark alongside a message cautioning users that it doesn’t use Apple’s “private and secure payment system.”

An Old Message

The issue gained attention this week after someone posted the Instacar screenshot on X. However, the warning message has actually been in place since Apple started complying with the EU’s Digital Markets Act in March 2024.

Apple did propose changing the warning banner—replacing the red exclamation mark with a less alarming information icon and slightly altering the message—but the EU has yet to approve the updated design. In a response sent to TechCrunch, Apple confirmed that it still intends to implement the change. 

Part of the delay may stem from Apple’s ongoing appeal of the EU’s decision and fine. While some suspect the warnings are a form of retaliation by Apple, it may simply be that the company hopes a victorious appeal will allow it to avoid redesigning the warning screens altogether.

The Battle With Epic

Apple has been facing heightened scrutiny over these screens in the U.S. as well. A similar ruling by an American court bans Apple from restricting how developers can link to alternative purchase systems, specifying that the company can’t interfere with consumers choosing to leave an app with anything beyond a neutral message about being directed to a third-party site.

That ruling resulted from a dispute between Apple and Epic Games, maker of the popular game Fortnite. Fortnite says it has submitted two requests to have the game reinstated in the App Store, but Apple has yet to accept them.

The post Apple’s Warnings About Third-Party Payments Aren’t New, but Must Change appeared first on PaymentsJournal.

The Consumer Financial Protection Bureau (CFPB) is withdrawing a proposal, originally passed during the lame-duck period of the Biden administration, that aimed to curb the sale of personal information by data brokers. 

At the time, then-CFPB Director Rohit Chopra said the rule was necessary to address national security, surveillance issues, and the risk of criminal exploitation associated with data broker practices. But this week, in a Federal Register notice, acting CFPB Director Russell Vought said the agency had determined the rule was not necessary at this time. Vought stated that the rule didn’t align with the agency’s current interpretation of the Fair Credit Reporting Act (FCRA) of 1970, which is currently under review.

The rule sought to classify data brokers as consumer reporting agencies under the FCRA. Under this designation, any organization selling data on income, financial status, credit history, credit scores, or debt payments would be required to comply with the FCRA. Brokers could only sell such information if the buyer can demonstrate a permissible purpose, and marketing does not constitute as a legitimate business need.

Concerns Over Criminal Acts

In addition to legitimate data brokers, would-be identity thieves and criminals also had access to the same detailed financial profiles available to credit bureaus and other legitimate entities. The rule would have protected consumers from having such data sold to malicious actors.

As of December, when the CFPB introduced the rule, the United States was the only Western democracy not to have enacted similar nationwide data protections. The global data broker industry is expected to top $460 billion by 2031.

The data broker proposal is the latest rulemaking at the agency to be rolled back in recent days. Vought has withdrawn nearly 70 policy statements, interpretive rules, and guidance that the CFPB had issued since its creation in 2011.   

The Legislative Alternative

If the rule is reinstated, it will likely come in the form of a law. Last year, Republican and Democratic representatives from Washington State jointly introduced The American Privacy Rights Act (APRA), designed to regulate the buying and selling of personal data collected from consumers, both with and without their consent.

After reports that House GOP leaders planned to scuttle the bill, the measure was tabled last June before it ever came to a vote.

The post CFPB Rescinds Rule Limiting Sale of Personal Data appeared first on PaymentsJournal.

Following a model established by China’s payments apps, South Korea plans to launch a QR code-centric payments service in Indonesia.

The Korea Financial Telecommunications & Clearings Institute (KFTC), a division of the Bank of Korea, is leading the initiative, with the broader goal of establishing a network that connects Korean financial services companies with overseas organizations.

However, Indonesia already has its own QR payments system—Quick Response Code Indonesian Standard (QRIS)—which was launched in 2019 and has since become firmly entrenched. The system processed 2.6 billion transactions in Q1 2025.

The platform has been so successful that Bank Indonesia recently announced its expansion, as QRIS is now compatible with existing payment systems in Singapore, Malaysia, and Thailand. The country has also planned future collaborations with Japan, India, China, Saudi Arabia, and South Korea.

Moving Beyond Borders

For its part, the KFTC already envisions its system moving beyond Indonesia. The institute plans to expand its network into Vietnam and is considering extending the system beyond Asia through a potential partnership with the National Bank of Georgia.

Both South Korea’s and Indonesia’s payment systems are following the model established by Chinese payment apps Alipay and WeChat. After achieving dominance in China, they began expanding globally. For example, Alipay has initiated partnerships with brands in Europe, Latin America, and the Middle East.

Following in the Footsteps

QR code-based systems have gained substantial traction in countries like China, where mobile phones are ubiquitous and card payments never fully took hold. This helps explain why real-time payments systems—QR-based or otherwise—have struggled to gain widespread adoption in the U.S., aside from a few specific use cases.

However, these systems do offer significant benefits for merchants. According to Tech Asia, QR code devices cost significantly less than traditional point-of-sale terminals that utilize NFC technology.

The lower costs reduce barriers to accepting digital payments, especially for small businesses. They also help address one of merchants’ chief complaints about the card-centric model: interchange fees.

The post South Korea to Launch QR Code-Based Payments System in Indonesia appeared first on PaymentsJournal.

Five northern European nations are planning to develop an offline card payment system as a backup in case internet or electrical connections are disrupted. The initiative follows several incidents in recent years where critical undersea cables and other infrastructure were damaged.

Over the next year, Finland, Sweden, Norway, Denmark, and Estonia will begin rolling out a payment system that operates without internet access. According to officials, it will likely involve offline terminals that encrypt and store transaction data until connectivity is restored.

According to Reuters, Sweden’s central bank hopes to establish a system by July 1, 2026, that would allow consumers to make offline card payments for essential goods. The system would be capable of operating during disruptions lasting up to seven days. Central banks in Norway and Denmark are also developing offline electronic payment systems.

Bank of Finland board member Tuomas Valimaki said payments were a potential target because of their critical role in daily life. The Nordic nations have moved almost entirely to electronic transactions. Only 10% of people in Finland use cash as their primary payment method.

The contactless debit card is the most commonly used payment method in the country. A 2023 survey found that Finland was also the only country where fewer than half of respondents reported ever using cash.

Reliance on Undersea Cables

Undersea cables are a key part of the infrastructure around the Baltic Sea, providing a major source of electricity to Estonia and other Baltic states. More than 95% of global internet traffic is carried via undersea cables.

However, they are also vulnerable to damage and difficult to repair. The Baltic Sea power cable running between Finland and Estonia was severed last Christmas, reducing electricity flow to Estonia by almost two-thirds.

Concerns Over the War

The initiative is partly a response to the ongoing war between Russia and Ukraine, which may have been responsible for the damaged cable in December.

“The likelihood of major disruptions has increased because the geopolitical situation has changed worldwide,” Valimaki told Reuters. “There is a war in Europe, and around that war, there is all sorts of hybrid influence and harassment, which may involve disrupting or cutting connections.”

The post Nordic States Announce Offline Payments Plan After Damage to Cables appeared first on PaymentsJournal.

A week after Apple was hit with a massive fine and ordered by the European Union to revamp its App Store policies, a U.S court has delivered a similar blow. A judge found that the company violated a prior court order aimed at loosening its grip on the App Store—part of a longstanding legal battle with Fortnite maker Epic Games.

In 2021, U.S. District Judge Yvonne Gonzalez Rogers ordered Apple to allow developers to direct users to alternative payment options for products purchased within its App Store. In response, Apple implemented hurdles for developers, including a 27% fee on external purchases and warnings to users about third-party payment links.

This week, Rogers concluded that “Apple knew exactly what it was doing and at every turn chose the most anticompetitive option” and stated that Apple’s vice president of finance lied under oath. As a result, Apple’s refusal to fully comply with the 2021 injunction may now trigger a criminal contempt investigation.

In the meantime, Apple is barred from imposing commissions or fees on purchases made outside its App Store. It must also replace its prior warnings with neutral messaging informing users that they are being redirected to a third-party site.

An Epic Battle

Epic Games has been in conflict with Apple for a long time. In 2020, the company implemented a store for purchasing Fortnite in-game currency within the mobile versions of the game, then sued for antitrust violations when Apple responded by removing Fortnite from the App Store. In 2021, Judge Gonzalez Rogers ruled that Apple had violated California state law prohibiting anti-competitive behavior by preventing developers from linking to external purchasing options within their apps.

According to Epic Games CEO Tim Sweeney, the ruling will now limit Apple’s control over how merchants operate in its App Store. “This is what we wanted all along,” he said. Sweeney said that Fortnite could return to the App Store as early as next week.

The EU Ruled Simliarly

In addition to a €500 million fine from the EU, Apple will now be required to allow sellers using its App Store to reference or link to alternative storefronts or other payment offers.

Previously, Apple customers in the EU could only complete purchases through the App Store, where the company takes a 30% cut.

The post Apple Forced to Strike Down Barriers to Its App Store in the U.S. appeared first on PaymentsJournal.

Truist is launching a bill pay solution for RTP, introducing an alias-based Request-for-Payment (RfP) platform within RTP, the instant payments platform operated by The Clearing House.

The solution will leverage 150 million available mobile and email tokens to keep user data confidential.

Although the service will be available to both consumers and businesses, Truist highlighted the benefits for large corporate billers. These include immediate acknowledgment of payment receipt—speeding up the reconciliation process—and faster access to funds, which should improve liquidity.

The financial institution also noted that the system would strengthen data management and security, while potentially reducing costs.

Expanding to B2B

There has been much speculation about when real-time payments networks will play a larger role in the U.S. payments landscape, and there have been significant recent strides in this direction. For example, the RTP network saw the total value of its processed instant payments nearly double in 2024.

While most payments on RTP were initiated by businesses, nearly all of them last year were business-to-consumer transactions. In an effort to expand its use to business-to-business payments, the Clearing House raised the network’s payment cap from $1 million to $10 million.

A Step in the Right Direction

Some of the proposed business use cases for RTP have been real-estate and supply chain transactions. However, both RTP and FedNow haven’t gained traction with retailers because they currently only allow users to send money—there is no request functionality.

Although it’s typically the customer who taps their debit card in a retail store, it is actually the merchant who initiates the payment request for these transactions. Currently, this functionality is not supported on RTP or FedNow. Additionally, the networks aren’t yet able to provide merchants with an approval code when a payment is declined.

While these issues will likely keep instant payments on the backburner for U.S. retailers, RTP’s expanded bill pay capability is a step in the right direction.

The post In the Next Step for RTP, Truist Pilots Bill Pay Solution appeared first on PaymentsJournal.

U.S. shoppers will soon be able to pay for their eBay purchases in installments, as the marketplace expands its partnership with Klarna.

Klarna’s buy now, pay later (BNPL) services have already been available to eBay shoppers in European countries like the UK, Austria, France, Italy, and Spain. Now, millions of U.S. consumers will be able to leverage BNPL loans to shop among more than two billion listings on the marketplace.

The deal extends beyond installment loans. Klarna has also recently introduced its resell feature to U.S. eBay shoppers. This allows users to list previous Klarna purchases, complete with pre-populated pictures and descriptions, on the marketplace to streamline the selling process. Since its launch in December, this functionality has already created over 500,000 new listings.

A Partnership Trend

The partnership continues a trend of major deals for both Klarna and eBay.

For example, eBay added Venmo as a payment option last summer to attract the peer-to-peer platform’s younger user base. Since approximately 60% of eBay’s volume comes from mobile devices, the marketplace expects that adding Venmo will lead to higher sales and reduce cart abandonment.

To streamline its global payment capabilities, eBay recently announced a partnership with UK-based digital payments processor Checkout.com. In addition to its payments platform, eBay plans to leverage Checkout’s fraud prevention tools and AI-driven transaction optimization capabilities.

Impactful Strides

As significant as these deals have been for eBay, Klarna has made more impactful strides—many of which have served to expand the Swedish-based company’s U.S. footprint.

The company recently signed a deal to bring its BNPL products to Clover’s point-of-sale systems. Clover is one of the leading POS providers in the U.S., especially among small- to medium-sized enterprises.

Klarna has also teamed up with the world’s largest retailer: Walmart. Under this agreement Klarna will become the exclusive BNPL provider for Walmart’s OnePay platform, a role previously held by BNPL competitor Affirm.

The post After European Success, eBay Will Bring Klarna BNPL to U.S. Shoppers appeared first on PaymentsJournal.

More digital assets companies are expanding into traditional financial services territory, as evidenced by two recent moves by Circle.

The firm, best known for its USDC stablecoin, revealed plans to explore applying for a bank charter. Gaining a bank charter would allow the crypto company to offer traditional lending products and take deposits.

Circle also recently shared that its most imminent product launch would be the introduction of a cross-border payments network. A source told Cointelegraph that the new network is “initially targeting remittances but is ultimately aiming to rival Mastercard and Visa.”

Unifying a Fractured Landcape

Cross-border payments have been a pain point for years, facing issues like payment delays and high fees due to the lack of a standardized transaction format. Several solutions have been proposed to unify the fractured landscape, including everything from the SWIFT network to Visa and Mastercard’s worldwide rails.

Interestingly, stablecoins like USDC have been considered one of the leading contenders for cross-border payments because their blockchain foundation makes transactions instant and inexpensive.

However, there has been some recent pushback against stablecoins, as all the leading options are based on the U.S. dollar, which detractors argue only serves to further increase the dollar’s dominance.

Circle has yet to share details on its cross-border solution, so it’s unclear if the network is intended to serve as an alternative to its stablecoin and how it will be positioned in an already crowded landscape.

Taking on Financial Services

Despite concerns about the prevalence of stablecoins, their dominance appears to be holding strong. The success of Circle’s stablecoin, now the second-leading option in a trillion-dollar market, has been the catalyst behind both the company’s moves into financial services.

The promise of digital asset technologies like stablecoins, tokenization, and blockchain is a major reason why so many leading financial institutions are heavily investing in what was once considered crypto-related tech.

However, even as mainstream institutions adopt digital assets, crypto companies have begun to take on aspects of conventional financial services. According to the Wall Street Journal, Circle is not alone in its ambitions to expand beyond crypto. Coinbase, BitGo, and Paxos are also considering applying for a banking license.  

The post Circle Mulls Bank Charter, Unveils Cross-Border Payments Network appeared first on PaymentsJournal.

Whether by design or sheer repetition, many consumers have memorized their debit or credit card numbers. That may be a handy piece of knowledge, but those who know their card numbers also tend to spend more—and rack up more debt.

A survey from Western & Southern Financial Group found that nearly a third of Americans surveyed have memorized at least one debit or credit card number. What’s more, 20% of respondents who know their card numbers spend more than $500 per month online, compared to just 13% of those who haven’t. They also carry, on average, 10% more debt than non-memorizers.

Generational Differences

The survey found a significant generation gap, with almost half of respondents who memorize their card numbers falling into the millennial group. Overall, more than a third of millennials have memorized at least one card number.

The reasons people gave for memorizing their numbers also varied across generations. More than two-thirds of Gen Z respondents said they did so to make online shopping easier, while, 20% of baby boomers memorized their card numbers specifically to avoid using digital wallets.

Gen Z was also the most likely to feel that knowing their card numbers led to more impulse buying and overspending. In contrast, a third of the baby boomers were the most likely to report that memorizing their card numbers had improved their financial discipline.

There is some evidence that memorization goes hand in hand with responsible behavior. A total of 70% of memorizers checked their credit card or bank statements at least weekly, compared to 61% of non-memorizers.

However, impulse buying was also slightly more common among memorizers. Roughly 26% made unplanned purchases, compared to 23% of non-memorizers. Memorizers were also somewhat more likely to shop when stressed.

Security Throws Up Roadblocks

The most common reason respondents gave for memorizing their card numbers was simply frequent use. However, this may become less common, as new security measures are making it harder for users to keep these numbers in their head.

The Apple Card’s Advanced Fraud Protection feature, for instance, automatically rotates the three-digit security code after the number is viewed in their Apple Wallet or auto-filled in Safari, making it impossible to memorize. Unlike other credit cards, Apple Card’s security code is stored in the Wallet app, not on the physical card.

The post Memorized Card Numbers Linked to Increased Spending, Debt appeared first on PaymentsJournal.

As digital assets gain wider adoption, a proposed law in New York would allow state agencies to accept cryptocurrency for government-related payments.

Assembly Bill A7788 would amend state financial laws to allow agencies to accept Bitcoin, Ether, Litecoin, and Bitcoin Cash. This would enable residents to use these digital assets to pay for fines, taxes, penalties, and other obligations.

The proposal also includes a clause allowing the state to charge a service fee to offset transaction costs or fees owed to crypto issuers.

Following the Lead

This move follows the example set by several states and cities that have started accepting digital asset payments. Colorado and Utah have been accepting cryptocurrencies for tax payments for years, and Louisiana recently announced it will be the first state to accept crypto payments for all state services.

Additionally, Detroit will accept crypto for tax and fee payments, making it the largest U.S. city to accept digital asset payments. While Detroit plans to accept many of the leading cryptocurrencies, it will also accept PayPal’s PYUSD stablecoin, as PayPal is facilitating all of the city’s crypto transactions.

The Model for Digital Assets Acceptance

The model for digital asset payments in Louisiana and Detroit could serve as a guideline for crypto payments around the country. In both cases, the public entity doesn’t directly hold any digital assets; all transactions are facilitated by a third-party provider.

This system addresses the volatility that has been one a key reason crypto hasn’t achieved broader acceptance. For instance, once a payment is made in Detroit, PayPal immediately converts the crypto to USD before it reaches the city’s accounts.

These types of integrations are likely to accelerate crypto’s momentum, even after a banner year last year. The increasing incorporation of digital assets technologies into the operations of key financial services providers and essential public organizations means crypto is more stable than ever, and further adoption is likely coming down the pike.

The post New York Residents Could Pay Bills with Crypto, Should Legislation Pass appeared first on PaymentsJournal.

Many Americans are waking up to substantial declines in their credit scores as delinquent student loans begin impacting them for the first time since the pandemic-era repayment pause ended.

The New York Fed estimates that more than 9 million student loan borrowers will experience significant credit score drops in the first half of 2025. The report also finds that over 15% of all student loan holders are now likely behind on their payments. This news comes amid rising delinquency rates in other borrowing sectors, such as auto loans.

A Slow-Rolling Process

As the country emerges from the pause on federal student loans, repayment requirements have been slowly rolling out, catching many borrowers unaware. 

After three and a half years, the payment pause officially ended in September 2023, marking the beginning of a one-year on-ramp phase during which loan servicers were not allowed to report late or missed payments to credit agencies.

Although this grace period has passed, overdue loans are not yet considered delinquent. Servicers cannot report a loan as delinquent until it is 90 days past due, meaning that late payments are just now beginning to show up on credit scores.

In a sense, the rising credit scores represent a return to the landscape that existed prior to the pause. When repayments were paused, all delinquent loans were marked as current, leading to a jump of 74 points in the median credit score between Q4 2019 and Q4 2020. By the end of 2024, borrowers with loans in delinquency had scores that were on average 103 points higher than at the end of 2019.

Repayment Options Are Returning

The good news for those seeing their credit scores decline is that the Trump administration has reinstated several Biden-era programs to help individuals get creative about repaying student debt. A court injunction issued last month had directed the Department of Education to cease initiatives like the Saving on a Valuable Education (SAVE) Plan.

However, recently, the U.S. Department of Education’s Office of Federal Student Aid reopened the online income-driven repayment plan, which caps borrowers’ monthly payments at a percentage of their earnings.

The post The Return of Student Loan Payments Is Playing Havoc with Credit Scores appeared first on PaymentsJournal.

Fintech Robinhood is introducing wealth management, private banking, and artificial intelligence (AI) solutions designed to bring luxury features to retail investment portfolios.

The company’s Gold members, who pay either $5 per month or $50 per year for their subscription, will gain access to the Robinhood Strategies platform. The service gives members with investments as little as $50 access to professionally managed portfolios of exchange-traded funds (ETFs) curated by Robinhood’s investment experts.

Gold members with at least $500 in assets can access individual stocks within the managed portfolios. The wealth management service comes with a 0.25% annual fee, capped at $250.

Luxury Touches for Younger Users

The company will also launch a private banking product for Gold subscribers later this year, featuring a high-yield savings account along with services like estate planning and tax advice.

Additionally, Robinhood members will enjoy perks like luxury travel services and access to exclusive events like the Met Gala and the Oscars. These experiences are highly sought after by Gen Z investors, many of whom are beginning their investment journey earlier than previous generations.

Younger investors are also highly tech-savvy and more inclined to use self-directed tools such as robo-advisors, which leverage AI to offer analysis in an industry traditionally driven by personalized service.

While robo-advisors may never fully replace wealth managers, AI has a growing role in wealth management. For this reason, Robinhood is launching its Cortex service later this year, designed to deliver AI-powered real-time market analysis.

Not Just for the Ultra Wealthy

One of the main trends continuing to transform the wealth management industry is the integration of new technologies, driving a hybrid approach that combines both AI and financial advisors.

However, another emerging trend that Robinhood hopes to capitalize on is the growing accessibility of wealth management services—not just for high-net-worth individuals anymore.

As Deepak Rao, General Manager and Vice President of Robinhood Money told Reuters: “We’re not going after someone who has $10 million. We’re after everybody else,”

The post Robinhood Aims to Bring Wealth Management Solutions to Everyday Investors appeared first on PaymentsJournal.

The stablecoin market is more competitive than ever, yet it remains dominated by USD-backed assets like Tether’s USDT and Circle’s USDC. In this dynamic environment, Latin American crypto exchange Bitso is launching a Mexican peso-backed stablecoin, which could serve as a cross-border payments solution in the region.

The exchange has established a subsidiary, Juno, to issue its digital assets. Juno’s first launch will be the MXNB stablecoin. Juno will operate independently from Bitso to manage MXNB and will conduct its own reserve audits and reporting.

Ben Reid, Head of Stablecoins at Bitso Business, said that a primary objective for the stablecoin is to drive foreign investment by allowing “global companies to do business in Latin America in a more efficient way” than the conventional financial infrastructure.

Stablecoin Store of Value

The launch follows a recent Bitso study on Latin American crypto adoption, in which the company reported a 9% year-over-year increase in stablecoin purchases on its exchange in 2024.

While there are existing Mexican peso-backed stablecoins, such as Tether’s MXNT, Bitso noted that most of last year’s growth was seen in USD-backed stablecoins. USDT and USDC together accounted for 39% of total purchases on the platform in 2024.

Bitso referred to these stablecoins as a store of value for Latin American citizens grappling with difficult macroeconomic conditions, including high inflation and currency devaluation.

Solving Cross-Border Payments Struggles

Stablecoins have gained traction in regions with volatile currencies or underbanked populations because they offer a reliable alternative. They have also emerged as prime candidates for cross-border remittances, as their blockchain foundation ensures swift and secure payments.

Cross-border payments are more in-demand than ever but remain plagued by issues like slow settlement times, fraud, and exorbitant fees. While a Mexican peso stablecoin like MXNB would undoubtedly be a more reliable alternative to fiat currencies, there are still questions about how it will carve out a niche in a competitive market.

To drive adoption of MXNB, Juno plans to launch its Juno Mint Platform, which gives businesses the APIs and tools to redeem and convert MXNB. The service also facilitates fiat conversions and stablecoin exchanges.

The post Mexican Peso Stablecoin Launches to Streamline Cross-Border Payments in Latin America appeared first on PaymentsJournal.

The White House has issued an executive order eliminating paper checks for government disbursements, effective September 30. While this initiative seems ambitious, the Trump administration has left itself some flexibility. The directive aims to significantly reduce the number of paper checks issued by the federal government, but it won’t eliminate them entirely anytime soon.

According to the order, the federal government will cease issuing paper checks for benefits, intragovernmental payments, vendor payments, and tax refunds. It also states that the government will stop accepting paper checks for payments “as soon as practicable.”

However, as is often the case, there are exceptions. Paper checks can still be issued in certain circumstances, such as for individuals without banking or electronic payment access.

While just 4.2% of U.S. households are unbanked, according to the FDIC, the demographics of these households have shifted. Unlike in the past, unbanked individuals are no longer disproportionately young. Instead, higher unbanked rates are now seen among lower-income households, working-age households with disabilities, and single-parent households—groups more likely to receive monetary assistance from the government.

Over the next six months, obtaining electronic funds transfer (EFT) information for the millions of individuals still receiving government checks will present a challenge.

Moving to Electronic Means

Overall, 23% of government benefit recipients still receive their assistance in the form of checks or vouchers. However, the vast majority of federal payments are now made electronically. The Treasury Department issued nearly 99% of its refunds via direct deposit during this tax filing season.

Earlier measures have also aimed to transition government disbursements to electronic payments. The Debt Collection Improvement Act  mandates that all government payments, excluding tax refunds, be delivered electronically unless waived by the Treasury Secretary.  

Benefits of Cutting Out Checks

Even a small reduction in paper checks could result in significant savings for the federal government. In 2023, the Treasury Department estimated that the average cost of issuing a paper check was 43 cents, while the average electronic funds transfer cost less than 2 cents.

EFTs are also less susceptible to fraud. Treasury checks are 16 times more likely to be reported lost or stolen, returned as undeliverable, or altered than an EFT, the administration said. It also noted that banks issue nearly 700,000 reports of check fraud each year.

The post An End to Government Checks? Not So Fast appeared first on PaymentsJournal.

Amid constant speculation about the use cases for biometric authentication, Stripe has agreed to handle payments operations for CLEAR.

CLEAR is best known for its membership program, CLEAR Plus, which leverages biometrics to expediate identity verification queues at airports. However, the company has since expanded its platform to offer biometric authentication solutions across industries such as healthcare and entertainment.

Through the integration with Stripe, CLEAR will gain support for a wide array of payments methods facilitated by the business payments processor, including digital wallets. In addition to one-time payments, the partnership is expected to streamline CLEAR’s subscription billing process.

A Deepening Partnership

CLEAR is collaborating with Stripe on several other ventures, including its CLEAR Mobile platform, which allows travelers who aren’t CLEAR Plus members to buy a one-time QR code for expedited airport security verification.

The biometrics company is also leaning on Stripe to handle card payments at its EnVe facial recognition pods, which were rolled out at airports like New York’s JFK last year. Additionally, Stripe will manage in-app enrollments for CLEAR Plus and oversee fraud mitigation efforts for the company.

Reusing Biometric Credentials

Without a doubt, biometric authentication has a strong use case in high-traffic areas like airports and stadiums. Consumers are more likely to enroll in biometrics programs if they believe it will help them skip long lines, while organizations benefit from an added layer of security.

However, there has been much speculation about when biometric authentication will become mainstream. So far, adoption in retail environments has lagged because merchants have been reluctant to invest in facial recognition equipment, and customers haven’t seen the benefit of enrolling in biometrics programs at every store they visit.

Reusable biometric credentials could change this dynamic, allow customers to use the same credential they use at the airport to make purchases at retailers. This kind of interoperability would be far more appealing to consumers and could significantly drive broader adoption of biometrics.

The post Stripe to Handle Payments for Biometrics Verification Company CLEAR appeared first on PaymentsJournal.

Australia has proposed new rules to govern the widespread implementation of technologies like crypto, CBDCs, and tokenization as part of its efforts to modernize the economy with digital assets.

In a whitepaper, the Australian Treasury noted that it would work with the Australian Securities and Investment Commission and the Reserve Bank of Australia to pilot programs using tokenized money, such as stablecoins, to settle transactions.

The regulators also proposed a licensing structure for crypto exchanges, called Digital Asset Platforms (DAPs). DAPS will be required to meet certain financial services standards, including capital levels and privacy disclosures, and must use third-party custodians to store customer assets.

A Clear Crypto Framework

This news follows the launch of the Markets in Crypto Assets (MiCA) regulations by the European Union. MiCA is a comprehensive legal framework for the issuance, investment, and trading of crypto assets across the EU, and it has been viewed by many as a global benchmark for crypto regulation.

Establishing a transparent regulatory framework creates an environment with clear boundaries, allowing companies to build new products without fear of legal repercussions. The lack of a clear crypto framework in the U.S. has often been criticized as a hindrance to innovation.

Paying Crypto Dividends

This assertion is supported by Singapore’s approach to digital assets. The country has strived to be a leader in financial technology, and in 2019, Singapore rolled out its cryptocurrency regulations framework known as the Payment Services Act (PSA).

This framework gives the Monetary Authority of Singapore jurisdiction over companies offering digital payment token (DPT) services, including activities like operating exchanges, trading DPTs, and facilitating wallets.

The early groundwork laid by Singapore is paying dividends. According to Cointelegraph, the country has become a key destination for Web3 companies, with Singapore issuing twice as many crypto licenses in 2024 as it did in 2023.

Research from ApeX Protocol found that Singapore is home to 1,600 blockchain patents, 2,433 jobs in the industry, and 81 crypto exchanges, which—as Cointelegraph pointed out—are impressive numbers for a country with a population of less than 6 million people.

The post Australia Proposes Ambitious Regulatory Framework for Crypto and Digital Assets appeared first on PaymentsJournal.

Automatic payments remain a favorite among bill payers, especially younger generations. Though many payers fear there may not be enough money in their accounts to cover bills, they still prefer being automatically enrolled in autopay processes.

In addition, affluent and urban households are more likely to enroll in automatic payment solutions, according to The 2025 State of Online Payments from InvoiceCloud. Overall, most people use automatic payments for at least some of their recurring bills.

It’s not just that younger individuals are more likely to be enrolled in autopay—they also prefer automatic enrollment in paperless billing far more than baby boomers. The data suggests that this presents a substantial opportunity for growth if billers take steps to proactively enroll their payers. One in five respondents who are not enrolled in paperless billing cited the lack of an enrollment option as the primary reason.

Convenience and Concerns

Convenience remains the primary driver of payers’ digital payment preferences. However, financial concerns continue to hinder enrollment in autopay.

Among those who are not enrolled in automatic payments, over a third cited financial constraints as the main reason for not signing up. In contrast, security concerns were far less significant. Many respondents hesitant to enroll in autopay expressed a preference for maintaining control over their payments, with comments like, “I like to know my balance due before funds are automatically removed from my account” as opposed to “I am concerned about storing financial information online.”

Autopay is also appealing because many payers still encounter challenges when making online payments manually. These difficulties are becoming increasingly common, with more than 70% reporting issues when paying bills digitally—an increase of 12% from last year’s survey. The most frequently cited issues included forgetting login credentials, limited payment options, or a lack of payment confirmations to remind them of due dates. Autopay can effectively address all of these concerns.

The Cellphone Solutions

In addition to reducing payment interruptions, autopay provides other benefits as well. Mobile carriers like Verizon and T-Mobile, for example, are increasingly steering their customers toward autopay.

It also allows them to offer incentives to customers who use preferred payment methods. T-Mobile offers a $25 monthly autopay discount, but only if the customer uses a debit card or bank account. AT&T reduces the monthly discount by $5 per line if the customer continues to use a credit card for autopay.

The post The Rise of Autopay: Simplifying Payments for Younger Generations appeared first on PaymentsJournal.

Financial literacy is essential for all age groups, especially children, as they develop habits that will benefit them in the long run.

Recently, Google announced a new feature that enables children with Android phones to make in-store purchases using Google Wallet.

Parents and guardians will still need to load the payment card, and they will be notified by email whenever their child makes a transaction. They will also be able to manage and track activities through Google’s Family Link parental control app.

While kids will be able to use Google Wallet to access items like event tickets, library cards, and gift cards, they currently won’t be able to use it to pay for online purchases. Additionally, these services will only be available to users in the U.S., UK, Australia, Spain, and Poland.

Giving Kids the Reins

Youth banking and payment accounts have surged in recent years. While traditional banks like Bank of America and Chase offer such services, peer-to-peer apps like Venmo and Cash App have also introduced products specifically geared toward kids.

Additionally, youth-centric apps from GoHenry and Greenlight not only provide bank accounts and debit cards but also feature interactive lessons to teach kids healthy spending habits.

While some parents may hesitate to give their kids the reins to these financial tools, all these options include features that allow parents to set limits and monitor their children’s activities.

Building Banking Relationships with Young Customers

Parental buy-in is the most important factor for gaining traction in the highly desirable youth market. This space has become competitive, as Gen Alpha—children born in the last 15 years—is expected to surpass two billion people.

Not only will Gen Alpha be the largest generation ever, but they will also be highly tech-savvy and likely to have plenty of spending power. Brands that establish strong relationships with younger users early on will be best positioned to retain them into adulthood.

While these factors likely contribute to Google extending its digital wallet functionality to kids, there is another aspect to consider. Apple already allows kids to use Apple Pay for in-store purchases with its Apple Cash Family app.

The post Kids Can Use Google Wallet to Tap-to-Pay in Stores, with Parental Supervision appeared first on PaymentsJournal.

In a strategic move to expand the global presence of its point-of-sale platform Clover, Fiserv is acquiring the European payment service provider CCV. This step is part of Fiserv’s ongoing strategy to support its ambitious expansion plans through acquisitions.

CCV provides a range of transaction processing solutions, online and closed-loop payments, acquiring services, and payment terminals for 600,000 businesses across the Netherlands, Belgium, and Germany. With a history of innovation in electronic payments, the company was responsible for facilitating the Netherlands’ first electronic transactions in the 1970s.

“The addition of CCV enables Fiserv to accelerate the deployment of our Clover platform and operating system, providing enhanced capabilities and innovation to our clients across Europe,” said Katia Karpova, Head of the EMEA region at Fiserv, in a prepared statement. 

Clover Keeps on Spreading

The acquisition of CCV follows Clover’s expansion last year into three new geographies: Brazil, Mexico, and Australia. Clover, which provides point-of-sale systems and card machines for small businesses, has become Fiserv’s major source of growth.

Clover’s revenue reached $2.7 billion in 2024, marking a 29% growth over the course of the year. Fiserv expects Clover’s revenues to reach $4.5 billion by 2026, suggesting a 28.5% year-over-year growth rate. While this goal may seem ambitious, Fiserv is taking the necessary steps to ensure that Clover meets these goals.

An Aggressive Series of Acquisitions

As mentioned, the acquisition of CCV aligns with Fiserv’s aggressive acquisition strategy.

Over the past few years, Fiserv has expanded its portfolio by acquiring numerous companies. In 2022, Fiserv acquired several fintech companies, including Finxact, OrangeData, NexTable, and City POS.

A year later, Fiserv acquired two Brazilian companies: Skytef, a financial software provider, and Sled, a payments software company.

More recently, at the end of last year, Fiserv acquired the Canadian company Payfare, a provider of instant payout and digital banking solutions tailored to the contractor workforce. This move was seen as a strong step toward the company strengthening its position in the gig economy, particularly among gig workers who often face challenges in accessing services during financial emergencies.

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Financial services providers across the spectrum have increasingly sought to leverage digital asset technologies over the past few years. Now, Raise plans to launch its digital gift card platform, built on blockchain technology.

The Chicago-based startup raised $63 million in its latest funding round, which further bolsters previous investments from companies like PayPal and Accel. In an interview with Coindesk, Raise Founder and CEO George Bousis said the company differentiates itself by offering a digital Smart Card that is a “fully on-chain, programmable retail currency.”

Gift cards have become one of the most popular gifts, both for others and for personal use. Consumers are buying gift cards not only for their flexibility but also because prepaid cards are increasingly integrated into loyalty programs and promotions.

Equal Popularity

While physical gift cards remain the top choice, data from Javelin suggests that digital gift cards could be equally popular by the end of the decade. Digital gift cards are much easier to purchase and send, and they also allow the sender to personalize their gift with videos or messages.

However, security concerns may impact digital prepaid cards. There’s the risk of fraud or unauthorized access, as well as the possibility that gift card details could be exposed in a data breach. Additionally, cybercriminals could duplicate and deplete a digital gift card before the recipient has a chance to use it.

Leveraging Smart Contracts

Blockchain mitigates many of these security risks because it doesn’t store information in a single location. As a decentralized platform, it shares financial data across the chain. The records stored on the blockchain are encrypted and immutable, making it harder for criminals to access and duplicate.

Blockchain also improves the gift card experience. Blockchain transactions happen nearly instantly, so gift cards balances are updated in real-time.

The decentralized model reduces the need for third-party intervention, which can lower the expense of blockchain transactions. Costs can also be further reduced by smart contracts—such as those that power Raise’s Smart Cards program—allowing actions like balance adjustments and refunds to be programmed and automatically executed.

The post Raise Gets Funding to Develop Blockchain-Based Digital Gift Cards appeared first on PaymentsJournal.

Coinbase intends to return to India after being forced to shut down its operations in the country over a year ago.

According to TechCrunch, Coinbase has met with several authorities in India, including the Financial Intelligence Unit (FIU), a government agency that oversees financial transactions.  

Coinbase’s previous attempts to establish crypto services in the country have been unsuccessful, including a 2022 integration with the India’s United Payments Interface (UPI) instant payments service, which was suspended after just three days. The service was halted because the National Payment Corporation of India stated that it did not recognize the legal standing of any crypto exchanges using UPI.

A year later, Coinbase was forced to pause all operations in India due to regulatory issues. Coinbase CEO Brian Armstrong later said that the crypto exchange had faced “informal pressure” from the Reserve Bank of India to cease trading in the country. While crypto trading is not illegal in India, the market remains small, partly due to the government’s 30% tax on crypto income and 1% deductions on each transaction.

Opening the Door

Coinbase hasn’t been the only crypto organization to face regulatory challenges in the country. Kraken and Binance were both forced to suspend operations in India after the exchanges faced accusations from the FIU that they were illegally operating in the country. The FIU requires more stringent disclosures on user activities than many governments.

However, Binance resumed crypto operations in India last year after assuring the FIU that it would fully comply with all requirements. This approval opened the door for other foreign crypto exchanges to operate in India. A Coinbase spokesperson told TechCrunch that the company “intends to comply with applicable regulatory requirements,” but declined to comment about any upcoming FIU registration.

An Innovation Hotbed

India has been a hub of payments innovation, driven by the country’s rapid adoption of UPI instant payments. UPI is now the most popular payment method in the world’s most populous nation, and its success has led India to establish similar operations globally.

Though crypto adoption in the country has been slow, Coinbase executives pointed to India’s strong community of Web3 developers. According to Cointelegraph, India had the highest rate of crypto adoption in the world last year, despite restrictions on foreign crypto exchanges.

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Two UK financial organizations are planning to establish an independent firm, Open Banking Limited, designed to foster the adoption of variable recurring payments (VRPs).

The Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) said that Open Banking will operate as an independent central entity and aims to launch live services as early as this year.

Variable recurring payments are payments made by businesses and consumers to utilities, government agencies, and financial institutions. Open Banking Limited’s goal will be to create a platform that allows payors to adjust the amount and timing of these transactions.

A better VRP system gives users much more control and reduces the chance of unexpected payments. For businesses, the platform could lead to lower processing costs and more efficient settlements.

Broader Adoption of VRP

A dedicated VRP organization is the latest effort in advancing the broader adoption of open banking in the UK. The country recently released its National Payments Vision whitepaper, outlining plans to accelerate the adoption of the open banking model.

In the whitepaper, the FCA was tasked with leading efforts to establish a stronger regulatory framework for open banking. According to Electronic Payments International, the organization’s endeavors have been successful so far, with over 11.7 million active UK open banking participants and more than 22.1 million open banking payments processed each month. 

Laying the Groundwork

The UK is not alone in its open banking efforts. In the U.S., the Consumer Financial Protection Bureau recently announced the activation of Section 1033 of the Dodd-Frank Act, which is designed to lay the groundwork for an open banking system. The rules are intended to put consumers in control of their financial data and give them the freedom to shop around for the best financial products.

Freedom of choice, lower transaction costs, and faster payments are three of the key tenets of the open banking model that many consider to be the future of banking. As more governments prioritize the model, financial institutions, businesses, and consumers will begin to understand the benefits and open banking adoption will accelerate.

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Consumers accustomed to swiping their Capital One cards during overseas travels could face issues once the credit card giant transitions its network to Discover.

Currently, Capital One’s card payments are processed on networks operated by Visa and Mastercard. After the acquisition of Discover was approved in December by the Office of the Delaware State Bank Commissioner, Capital One said it plans to move its payments processing to Discover’s rails.

This change is unlikely to have a significant impact in the U.S., where Discover’s network is nearly as ubiquitous as Visa, Mastercard, and American Express. However, Discover is far less common outside the U.S, potentially causing  payment processing issues for U.S. travelers using Capital One cards abroad.

Forging Ahead

Despite these hurdles, Capital One is forging ahead with plans to move all its debit cards and some of its credit cards to Discover’s network as early as Q2 2025. The company also hopes to migrate a larger portion of its credit card business to the Discover network in the future.

“In total, across debit and credit, we expect to add over 25 million Capital One cardholders and over $175 billion in Capital One purchase volume by 2027,” said Richard Fairbank, CEO of Capital One, at an investor presentation last year. “This injection and volume in the network will help Discover be competitive with the leading network.”

Pledging Investments

The centralization of financial services among a few major players has been a key driver of opposition to the merger. Capital One’s acquisition of Discover, valued at over $35 billion, will make the combined company the largest card issuer in the U.S. The deal will position Capital One with approximately $250 billion in card balances, reflecting a 22% increase in market share.

In order to mitigate some of the concerns surrounding the highly scrutinized acquisition, Capital One recently pledged $265 billion in lending, philanthropy, and community investments if regulators approved the deal. The company stated that this commitment is twice as large as any other community benefits plan of its kind.

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Fiserv is taking a strong step forward to better serve the gig economy—particularly gig workers, who often face challenges accessing services during financial emergencies—with its acquisition of Payfare.

A global leader in payments processing serving businesses across more than 100 countries, Fiserv aims to address these needs with the help of Payfare, a provider of instant payout and digital banking solutions, tailored to the contractor workforce.

The timing is opportune for Fiserv, which is purchasing Payfare at a reduced share price. In September, Payfare largest contract with DoorDash was not renewed, ending its involvement with the DasherDirect platform. Following the announcement, Payfare’s share price dropped from $8.43 to $2.05, according to The Deep Dive.

Shortly after, Payfare announced it was embarking on a strategic review to explore new opportunities, including a potential sale. Reports indicate that Fiserv is acquiring Payfare for $4 per share, valuing the transaction at just over $200 million.

“Payfare has built a reputation as an innovator in workforce payments for gig-economy companies,” Frank Bisignano, Chairman, President and Chief Executive Officer of Fiserv, said in a statement. “Together, we can accelerate the delivery of embedded finance solutions for all of our clients, empowering their next chapter of success.”

A Workers’ Struggle

Payments to gig workers have long been fraught with challenges on both ends. A 2021 report by Payments Canada on the gig economy in the region found that one in five gig workers waited at least a couple of weeks to receive payment after completing their work. Among those on the same day their contract ended, most were paid in cash.

In late 2020, Payfare signed a contract with DoorDash in hopes of alleviating some of these issues. The agreement centered on DasherDirect, a platform that provided DoorDash delivery drivers with a dedicated financial solution, including a Business Prepaid Visa Card and a mobile banking app.

Once that contract comes to an end, Payfare’s most significant asset may be the Lyft Direct Program. This offering includes a Lyft Direct debit card and banking app, as well as additional features such as cash ATM deposit access and wellness perks.

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Amid controversy surrounding the central bank digital currency (CBDC) model, the Bank for International Settlements (BIS) has proposed a new solution for the digital asset that would incorporate both a central bank and retail financial institutions.

In the BIS model, the CBDC would be issued and governed by the central bank, while retail banks would provide services to consumers. For example, banks would offer the CBDC  through their existing app or digital wallet. To provide the CBDC, banks would have to undergo a certification process and maintain compliance with their central bank’s regulations.

BIS is a consortium of seven central banks that includes the Bank of England and the Federal Reserve Bank of New York. The organization was built to identify and leverage synergies among its members that can benefit global financial systems. The group recently led efforts to streamline cross-border payments systems and explore how CBDCs could coexist with tokenized commercial bank deposits on a shared platform.

Forging Ahead

The group is forging ahead with its proposal for a CBDC, despite opposition to the model. One of the main arguments against CBDCs revolves around privacy, as digital currencies could provide governments with protected transaction and user data.

Due to privacy concerns, a French lawmaker and member of the EU parliament Sarah Knafo recently decried CBDCs. Since governments still want to leverage the benefits of digital assets and crypto technologies, Knafo said a bitcoin reserve would be better solution.

Guaranteeing Privacy

The BIS group, which proposed the hybrid CBDC model, said that these privacy concerns would not factor into its solution, which will use tokens to replace personal information and keep users anonymous. The CBDC design will also support account-based models, where users have specific accounts tied to their financial institution.

The authors of the proposal noted that “privacy can be guaranteed by separating transaction from identity information, such that the latter remains with private intermediaries and users. This helps to reduce risks and ensure greater privacy protections than in other models.”

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With artificial intelligence gaining prominence as the next frontier in fraud detection, Visa has completed its acquisition of Featurespace, a developer of real-time AI-powered payment protection technology.

Featurespace works with many of the world’s largest banks and financial institutions, including HSBC, NatWest, Worldpay, and Danske Bank. The company processes more than 100 billion payment events each year.

This move mirrors a recent announcement from Mastercard, which earlier this year revealed plans to acquire Recorded Future, an AI company specializing in payments fraud. Recorded Future bills itself as a threat intelligence company with more than 1,900 clients across 75 countries. The deal will expand Mastercard’s existing suite of identity, fraud prevention, and cybersecurity services, primarily under the Brighterion label.

Both credit card giants recognize the importance of deploying AI as widely as possible. In addition to being one of the top buzzwords currently in the financial sector, the technology has already demonstrated its worth as an effective crime-fighting tool. 

“There’s so much information that is collected by a financial institution or a merchant that could be used to help detect fraud or suspicious activity,” said Suzanne Sando, Senior Analyst of Fraud and Security at Javelin Strategy & Research. “This data might contain signs of irregularities in the way that transactions are being made, and that’s where AI comes in. There is a wealth of data that is not being used, and it needs to be used to create a more holistic view of the entire transaction.”

Buying the Expertise

It appears that both Visa and Mastercard opted to acquire an AI company rather than further developing these capabilities in-house. For example, Visa says that Featurespace’s capabilities complement its existing fraud prevention and risk scoring offerings.

Visa’s existing Cybersource service addresses fraud in e-commerce and retail. This solution also uses machine learning-based models for risk scoring, but primarily on the merchant side. Cybersource specializes in combatting payment transaction fraud, such as criminals using stolen credit card numbers on a merchant’s website.

Similarly, in 2017, Mastercard’s first major foray into AI came with the acquisition of Brighterion, which is now its primary fraud detection arm. Overall, these acquisitions make sense from a branding perspective. Not only does it allow an established company like Visa or Mastercard to bring proven, turnkey technologies into the fold, but it also sends a strong message to criminals and competitors alike that they are leveraging AI in a significant way.

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The Consumer Financial Protection Bureau (CFPB) has issued a warning to credit card issuers about deceptive practices in their rewards programs. Card companies may be violating federal law if they devalue rewards points, fail to deliver promised benefits, or hide conditions in the fine print of card agreements.

This warning follows a public hearing hosted by the CFPB and the U.S. Department of Transportation in May, which addressed challenges consumers are experiencing with airline and credit card rewards programs. Consumers have reported difficulties in redeeming rewards or having their valued reduced due to policy changes by program partners.

Three Danger Areas

The new circular highlights three potentially deceptive practices by issuers.

First, it’s currently legal for issuers to change the terms of the points their cardholders have earned. For example, the fine print on JP Morgan Chase’s popular Chase Sapphire Preferred Card states that they are only required to give the cardholder 30 days’ notice before reducing the value of points. The CFPB aims to make this practice illegal. In its circular, CFPB notes that altering the value of a customer’s accrued points after they are earned is unfair and essentially amounts to a bait-and-switch tactic.

Secondly, the CFPB warns against hiding the conditions for earning or keeping rewards.Fine print disclaimers or terms buried in contracts sometimes contradict promotional language used to advertise the rewards consumers can earn. Additionally, companies may unlawfully use fine print to cancel rewards that consumers have already earned.

Finally, companies managing rewards programs will be held accountable for ensuring that consumers can redeem the rewards they have earned, including coordinating with merchant partners and vendors. There have been reports of consumers attempting to make purchases through a travel partner system, like an airline, only to run into technical issues that result in lost points, leaving the user no recourse to recover them. 

“Points are really their own monetary system at this point, negotiated with partner vendors and issuer rewards programs,” said Ben Danner, Senior Analyst of Credit and Commercial at Javelin Strategy & Research. “Consumers should be evaluating how points are converted into things like miles and cash back that are described in the terms and conditions upon signup. And as with any credit card, if the consumer is revolving debt, the rewards are not going to be very helpful for their financial situation.”

Pricey Violations

Deceptive practices involving rewards points have been a concern for over a decade. In 2012, American Express was ordered to refund $85 million after misleading consumers who expected a $300 bonus for signing up for its Blue Sky credit card program. More recently, in 2023, the CFPB fined Bank of America more than $100 million for withholding cash and points rewards from certain customers.

“Issuers should always be making sure that their marketing messaging and offers align with the actual offer,” said Danner. “Try to leave as little room for misinterpretation as possible.”

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In the budget it passed for next year, Greece will implement caps on certain banking fees to help mitigate the cost-of-living pressures faced by consumers.

Although Greek financial institutions had already moved to reduce some of the fees they charge customers, the country’s Prime Minister, Kyriakos Mitsotakis, said these measures didn’t go far enough. As part of the new policy, money transfer fees will be capped at €0.50 ($0.52) on transactions up to €5,000.

After years of financial struggles that required billions in government aid, Greece’s banks have now become profitable to they point where they have begun distributing dividends to shareholders. This renewed profitability is one of the reasons Mitsotakis felt it was time for banks to diminish their fees.

There are a multitude of additional initiatives underway to ease the burden on consumers, including a plan to eliminate fees on transactions with state agencies and utility companies. Banks will also contribute €100 million toward the construction or refurbishment of schools, and financial institutions will be required to pay double property taxes on homes they own but are not in use—an effort aimed at increasing the housing supply.

Spoonful of Soup

It’s estimated that Greek financial institutions generate annual revenue of €200 million from fees charged to consumers, and capping these fees could significantly hit the banks’ bottom lines. Still, Mitsotakis believes that relieving the strain on consumers is more important than protecting bank profits.

This sentiment is reflected in recent actions by the U.S. Consumer Financial Protection Bureau, which announced new rules to limit the overdraft fees banks and credit unions can charge to $5 in an initiative it believes will save consumers billions. However, there has been pushback from U.S banks, who believe that the rules may lead them to eliminate the overdraft protection so many consumers rely on.

In Greece, the new measures were criticized by some groups who felt the efforts didn’t go far enough to impact consumers. One opposition group likened the efforts to “giving pensioners a spoonful of the soup of super profits.”

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The Consumer Financial Protection Bureau has released the final iteration of its rule that will cap the overdraft fees banks and credit unions can charge, a measure expected to save U.S. consumers $5 billion annually.

Under the new regulations, banks could either charge a $5 overdraft fee or limit the fee to an amount that covers the lender’s costs. In most cases, this represents a dramatic reduction from the $35 average overdraft fee. The rule would also treat overdraft loans similarly to credit cards, requiring lenders to disclose all associated interest rates and fees.

“For far too long, the largest banks have exploited a legal loophole that has drained billions of dollars from Americans’ deposit accounts,” noted CFPB Director Rohit Chopra, in a statement. “The CFPB is cracking down on these excessive junk fees and requiring big banks to come clean about the interest rate they’re charging on overdraft loans.”

Substantial Pushback

The rule, set to take effect in October 2025, will apply to banks and credit unions with assets of at least $10 billion in assets. While many of these institutions have already moved to reduce the frequency or amount of overdraft fees—or have eliminated them entirely—there has been substantial pushback to the CFPB’s regulations since they were proposed earlier this year.

Earlier this year, Rob Nichols, President and CEO of the American Bankers Association noted that “the proposal would make it significantly harder for banks to offer overdraft protection to customers, including those who have few, if any, other means to access needed liquidity. The CFPB is effectively proposing to take away overdraft protection from consumers who want and need it.”

A Safety Net

Without the safety net of overdraft protection, many in the banking industry argue that consumers facing medical emergencies or unexpected expenses may have to turn to less desirable alternatives like payday loans.

There have also been concerns among smaller banks and credit unions that, even though the rule only applies the largest institutions, they may face pressure to adopt similar standards to stay competitive.

The post CFPB Finalizes Rule to Limit Bank Overdraft Fees appeared first on PaymentsJournal.

The Consumer Financial Protection Bureau has proposed rules designed to reduce the impact of coerced debt on victims of domestic violence and elder abuse.

In many cases, abusers manipulate or intimidate their spouse or family member into applying for credit cards or loans. Abusers may open accounts in the victim’s names without their knowledge, coerce them into signing financial documents, or make unauthorized purchases on their accounts.

The effects of financial abuse can be significant for survivors. Nearly three-quarters of domestic violence victims report staying in an abusive relationship longer because of coerced debt, according to the CFPB. The impact is even greater for women of color, who are more likely to experience financial abuse and carry higher amounts of coerced debt.

Expanding Protections

Financial abuse can have a dramatic effect on a victim’s credit score. The CFPB noted that once survivors clear these debts from their credit report, roughly a third see their credit score jump by over 20 points. This increase can be the difference in qualifying for a loan or securing a better interest rate.

“People trapped by domestic abuse must often sign documents under the threat of violence, ruining their financial lives and making it even more difficult to escape,” said CFPB Director Rohit Chopra, in a prepared statement. “Expanding identity theft protections could help survivors rebuild their financial lives and would ensure that our credit reporting system is not used as a tool for domestic and elder abuse.”

Searching for Insight

The CFPB is in the initial stages of developing rules to address financial abuse and is looking to the public for insights on the true effects of coerced debt on credit scores, as well as potential barriers that may prevent victims from receiving aid.

The CFPB is also interested in understanding the challenges that coerced debt creates for specific groups, including children in foster care, survivors of intimate partner violence, and older Americans.

Elder abuse, in particular, can be hard to detect because many older individuals are more likely to trust others at their word and less likely to report being victims of abuse. This is why older adults have been under particular duress from both in-house abusers and from criminals who seek to coerce the elderly or prey on their emotions.

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In a move that could jump-start instant payments in the U.S., the Clearing House is raising the payment limit on its RTP network from $1 million to $10 million. The new limit will take effect on February 9, 2025.

“The higher transaction limit would enable more real-time payments use cases, especially higher-value transactions such as business-to-business transactions and real estate,” said Elisa Tavilla, Director of Debit Payments at Javelin Strategy & Research. “This is a positive development and could help accelerate instant payment adoption in the U.S.”

While businesses account for 80% of RTP transactions, 95% of these payments are received by consumers. This indicates there’s some room for growth in higher-dollar B2B payments.

The Clearing House is highlighting several use cases that will be enhanced by the increased limit, including:

• Real Estate/Title Insurance: With commercial and higher-value residential real estate payments now being sent instantly around the clock, more closings can be settled after business hours or on weekends.
• Merchant Settlement: Larger merchants and retailers can receive instant payments the same day they’re made, instead of waiting for a payout the following day.
• Supply Chain: Manufacturers can pay suppliers instantly, enabling quicker receipt of products and supplies.
• Cash Concentration: Businesses can more easily transfer funds to a single account, optimizing liquidity and streamlining fund consolidation.

“The $10 million transaction limit allows financial institutions and their customers to make larger payments in real time, continually enabling the RTP network to evolve to meet industry needs,” said Margaret Weichert, Chief Product Officer at The Clearing House, in a prepared statement. “Customers already benefit from the system’s around-the-clock availability, with 42% of transactions taking place overnight, on weekends, or holidays.”

Staying Ahead of the Competition

Although the U.S. government launched its instant payments service, FedNow, last year, the RTP network remains the largest system of its kind in the country, averaging more than one million payments daily. On November 1, the network set a new single-day record, processing 1.45 million transactions valued at $1.24 billion. More than 285,000 businesses send instant payments over the RTP network each month.

The RTP transaction limit has been $1 million since April 2022, when it was increased from $100,000. This change followed a similar increase to the Same Day ACH transaction limit, also raised to $1 million, one month earlier. FedNow has a transaction limit of $500,000.

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For various reasons, the U.S. Department of Agriculture faces challenges in issuing personal identity verification (PIV) cards to all its workers, despite these credentials being essential for accessing government systems. This presented a problem in combating fraudulent attempts to breach these systems—until USDA developed a pilot program featuring FIDO, or Fast Identity Online.

The issue arose because USDA employs a significant number of seasonal workers who are ineligible for PIV cards. To address this, USDA introduced a waiver process that allowed employees to obtain a user ID and password. However, it quickly became clear that these efforts were vulnerable to sophisticated credential phishing campaigns. 

USDA sought a technical solution that could deliver phishing-resistant multi-factor authentication (MFA) and reduce the risk of malicious actors tricking employees into providing their login credentials. What’s more, they required a solution that offered the same protections as a PIV card while addressing the decontamination challenges present at many USDA sites.

The answer was FIDO, which USDA now touts as a major step forward in fighting phishing attempts. A biometric authentication system, FIDO has allowed approximately 40,000 registered users to securely access USDA’s network without the vulnerabilities associated with usernames and passwords.

Calling FIDO

FIDO authentication has been around for several years, although its adoption is not yet widespread. It relies on physical characteristics, such as a fingerprint, rather than something that can be easily guessed or stolen, like a password. Organization can use FIDO alongside other authentication methods, such as usernames and passwords or two-factor authentication. This layered approach ensures that even if one method is compromised, the other can still verify the user’s identity.

Apple, Google, and Microsoft have been working on a multi-device FIDO credential known as passkeys. According to the FIDO Alliance, global awareness of passkeys has grown significantly in the two years since their introduction—from 39% familiarity in 2022 to 57% in 2024.

“Many different organizations are already using FIDO authentication standards, mostly fintechs, social media companies, search engine providers, email service providers, and gaming companies,” said Jennifer Pitt, Senior Analyst of Fraud and Security at Javelin Strategy & Research. “But only a couple financial institutions have adopted FIDO standards. The biggest hindrances are the time and cost of updating current technology that may not be compatible with FIDO standards.”

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Brazil, a trailblazer in instant payments, reported that its popular Pix platform facilitated transactions worth over 120.7% more this Black Friday compared to last year.

According to the latest data from Brazil’s Central Bank, Brazilians spent roughly 130 billion reais ($21.60 billion) using Pix this Black Friday, up from 58.9 billion reais last year. In addition to the value spike, the platform also saw a significant rise in volume—239.9 million transactions compared to 136.3 million the previous year. This year’s Black Friday also set a record for the most transactions in a single day.

“There is a lot of momentum around Pix in Brazil, and that’s largely because of the way the Brazilian Central Bank set it up,” said Don Apgar, Director of Merchant Payments at Javelin Strategy & Research. “The Central Bank launched Pix with three important boosts. First, it made it mandatory for all major banks to participate. Second, it standardized user experiences in all use cases, and, finally, there are no fees for either sender or receiver.”

Not a Holiday Phenomenon

These features undoubtedly fueled Pix’s surge this Black Friday, which is generally considered to be the beginning of the holiday shopping season. While the day after Thanksgiving is traditionally the busiest shopping day of the year in many countries, Pix’s upswing isn’t simply a holiday phenomenon.

Since its launch four years ago, the platform has quickly gained popularity as a preferred payment method in Brazil. By next year, Pix is expected to surpass credit cards as the predominant payment method in the country.

The Market Picks the Winner

Instant payments are one of the most transformative innovations in the payments industry and are expected to continue gathering steam worldwide. However, the U.S. has taken a different approach to this emerging payment method, resulting in more tepid adoption.

“In the U.S., the Federal Reserve participates in payments, such as instant payments platform FedNow and wire transfers, but it doesn’t mandate participation,” Apgar said. “The U.S. prefers to have the market pick the winner, if you will.”

“Also, note that Pix is only available for funds you have in your bank account, there is no credit component,” he said. “In the U.S., a scheme like this would offset some debit card volume, but not be applicable to credit purchases, including alternative lending products like BNPL.”

The post Black Friday Instant Payments on Pix More Than Doubled from Last Year appeared first on PaymentsJournal.

Just in time for the holiday gift-giving season, Target is redesigning its Target GiftCards to prevent tampering before it starts. Following a Maryland law that passed earlier this year, aimed at cracking down on gift card fraud, Target is one of the first major retailers to overhaul its gift card system.

According to Target, traditional gift cards have access codes printed on the back, which criminals can steal before the cards are sold, allowing them to drain the funds even after the purchase. Going forward, the new cards will feature a blank space where the codes once appeared, and at checkout, a team member will apply a security access label to further reduce the risk of fraud.

The redesign comports with a law that went into effect in Maryland over the summer, mandating tamper-proof packaging for most gift cards sold in person. The bill also requires mandatory employee training to help them detect tampered cards. The law will take full effect on October 1, 2025.

It was anticipated that major retailers would design cards to adhere to the Maryland standards, regardless of where the cards are sold.

“You can’t avoid making these changes almost universally, because you don’t want to have one process for Maryland and another for everywhere else,” said Jordan Hirschfield, Director of Prepaid at Javelin Strategy & Research. “From my conversations with people in the industry, the reality is they probably didn’t need the legislation anyway. They’re all seeing the trends of tampering, and they want to be proactive about it. Everyone that I’ve spoken with in the industry is wants to make this a better, more secure purchase experience.”

A Sizable Target

Target has long been a target for gift card fraud. Last holiday season, police in Virginia arrested two men who were stocking the shelves with altered gift cards in a Target outlet. They were later found to be in possession of nearly 1,000 Target gift cards.

“Remember, gift cards hold no value until they’re purchased and activated,” said Hirschfield. “Retailers want to show that they can have better packaging while also making it easier for that retail clerk who is not trained in gift card fraud to notice that something has been tampered with and say, ‘I’m going to remove this one. I’ll get you a different one.’”

The post Target Redesigns Gift Cards Ahead of Maryland Anti-Tamper Law appeared first on PaymentsJournal.

Just in time for the holidays, Google is updating the artificial intelligence engine behind its visual search tool Google Lens, aiming to help shoppers make more informed decisions at brick-and-mortar retailers.

According to Google, 72% of consumers use their smartphones in-store to find the right item at the right price. However, over half of these shoppers still leave the store empty-handed. The goal of the updates is to allow consumers to take a picture of a product and instantly access reviews, information on similar products at the same retailer, and price comparisons with other nearby merchants.

“We know consumers are really liking using Lens,” said Lilian Rincon, Vice President of Consumer Shopping Product at Google, in an interview with TechCrunch. “In fact, Lens is used for nearly 20 billion visual searches every month, and 20% of Lens searches are shopping-related. So, we’re excited to bring this to market. It gives some of that important information to help a shopper feel more confident.”

Significant Advancements

Google said the enhanced capability was made possible by significant advancements in its Gemini AI models’ image recognition technology, in conjunction with product listing data provided by its Shopping Graph platform.

The expanded Google Lens features will initially only work on toys, beauty products, and electronics in stores that share their inventory data with Google. Presently, the merchants who meet that criterion are national retailers like Target, Macy’s, and Ulta Beauty. In addition, shoppers who want to utilize the features will have to share their location data with Google.

Popular Additions

The tech giant also announced it will incorporate more shopping-related features for U.S. Google Maps users in the next few weeks. Consumers will be able to search for products like clothing, groceries, electronics, and home goods in Maps and find nearby merchants who sell them.

Once shoppers locate their items, they’ll have another payment option to choose from. Google said it is adding support for buy now, pay later service Afterpay in Google Pay, following its earlier integration of BNPL options through Affirm and Zip earlier this year.

BNPL services have soared in popularity in a few short years, becoming  a favored addition to digital wallets like Google Pay and Apple Pay. Google also shared that it was working to add Klarna as a payments option in the near future.

The post Google Lens Gets AI Upgrade to Take the Guesswork Out of Holiday Shopping appeared first on PaymentsJournal.

Following a series of fraudulent purchases, a convenience store chain has temporarily halted its contactless payment system. Stewart’s Shops disabled its tap-to-pay technology in mid-October. However, experts suggest the decision may be an overreaction to a software glitch, emphasizing that tap-to-pay remains a secure payment method for consumers.

According to Stewart’s, criminals used tap-to-pay to make sizable purchases, allegedly with stolen or fraudulent credit cards. Although the transactions went through as if they were legitimate, the payments ultimately failed to process.

Stewart’s operates more than 350 stores across upstate New York and Vermont, with the scams reported from stores in Ulster and Orange counties. In response, the company promptly disabled tap-to-pay functionality across all locations but is actively working to  restore the service.

According to Don Apgar, Director of Merchant Services at Javelin Strategy & Research, the issue was likely a result of something other than a weakness in tap-to-pay technology. “It is very hard to drive fraud through contactless payments given the security that is built into the interface,” he said.

Compliance Is Key

Apgar noted that, in most cases, stores are not held responsible for fraudulent transactions. Merchants bear no liability for contactless transactions as long as their systems comply with PCI-DSS security standards.

“If these fraud transactions were straight-up stolen cards, then the issuers absorb that fraud,” Apgar said. “If the cards were not stolen, but cloned or fraudulent somehow, they may have had inside knowledge to exploit some non-compliant weakness in Stewart’s contactless terminals. In that case, the merchant would be liable for the fraud if their card platform was not PCI-DSS compliant.”

And that may be the case with what happened at Stewart’s. “It’s a software bug, not a breach,” Stewart’s spokesman Robin Cooper told the Albany Times-Union. “None of our customers’ information is in jeopardy.” 

A Safer Method

In general, tap-to-pay is considered a safer alternative to inserting a card at a gas pump. The FBI has even issued a bulletin encouraging consumers to use tap-to-pay for gas and similar purchases, noting that “tap-to-pay transactions are more secure and less likely to be compromised.”

Skimming, however, remains a serious concern for retailers. This crime involves devices illegally installed on or inside ATMs, point-of-sale terminals, or fuel pumps that capture card data and record cardholders’ PINs. According to the FBI, skimming costs financial institutions and consumers more than $1 billion each year.

The post Despite Stewart’s Shutdown, Tap-to-Pay Remains Safe for Most Consumers appeared first on PaymentsJournal.

Holiday gift cards have a meaningful impact on employees and their teams worldwide.

In fact, a recent survey from CleverCards, which polled 600 employees in Ireland, revealed that 84% of respondents said receiving a holiday gift card from their employer would boost their engagement and make them less likely to consider switching jobs.

The main reason employees were motivated by gift cards was their flexibility—they could be spent anywhere. Workers also noted that they would use the funds to treat themselves instead of covering essential expenses. Indeed, the study found that only around a quarter of respondents planned to use their incentive to pay bills.

“As it is in Ireland, it is in the United States,” said Jordan Hirschfield, Director of Prepaid at Javelin Strategy & Research. “In Javelin’s U.S. survey, we asked employees if receiving a recognition benefit increases their satisfaction with their employer, and 83% said yes. Employees generally treat themselves with these incentives, and Javelin’s research shows that people will usually spend more than the value of that gift card.”

The Three Points

The rising popularity of gift cards as employee incentives creates powerful opportunities for retailers and gift card issuers. According to Hirschfield, when consumers receive a gift card from a new brand, 44% become repeat customers, and 41% join the company’s loyalty program.

Recognizing the benefits of employer incentive programs, more brands are now offering discounts on their business-to-business offerings to drive sales.

“The employers that participate in formal incentive purchase programs buy gift cards at a discount,” Hirschfield said. “That discount is worthwhile to the retailer because it can ramp up repeat purchases. Instead of offering a coupon, which is strictly money off, this is a slight discount which they then recoup by participating in these plans.”

“To link it back to the employers, their employees are more engaged and responsive, and they’re more likely to stick it out through the ups and downs of the workplace,” he said. “It’s a massively beneficial program for all three points that are involved: the employee, the employer, and the sponsor of the gift card.”

The post Holiday Gift Cards Go a Long Way Toward Inspiring Employee Loyalty appeared first on PaymentsJournal.

The UK government recently released its National Payments Vision whitepaper, outlining key aspects of the country’s payments ecosystem, particularly the need to reduce regulatory congestion. Notably, it highlights the vital role of open banking in shaping the future of the UK’s payments landscape.

“It is the government’s ambition that seamless account-to-account payments are developed as a ubiquitous payment method,” the paper noted. “For open banking to scale and help deliver more competition and innovation in the market, it needs to transition to a sustainable longterm regulatory framework.”

Last year, the UK processed 29.1 billion payments made using credit or debit cards. The government aims to reduce this reliance by offering greater choices to consumers and merchants—a move designed to spur innovation and downward competitive pressure payment costs.

The UK’s Financial Conduct Authority (FCA) has been assigned to take the lead on regulating open banking, with a new central body to eventually oversee the country’s efforts. Additionally, the FCA will explore potential interoperability between open banking and other smart data schemes, aligning with the government’s vision for the open banking framework to serve as the foundation for open finance.

To that end, the UK is developing a pilot program for variable recurring payments (VRPs), an open banking-enabled payment method initially focused on a limited number of low-risk use cases, such as bill payments. VRPs function similarly to direct debit transactions, transferring funds between accounts at regular intervals. These transactions settle in real time and are customizable.

An Encouraging Response

Reactions to the initiative have mostly been positive. Charlotte Crosswell, chair of London’s Centre for Finance, Innovation and Technology, wrote on LinkedIn that the paper created “a roadmap for creating a secure, innovative, and competitive payments sector.”

“This will strengthen the foundations of today’s ecosystem and steer future activity to drive innovation, facilitate competition and ensure security,” she added.

In some respects, the National Payments Vision aligns with a recommendation issued last month by the Consumer Financial Protection Bureau. Building on Section 1033, a long-dormant part of the Dodd-Frank Act, the CFPB advocated that consumers should be able to transfer their financial data between institutions freely and without encumbrances. As part of establishing  a framework for open banking, individuals will gain full control of their financial data, including the ability  to revoke a bank’s access to their information at any time.

The post The UK’s Vision for the Future of Open Banking appeared first on PaymentsJournal.

Visa is betting that the world needs a single card that covers debit, credit, buy now, pay later services, and potentially cross-border payments, and it’s bringing this concept—already thriving in Asia—to the U.S.

The new Flexible Credential card isn’t issued by a bank but through a partnership with BNPL giant Affirm. Cardholders have the flexibility to pay immediately or use the Affirm app to pay over time. By customizing their preferences, users can set specific rules—for example, using a debit card for purchases below a certain amount, or using credit for purchases at certain stores. They can also toggle between payment methods, choosing from debit, credit, BNPL, or redeeming rewards.

Launched in Asia earlier this year, the card is gaining traction. According to Visa, cardholders tend to use debit for everyday items, with about 70% switching to credit for big-ticket purchases. Visa plans to expand to Europe in the coming months.

“The card is reminiscent of the cartão múltiplo [multi card] in Brazil, which allows customers to choose between a debit or a credit transaction at the point of sale,” said Ben Danner, Senior Analyst of Credit and Commercial at Javelin Strategy & Research. “Further enabling consumers with a choice to pay immediately or pay using a pay-over-time function gives consumers more flexibility at the point of sale, a strong value proposition for Affirm.”

Cross-Border Options

Visa also rolled out a version in the United Arab Emirateswith digital bank Liv, enabling cross-border payments. The process works by automatically routing transactions in the appropriate transaction currency, whether the purchase is made online or in-store.

Through the mobile app, cardholders can transfer funds between local and foreign currency accounts, ensuring they have the funds to make a purchase. Liv cards support five major currencies, including the U.S. dollar, euro, British pound, Canadian dollar, and Australian dollar.

Visa says that UAE’s cross-border outbound volumes are among the fastest-growing categories in its major cross-border markets. At this time, there are no plans to introduce these capabilities for U.S. users, a Visa spokesperson told PaymentsJournal.

The post Visa’s All-in-One Card Comes to the U.S. appeared first on PaymentsJournal.

Over two-thirds of U.S. retirees had outstanding credit card debt this year, marking a substantial increase from previous years, according to data from the Employee Benefit Research Institute (EBRI).

This increased dependence on credit cards is an alarming trend given the fixed budgets many seniors live on. According to the survey, roughly 83% of retirees were collecting Social Security, which, on average, accounted for about half of their income.

After pandemic-fueled inflation, costs have not cooled significantly this year. Many retirees are still struggling with higher rent payments and the rising cost of everyday essentials. While Social Security payments have included cost-of-living increases, in many cases these adjustments haven’t been enough to keep up rising expenses.

To bridge the gap between their Social Security income and living costs, retirees have increasingly relied on credit cards. Just a few years ago, only 40% of retirees carried credit card debt, according to EBRI.

Covering Budget Shortfalls

The increased reliance on credit cards to cover budget shortfalls isn’t limited to retirees. Separate research from the Federal Reserve found that consumer credit card debt skyrocketed above $1 trillion, with delinquencies also on the rise.

As consumers age, many carry this debt into retirement. According to CNBC, U.S. retirees that are just reaching retirement are more likely to have debt—and at higher levels—compared to past generations.

A Pressing Concern

In addition to inflation, consumers of all ages are facing high interest rates. As rates have risen, so have credit card annual percentage rates, making credit cards an expensive way to borrow.

The combination of inflation and high interest rates has put immense pressure on consumers and could have repercussions for financial institutions. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, major financial institutions are required to undergo stress tests to assess how they would respond in the event of an economic catastrophe like the financial crisis.

This year’s stress tests revealed that consumer credit card losses would amount to $175 billion, the highest among all lending segments. Since there is still uncertainty about the trajectory of the U.S. economy, this continued reliance on credit cards among consumers should be a pressing concern for banks.

The post Credit Card Debt Is Soaring Among Retirees appeared first on PaymentsJournal.

Instant payments platform Pix will integrate NFC contactless payment functionality for customers who have linked their bank accounts to Google Wallet.

Brazil’s central bank unveiled Pix by Proximity at a joint presentation with the president of Google Brazil. Initially, this feature will be available only to Google Wallet users on Android phones. However, the platform plans to roll out contactless payment support to all customers next year.

“For the user, everything will be done naturally,” said Natacha Litvinov, Head of Payment Partnerships for Latin America at Google in a statement. “The user can choose which account linked to the Google wallet will be used to execute the Pix transaction. Payment confirmation is done using biometrics, and the payment message is sent to the cell phone and also to the machine.”

Wider Integrations

The widescale launch of Pix by Proximity comes after Brazil established a framework for contactless payments this summer that was approved by the Central Bank and the National Monetary Council.

In addition to contactless payments, Pix and Google are working to add a “Pay with GPay” button in e-commerce applications to speed up transactions while keeping buyers on the seller’s platform. This integration comes as Pix’s use in e-commerce applications is soaring—the platform is expected to overtake credit cards as the predominant payment option in Brazil next year.

As the platform scales, concerns about fraud and security have emerged. The Central Bank plans to address these by installing transaction limits for purchases made from unknown devices.

In addition, Pix and Google Wallet are launching Night Mode. When activated, it will block all Pix transactions from personal accounts to unknown beneficiaries between 8 p.m. and 6 a.m.

A New Level

In addition to benefits for consumers, contactless payments offer substantial benefits for merchants. Customers have come to expect mobile payment options because they are fast, secure, and more hygienic. With the growing popularity of Pix, merchants who support contactless payments have a strong opportunity to expand their customer base.

“Today, the number of transactions sent to companies is still lower than that sent to individuals (the ratio was 70% to 30% this summer), but this could change,” Pedro Romero, Director of Wallet & Banking at Brazil’s PicPay, told Valor Investe. “We usually make many more payments to businesses than to individuals, so this new experience—which brings countless advantages to merchants—will take Pix to a new level.”

The post Pix Launches Contactless Payments for Google Wallet Users appeared first on PaymentsJournal.

Robinhood, Galaxy Digital, and Kraken will collaborate on a network to support Paxos’ newly launched stablecoin, USDG.

The consortium of crypto companies said the Global Dollar network is designed to accelerate worldwide stablecoin adoption. USDG is currently available only on the Ethereum blockchain, though Paxos said the stablecoin could be available on other blockchains soon.

“The collaboration between this list of partners is impressive,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “These firms are taking an approach that is more like Tether than Circle. They are launching USDG out of Singapore, because there is a greater serviceable addressable market outside of the U.S. right now.”

A Crowded Field

Paxos said USDG is compliant with the Monetary Authority of Singapore’s stablecoin framework, which was established last year. The stablecoin is backed one-to-one with the U.S. dollar in deposits, short-duration U.S. government securities, and other cash equivalents. The company’s USDG reserve will be held and managed at DBS Bank, Singapore’s largest financial institution.

The stablecoin is joining a crowded field dominated by Tether’s USDT and Circle’s USDC. Paxos also offers its Pax Dollar, and the company manages PayPal’s PYUSD stablecoin, which has quickly reached a $1 billion market cap.

A Golden Age

The multitude of use cases for stablecoins has fueled the surge in offerings, so much so that the digital assets could be on the cusp of a golden age. There are especially promising stablecoin use cases in cross-border payments and in countries with more volatile fiat currencies.

“Comparatively, the U.S. economy is doing well,” Hugentobler said. “There are relatively low rates of inflation, it is easy access to the dollar (world reserve currency), and there are dozens of ways to send payments and transact. That isn’t the case in many countries around the globe.  This backs our thesis at Javelin that stablecoins will continue to grow and provide a great alternative to traditional fiat currencies, particularly in areas with economic uncertainty.”

He added: “However, Tether and Circle have dominated most of the world’s stablecoin market share, so there are plenty of challenges ahead for the Global Dollar network.”

The post Robinhood, Galaxy Digital, Kraken Unite for New Paxos Stablecoin Network appeared first on PaymentsJournal.

We are starting to see the first fallout from the Consumer Financial Protection Bureau’s report this summer exploring the excessive payment fees charged by school lunch programs. A class action lawsuit claims that a New Jersey-based processor charges exorbitant transaction fees when it processes children’s school lunch payments.

The suit says that PAMS Lunch Room and PCS Revenue Control Systems, which do business as Pay PAMS, are in violation of New Jersey’s Consumer Fraud Act and the state’s Truth-in-Consumer Contract Warranty and Notice Act.

According to the CFPB, the company is the fifth-largest operator among the nation’s school lunch payment processors. PayPAMS handles the lunch fees for more than 2,500 schools in 14 districts, covering more than a million students.

The CFPB report found that the school lunch payment processing industry charges parents $100 million in “junk fees” annually. The suit claims that payment processors increase prices to families by charging far more than their processing cost claims.

“The CFPB found that, at the time it was conducting its research, PayPAMS charged consumers fees of between approximately $1.95 to $2.40 per transaction regardless of transaction amount or type,” the suit claims, “when in general, the cost to a payment processors on a credit, debit, or prepaid card transaction is around 1.53% of the transaction, and between $0.26 to $0.50 per transaction for an ACH transfer.”

Unavoidable Charges

The report from the CFPB analyzed the lunch programs at the 300 largest public school districts in America and found that payment processors charge average transaction fees of $2.37, or 4.4% of the total transaction, each time money is added to a payment account. Families making online payments every other week can end up spending as much as $42 in transaction fees during a school year.

The third-party payment processors sell their services to school districts by asserting that they can lower school district processing costs and increase administrative efficiency. But the Arlington Independent School District in Texas, for instance, allows PayPAMS to charge a 5.6% fee per transaction. On a $50 deposit into a school lunch account, that amounts to $2.80 in fees and a profit of $2.42, or more than seven times its costs, the suit claims.

The suit also claims that school districts increasingly refuse to accept cash or checks for payment of school lunches, or only accept such payments during hours that are inconvenient to working parents.

The post School Lunch Payment Processor Hit with Lawsuit over ‘Exorbitant’ Fees appeared first on PaymentsJournal.

The Federal Trade Commission is sending more than $2.5 million to consumers who were manipulated by false credit card offers on Credit Karma’s platform.

The payments are the fruition of an action the FTC brought against the fintech two years ago, after it discovered “dark digital patterns.” The agency alleged that Credit Karma presented users with card offers that they were “pre-approved” for, or had “90% odds” of acquiring, when in reality they did not qualify.

“The credit card industry is tightly regulated, and consumers are generally protected against unfair, deceptive marketing practices,” said Ben Danner, Senior Credit and Commercial Analyst at Javelin Strategy & Research. “This reiterates to industry participants that deceptive advertising campaigns will not be tolerated in the credit space.”

Accumulating Data

Credit Karma might be best known for its credit score and credit reporting tools, but to access those services consumers must provide their personal data. The FTC reported that Credit Karma accumulated more than 2,500 data points on its users, including credit and income information. The company then leveraged that data to send personalized ads and credit card offers.

Once a customer clicked on a “pre-approved” credit offer, the platform initiated a hard pull of the user’s credit report, which had the potential to damage the customer’s credit score if the card was denied.

According to the FTC, Credit Karma was aware that its pre-approved card offers created false hope for consumers. In training materials for its customer service personnel, Credit Karma expressly mentioned that denial of a pre-approved offer was a common customer complaint.

Almost a third of Credit Karma’s “pre-approved” customers were denied after making applications. Though the fintech mentioned that denial was possible, that information was often buried in legal disclaimers.

Coming to a Head

Regulators have become increasingly concerned about the role fintechs play in the banking-as-a-service model. Though most financial technology companies are heavily involved with consumer financial data, they aren’t subject to the same regulations that financial institutions must follow.

Those issues came to a head after the Synapse failure, by which the fintech’s lax accounting practices cost its customers millions. There was widespread speculation that the severity of that collapse could lead to a reset of the BaaS model, and the FDIC has recently rolled out new rules designed to hold fintechs accountable to the same rules as banks.

The post FTC to Return Millions to Consumers Over Credit Karma Misrepresentations appeared first on PaymentsJournal.

Asia has become the top region for crypto and digital assets developers after increasing its share to 32%, up from 13% in less than a decade.

At the same time, the number of North American developers was cut in half, according to an X post by Maria Shen, a general partner at Electric Capita. Though more blockchain developers are moving beyond America’s borders, the U.S. still has the highest number of developers of any country.

The news comes amid increasing concerns about the lack of a crypto and digital asset framework in the United States. Without a consistent set of rules to follow, U.S. regulators like the Securities and Exchange Commission have taken an enforcement-first approach to the crypto industry.

“The only thing that is clear is that nothing is clear,” said James Wester, Director of Cryptocurrency at Javelin Strategy & Research, in a conversation with PaymentsJournal. “It’s becoming tough for companies to build products in this space, because they don’t know they’re doing anything wrong until they get an enforcement notice. Imagine not knowing the speed limit until you get pulled over for a ticket. That’s the way things are shaping up right now.”

An Exodus of Crypto Talent

The U.S. regulatory uncertainty has led to concerns that there could be an exodus of crypto talent to other regions of the world. The European Union will roll out its comprehensive crypto framework, Markets in Crypto-Assets (MiCA), later this year, which will make the EU an attractive alternative for crypto talent.

There have also been a variety of crypto efforts in Asia, where innovations like instant payments, digital wallets, and contactless payments have quickly gained traction. China has long pushed for its central bank digital currency, commonly called the digital yuan, to gain more precedence in a culture dominated by mobile payments.

India has been a powerful player in instant payments with its UPI system, which has quickly become the predominant method of payment in the country. Now India is making headway with crypto—according to Shen, though 18.8% of all crypto developers are based in the United States, India is next with 11.8%.

The post Asia Overtakes North America as Leading Crypto Development Hub appeared first on PaymentsJournal.

Jamie Dimon, CEO of JPMorgan Chase, contends that several recent rules designed to regulate the U.S. banking sector have been misguided or inadequate. He said there may be no recourse other than legal action.

Speaking at an American Bankers Association conference, Dimon took issue with last year’s proposal to raise capital requirements on systemically important banks. The Basel III endgame reforms are designed to strengthen the financial industry against economic downturns, and lawmakers originally proposed a 19% capital requirement for the biggest banks.

Though the requirement was lowered to 9% after lobbying from Wall Street, Dimon said that threshold still isn’t low enough. The executive said the heightened capital requirement would place too much strain on big banks and that the Basel rules were based on faulty operational risk calculations and inconsistent liquidity coverage ratios.

Taking Aim

The CEO also said it is “grossly unfair” that credit card companies like Capital One and American Express are able to charge higher fees on debit card transactions than card-issuing banks.

In addition, Dimon took aim at the Consumer Financial Protection Bureau’s proposed framework to spur U.S. open banking. The goal of the CFPB’s rules is to give consumers control of their financial data and allow them to shop around for the financial institution that has the best rates and products.

Open banking has been much more prevalent overseas, and Dimon said he was not against the model itself. He said the CFPB’s rules would do more to compromise consumer data than safeguard it, perhaps leading to a spike in fraud.

‘Unfair and Unjust’

There is some uncertainty about the outcome of the Basel III reforms and the CFPB’s open-banking rules that will likely be clarified only after the U.S. presidential election. Still, many financial institutions might be hesitant to criticize and sue regulators because of concerns about retaliation.

However, the executive said JPMorgan Chase has been compelled to act because of the “unfair and unjust” regulatory environment.

“It is time to fight back,” Dimon said. “We don’t want to get involved in litigation just to make a point, but if you’re in a knife fight, you better bring a knife, and that’s where we are.”

The post JPMorgan Chase CEO Criticizes U.S. Banking Regulations appeared first on PaymentsJournal.

The Pennsylvania House of Representatives has passed a bill designed to establish a framework for transactions involving crypto and digital assets.

The crypto bill received overwhelming support from both parties in Pennsylvania, one of the battleground states likely to decide the upcoming U.S. presidential election. House Bill 2481, which has also been called the Bitcoin Rights bill, received only 26 votes against among the 202 members of the House. It is estimated that roughly 12% of the 13 million Pennsylvanians are crypto holders.

Crypto, stablecoins, and non-fungible tokens would fall under the proposed law’s purview, but the bill excludes any government-controlled digital assets like CBDCs. If the bill is passed, state and local governments in Pennsylvania won’t be able to restrict consumers or businesses from accepting digital assets as payment. In addition, any crypto transactions in the state will be taxed like fiat transactions, and additional taxes or fees on crypto payments would be prohibited.

Establishing a Framework

The Pennsylvania bill was developed in conjunction with the Satoshi Action Fund (SAF), a bitcoin advocacy group. Bill 2481 will now move to the Pennsylvania Senate, though it won’t receive a vote until after the election.

Lawmakers in 20 other states are considering crypto and digital assets regulations, and many of those efforts have been led by the SAF. Crypto regulations have already been enacted in Oklahoma, Louisiana, Montana, and Arkansas. Louisiana also recently became the first state to accept crypto payments for all state services.

Crypto Innovators

Crypto has become an important topic for regulators that has factored into the U.S. elections more significantly than ever before. The United States has fallen behind other regions like the EU, which launches its Markets in Crypto Assets (MiCA) regulations later this year.

Though there are no federal crypto laws on the books, the U.S. Securities and Exchange Commission has made it clear through a series of enforcement actions that it considers crypto a security and crypto exchanges as unregistered securities brokers.

Because of such actions, there have been concerns that digital assets trailblazers will move elsewhere and the United States could lag behind the world in financial innovation.

The post Pennsylvania Passes Bipartisan Bill to Establish Crypto Framework appeared first on PaymentsJournal.

In its push to further internationalize the yuan, the Chinese government has enlisted HSBC’s Hong Kong unit to join its worldwide interbank payment system as a direct offshore participant. It’s the next step in China’s promotion of its Cross-Border Interbank Payment System (CIPS), which it has touted as an alternative to the globally dominant Swift payments system. Nevertheless, CIPS is a partner of Swift and uses its messaging service to facilitate international payments.

CIPS was set up in October 2015 as a settlement and payment clearing system for transactions that use the yuan. The system is overseen by China’s central bank but is run by the private company CIPS Co. Ltd., based in Shanghai. 

The yuan currently ranks fourth in global payments. The Chinese government would love for it to challenge the U.S. dollar, still by far the world’s most widely used currency.

Hong Kong’s Role

Hong Kong has been a key part of China’s developmental strategy for some time. Having HSBC on board will make payments faster and cheaper for overseas companies that want to trade and invest using China’s currency.

Cross-border payments are not the only role Hong Kong has played in China’s economic outreach. Earlier this year, the Hong Kong Monetary Authority and the People’s Bank of China announced that residents in Hong Kong will be able to use the digital yuan, also known as e-CNY, for cross-border transactions. This marked the first application of the central bank digital currency outside mainland China.

China’s National Financial Regulatory Administration has also begun to encourage banks and insurance firms to issue yuan-denominated bonds and list shares in the Hong Kong Special Administrative Region. On top of that, Chinese mainland companies have been encouraged to set up their global or regional headquarters in Hong Kong.

But the growth of the yuan in cross-border transactions has also been driven in large part by Russia. International sanctions prevent major Russian banks from using the Swift international payment system, a result of the ongoing invasion of Ukraine. This has left Russia increasingly turning toward the Chinese yuan for cross-border payments. According to the Russian Central Bank, Russia has invested 139.6 billion rubles ($2.28 billion in yuan) this year alone.

The post Reaching for More Cross-Border Payments, China Looks to Hong Kong appeared first on PaymentsJournal.

Open-banking platform Dwolla, which allows businesses to integrate into the U.S. instant payments rails, will expand its partnership with data firm Plaid.

The new integration will bring Plaid’s instant account verification and risk assessment functionalities to Dwolla’s pay-by-bank operations as soon as next year. Businesses will also be able to onboard to Dwolla using Plaid, a platform well known to many organizations.

The new solution is expected to interface with accounts at more than 12,000 U.S. financial institutions, according to a news release.

“Our expanded partnership with Plaid represents a significant step forward in our mission to simplify and streamline pay-by-bank payments for businesses,” said Dave Glaser, CEO of Dwolla. “By integrating Plaid’s advanced account verification and risk assessment features into our open-banking services, we’re providing a single, unified solution that addresses the complex needs of modern enterprises in the evolving payments landscape.”

Significant Deals

The expansion of the Plaid partnership is the latest in a series of significant deals for Dwolla. Earlier this year, Dwolla announced an agreement with Visa that would bring its open-banking platform to the credit card giant’s infrastructure. That deal came on the heels of Dwolla’s agreement with cybersecurity company MX Technologies.

Dwolla’s platform integrates into both U.S. instant payment rails—RTP and FedNow—in a single interface. In addition to real-time settlement, instant payments offer businesses a more secure payment method that can include much more transactional data.

A Prime Position

Dwolla is in a prime position to benefit from the Consumer Financial Protection Bureau’s new rules that should give the U.S. open-banking industry a clearer regulatory framework. The CFPB’s rules are designed to protect consumers but also aimed at increasing innovation in financial services.

Although the CFPB’s new regulations are mostly about giving customers the freedom to switch between financial institutions whenever they want, the agency specifically cited instant payments. The CFPB believes pay-by-bank can be a better option for merchants and consumers because it is more cost-effective than credit cards. Instant payments are also more secure because they require the consumer to authorize the transaction.

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After a year when credit unions have been victimized by a series of hacking attacks, the National Credit Union Administration is taking action. The NCUA has sent a letter to credit union boards of directors and CEOs highlighting the risk of cyberattacks at these institutions.

“Given the proliferation of sophisticated information security threats and the importance of safeguarding the assets and information of your members, the NCUA urges credit union boards of directors to prioritize cybersecurity as a top oversight and governance responsibility,” the letter reads. “Credit union board directors like you must ensure that a credit union’s senior leadership is highly focused on managing cyber risks and that your credit union has the necessary resources to maintain an effective cybersecurity program that aligns with the products, services, and risk profile of your institution.”

The letter highlights four key areas where credit unions could better address cybersecurity:

•               Recurring training

•               Approval of an information security program

•               Operational management

•               Effective incident response planning and resilience

According to the letter, from September 2023 through August 2024, federally insured credit unions reported more than a thousand cyber incidents. Last December, more than 60 credit unions nationwide were victims of a ransomware attack. That was precipitated by a hack against Ongoing Operations, a division of Trellance, a cloud computing provider that serves credit unions,

Then, in July, a ransomware attack disrupted online banking services for more than 500,000 members of Patelco Credit Union in Dublin, Calif. The attack exposed the personal information of more than a million customers and employees.

“Credit unions, like all financial institutions, are under constant threat of cyberattacks,” said Kevin Libby, Fraud & Security Analyst at Javelin Strategy & Research. “The risk of those attacks succeeding is twofold. “Security breaches can lead to sensitive consumer data, and personal information being exposed. Likewise, criminals can gain control over and steal financial assets. It is encouraging that organizations like the NCUA are working across their member institutions to provide guidance on how best to fortify their cybersecurity protocols. Attack vectors are constantly evolving, and financial institutions would do well to address each the four aspects of cybersecurity identified in the NCUA’s letter.”     

Fighting Spam Calls

Credit union leadership has taken a strong stand against scams in recent years. Last year, America’s Credit Unions, alongside the American Bankers Association, sent a letter to the Federal Communications Commission asking for help in dealing with illegal and spoofed calls as well as in reducing the number of legitimate calls that are mistakenly blocked as spam. Their concerns included not just reducing the incidence and recognizability of spam calls but also ensuring that legitimate calls really do get through and reducing the chances that phone numbers are spoofed.

That highlights another way fraud has had a negative impact on financial institutions. A study from TransUnion found that although nearly 90% of consumers say they don’t pick up the phone, 74% of respondents did not answer a call because of safety or fraud concerns, only to learn later that it was a legitimate call. By trying to steer clear of fraud, consumers are missing critical calls.

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An executive at crypto firm Circle said UK regulators could be rolling out stablecoin legislation in the next few months.

Stablecoins have surged onto the digital assets scene in the past few years, led by Tether’s USDT and Circle’s USDC. However, UK regulators have been slow to release stablecoin-specific rules.

After Dante Disparte, Global Head of Policy at Circle, met with officials at the Bank of England, he was reassured by their digital asset strategies. Disparte told CNBC that UK stablecoin laws could be on the books in a matter of “months, not years.” There has been no comment from the Bank of England or the UK Treasury.

Crypto Resistance

The UK has lagged behind the European Union in creating a regulatory framework for crypto. The EU’s Markets in Crypto Assets (MiCA) regulations are set to take effect by the end of the year. MiCA is an overarching set of rules for crypto and digital assets and includes regulations specific to stablecoins.

The UK has been less enthusiastic about establishing a similar framework for crypto. According to Disparte, much of the UK’s crypto resistance stemmed from concerns in the wake of the collapse of crypto platform FTX, as well as apprehension about fraud and risk.

“You could also look back, and I think many in the UK and in other countries would argue that they’re vindicated in not having jumped in too quickly and fully regulating and bringing the environment onshore because of all the issues we’ve seen in crypto over the last few years,” Disparte said.

The Money of the Future

Because many stablecoins track a fiat currency one to one, they don’t carry as much volatility and risk as other cryptocurrencies. As the use cases for stablecoins have grown, major players in the payments industry have invested in the technology. PayPal rolled out its PayPal USD stablecoin earlier this year, and Stripe just made a billion-dollar investment in stablecoin specialist Bridge.

The proven capabilities of the technology mean the UK could miss out on the benefits of stablecoins if it doesn’t create an infrastructure for them.

“In the spirit of protecting the U.K. economy from excess risk and crypto, there’s also a point in time in which you end up protecting the economy from job creation and the industries of the future,” Disparte said. “You can’t have the economy of the future unless you have the money of the future.”

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Artificial intelligence is having a huge impact on the U.S. federal government’s fraud detection efforts. The Treasury Department credited AI with helping officials prevent and recover more than $4 billion in fraud during fiscal 2024 alone—six times the amount recovered in the previous year.

And it’s not just digital payments that are subject to AI’s scrutiny. According to CNN, machine learning technology helped the Treasury recover $1 billion in check fraud in fiscal 2024, nearly tripling the amount recovered the year prior.

The U.S. federal government is one of the largest issuers of checks in the world, making fraud detection a particularly acute issue. Last year, the  Treasury disbursed 1.4 billion payments totaling $6.9 trillion, covering everything from Social Security payments to tax refunds.

Along with the sheer volume of checks issued, the government also maintains a tremendous amount of data related to these programs, which fuels its AI fraud detection efforts.

“Machine learning AI technologies are proving to be effective fraud detection and mitigation tools due to their ability to efficiently consume and derive insights from large, complex, data sets absent a great deal of human involvement,” said Kevin Libby, Analyst of Fraud and Security at Javelin Strategy & Research.

A Pandemic Problem

When the government launched relief programs in the wake of the pandemic, fraud of all kinds surged. The U.S. Department of Labor’s Office of the Inspector General estimated that there was $45.6 billion worth of fraud resulting from unemployment checks. The Treasury Department reported that check fraud has increased by 385% since the pandemic.

As a result, U.S. officials quietly started using AI to detect financial crime in late 2022. The use of machine learning to detect check fraud was a focal point, and in the end, was highly successful. The government now reports that by identifying unusual transaction patterns, it can stop check fraud almost in real time. The goal is to act quickly enough to alert banks to anomalies before fraudulent checks are cashed.

“AI is adept at rapid pattern recognition and anomaly detection,” said Libby. “This has proved to be invaluable in rooting out various forms of check fraud, especially in the case of novel or emerging fraud schemes.”

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Consumers today have more payment options than ever, ranging from traditional methods like checks and cash to prepaid cards and online payment service providers such as PayPal, Venmo, and Cash App. Some might assume that consumers who rely solely on alternative payment methods would conduct most of their transactions digitally. However, it turns out that fully banked individuals account for a much higher share of digital payment transactions than those using only alternative methods.   

A study from the Atlanta Fed looks at the share of digital payments by value across different consumer groups. The highest share is seen among high-income, fully banked consumers, defined as those with annual household income over $50,000. This cohort uses digital payments for more than 85% of the value of their transactions. However, for consumers who rely solely on alternative accounts or credit cards, that figure drops to 57%.

So, what do unbanked or underbanked consumers use instead? Roughly a third of their transactions are conducted with paper-based instruments—such as cash, checks or money orders. In contrast, high-income consumers use these methods for just 13% of their payments. Additionally, underbanked consumers are much more likely to use debit cards, which account for 35% of their transactions, compared to just 13% for the high-income group.

An earlier report from the Atlanta Fed discussed another option that may benefit this group: instant payments, which have the potential to extend financial advantages to those without full access to the banking system. In an essay published earlier this year, Lali Shaffer, a payments risk expert at the Atlanta Fed, identified two specific barriers that instant payments can help address: high and unpredictable fees, and delays in funds availability.

Limiting Features

This recent research dug deeper into the reasons why some households have limited access to full banking services. A key factor is their inability to fulfill the requirements for obtaining a transaction account. Unlike depository institutions, nonbank transaction account providers often don’t require a minimum balance, an initial deposit, or even full identification to open an account.

But consumers may not be aware of the availability of the availability of these alternative transaction account options or the benefits of account ownership. Many unbanked households continue to cite a lack of sufficient funds or proper identification as a hindrance to opening an account, unaware of services like Bank On, a nonprofit that offers traditional banking accounts with a minimum deposit of just $25.

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To alleviate the inflationary pressure on consumers and small businesses, the Australian government has announced plans to ban interchange fees on debit card purchases.

The Australian central bank estimated that debit card surcharges cost customers A$1 billion ($671 million) per year. Debit card usage has picked up steam in the country since the pandemic, with the central bank reporting that less than 12% of retail transactions in Australia are made with cash.

These transaction fees cost small businesses in the long run. The Australian government identified instances where smaller merchants were charged twice the amount that large retailers paid for the same transaction.

Sending a Message

It will likely take over a year before the interchange fee ban is implemented, as the rule is still subject to review by the Reserve Bank of Australia. However, the government felt it was the right time to send a message to payment providers that unfair and excessive debit card surcharging must be eliminated.

Australia’s move follows the European Union’s lead, which banned  debit card interchange fees six years ago. Not long after, the UK instituted its own ban on both debit and credit card surcharges.

Seeking Clarity

In the U.S., debit card interchange fees are governed under Regulation II of the Durbin Amendment, which caps the fees at 0.05% of the transaction amount plus $0.21, with an additional $0.01 for fraud prevention measures.

Last year, U.S. regulators voted in favor of a proposal to lower debit interchange fees to 0.04% plus $0.144, as well as an increased fraud prevention rate of $0.013. The changes sparked controversy among merchants and issuers. Many merchants felt the reduction didn’t go far enough, while some issuers were concerned about the potential loss of revenue. Despite  a flood of commentary, there has been no ruling on the reduction yet.

Fees have long been top of mind for merchants, especially credit card interchange fees. After a highly publicized $30 billion settlement between Visa, Mastercard, and merchants was recently shelved, there is still no clarity on when U.S. merchants might see a reduction in credit card interchange fees either.

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Mastercard continues to expand its cross-border payment offerings through a new collaboration with Citi. The two financial giants are teaming up to offer cross-border payments to Mastercard debit cards in 14 receiving markets worldwide, including the U.S.

Although Mastercard has previously teamed up with several regional financial institutions, Citi is the first global bank to enable cross-border payments to Mastercard debit cards. This service is available to Citi clients across 65 origination countries spanning the corporate, financial institutions, e-commerce, and commercial sectors.

Citi and Mastercard are promoting the solution for a range of use cases, including insurance payouts, airline refunds, compensation payments, on-demand payments to freelancers and gig economy workers, e-commerce payments to merchants, and refunds to customers. The new offering leverages Mastercard Move, a suite of global solutions that cover both domestic and cross-border transactions. Mastercard Move’s cross-border services now reach more than 95% of the world’s banked population across 280 countries.

This is just one of the ways Mastercard has aggressively expanded its cross-border portfolio recently. Last year, the company introduced Cross-Border Services Express, allowing financial institutions to set up international payments for their customers. “Cross-Border Services Express levels the playing field and provides small and mid-tier banks, including credit unions and community banks, with the same international payments features regardless of their size and scale,” Alan Marquard, Executive Vice President of Transfer Solutions at Mastercard, noted in a prepared statement.

Partnerships Around the World

Recent partnerships with many of the world’s leading financial institutions highlight the growing demand for faster payments. An alliance with China’s Alipay, announced in March, reflects the growing consumer demand for faster online payments in and out of China.

Last November, Mastercard announced a strategic partnership with Dubai Islamic Bank to launch cross-border services for both peer-to-peer and business-to-business transfers. This collaboration further demonstrates the United Arab Emirates’ determination to transform its payments ecosystems, both domestically and internationally.

“Cross-border payment solutions that ride on card rails are a game changer,” Albert Bodine, Director of Commercial and Enterprise Payments at Javelin Strategy & Research, noted upon the introduction of Cross-Border Services Express in 2023. “The relative ease of payment versus other methods will move card-based toward the instrument of choice.”

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Despite recent instant payments initiatives, the Swiss National Bank reported that cash is still the most widely accepted payment method among businesses in the country.

Roughly 98% of the 770 companies surveyed by the central bank said they accepted physical payment, primarily citing customer demand. Many businesses also believe cash is more stable and less expensive than many other payment options.

The Swiss National Bank’s survey included businesses from a variety of industries, including retailers, transportation companies, service providers, and entertainment venues. According to Reuters, the survey found that the overwhelming sentiment among business owners was they “continue to view cash as important.”

Standing Apart

While many of its EU neighbors have readily adopted emerging payment methods, Switzerland has stood apart. One challenge is the country’s shrinking bank network, which has decreased by 21% over the last decade. According to Reuters, UBS plans to close 85 additional branches next year, after its recent acquisition of Credit Suisse.

There have been concerns that the lack of access to the financial system could marginalize portions of the population if the country moves away from cash. It’s not uncommon for Swiss customers to make large transactions, including purchasing automobiles, using physical bills. Notably, the country offers some of the highest-value notes in the world—the 1,000 Swiss franc note ($1,166).

The Costs of Cash

The results of the Swiss National Bank’s survey come shortly after the central bank announced that it made significant strides in establishing an instant payments network among 60 financial institutions in Switzerland. The bank aims to have every bank in the country on board within the next two years.

These efforts have been amplified by some Swiss regulators encouraging alternatives to cash payments. There are also indications that some Swiss public transportation companies could soon limit cash acceptance.

However, many Swiss businesses have pushed back, citing the costs associated with accepting cash, including bank and cash transport fees, as outweighing the benefits. Despite these efforts, the Swiss National Bank’s survey shows that most businesses and consumers in the country remain largely unaffected by the shift away from cash.

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UniCredit’s recent purchase of a significant stake in Germany’s Commerzbank ignited its share of controversy, but the Chief Supervisor of the European Central Bank has called for more cross-border bank mergers.

Though she did not specifically mention UniCredit or Commerzbank, the ECB’s Claudia Buch told attendees at a conference in Lithuania that “cross-border activities and mergers can provide opportunities to generate economies of scale and scope.”

Italy’s UniCredit initially acquired a 9% stake in Germany’s second-largest financial institution last month through an overnight transaction. The institution then leveraged derivatives to increase its stake to 21%. UniCredit has since petitioned the ECB for approval to acquire a 29.9% controlling stake in the company.

Drawing Criticism

The move drew criticism from observers who likened UniCredit’s purchase to a hostile takeover. Both the German government and rival Deutsche Bank have raised concerns, calling the move an unfriendly attack. Detractors of Unicredit’s purchase expressed concerns that a foreign bank might limit the credit available to German businesses and that UniCredit might falter if the Italian economy struggles.

Though the Italian economy has faced challenges, UniCredit has successfully amassed billions of euros for acquisitions. If the bank can pull of a merger with Commerzbank, it would be the largest cross-border bank merger in the EU since the financial crisis. The only real stumbling block in the lender’s plan could be securing approval from the ECB.

Consolidating Positions

Given the ECB’s stance on cross-border bank mergers and Buch’s recent comments, it seems unlikely that the central bank will reject UniCredit’s appeal. The ECB has stated that it applies the same criteria to evaluate cross-border mergers as it does for domestic transactions, primarily focusing on ensuring that the banks are on solid footing.

The ECB has long called for European banks to strengthen their positions through consolidation. The central bank has expressed concern that EU financial institutions have been so focused on their own countries that they have fallen behind  their counterparts in the U.S. and China. However, cross-border bank mergers can be difficult due to country-specific regulations.

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Virtual Payables Direct, Bank of America’s new business-to-business payment offering, further expands the bank’s capabilities in instant payments, allowing UK users and the Single Europe Payments Area (SEPA) to pay suppliers via direct bank transfer. The service builds on BofA’s existing virtual cards program, offering traditional benefits such as extended payment terms, in addition to the instant payment function.

Europe is a key area for the growth of B2B card spending. A report from Javelin Strategy & Research estimated the overall commercial card spending growth rate for Central and Eastern Europe, the Middle East, and Africa at 15.3%. 

With Virtual Payables Direct, once an order is placed and the invoice is approved, the buyer can request that the payment be processed through the new platform. At that point, a virtual card is generated, but the payment can also be made via bank transfer. Bank of America officials say this new feature will simplify the payment process, reduce complexity for suppliers, and lower the risks associated with payment acceptance.

“Virtual Payables Direct offers our clients in EMEA [Europe, Middle East and Africa] greater flexibility as they can make card payments to any supplier in the region, regardless of whether the supplier typically accepts card payments,” said Chris Jameson, Head of Product Management for Global Payments Solutions (GPS) EMEA, in a statement. “The payments are made much earlier in the procurement cycle, thereby helping to improve important supplier relationships and allowing the buyer to take advantage of any prompt payment discounts.”

BofA is promoting Virtual Payables Direct as a solution to help both buyers and vendors manage their cash flow more effectively. It allows buyers to make larger, one-off, or last-minute payments, while suppliers benefit from receiving payments more quickly. 

A Lane for Banks

Virtual card payments, also known as ePayables, remain an area where banks and other large financial institutions are better positioned to take advantage of advances in technology compared to smaller fintechs.

“The platforms for ePayables are often sourced from a financial institution that supplies other essential treasury functions to an enterprise, such as ACH, wire and checks processing,” Albert Bodine, Director of Commercial and Enterprise Payments at Javelin, wrote in his report. “Fintechs play in this space as well, but they still require a sponsor bank to supply payment accounts, so the majority of ePayables programs are sourced with chartered financial institutions directly.”

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A phishing attack targeting Blue Cross/Blue Shield of Minnesota proved highly successful—until the FBI finally caught the criminals four years later. In July 2020, the health insurer made approximately 18 wire transfers totaling nearly $8 million to a pair of Nigerian scammers. The case was recently brought to light when the two were indicted in the scheme.

Blue Cross was swindled into sending money to accounts falsely represented as belonging to Minneapolis-based Fairview Health Services, according to the Minneapolis Star-Tribune. Fairview is a nonprofit that operates community hospitals, clinics, and senior facilities. Two other unidentified health insurers from the Twin Cities also wired Fairview $2.8 million and $1.5 million, respectively.

The scam was a classic credential phishing scheme, where the criminals created email accounts that mimicked those of Fairview’s CEO, general counsel, and a business analyst. Using these spoofed accounts, they sent emails to Fairview employees, tricking them into accessing a malicious link to steal usernames and passwords. Additionally, they set up a fake internet domain designed to resemble Fairview’s legitimate site.

With this information, the criminals obtained access to Fairview’s Optum Pay account, which collects payments from health insurers. They were then able to change vendor account details, redirecting funds intended for Fairview into unauthorized bank accounts.

Blue Cross reports that it was able to recover most of the funds lost in the scam.

A Growing Concern

Phishing has reached epidemic levels. According to Cofense’s 2024 Annual State of Email Security report, the number of malicious emails bypassing secure email gateways in the prior year more than doubled. Additionally, more than 90% of data breaches detected in 2023 were linked to credential phishing.

Few details have been released on the specific nature of phishing emails. However, security professionals caution users to always take their time when responding to emails from high-level executives—especially if it’s unusual for them to be reaching out directly.

Employees are often the weakest link in cyberattacks. As phishing campaigns become more sophisticated, employees may no longer be able to tell the difference between legitimate and fake emails.

“Organizations must regularly train their employees on sophisticated phishing tactics like this,” said Jennifer Pitt, Senior Analyst n Fraud and security at Javelin Strategy & Research. “Employees should be suspicious of any email they get asking them to click a link and provide more information. For this reason, it is best that organizations do not include links asking for information in legitimate company emails to avoid confusing employees.

Employees should NEVER give out their password, not even to someone claiming to be the CEO. Additionally, organizations should implement a two-person process for changing bank account or vendor information or approving large transfers/transactions. As fraudsters often prey on an employees’ sense of urgency, mandating that another person look at the email and approve changes or transactions will allow for more time to logically process the email and question its legitimacy. If employees at any level ever have questions about the legitimacy of an email or are unsure if what is being asked is the proper thing to do, they should be encouraged to contact the email sender — using the contact information already on file, not the contact information in the email.”

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Last year, the U.S. Securities and Exchange Commission denied Coinbase’s request for more transparent crypto regulations, prompting the crypto exchange to take its case to the Court of Appeals for the Third Circuit.

The SEC has often asserted that cryptocurrencies are securities and should be regulated accordingly. This stance led the commission to bring enforcement actions against many crypto marketplaces, including Coinbase, alleging they were operating as unregistered securities brokers.

“The current SEC’s stance toward crypto is unfortunate,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “Here is an asset class that has over $2 trillion in market capitalization and little guidance to go off.”

An Insufficient Rationale

Two years ago, Coinbase petitioned the SEC to create a regulatory framework around digitally native securities and define which digital assets would be classified as such. The petition was dismissed, with the SEC issuing only a two-page explanation.

Coinbase argued that the SEC’s rationale was insufficient and that the commission’s refusal to establish clear guidelines makes it very difficult for these digital asset companies to properly register with the SEC or for digital assets to operate as they were designed.

The panel of appeal’s court judges said that while the SEC isn’t required to issue a sizable attestation, the commission’s response should have included more substance.

“There’s an argument here that this is pretty darn close to vacuous,” said Judge Thomas Ambro according to a report from Law360. “I don’t really understand why it is that you’re denying rulemaking, even though I realize you don’t have to give a whole lot. It’s a brief reasoning, but I don’t see the reasoning.”

A Source of Frustration

The SEC argued that it should not have to create new rules for the crypto industry when existing regulations are adequate.

“If Coinbase wants to arrange its business in a way that does not comply with the existing regulatory framework, that does not establish a right to have the framework adapted to meet their business,” said SEC lawyer Ezekiel Hill.

The appeals judges agreed that the SEC isn’t obligated to make rules at Coinbase’s request, but they were unable to discern why crypto regulations aren’t a priority for the SEC, especially given the commission’s continued enforcement actions against crypto companies. This enforcement-first approach has been a source of persistent frustration for the crypto industry in the U.S.

“Fortunately, companies have a template to work from with the new MiCA regulations in the EU, but that’s no guarantee the SEC won’t continue to act vacuously towards the industry,” Hugentobler said. “If there isn’t a change in the SEC’s leadership and perspective, the progress of the crypto industry will be limited, and organizations and developers will continue their mass exodus out of the U.S.”

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Bank of America will open over 165 new U.S. branches by the end of next year, with the new model will de-emphasizing teller transactions.

While the increase in brick-and-mortar locations may seem at odds with the continued shift to digital banking, Bank of America’s leadership told Reuters that physical branches account for 80% of its new checking account openings.

This news comes after rival JPMorgan Chase announced its ambitious strategy to expand its footprint by 500 branches over the next three years. JPMorgan currently has the largest network of bank branches in the U.S., with more than 1,000 more branches than Bank of America.

Company Storefront

As more customers complete routine transactions online and at ATMs, banks have redesigned their branches to spotlight offerings like mortgages, investments, and other loan products. At JPMorgan Chase’s new branches, a consultative area for customers will be the primary focal point.

“Our branch network is one of the key reasons that customers open accounts with us and it has helped us attract deposits,” Jennifer Roberts, CEO of Consumer Banking at Chase, told Reuters. “We really view our branches as a storefront for the entire company and it is an anchor for us to expand our relationship with customers as we aim to be their primary financial partner.”

Critical Inroads

Bank of America’s move comes as many consumers, especially younger generations, have shifted away from larger banks. While Gen Z wants a sleek, digital-first experience for most of their banking needs, they also look for guidance when making significant financial decisions.

Gen Z is reaching the age where most adults choose their primary financial institution, making it critical for banks to establish relationships now. This is likely one reason why Bank of America is accelerating its branch expansion, adding roughly 40 new locations this year.

However, Bank of America still has around 1,000 less branches than it did 10 years ago, and most of that period was spent redesigning existing branches. It was not until the past two years that the bank renewed its expansion efforts.

The post Bank of America to Shift Gears with New Branch Expansion appeared first on PaymentsJournal.

Italy’s UniCredit has acquired a 9% stake in Germany’s Commerzbank and indicated its intention to seek a merger between the two financial institutions.

UniCredit purchased its shares from the German government, which had been a stakeholder in Commerzbank since the financial crisis. There has been some pushback against the unexpected move by observers who deemed the overnight purchase a clandestine move.

On the other hand, many analysts have applauded UniCredit, believing it could lead to more cross-border bank mergers in the European Union.

“European countries might be partners, but they are still competing sometimes,” said Arnaud Journois, Senior Vice President of European Financial Institution Ratings at Morningstar DBRS, in an interview with CNBC. “I know that from an EU standpoint—policymaker standpoint—there is appetite for more consolidation to happen. However, we think that there are a few hurdles that make that difficult, especially on the regulatory side.”

Facing Resistance

In addition to the standard challenges of moving assets across borders, UniCredit could face resistance from local government officials. Deutsche Bank, the largest financial institution in Germany, might also work to prevent the cross-border merger. Deutsche Bank was previously considered a top contender to acquire Commerzbank, but currently lacks the resources to pursue it.

UniCredit hopes to get approval from the European Central Bank to acquire up to a 30% stake in Commerzbank. The ECB is unlikely to object, as it has been calling for EU institutions to consolidate for some time. EU leaders want to strengthen the region’s financial institutions, which have struggled to keep up with banks in the U.S. and China.

An Ambitious Growth Strategy

There have also been calls among financial leaders for the EU to strengthen its relationship with the UK. Since Brexit, EU merchants, payments processors, and financial institutions have struggled with the regulations and fees associated with doing business in the UK. These appeals followed a meeting between Britain’s prime minister met and Germany’s chancellor to develop an economic growth strategy.

UniCredit’s growth strategy has been ambitious; a merger with Commerzbank would be the largest cross-border merger in the EU since the financial crisis. The move is also strategic for UniCredit, as it acquired its shares in Commerzbank after the German bank struggled and its valuation dipped.

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Authorized Push Payment (APP) fraud has been notoriously difficult to fight against because it involves consumers voluntarily transferring assets to  fraudulent accounts. In most cases, bad actors target their victims through social engineering or impersonating a real person or company.

“There is obviously a technology piece that plays a role here, but there’s also a human element, a psychological piece that’s a big part of this,” Tracy Kitten, Director of Fraud and Security at Javelin Strategy & Research, has said about APP fraud. “I think part of what makes resolving the scam issue so challenging, because these are transactions that the users are actually authorizing.”

According to ACI’s Scamscope report, APP fraud is projected to cost the U.S. more than $3 billion by 2027. In an effort to reduce this figure, the Atlanta Fed has released a new report outlining some of the most effective strategies to combat APP fraud.

Useful Tools

Sharing information plays a critical aspect of identifying APP fraud. The Fed’s ScamClassifier, a voluntary tool designed for information sharing, enhances not only detection and reporting but also mitigation efforts within organizations and across the entire payments supply chain. The Fed urges financial institutions and other organizations to register for the service.

In the UK, organizations have adopted the account name verification service Confirmation of Payee, which requires receiving institutions to validate account names before any payment is initiated. The Fed notes this as a potential model for the U.S.

Looking to the Future

The new Nacha rules, set to take effect in mid-2026, require institutions to establish and follow procedures for handling potentially suspicious or fraudulent ACH credits. The goal is to facilitate the quick return of fraudulent transactions. Like ScamClassifier, these new rules encourage a collaborative approach to mitigating ACH fraud, enlisting both sending and receiving financial institutions to combating unauthorized transactions, including APP fraud.

Finally, the Aspen Institute has announced a National Task Force for Fraud & Scam Prevention, which includes the Treasury Department alongside major players like Visa, Mastercard, and Zelle.

The post The Fed Fights Back Against APP Fraud appeared first on PaymentsJournal.

The Interledger Foundation, an organization advocating for an open and interoperable payment network, is teaming up with fintech company Chimoney to facilitate cross-border payments across more than 130 countries. Chimoney will integrate its payment infrastructure integration with the Interledger Protocol (ILP), an open-source protocol for transferring payments across various ledgers, independent of any single blockchain or currency.

This partnership will facilitate peer-to-peer transfers to more than 130 countries, and ensure that businesses can accept payments, handle disbursements, and offer payout options to banks worldwide. Additionally, it allows beneficiaries of cash-based transfers to bypass significant bank fees, exchange rates, and other transaction charges that are traditionally required to send and receive money internationally. This makes the process more cost-effective for everyone involved.

A Force for Access

The Interledger Foundation works to increase access to digital financial services for the 1.4 billion people worldwide currently excluded from the traditional banking system. The organization works with its partners to integrate ILP into both existing and emerging financial and payments infrastructures.

Chimoney has been a recipient of Interledger’s Digital Financial Services grant program, which supports the growth of interoperable payment capabilities across global financial infrastructures. Interledger also works closely with the Mojaloop Foundation, a coalition of nonprofits dedicated to building real-time digital payment systems for developing countries. Founded in 2020 by a group led by the Gates Foundation and Google, Mojaloop focuses on advancing financial inclusion.

“With Interledger, we’re able to roll out our fintech-in-a-box solution to more regions and networks quickly,” Chimoney CEO Uchi Uchibeke told PaymentsJournal. “This speed and access would be much harder if we were relying on governments or banks to create a protocol like ILP. Interledger’s nonprofit approach also ensures a neutral, global reach, enabling fintechs like us to innovate faster and deliver real value to users across borders.”

Growing Plans

The initiative with Chimoney follows an earlier plan, announced earlier this year, to enable banks in rural Mexican communities to receive cross-border payments from the U.S. Interledger teamed up with The People’s Clearinghouse to streamline cross-border payment capabilities at 140 community banks in Mexico.

While these projects are worthwhile, they also highlight the need for nonprofits to play a key role in fostering cross-border payments in areas that may not seem immediately profitable. Additionally, they may also spur more interest from existing cross-border protocols.

“This is clearly not designed for large commercial enterprises,” said Albert Bodine, Director of Commercial and Enterprise Payments at Javelin strategy & Research. “It will be interesting to see if the card networks, SWIFT, and others get into the game of connecting the instant payments networks, something that would be used by both the unbanked and large B2B interests. That would blow this out of the water.”

The post Interledger Steps Up to Foster Cross-Border Payments in 130 Countries appeared first on PaymentsJournal.

UK regulators have proposed a bill that would categorize crypto and digital assets as personal property.

The current lack of regulation around crypto has made it difficult for legal professionals to determine digital asset ownership during divorces and other disputes. Gaining further regulatory clarity should also make it easier to safeguard consumers and businesses from crypto fraud.

“It’s probable that the UK will implement provisions for the different types of crypto, as well as NFTs and tokenized real-world assets,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “It’s a step in the right direction, particularly after the FTX, 3AC, and Celsius debacles, which have clouded crypto ownership.”

Leading Financial Innovation

Previously, UK personal property law included physical possessions like automobiles and jewelry and intangible assets such as stocks and intellectual property. The new bill aims to establish a category that will include crypto and digital assets, giving owners the same rights as those afforded to other types of personal property.

The UK has been a leader in financial innovation—the country has been an early adopter of open banking concepts like instant payments. The UK has also highlighted digital assets, including tokenization, stablecoins, and blockchain as key breakthroughs that will revolutionize finance.

U.S. Uncertainty

The same regulatory uncertainty surrounding crypto and digital assets exists in the U.S., but American legislators have been less amenable to crypto regulation. The U.S. Securities and Exchange Commission has classified crypto and digital assets as securities rather than commodities and has taken action against multiple crypto exchanges, alleging they are operating as unregistered securities brokers.

However, there have been positive moves by U.S. lawmakers, including the recent approval of bitcoin and ether ETFs. The launch of these ETFs has attracted significant inflows from some of the largest institutional investors in the world.

Still, the regulatory uncertainty has continued to weigh on the U.S. crypto industry, which still awaits the sort of framework that has been proposed in the UK.

“The UK bill is great news, and it brings it all back to ‘not your keys, not your crypto,’” Hugentobler said. “This should keep things moving in the right direction for crypto and digital assets personal property rights.”

The post UK Lawmakers Introduce Bill to Bring Regulatory Clarity on Crypto appeared first on PaymentsJournal.

Ransomware is a worldwide phenomenon, with some of the most dangerous malefactors coming from regions like Russia. Unsurprisingly, many cybercriminals often target U.S. victims.

Data from Trustwave SpiderLabs found that the percentage of reported ransomware attacks involving U.S. organizations increased from 51% last year to 65% in 2024. Brazil and Canada followed as the  second and third most affected countries.

These attacks continue to target the financial services industry, with banks being particularly vulnerable. The banking sector accounts for a fifth of all ransomware attacks in the U.S., while credit unions contribute an additional 8%. In December, more than 60 credit unions nationwide were hit by a ransomware attack, and earlier this year, a cyberattack shut down California’s Patelco Credit Union for weeks.

According to Trustwave SpiderLabs’ report, Defending Financial Services in 2024, Russia-based AlphV (also known as BlackCat) and LockBit are the predominant groups operating in this space. LockBit is responsible for about a quarter of all attacks this year, while AlphV accounted for 10% of attacks in 2023, but its share has increased to 24%.

There are reasons to believe that the increasing exposure of these organizations may help hasten their demise. AlphV was responsible for the most notorious ransomware attack of the year, forcing payments processor Change Healthcare to pay an estimated $22 million ransom.

After squabbling over the ransom money, the ransomware gang was further unsettled by the public disclosure of their attack in the press. Some reports have even suggested that AlphV was shutting down completely, although this doesn’t appear to be the case.

Finance As a Target

The reasons why both U.S. and lending organizations are prime targets for these attacks are clear. Financial institutions handle vast amounts of sensitive data and orchestrate large monetary transactions, making them attractive to criminals looking to disrupt operations and extract large ransoms.

“To mitigate rising threats from cybercriminals, financial institutions must enforce stringent access controls, implement continuous monitoring, and enhance employee vetting processes,” said Karl Sigler, Security Research Manager at Trustwave SpiderLabs. “Institutions should also implement layered security measures, including advanced email filtering and dark web monitoring, to better detect and respond to potential threats in real time.”

Yet too often, the targets make it easy for these attacks to occur. In the case of Change Healthcare, its parent company, UnitedHealth, later admitted that it wasn’t using multifactor authentication to secure its most critical systems. 

The post Study Finds Increase in Ransomware Attacks in the U.S. appeared first on PaymentsJournal.

Slim CD, a processing gateway that handles credit card payments for U.S. and Canadian merchants, revealed it was hit by a cyberattack in June. The breach potentially exposed the credit card details of 1.7 million individuals.

Slim CD said that the compromised data included users’ credit card numbers,  expiration dates, names, and addresses. The company first became aware of suspicious activity on June 15 and was reportedly able to shut down the breach quickly.

According to the company’s statement, an investigation revealed unauthorized access to its systems from August 17, 2023 to June 15, 2024. This breach may have allowed an unauthorized actor to view or obtain certain credit card information between June 14, 2024 and June 15, 2024.

“It is extremely troublesome that the payment processing giant did not detect the breach for almost a year,” said Jennifer Pitt, Senior Analyst, Fraud and Security at Javelin Strategy & Research. “This breach, along with the many other data breaches reported this year, begs the question of whether companies are doing enough to secure their data and detect intrusions early, before data is compromised. From someone on the outside looking in, it certainly appears that many companies are choosing to skirt robust data security practices in favor of saving money instead.”

Fallout From the Hack

Slim CD supports a wide range of payment processors, including Elavon, Worldpay, and FirstData. While 1.7 million compromised credit cards is a lot, it’s worth noting that there are roughly 500 million credit cards in the United States alone.

Slim CD stated it began sending emails to potentially affected individuals earlier this month to ensure they receive “accurate and complete notice.” In general, unless a company notifies consumers directly, there is no way to know if their credit card data has been exposed.

The company says that it has found no evidence that the breached information has been used for identity theft or fraud.

“Those with their credit card information exposed should not take this as a green light to keep using the same card,” said Pitt. “Criminals may try to use the compromised card right away or they may sell the information to someone who holds onto it long enough to establish a false sense of security for the credit card holder.”

Pitt advised that victims of the breach should cancel the affected card. She also recommends that consumers change any passwords associated with the compromised account, monitor their credit card statements and credit reports, and consider placing a fraud alert on their credit cards and credit profiles.

The post Payment Gateway Reveals Hack Affecting 1.7 Million Cards appeared first on PaymentsJournal.

As part of an ongoing partnership between the two companies, PayPal will now process some of the credit and debit card transactions for Shopify Payments in the U.S.

Additionally, PayPal’s wallet will be integrated into Shopify Payments in the U.S., unifying numerous merchant services like payouts, reporting, and chargebacks into a single solution. A few years ago, PayPal introduced similar functionality for Shopify shoppers in France, and the U.S. integration is expected to be operational in a few weeks, according to PayPal President and CEO Alex Criss.

“This aligns with the strategy that Criss has rolled out since taking the helm as CEO,” said Don Apgar, Director of Merchant Payments at Javelin Strategy & Research. “Criss’ predecessor Dan Shulman focused more on growing the PayPal franchise through new users, but a slew of fintechs popped up offering competing services. In contrast, Criss has focused more on adding value and increasing utility for the existing PayPal user base, both consumer and merchant.”  

Brokering Deals

Chriss has recently brokered deals with Adyen and Fiserv, both aimed at incorporating PayPal Fastlane into their checkout process. Fastlane offers a one-click checkout experience that can speed up transactions by up to 40%, according to PayPal.

The company has also beefed up its debit card in recent weeks, adding support for use at brick-and-mortar stores and integration with Apple Wallet.

A Better Customer Experience

The Shopify integration should be another boost for the payments platform—Shopify processed over $41.1 billion in gross payments volume in Q2 24 alone. Meanwhile, PayPal’s more than 278 million U.S. users are likely to have a significant impact on its platform as well.

Shopify runs a third-party marketplace that many small businesses use to create an online presence. The PayPal integration will offer these merchants a more secure payments option.

“This integration with Shopify, along with the PayPal’s Fastlane product, makes paying with PayPal easier for consumers while offering better fraud prevention for merchants,” Apgar said. “The overall reduction in checkout friction benefits both consumers and merchants with reduced cart abandonment and a better customer experience at checkout.”

The post PayPal Expands Partnership with Shopify As a U.S. Card Processor appeared first on PaymentsJournal.

Visa’s A2A pay-by-bank service will launch in the UK and Europe next year, offering consumers a more secure way to pay bills and make purchases directly from their bank accounts.

Currently, when consumers set up direct debits for rent, utilities, or childcare, they often are required to sign over extensive personal data. In addition, they typically need to give advance notice to change payment amounts, and handling one-off transfers might require multiple interactions. Many consumers also lose significant amounts each year due to unauthorized subscription auto-renewals.

Visa A2A is designed to mitigate these issues by giving consumers the ability to monitor transactions and reverse them if necessary. The platform uses variable recurring payments (VRP), enabling users to adjust their direct debits with each transaction. A2A also leverages biometric authentication to reduce unauthorized transactions.

“We want to bring pay-by-bank methods into the 21^st century and give consumers choice, peace of mind and a digital experience they know and love,” said Mandy Lamb, Managing Director, Visa UK and Ireland, in a statement. “Visa A2A will ensure consumer-to-business bank transfer payments have similar levels of protection that consumers are used to when they use their cards.”

Faster Payments

Visa will pilot A2A in the UK in early 2025 before expanding to Europe later in the year. The service will initially have limited scope—it can’t be used to pay for many recurring expenses like streaming services or gym memberships.

As the platform gains traction, businesses could see immediate benefits. A2A uses the UK’s Faster Payment System rails, which can deliver near real-time settlement. Merchants will be notified much faster if a consumer cancels or modifies a payment, and the system’s higher throughput for transaction data should facilitate smoother reconciliation.

Open Banking Trailblazer

Visa A2A should be well-received. The UK has been an open banking trailblazer, and account-to-account payments are one of the core principles of the model. The U.S. has lagged behind many other countries, in part due to the established credit card culture.

U.S. consumers have been hesitant to adopt pay-by-bank solutions because these methods are viewed as less secure, and account-to-account transactions are often irrevocable once authorized. Visa A2A could alleviate these concerns if the service gets a U.S. launch.

The post Visa to Launch Upgraded Pay-by-Bank Solution appeared first on PaymentsJournal.

Alibaba will soon accept payments through rival Tencent’s WeChat Pay on its popular Tmall and Taobao e-commerce platforms.

Previously, the Chinese tech company only accepted payments through Alipay, which is owned by affiliate Ant Group. Both Alibaba and Tencent have developed vast ecosystems centered around super apps designed as all-encompassing solutions.

Alibaba’s decision is a milestone as it moves away from the closed platforms that some have called “walled gardens.”

Economic Pressures

The economic environment in China is likely a driving force behind Alibaba’s move. Chinese consumers have been under immense pressure due to inflation and the lingering effects of stringent COVID-19 restrictions.

To fuel growth, the government has urged tech companies to loosen their grip on their ecosystems. In the past, both Tencent and Alibaba have actively worked to block the use of their rivals’ products on their platforms. While there have been steps toward loosening these restrictions, Alibaba still faces intense competition from rivals like JD.com and PDD, owner of the popular Temu platform.

Competition is likely another factor motivating Alibaba to integrate WeChat Pay, one of the largest mobile payment apps in a country where mobile payments are the norm. The WeChat platform boasts 1.3 billion total users, which presents a substantial opportunity for Alibaba, especially in less developed segments of China.

A Payments Fixture

Economic pressures are part of the reason why Apple recently opened its historically rigid ecosystem to include buy now, pay later provider Affirm, among others. BNPL has quickly become a payments fixture, as consumers increasingly prefer to split their payments without incurring interest from credit cards.

Apple had previously attempted to offer BNPL through its in-house Apple Pay Later platform, but this approach had limited reach—it was only available in the U.S.—and was resource-intensive for the company.

The post Alibaba Pumps Brakes on Super App with WeChat Pay Integration appeared first on PaymentsJournal.

In 2022, Midwest convenience store chain Kwik Trip partnered with Coinsource to begin installing automatic teller machines that dispense bitcoin. Before long, shoppers at any of their 800 locations could pocket a little crypto after gassing up their cars. This move followed similar initiatives by other middle American retailers like Circle K and Walmart to offer bitcoin to their customers.

However, recent news reveals that these ATMs are highly susceptible to fraud, especially among older Americans. A report from the U.S. Federal Trade Commission (FTC) found that Americans lost $65 million in the first half of 2024 to scams involving bitcoin ATMs. Consumers ages 60 and older were more than three times as likely as younger adults to report losses. The median loss reported across all age groups was $10,000.

Bitcoin ATMs have been around for more than a decade. They are typically located in convenience stores, gas stations, and other busy areas. But instead of dispensing cash like traditional ATMs, they allow consumers to buy and sell cryptocurrency.

The crimes exploit the fact that cryptocurrency is hard to trace and even harder to recover once it falls into the hands of scammers. In a typical theft, someone impersonating a government agent or other type of authority figure creates an urgent scenario designed to persuade victims to withdraw cash from their bank accounts.

Depositing the cash into a bitcoin ATM is supposed to fix the problem. Bitcoin is purported tp ne a secure way to protect the money, so much so that criminals refer to the machines as “safety lockers.”

The victim is instructed to deposit a sizable amount of cash at a specific ATM location. The criminal then texts a QR code that the victim can scan at the machine. Once the code is scanned, the cash goes straight into the criminal’s wallet.

Protecting Yourself

The FTC’s recommendations on protecting yourself from these scams rely on tried-and-true methods. The organization emphasizes that cash should never be withdrawn in response to an unexpected call or message. Legitimate authorities would never make such a request.

While bitcoin adds a modern twist to these scams, the FTC warns consumers not to trust anyone who claims they need a bitcoin ATM to transfer money. Legitimate businesses and government agencies will never ask for this, so anyone who does is almost certainly a criminal.

The post Bitcoin ATMs, a Convenience Store Staple, Are Ripe for Scams appeared first on PaymentsJournal.

Digital gift cards now account for over half (52%) of the UK gift card market share in what is being called a “pivotal shift” in the industry.

In the first half of the year, digital gift card sales increased by 17.1%, according to a report from the Gift Card & Voucher Association (GCVA). Over the past five years, this figure has grown by 30% as UK companies have increasingly incorporated digital gift cards into their loyalty and rewards programs.

“The surge in digital gifting in the UK is impressive and it is ahead of the pace in the U.S.,” said Jordan Hirschfield, Director of Prepaid at Javelin Strategy & Research. “Javelin firmly believes that the U.S. will reach a 50/50 split between physical and digital gift cards by the end of the decade. That is driven by similar features of loyalty and rewards that link easily to consumers’ apps and stored value accounts.”

Getting Creative

The leisure and entertainment sector outperformed the retail sector in the UK gift card market, with sales of entertainment-oriented cards increasing by 15.5% year-over-year. However, digital gift card sales in the retail sector still saw a 23.2% year-over-year growth, with grocery stores being the most popular choice among consumers.

Retailers have continued to find creative ways to drive gift card sales. This includes offering a bonus gift card with a purchase or rewarding extra loyalty points to customers who make purchases using their stored value accounts.

A Landmark Moment

Digital gift cards can be a strong component of a loyalty program, driving both engagement with a company’s app and fueling greater spending—consumers typically spend more than the gift card’s value.

“The rise of digital gift cards is a landmark moment for our industry, highlighting the shifting preferences of both consumers and businesses,” said Hannah Shimko, Managing Director of the GCVA in a prepared statement. “This trend underscores the innovation and flexibility inherent in the gift card market, which continues to adapt and grow despite economic headwinds. As we approach the crucial Christmas period, it will be intriguing to see how these trends evolve and shape the future of the market.”

The post Digital Gift Cards Outpace Physical Cards in the UK appeared first on PaymentsJournal.

Visa and Revolut are launching Instant Card Transfers, a platform designed to mitigate the challenges of cross-border business payments.

Organizations that transfer funds internationally have long contended with high transaction fees and prolonged processing times. In addition, each country has its own set of regulations for cross-border payments. Instead of searching for IBAN numbers and Bank Identifier Codes, Revolut’s business clients will only need a card number to send money internationally.

Instant Card Transfers is expected to reduce the multi-day delays often associated with cross-border payments, with many transactions reaching their destination in less than 30 minutes.

Significant Strides

The new offering will be available in over 78 countries and support 50 currencies. This platform gives small- to medium-sized businesses an opportunity to expand their global footprint, although it will initially be open only to UK and EU members.

Since its inception in 2015, UK-based fintech Revolut has made significant strides, including securing its long-awaited UK banking license. The fintech has also announced plans for U.S. expansion, although it has not yet filed for a U.S. banking charter.

A Global Framework

Commercial payments have become so complex that even many seasoned financial professionals may not grasp all their nuances. With cross-border business payments, substantial sums change hands through various methods, and companies have to account for currency conversions.

The demand for cross-border solutions is unlikely to decline given the ever-growing globalization of business. Progress toward establishing a global framework for cross-border payments has been slow, but platforms like Swift and BIS’s Project Agora are designed to address this gap.

However, the most effective candidates for facilitating global cross-border payments already have a framework in place.

“There are several options that could fill that gap and deliver the infrastructure for cross-border payments, but it’s still not clear which one will emerge,” said Albert Bodine, Director of Commercial and Enterprise Payments at Javelin Strategy & Research, in a previous conversation with PaymentsJournal. “Visa and Mastercard would be perfect candidates for cross-border payments because they already have an established global highway. It could be a great addition to their business, especially if there’s a reduction in credit card interchange fees.”

The post Visa and Revolut Collaborate on Cross-Border Business Payments Platform appeared first on PaymentsJournal.

A U.S. appeals court has dismissed a lawsuit against the U.S. Securities and Exchange Commission that aimed to force the SEC to take a formal position on whether ether and the Ethereum network are classified as securities or commodities.

The suit, brought by crypto law firm Hodl Law, was intended as a preemptive move, given that the SEC has previously taken action against multiple crypto services, alleging they operated as unauthorized securities brokers.

Hodl Law argued that since it trades ether on the Ethereum blockchain, there was a “realistic danger” that the firm could face a SEC enforcement action in the future. However, a panel of three judges found no indication that the SEC had ever considered taking action against Hodl.

According to Cointelegraph, the judges also noted that if the SEC were to rule that Ethereum transactions violated the Securities Act, Hodl Law would be in violation due to its current activities. In addition, the judges stated that Hodl Law had no authority to compel the SEC to create regulations or even respond to their requests.

Indefinite Timeline

After the approval and launch of ether ETFs earlier this year, there was cautious optimism that the SEC pause further enforcement actions. The ether ETF approval came as a surprise, given the SEC’s previous objections to ether and Ethereum, but it doesn’t mean there won’t be challenges down the road.

“The SEC has not taken an official position as to whether Ether or Ethereum is a ‘security’ under the Securities Act, and it is possible that the Commission will never decide that Ether or Ethereum is a ‘security’ under the Securities Act,” the judges wrote in their opinion.

Overshadowing Positives

Regulatory uncertainty around crypto has overshadowed what has otherwise been a positive year. In the wake of the bitcoin ETF launch, bitcoin hit an all-time high, and institutional investors have made significant investments in crypto, blockchain, and tokenization on a large scale.

However, unease will likely persist in the crypto community until a more substantial regulatory framework is established.

“I don’t believe the question we wanted answered is burdensome or extreme: is using the Ethereum Network a violation of federal securities laws?” Hodl Law’s senior managing partner Fred Rispoli wrote in an X post. “We won’t get that answer for now, but we have some more avenues to attempt to force the SEC to provide an answer to us. We are not giving up.”

The post Lawsuit to Force SEC Decision on Ethereum Thrown Out appeared first on PaymentsJournal.

The Swiss National Bank announced that roughly 60 financial institutions in the country can now send and receive instant payments, covering over 95% of retail transactions.

The central bank said that more banks will be added over the next few months and anticipates that all of financial institutions in Switzerland will support instant payments by the end of 2026. The platform was facilitated though a partnership with financial services company SIX.

“Instant payments allow private individuals and companies to perform account-to-account transactions with immediate execution and final settlement in seconds, around the clock,” the Swiss National Bank said in a statement. “This market launch represents a further important milestone and reflects the collective stakeholder commitment to the future of cashless payments in Switzerland.”

Cash Affinity

Instant payments have been adopted much faster in other parts of Europe, whether they have been available since 2017. In contrast, the Swiss have had a much stronger affinity for cash payments, as evidenced by a recent Swiss National Bank study that found cash to be the country’s most widely accepted payment method.

According to the central bank, roughly 92% of customer-facing Swiss companies accept cash, while 59% accept payment apps. This reliance on physical payment has raised concerns among some Swiss regulators about the shift to digital transactions.

It’s not uncommon for Swiss citizens to pay for large transactions, including car purchases, with cash. The concern is that a widespread movement to payment apps, coupled with the reduced availability of banks and ATMs, could marginalize young consumers and the elderly.

Slow to Catch On

Instant payments have been slow to catch on in the U.S. as well, though not due to an attachment to cash. The established banking system and the comfort with card payments have kept instant payments adoption on the back burner.

This has begun to change since the launch of FedNow and RTP. FedNow has grown to include 900 financial institutions in just a year, though that is a fraction of the 10,000 institutions in the U.S.

“FedNow adoption is growing, and financial institutions know that instant payments are something that they need, given all the other technologies that we have are immediate and real time,” said Elisa Tavilla, Director of Debit Payments at Javelin Strategy & Research, in an earlier interview with PaymentsJournal. “Everything else in our lives is real time now—payments should be too.”

The post Switzerland Joins the Instant Payments Movement appeared first on PaymentsJournal.

Global financial services company State Street will partner with Taurus, a Swiss digital asset infrastructure provider, to deliver tokenization services for institutional clients.

State Street has long been involved with crypto and blockchain, having previously partnered with crypto custody platform Copper. Since the firm ended that partnership last year, if might seem like a natural fit for State Street to provide crypto custodial services itself, because the organization already manages $4.3 trillion in assets.

However, the company is starting with tokenization because of the lingering regulatory concerns in the U.S. State Street pointed to the U.S. Securities and Exchange Commission’s SAB 121 Accounting Bulletin, which restricts institutions from holding their customer’s crypto assets, as a limiting factor.

“While we’re starting with tokenization, that’s not where we’re ending,” said Donna Milrod, State Street’s Chief Product Officer and Head of Digital Asset Solutions, in an interview with CoinDesk. “As soon as the U.S. regulations help us out, we will be providing digital custody services as well. We know how to be a custodian. We don’t do that on our balance sheet. We do that off-balance sheet. They’re not our assets.”

A Drawn-Out Process

The regulatory environment in the U.S. has been on the minds of the crypto community for some time. Earlier this year, SAB 121 was momentarily reversed, but that effort was later vetoed. The more crypto-friendly FIT21 was then passed in the House of Representatives, but there are still challenges to its approval.

Though crypto supporters scored a win with the approval and launch of bitcoin and ether ETFs, there is still uncertainty given the SEC’s recent actions to regulate digital assets.

“This goes along with our thesis that companies in the U.S. will continue to focus on expanding operations, or partnering with those that are in a crypto-friendly regulatory regime,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “Switzerland has been involved in blockchain for longer than any other country and Taurus has developed the technology and infrastructure to facilitate an effective roll-out of State Street’s new products.”

“However, given the drawn-out regulatory process in the U.S., it may take some time for State Street to achieve its goal of offering crypto custody,” he said.

The post State Street to Launch Tokenization Platform for Institutional Investors appeared first on PaymentsJournal.

Science Card has developed a platform that allow UK consumers to fund university research in healthcare, computing, and climate change by making purchases with a Mastercard-powered debit card.

Users can set up a free account and select the projects they want to support. As they make transactions, Science Card will automatically round up the amounts and contribute these funds to the selected projects. Customers can increase their contributions up to 10 times and customize their donations for each project.

“The UK is a world leader when it comes to research and development, with huge potential to advance the areas of health, technology and combating climate change,” said Daniel Baeriswyl, PhD, Founder of Science Card in a prepared statement. “Our mission is to bridge the gap between science and financial services, empowering people to shape our sustainable future, and enabling them to drive game-changing breakthroughs and innovations in science and tech, all by just going about their everyday spending.”

Ambitious Plans

Some of the healthcare projects available through Science Card include research on kidney transplants and cervical cancer treatments. The company also announced support for a research project focused on neurodegenerative diseases like dementia and Alzheimer’s at University College London’s Department of Mechanical Engineering, with a funding goal of £499,955.

For a platform that launched earlier this year, Science Card has ambitious plans—it aims to reach over two million customers and fund millions in scientific research by 2028.

The company hopes to expand its model to Europe and the U.S. and establish partnerships with top universities worldwide. In addition to user contributions, 10% of Science Card’s profits are directed towards its sourced research projects.

For its part, Mastercard continues to partner with businesses that are pushing the envelope on multiple fronts. The credit card giant just announced a crypto debit card it launched in collaboration with Baanx that can convert the crypto in MetaMask’s self-custodial wallets to fiat at the point of sale.

The post Science Card Launches Mastercard Debit Card to Propel UK Scientific Innovation appeared first on PaymentsJournal.

Banking and credit union groups have filed a lawsuit against the state of Illinois, seeking to block the ban on applying interchange fees to taxes and tips. The suit claims that if the Illinois Interchange Fee Prohibition Act (IFPA) were to take effect, it would disrupt the current payment system and reduce the benefits that credit and debit cards offer to both consumers and businesses.

The law was signed on June 7 by Governor JB Pritzker and is set to take effect in July 2025, making Illinois the first state to exempt taxes and tips from interchange fees.

Challenges Arising from Illinois’ Interchange Fee Prohibition Act

Card issuers and processors would need to establish specific rules for consumers based in Illinois. The IFPA is vague about implementation details, but it could require consumers to swipe their credit card a second time to cover taxes and tips.

The lawsuit was filed by the Illinois Bankers Association, American Bankers Association, Illinois Credit Union League, and America’s Credit Unions, alleging that Illinois is interfering with the federal government’s exclusive regulatory authority over various federally chartered financial institutions. They argue that this law would prevent federal and state financial institutions from operating on a level playing field.

“The IFPA therefore cannot be enforced against national or state banks, federal or state savings associations or savings banks, federal or state credit unions, card networks, or any other participants in the electronic payment processing ecosystem that are integral to facilitating card transactions,” the suit claims.

“There is no way to implement what the law states easily or inexpensively,” said Don Apgar, Director of the Merchant Payment Practice at Javelin Strategy & Research. “It’s not just as simple as not charging the merchant fees on taxes and tips, but this affects the entire settlement process between merchants, processors, card networks and card issuers.  There is also the possibility that smaller issuers will cease servicing restaurants or allowing their cards to be used there solely to avoid the costs of compliance, reducing competition and ultimately resulting in higher costs for merchants and consumers.”  

Those in Support

Retailers remain in full-throated support of the IFPA. “It helps retailers control costs on the moneys they’re collecting on behalf of state and local governments and tipped employees,” Rob Karr, President and CEO of the Illinois Retail Merchants Association, told Bloomberg Law. Karr’s group helped the Illinois legislature write the law.

The Illinois rule is seen as a test case, with several other states now considering similar laws. Pennsylvania, for example, has proposed a law that would require processors to refund swipe fees incurred on sales taxes.

In addition, Senator Dick Durbin—who’s from Illinois—has been advocating for a national cap on interchange fees  through his Credit Card Competition Act of 2023. However, that proposal remains stalled in the Senate Banking Committee and the House Financial Services Committee.

The post Banks, Credit Unions File Lawsuit to Stop Illinois Swipe Fee Law appeared first on PaymentsJournal.

MetaMask, a popular crypto wallet for users who prefer to manage their assets themselves, is launching a debit card that converts crypto to fiat at the point of sale through partnerships with Mastercard and crypto payments company Baanx.

Lorenzo Santos, Senior Product Manager at Consensys, explained the process in a statement to Cointelegraph. First, users must store their crypto on the Linea network. When the MetaMask debit card is swiped, an on-chain transaction is created, transferring tokens from the customer’s wallet to the “Crypto Life” smart contract.

Once the merchant authorizes the transaction, the smart contract performs the fiat-to-crypto conversion, finalizing the payment over Mastercard’s payment network. Customers will be able to select the type of crypto they want to use for each transaction.

Expanding Reach

The MetaMask card is not the first crypto debit card, but other options have been launched by custodial platforms like Coinbase and Crypto.com. With the MetaMask card, users retain control of their private keys until the time of purchase.

The company will initially launch the new card for a select group of users in a pilot program in the UK and Europe, with plans to expand the product’s reach soon.

According to Cointelegraph, one of the objectives of the project is to foster financial inclusion. The new debit card gives unbanked and lower-income consumers another way to make everyday purchases.

Center of Commerce

Some of the largest financial institutions in the world have made substantial investments in products built on decentralized finance concepts like tokenization and blockchain. Mastercard has been a key player in many of them, including a previous collaboration with Baanx and a  global crypto cross-border payments system in Latin America and Europe.

“Mastercard’s position at the center of commerce affords us a unique vantage point to identify real-world challenges and opportunities to solve for them,” said Raj Dhamodharan, Executive Vice President of Blockchain & Digital Assets at Mastercard in a prepared statement. “We saw a significant opportunity to make purchases for self-custody wallet users easier, more secure, and interoperable.”

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Two European trade associations have issued a letter raising objections to the UK’s proposed interchange fee cap for payments originating from European issuers, saying that the proposal could harm the EU’s financial systems.

UK legislators proposed the new rules after a review found that UK businesses paid an additional £150 million to £200 million in interchange fees to EU credit card companies in 2022. These fees are incurred when consumers use an EU-issued debit or credit card to make online purchases from UK businesses.

In response, UK regulators proposed a temporary credit interchange cap of 0.3% and a debit cap of 0.2% on EU cards, and lawmakers will determine permanent caps after further analysis.

“While we appreciate the rationale for taking action to boost competition and innovation in payments domestically, and cross-border, we see the proposed measure as potentially discriminatory, a risk to the integrity of national payments and retail banking markets in the EU and counterproductive,” the European Banking Association and Payments Europe wrote in a letter.

Points of Contention

The two groups also noted that EU financial institutions “will lose money on each transaction.” Fintechs and digital-first banks could be particularly affected, as they don’t offer widespread lending and are much more reliant on payment fees.  

Another point of contention was that the proposed UK regulation did not address the other side of the coin—where UK consumers use their cards for transactions in the EU.

Heated Debates

According to the Financial Times, UK regulators were spurred into action after Visa and Mastercard raised their fees in 2022, given that roughly 99% of UK debit and credit card payments are processed by these two companies.

U.S. merchants have echoed similar concerns, having agreed to a $30 billion settlement with Visa and Mastercard over high interchange fees. However, this settlement was ultimately rejected because merchant groups, like the National Retail Federation (NRF), argued that the deal was far less than merchants were owed, and a NY judge agreed.

While debates over credit card interchange fees are likely to continue, many overlook the role credit card companies play in worldwide payments infrastructure. Dramatic changes in interchange fees could have immediate implications for consumers.

“The NRF’s position is card payments should be free to the retailer,” Don Apgar, Director of Merchant Payments at Javelin Strategy & Research, told PaymentsJournal in June. “The challenge is card issuers have two income streams: fees from merchants and fees and interest from cardholders.”

“If merchant fees are removed, every card could have a $199 annual fee, no rewards, and a 29.99% APR,” he said. “Granted, there’s room to improve card pricing and structure, but rarely does progress happen when one side pushes relentlessly in court to get everything for free.”
 

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The approval of ether exchange-traded funds came swiftly after the launch of bitcoin ETFs, fueling speculation that other digital asset ETFs might soon follow.

In a recent webinar, Dave Lavalle, Global Head of ETFs at Grayscale, said that there have been massive inflows into bitcoin and ether ETFs that have quickly made digital assets a cornerstone of many portfolios.

Lavalle also said that digital asset ETFs are just starting to gain momentum. A Solana ETF has already been proposed and is awaiting regulatory approval. U.S. Lawmakers recently delayed their decision on the Hashdex Nasdaq Crypto Index ETF. The fund gives investors the ability to buy multiple cryptocurrencies at once based on the coins’ weighting in the Nasdaq Crypto U.S. Index.

“Asset managers, issuers, and other financial institutions are noticing the magnitude of these inflows and are realizing it’s a money-making gold mine through fees,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “These regulated ETFs have really helped to solidify the industry.”

Impacting the Ecosystem

Crypto ETFs have stabilized the crypto industry because some of the largest financial institutions in the world, like Blackrock, Fidelity, and Grayscale are backing them. So far, however, the nascent ETFs haven’t had the widescale impact on the digital assets ecosystem that some in the crypto community hoped for.

“Prior to the ETFs, typically inflows will come into bitcoin and some of the other top market cap tokens and trickle down into other ecosystems where most of the building and innovation is taking place,” Hugentobler said. “That is still likely to happen, but if billions of dollars are locked up in spot ETFs, there’s no way for those funds to feed the ecosystem and promote growth.”

Increasing Demand

It might take time for the crypto industry to feel the full effects of the launch, but the ETF approvals were almost universally hailed as a win for the crypto community. The approval of ether ETFs was particularly surprising given previous challenges from the U.S. Securities and Exchange Commission.

“ETFs will likely continue to be approved, and at an accelerated pace, particularly when Gary Gensler is no longer SEC chairman,” Hugentobler said. “Overall, it brings attention to the industry as a legitimate asset class. This should help light a fire under regulatory representatives to make decisions and move the ball forward on rolling out a legitimate regulatory framework.” 

The post More ETFs Tracking Digital Assets, Crypto Indexes, Are Imminent appeared first on PaymentsJournal.

Afterpay has been beta testing buy now, pay later integration into Cash App Card transactions, with the goal of bringing BNPL loans across the entire  peer-to-peer platform.

Block, formerly Square, has owned both companies since the 2021 acquisition of Afterpay. Launched in 2013, Cash App boasts a customer base of 57 million users, 40% of which use the Cash App Card. These users will soon be able to split their purchases using Afterpay’s pay-in-4 loans, a feature that’s been in-demand in its own right.

“BNPL continues to be a popular payment method among consumers, and vendors and issuers are all trying to grab a share of the spend,” said Ben Danner, Senior Credit and Commerical Analyst at Javelin Strategy & Research. “Afterpay is taking a play right out of the book of the major credit card issuers—offering an installment plan to a linked card. Several major issuers such as Chase have such programs which offer customers the ability to split payments into installments for a fixed monthly fee.” 

Against the Value Proposition

Similar to credit card companies, Afterpay will also charge a “small fee” for BNPL transactions on the Cash App Card, which could signal a trend.

“If BNPL vendors move towards card-linked financing where consumers are expected to pay fixed fees, that fails to align with the initial value proposition of BNPL—a payment method that prides itself on no fees and no interest,” Danner said.

Increasing Demand

BNPL has become so popular among consumers that some experts have raised concerns about the mounting debt from these loans. Some have called it “phantom debt” because BNPL providers like Afterpay and Klarna haven’t been required to report their transactions to the NY Federal Reserve.

These concerns prompted the Consumer Financial Protection Bureau to issue an interpretive rule mandating that BNPL services operate more like credit card companies. BNPL providers will now need to issue statements to both regulators and consumers, and disclose any fees. Many BNPL services have pushed back, asserting that they operate with full transparency and that delinquencies are infrequent.

Although BNPL is undoubtedly due for more regulation, consumer demand for the ability to split purchases at the point of sale continues to grow. This trend suggests that means more companies will follow Block’s lead and incorporate the service into their payments platforms, much like how Apple recently integrated Affirm’s BNPL products into Apple Pay.

“We’re really at the starting point of the execution of this product,” Nick Molnar, CEO and Co-Founder at Afterpay, told Modern Retail. “To provide a customer that’s already using the Cash App Card on a frequent basis the ability now to use that card to pay in four is an incredible opportunity.”

The post Cash App Explores BNPL Integration with Afterpay appeared first on PaymentsJournal.

Have you ever paid for a cheeseburger with your face? It may become a reality sooner than expected, especially at Whataburger. J.P. Morgan Payments and PopID are expanding their in-store biometric payment pilot to merchants across the United States, with Whataburger as the main attraction. The San Antonio-based fast food chain is evolving into a high-tech pioneer through its facial recognition efforts.

Whataburger has been quietly testing pay-by-face technology over the past year, noting shorter wait times and increased customer loyalty. Although specific details weren’t provided, PopID claims its platform can reduce checkout times by up to 90 seconds per transaction and has led to a 4% increase in average ticket sizes.

How to Pay by Face

The process involves customers uploading a photo of their face and registering for biometric payments through the Whataburger app. This data is then converted into a template, encrypted, and securely stored in the PopID cloud. During a purchase, the customer’s face template is matched against the stored template, and the merchant receives confirmation of the verified transaction.

The technology is merchant-agnostic. Once customers’ data is uploaded to the PopID cloud, they can use their facial biometrics at any participating pilot merchant and can opt in or out of the program at any time.

“At Whataburger, we believe in innovation, and this marks a significant step forward in enhancing our overall dining experience,” Jerry Phillips, VP of Technology, Whataburger, said in a press release. “This new offering allows us to provide a faster, safer and seamless checkout process for our valued guests, backed by the stability of an established financial institution.”

Competitors in the Market

Whataburger isn’t the only fast-food chain testing out biometric technology. In January, Steak ’n Shake began installing facial recognition kiosks in its 300 locations for patron check-in. McDonald’s restaurants in China have used facial recognition technology since as early as 2015, and KFC locations in China followed suit in 2018. Both Starbucks and Panera Bread have also both been experimenting with pay-by-palm technology.

It’s becoming common for Whataburger to be at the forefront technological innovation. Earlier this year, after Hurricane Beryl struck Houston, city residents used the Whataburger app to figure out which areas had power.

The local electric utility, CenterPoint Energy, didn’t have a map showing affected service areas. However, since Whataburger operates 24 hours a day, users could tell which parts of the city had electricity by checking which Whataburger locations were open.

The post Whataburger Puts Facial Recognition on the Menu appeared first on PaymentsJournal.

The Consumer Financial Protection Bureau may take action against JPMorgan Chase over fraud concerns related to peer-to-peer payment platform Zelle—prompting the bank to consider litigation against the CFPB.

Zelle, operated by Early Warning, is a joint venture by the major banks, including Bank of America, Wells Fargo, and Capital One. The platform has rapidly become the most popular P2P platform in the U.S., with over 2.9 billion transactions last year.

Unfortunately, this popularity has attracted criminals who have devised various methods to scam Zelle users, including phishing and impostor scams. The prevalence of fraud on the platform, coupled with concerns about victim reimbursement, led the CFPB to initiate a probe of JPMorgan Chase.

However, JPMorgan said in a statement that the CFPB is aware the bank goes “above and beyond” to refund customers for unauthorized transactions, including scams. The bank also stated that the bureau is overreaching, and is prepared to challenge the CFPB if necessary, including through litigation.

Consumer Education

Despite JPMorgan Chase’s assertions, Reuters reported that only 38% of JPMorgan Chase, Bank of America, and Wells Fargo customers were reimbursed for disputed fraud transactions in 2023, down from 62% in 2019.

“There is no question that consumers need protection—both from the outside world and themselves,” said Brian Riley, Director of Credit and Co-Head of Payments at Javelin Strategy & Research. “The solution might be better education, so consumers know that payments are irrevocable, or it might be to slow the process down, so there’s an option to cancel transactions when necessary.”

Relative Safety

Federal law requires banks to reimburse customers for unauthorized payments, but some banks have been hesitant to refund fraud victims. They worry that issuing refunds might encourage more criminal activity, potentially costing financial institutions billions.

However, as fraud escalates, it could drive some customers away from newer platforms and back to the relative safety of conventional payment systems.

“Fast payment options that allow consumers to move money quickly are something people want, but at the end of the day, if consumers do not understand the risks, or their banks are unwilling to have protections in place, the process will not fill the needs of everyday users,” Riley said. 

The post JPMorgan Chase Mulls Litigation Against CFPB Over Zelle Probe appeared first on PaymentsJournal.

As peer-to-peer payment apps like Zelle and Venmo gain popularity, so does the opportunity for criminals to entice victims into sending money in transactions that are very difficult to reverse. Newly proposed legislation would allow people who make fraudulent P2P payments to be reimbursed by the apps.

The proposed bill  would help consumers get their money back when they make payments to criminals  on Zelle, Venmo, and other platforms. Currently, the Electronic Fund Transfer Act of 1978 only protects customers from unauthorized transfers, such as when a credit card is stolen. The new legislation would protect consumers from liability when they are defrauded into making a transfer to criminals.

The law currently has an exemption for bank wire transfers. The proposed legislation would eliminate that exemption and allow consumers to get reimbursement for fraud in that area as well.

P2P Fraud – A Growing Concern

Transfer fraud is a growing problem as P2P apps become increasingly popular. Consumers and small businesses sent $806 billion in payments on Zelle last year alone, 28% more than in 2022. By the end of the year, Americans were sending an average of more than $100 million via Zelle every hour.

Meanwhile, reports of payment app fraud have risen by 62% in the past two years, according to the Federal Trade Commission. Consumers reported more than 22,000 instances of fraud, costing a total of $98 million on payment apps and services in just Q2 2024.

A Senate investigation released last month reported that JPMorgan, Bank of America, and Wells Fargo collectively reimbursed consumers for approximately 38%, or $64 million, of the $166 million worth of fraud disputes at these banks in 2023. Those three banks handle nearly three-quarters of all Zelle payments.

The number of wire transfer fraud claims reported to the Consumer Financial Protection Bureau has also been growing. They jumped from 88 in 2020 to 355 in 2023, and reached a whopping $500 million in the most recent quarter.

The newly proposed legislation follows a similar measure that passed in the UK last year. Starting October 7, UK payment service providers must reimburse victims of authorized push payment fraud, following regulations announced by the government’s Payment Services Regulator last year.

The post Congress Considers Reimbursement Rules for P2P Fraud appeared first on PaymentsJournal.

Banks in rural Mexican communities may soon be able to receive cross-border payments from the U.S., thanks to a new initiative from the Interledger Foundation and the People’s Clearinghouse. The organizations have announced a plan to streamline cross-border payment capabilities to the 140 community banks that are members of the Mexican Association of Social Sector Credit Unions.

The People’s Clearinghouse, a tech platform serving community banks and credit unions in Mexico, aims to connect rural financial institutions to the national payments system and hopes this initiative will serve as a blueprint for global deployment, benefiting other underbanked populations. The Interledger Foundation, a global nonprofit advocating for open, interoperable payment solutions, will facilitate the money transfers using its Interledger Protocol. It partners with Mojaloop, a coalition of nonprofits building a real-time digital payments system for developing countries that’s backed by the Bill and Melinda Gates Foundation. Mojaloop’s instant payments infrastructure translates from the ILP language to whatever language each community bank is using.

The project is expected to go live in the first half of 2025. It will initially serve more than half a million Mexican banking customers—210,000 at community banks and 300,000 at savings co-ops.

U.S.-based Mexicans have long been forced to use private money transfer services to send cash back to Mexico. These services often entail high fees, high minimums, and long wait times to receive funds. Additionally, many of Mexico’s community banks don’t have the clearing and transfer systems necessary to deposit funds directly into recipients’ accounts. The new service aims to provide an alternative to this process.

Trailing Other Latin Nations

Other Latin American nations have had success with cross-border payments. Brazil’s Pix recently announced that it would allow Brazilians traveling abroad to use Pix at participating stores and let foreign nationals within Brazil make Pix transactions.

However, Mexico has faced a tepid reception for CoDi, its instant payment system based on QR codes, partly because the Mexican government has done little to promote it. As a result, financial institutions have been looking for ad hoc ways to facilitate payments, especially cross-border transactions. One example is an initiative from Mexico’s Nubank, announced last year, to send money across the border through WhatsApp.

The post Cross-Border Payments Are Heading for Rural Mexico appeared first on PaymentsJournal.

The California Department of Motor Vehicles has announced that it will be placing all 42 million of its car titles on the blockchain. Aiming to detect fraud and streamline the title transfer process, this new technology will allow California’s more than 39 million residents to manage their vehicle titles through the DMV’s app on their phones.

The time required to transfer vehicle titles is expected to decrease from two weeks to just a few minutes, according to the DMV. Besides enhancing convenience, this move is intended to help detect lien fraud. The blockchain will create a transparent record of ownership, making  any fraudulent transfers immediately apparent to the DMV.

A blog post on Avalanche, which is hosting the blockchain, highlights that this initiative represents a key milestone in Governor Newsom’s vision of incorporating blockchain solutions into government operations.

Moving Beyond Finance

With this move, California has become the first state in the U.S. to place car titles on the blockchain. While blockchain technology has been predominately used in the financial sector, its transparent nature makes it a promising solution for managing public databases and bureaucratic processes.

“These systems have historically been accessible by large financial institutions but have done little for regular citizens,” said Andrew Smith, President of Oxhead Alpha, in a statement. The tech company worked with the state on the initiative. “We believe that ultimately, value transfer will be embedded within the system itself proving the technology works at scale and enables other jurisdictions to implement similar approaches.”

The California project has been in development since at least January 2023 and has evolved significantly since then. At the time of the initial announcement, California DMV Chief Digital Officer Ajay Gupta said that they hoped to fully replicate the DMV’s title database onto its blockchain within the next three months. They also mentioned exploring NFT car titles as a way to modernize the process, but the latest announcement makes no reference to NFTs.

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The European Central Bank addressed concerns that its planned central bank digital currency, the digital euro, could be used to surveil EU citizens.

In a recent interview with CoinTelegraph, Maarten Daman, a data protection officer at the ECB, said the digital euro is being built to be the most private electronic payment option available to European consumers.

One primary reason authorities might seek personal data from payment transactions is to identify money laundering or fraudulent activity. However, Daman insisted that the system is being designed with strong mechanisms to ensure users can’t be traced.

“The Eurosystem would not be technically able to directly identify digital euro users, track their payments, nor legally allowed to do so, nor would we have a commercial incentive as a public institution,” Daman told CoinTelegraph.

Pseudonymization Technology

To protect consumers, the digital euro’s infrastructure will incorporate pseudonymization technology, which replaces personal information with fictitious data. This tech gives institutions and authorities the ability to analyze data for signs of criminal activity while keeping individuals anonymous.

In this model, the ECB would provide the digital euro’s infrastructure and ledger, while private companies would offer digital wallets for the CBDC.

Increasing Awareness

The push for payments innovation was echoed in a recent release from the Bank of England, where the UK’s central bank announced plans to implement technologies like tokenization, blockchain, and stablecoins to optimize its financial operations. However, the UK’s central bank stopped short of announcing its own CBDC launch, though it is still under consideration.

The ECB is forging ahead with its plans for the digital euro and expects to develop use cases for the CBDC by the fall of 2025. While stricter privacy controls might allay some doubters, the digital euro could struggle to gain traction simply due to a lack of consumer awareness.  

ALthough the CBDC was announced in 2020, a survey from Deutsche Bundersbank, Germany’s central bank, found that almost 60% of European citizens are unaware of it. Among those who are familiar with the digital euro, over 75% expressed significant concerns about its privacy measures.

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Artificial intelligence can sometimes seem like a solution in search of a problem, but one area where it has already made an impact is fraud prevention. In fact, two-thirds of organizations surveyed by IBM reported using AI to detect and combat fraud within their security operations centers, and it’s paying off.

By using strategies such as attack surface management, red-teaming, and posture management, these organizations were able to contain data breaches more quickly and at a much lower cost than those not employing AI. According to IBM’s Cost of a Data Breach Report, companies using AI incurred $2.2 million less in breach costs compared to those that don’t use AI to prevent such attacks.

Overall, the average cost of a data breach in 2024 jumped to $4.88 million from $4.45 million the previous year, marking the highest annual increase since the pandemic. The distinction between organizations using AI and those not using it is stark. When organizations extensively used AI and automation for preventing security breaches, their average cost for a cyberattack was $3.76 million. In contrast, those not using these tools lost an average of $5.98 million per breach.

A Tool for Criminals

One reason AI has proven so critical is that attackers are also using the technology. 

“The use of generative AI by cybercriminals is making it easier for them to socially engineer or trick employees into providing sensitive information,” said Jennifer Pitt, Senior Analyst of Fraud & Security at Javelin Strategy & Research. “There have already been several cases where cybercriminals successfully used voice cloning and/or deepfake images and video to convince even the most security-conscious employees to provide sensitive information to people they thought were executives authorized to obtain the information.”

AI has also helped speed up the detection of data breaches, a key factor in limiting the damage. Organizations extensively using security AI and automation identified and contained data breaches nearly 100 days faster on average compared to those without these technologies.

“It is crucial that organizations train employees on how AI is used for social engineering and phishing attacks and encourage employees to challenge anyone who asks for sensitive information,” said Pitt. “Organizations must also implement generative AI solutions that can detect deepfakes and AI-generated content, then learn and adapt quickly to changing attacker strategies. With the growing number of data breaches and AI-related cyberattacks, companies can no longer afford to rely on legacy detection solutions.”

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The European Central Bank released the results of its first stress test of EU banks’ cybersecurity measures, revealing that many banks would struggle to recover from a hack.

The ECB asked 109 banks to detail their emergency plans in the case of a cyberattack, including both their response to the breach and their strategy for restoring normal operations for their customers. After reviewing the banks’ procedures, the ECB gave feedback on the areas where each bank could improve their response, like enhancing backup systems or strengthening controls on third-party partners

“The results of the stress test are insightful and showed that while banks do have high-level response and recovery frameworks in place, there is still room for improvement,” ECB supervisor Anneli Tuominen noted in a blog post.

Rectifying Shortcomings

An additional 28 banks were chosen to participate in a more intense exercise that included on-site inspections and cyberattack simulations. According to the ECB, many of the banks have already rectified some of the shortcomings revealed in the stress test.

The central bank was careful not to release any details about the specific weaknesses it uncovered or the individual banks it tested, as it didn’t want to give cybercriminals any data they could use against the institutions. The ECB said it would decide whether to pursue further stress tests by the end of the year.

Top of Mind

Cybersecurity continues to be  a top priority, particularly after the global internet outage that recently rocked many businesses, including banks. While that incident was tied to an update from cybersecurity provider CrowdStrike and not a cyberattack, it still exposed weaknesses in financial institutions’ responses to cyber incidents.

One of the most important considerations for banks is their dependence on third-party providers to manage critical aspects of their business. As a result, EU banks’ relationships with third-party providers were a central focus of the ECB’s stress test.

The central bank reported that cyber incidents were on the rise in its 113 banks in the latter part of last year, partially due to the war in Ukraine. The powerful technology that is now in the hands of hackers, including deepfake AI, makes it critical for financial institutions to have actionable strategies in the event of a hack.

The post ECB’s Cybersecurity Stress Test Reveals Challenges for EU Banks appeared first on PaymentsJournal.

Whenever a purchase is made with a debit card, transaction fees are typically about 50 cents. But, if that purchase is for a child’s lunch at school, the fee can jump to over $2.

This disparity occurs when a market is dominated by a small handful of players. Although more than 20 companies offer lunch payment services to school districts nationwide, the majority of enrolled students are served by just three market leaders—MySchoolBucks, SchoolCafé, and LINQ Connect—who control two-thirds of the school lunch payments market, according to a new report from the Consumer Financial Protection Bureau.

The CFPB analyzed the lunch programs at the 300 largest public school districts in America and found that payment processors charge average transaction fees of $2.37, or 4.4% of the total transaction, each time money is added to a payment account. Families making online payments every other week can end up spending as much as $42 in transaction fees over the course of a school year.

Families paying full price for lunch spend 8 cents in fees for every $1, while those paying a reduced price for lunch can incur as much as 60 cents in fees for every $1 spent.

And most families have no choice but to pay thoee fees. Contracts are determined at a school district level, meaning parents are stuck with whichever company won the bid to handle funds for online student lunch accounts.

The Cashless Lunchroom

This is all unfolding as school districts increasingly shift to cashless operations. The CFPB found that 87% of the sampled school districts have contracted with payment processors to enable electronic payments for expenses like school lunch costs.

The payment platforms are often just one element of a larger contract for school nutrition or information management services. This makes the fees less noticeable to the school districts and leaves many schools less inclined to negotiate them.

“As the growing use of digital payment options expands to our schools, we must take care to meet schools and families where they are—examining benefits as well as pitfalls, listening to community concerns, and implementing guardrails where necessary,” said U.S. Secretary of Education Miguel Cardona in a statement accompanying the findings. “Above all, actions around digital payment options must keep students at the center, recognizing that no student can learn if they are hungry and lack the tools they need.”

The post The Hidden Costs of School Lunch Payment Fees appeared first on PaymentsJournal.

Bank of America’s CashPro corporate payments app processed $500 billion through the first half of the year, a 40% increase from a year ago.

Business banking apps have increasingly adopted mobile-friendly features similar to those in consumer online banking apps. This ease-of-use has helped mobile business banking apps gain massive popularity, and Bank of America expects CashPro to reach $1 trillion in payments volume by the end of the year.

“This volume of payment approvals via our CashPro App reflects a shift in client behavior and digital banking expectations over the last few years,” said Jennifer Sanctis, head of CashPro App at Bank of America in a prepared statement. “The app’s innovative design offers a convenient and secure client experience through which users can approve and validate payments and monitor account activity from anywhere and at any time of day.”

Increasingly Remote

The demand for business mobile banking services accelerated during the pandemic, and these solutions have since become essential for increasingly remote . Apps like CashPro offer business owners a way to monitor their payments, deposits, loans, and other financial transactions directly from their mobile device.

According to Bank of America, CashPro has become a leading  corporate mobile app worldwide, with 550,000 users across 40,000 companies. The app supports payments initiated online,  through the app itself, and via APIs and file-based transactions.

The bank’s corporate clients routinely process single payments exceeding $500 million through the app, Bank of America reported. The platform also allows businesses to layer additional security measures before authorizing payments.

Dramatic Effects

Bank of America’s corporate mobile banking solution is part of a broader trend toward modernizing business payments, which can have dramatic impacts on merchants.

As James Richardson, Head of Global Product Solutions at Bottomline, said in a recent PaymentsJournal podcast: “Generally speaking, corporates believe there are smarter ways of solving for business payments than the technology that’s accessible to them provides. They’re rationalizing their vendor relationships and looking for more meaningful strategic partnerships to help them streamline business payments.”

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Following the lead of the Consumer Financial Protection Bureau in the U.S., Britain’s new Labour government is preparing to impose new regulations on the UK’s buy now, pay later industry.

The government initially proposed regulations for the sector in 2021 under the former Conservative administration, but progress stalled. In March, Labour’s shadow city minister Tulip Siddiq criticized the former government for its “dithering” and “constant delays” in regulating BNPL. With Siddiq now serving as the actual city minister, there is increased anticipation that these concerns will be addressed. Speculation suggests that the new government could have regulatory plans in place within the next 24 months.

Pressures on Consumers

One key issue is that BNPL companies employ different methods of charging their customers. While most BNPL firms charge fees on a per-transaction basis to their merchant partners, some also charge interest or late payment fees. Labour has indicated a desire for more uniform practices across the industry.

Another concern is the growing debt many consumers, especially younger individuals, have racked up through BNPL plans, sometimes with multiple providers. One UK study found more than one in 10 BNPL customers were in arrears.

Compounding this issue is the current state of the British economy, where rising interest rates have increased financial pressures on consumers. While pushing more buyers into BNPL plans, the economic issues have also made it more difficult for them to pay back these loans.

Following the U.S. Lead

Observers believe that credit cards will eventually serve as the model for the new BNPL regulations.

“I’d expect that the UK will follow the guidance of previously established regulations around credit cards to write the new rules for the BNPL industry,” said Ben Danner, Senior Analyst, Credit and Commercial at Javelin Strategy & Research. “I’d expect further disclosure requirements and further transparency with regulating financial authorities.” 

In the U.S., the CFPB has responded to similar pressures by issuing a rule that treats BNPL lenders similarly to credit card providers. This regulation, introduced in May, stipulates that BNPL lenders provide consumers some key legal protections and rights comparable to those associated with conventional credit cards. These protections include the right to dispute charges and request a refund from the lender after returning a product purchased with a BNPL loan.

“I’d expect similar regulation in the UK to what we saw from the CFPB,” said Danner. “Look for things like clear advertising and communication of the terms and returns policies. I’d also expect regulation around the assessment of creditworthiness and credit files.” 

The post UK Ready to Move on Regulating BNPL appeared first on PaymentsJournal.

Luxury sports cars and cryptocurrency naturally share a market among wealthy, status-conscious individuals. Ferrari is capitalizing on that connection by announcing it will accept bitcoin and other cryptocurrencies at its European dealerships starting this month.

The Italian automaker began accepting bitcoin and crypto payments at its U.S. dealers last year. But Europe, the Middle East, and Africa remain its largest market, with more than 1,500 cars sold there in Q1 2024, compared to just under 1,000 in the Americas. Ferrari plans to expand the bitcoin payment option to all of its dealers worldwide by the end of this year.

In Europe, as in the U.S., Ferrari is partnering with bitcoin payments processor BitPay to process the payments. In addition to providing technical expertise, BitPay helps insulate the carmaker’s dealers from crypto pricing uncertainty. When a customer buys a Ferrari using bitcoin, BitPay instantly converts it to traditional fiat currency to eliminate any volatility.

The expansion into Europe indicates that Ferrari views the U.S. bitcoin payment initiative as a success. Enrico Galliera, Chief Marketing and Commercial Officer at Ferrari, mentioned last year that the order books were full into 2025.

Galliera also said at the time that the company’s decision to accept crypto was influenced by Ferrari’s dealers, as well as potential purchasers. “Some are young investors who have built their fortunes around cryptocurrencies,” he said. “Some others are more traditional investors who want to diversify their portfolios.”

Crypto and Luxury Brands

Ferrari isn’t the first luxury brand to embrace crypto. Gucci, TAG Heuer, and Balenciaga have all announced they would accept cryptocurrency payments.

It’s also not the first luxury carmaker to explore this area. Tesla, one of Ferrari’s rivals, announced in 2021 that it would start accepting bitcoin as payment for its electric cars and even invested more than $2 billion worth of bitcoin to facilitate the payments.

However, Tesla reversed that decision within a few months, citing concerns about the climate impact of energy-intensive bitcoin mining. This past May, Tesla announced that it would start accepting the less popular dogecoin for Tesla-related merchandise, although not for purchasing its cars. On the other hand, consumers are able to buy a Ferrari with dogecoin.

The post Sports Cars and Crypto, a Match Made in Retail Heaven appeared first on PaymentsJournal.

Five spot ether exchange-traded funds (ETF) are slated to begin trading on the Chicago Board Options Exchange. They follow the nine bitcoin ETFs that began selling earlier this year as the only two cryptocurrency plays available to investors on the regular stock market.

The new ETFs include the 21Shares Core Ethereum ETF, Fidelity Ethereum Fund, Invesco Galaxy Ethereum ETF, VanEck Ethereum ETF, and Franklin Ethereum ETF.  To jumpstart the introduction, virtually all of the ETH ETF issuers have announced plans to temporarily waive or discount their fees. The discounts run from 50% fee reductions to full waivers and will be in place anywhere from six months to a year.

The bitcoin ETFs have been highly successful, with more than $17 billion in net inflows since their introduction. The ether ETFs will face an uphill climb in replicating that success, with some industry experts expecting them to garner anywhere between 10% and 20% of the inflows garnered by the bitcoin ETFs.

As a less widely traded asset, ether is expected to endure more price volatility than bitcoin. As the world’s second-largest cryptocurrency, ether has a market cap of just over $400 billion, while bitcoin’s market cap is well over $1 trillion. Analysts looking at the ether ETFs are expecting significant price fluctuations after the introduction. For instance, data from research firm Deribit shows that the implied volatility of ether options rose from 56% to 70% in the past week. 

Not Mined but Staked

One key difference between the two cryptocurrencies is that bitcoin is mined, while Ethereum has switched to staking. In September 2022, Ethereum replaced its energy-intensive Proof-of-Work (PoW) mining mechanism with a Proof-of-Stake (PoS) mechanism rooted more in financial transactions. Technically speaking, Ethereum is the blockchain platform, while ether is the cryptocurrency derived from that platform.

This change transformed how new Ethereum is created, making traditional mining obsolete. Staking involves committing ether as collateral to validate transactions on the Ethereum network, which allows you to earn more ether.

One upshot of the ether ETFs is that they will almost certainly increase demand for the cryptocurrency, potentially leading to a severe supply shortage. The Ethereum Exchange Reserve, which tracks the amount of ether available on cryptocurrency exchanges, is already at multi-year lows.

The post Ether ETFs Make Their Bow, With Uncertainty Ahead appeared first on PaymentsJournal.

Popular instant payments platform Pix will delay the launch of its automatic draft feature until next June, according to Brazil’s central bank.

The new feature, called Automatic Pix, allows the platform’s users to pay recurring bills without authorizing each transaction. Originally scheduled for an October launch, no reason has been given for the delay.

The platform is operated by Brazil’s central bank, which has faced a series of challenges over the past few months. In April, the bank’s governor, Roberto Campos Neto, voiced concerns that market uncertainty made it difficult for him to provide proper guidance for the future.

Neto has also called for a constitutional amendment that would give Pix autonomy from the central bank, citing concerns that the bank doesn’t have the budget to run the service after the dynamic growth Pix has experienced in the past few years.

Gaining Traction

Pix launched in 2020 and was quickly adopted by the previously cash-based country. The platform has more than 150 million users and accounts for 90% of Brazil’s payments.

The platform recently introduced Pix Roaming, which allows foreign tourists to use Pix while visiting Brazil. Pix also recently launched International Pix, which allows Brazilian visitors to Uruguay, Argentina, Chile, and even some U.S. locations to use the service to pay for purchases abroad.

All-Encompassing System

Automatic payment support is the next step in Pix’s quest to become an all-encompassing system, like China’s Alipay and WeChat, that eliminates the need for card-based payments.

Brazil’s central bank touted Automatic Pix as a solution that would reduce billing costs for utility companies, schools, streaming services, and other subscription-based services. Pix also believes the new service will reduce credit delinquency.

While there is certainly a demand for the service, Brazil’s central bank has issues to solve first. The Brazilian Report cited multiple reasons for the delay of Automatic Pix, including everything from staffing shortages to a lack of clear payment dispute guidelines. It’s not clear if the central bank can resolve those issues in time to get Automatic Pix online by June.

The post Brazil’s Pix Delays Automatic Debit Feature appeared first on PaymentsJournal.

British interbank payments service CHAPS (Clearing House Automated Payment System) experienced another glitch on Thursday, delaying many high-value, time-sensitive payments. Although the cause of the slowdown is not yet clear, it is not being treated as a hacking incident. However, it may give some businesses pause when considering how to send sizable payments.

Operated by the Bank of England since 2017, CHAPS is one of the largest high-value payment systems in the world. Some of its main functions include facilitating the settlement of money market and foreign exchange transactions for some of the UK’s largest financial institutions and businesses. Corporations also use CHAPS to issue time-sensitive and high value payments to suppliers, pay taxes, and even for soccer teams to buy players. Consumers can use CHAPS to purchase big-ticket items, such as a house or car.  

The effects of a slowdown are much larger on business transactions than on consumer purchases.

“CHAPS is integral to businesses in the UK,” said Albert Bodine, Director of Commercial and Enterprise Payments at Javelin Strategy & Research. “When you have glitches in systems like these, it highlights how beholden to those rails that businesses are. The payment options for business transactions of this size are relatively small.”

Overall, CHAPS handles roughly 200,000 payments every weekday, totaling £363 billion. Predominantly a payment highway for EU traffic, CHAPS lacks the extensive coverage of its rival SWIFT, which processes around 45 million transactions daily.

Technical Difficulties

The CHAPS system has suffered technical problems before. It was down for six hours last August, with no explanation from the BoE. In 2014, the Real-Time Gross Settlement system, which underpins CHAPS, suffered an outage that lasted for several hours.

“Despite assurances from the Bank that retail payment systems remain unaffected, the recurrence of such outages—three major incidents in the past decade—raises serious concerns about the infrastructure’s reliability,” said Ryta Zasiekina, founder of Latvia-based payments company CONCRYT. “The central bank’s ongoing efforts, including working closely with third-party suppliers and other authorities, are crucial, yet the persistent issues call for a more rigorous approach to contingency planning and crisis management.”

Indeed, one long-term effect of these outages could be that businesses start considering more reliable options.

“It shines the light on the disruptors that are evolving out there, like blockchain, which could replace some of the traffic on CHAPS or SWIFT,” said Bodine. “Credit card rails that can handle transactions of this size are now available in every country in the world, offering what could be larger destinations for more and more B2B traffic.”

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The Consumer Financial Protection Bureau proposed an interpretive rule classifying paycheck advances and earned wage access (EWA) products as consumer loans.

According to the CFPB, employees take an average of 27 employer-sponsored paycheck advance loans each year, and these loans carry an average annual percentage rate of 109.5%. Under the new rule, paycheck advance lenders will have to disclose their fees and rate information like other consumer lenders.

“Paycheck advance products are often marketed to and designed for employers, rather than employees,” said CFPB Director Rohit Chopra. “The CFPB’s actions will help workers know what they are getting with these products and prevent race-to-the-bottom business practices.”

A Growing Need

Roughly 75% of U.S. workers receive their paychecks on a biweekly or monthly basis. Due to the lingering effects of high interest rates and inflation, many workers can’t wait until payday to meet certain expenses.

The EWA industry has grown rapidly to address this need, with the CFPB estimating that more than seven million workers accessed wages totaling approximately $22 billion in 2022. Proponents of paycheck advance products highlight that these products allow workers to receive the money they’ve earned faster.

Truth in Lending

The CFPB’s main concern is the potential exploitation of workers through high APRs and undisclosed fees. The Bureau found that more than 90% of workers incurred a fee in 2022 that wasn’t reimbursed by their employer. Most of those fees, which ranged from $1 to $5.99, were paid to expedite paycheck transfers.

Additionally, the CFPB expressed concern over some EWA companies mandating tips for payment processing. Under the new rule, these fees and tips would need to meet the Truth in Lending Act’s standards for finance charges.

The decision to regulate EWA lenders follows the CFPB’s interpretive rule asserting that buy now, pay later lenders should be treated like credit card companies. Similarly, the BNPL rule requires that these lenders need to clearly disclose their fees and issue statements like credit card companies do.

While the rule didn’t have immediate ramifications for the BNPL industry, the EWA industry might feel more shockwaves from the CFPB’s actions. Many EWA providers have asked state and federal lawmakers to give them an exemption from lending regulations and it’s not immediately clear how the CFPB’s new rule will affect those efforts.

The post Paycheck Advances Should be Considered Loans, Says CFPB appeared first on PaymentsJournal.

Capital One has committed $265 billion in lending, philanthropy, and community investments if regulators approve its closely scrutinized acquisition of Discover Financial Services.

The $35 billion deal, announced in February, would make Capital One the largest U.S. credit card issuer by balances and the sixth-largest bank by assets, giving it control of Discover’s extensive card payment network. What’s more, the deal would result in Capital One holding around $250 billion in card balances, increasing its market share to 22%, per Reuters.

The new proposal includes $200 billion in lending to consumers and $15 billion in lending to small businesses (with revenue under $1 million) in low- to moderate-income communities. Capital One said that its plan was twice as large as any other community benefits plan (CBP) that accompanies a bank acquisition.

Philanthropic Efforts

In addition to increased lending in lower-income areas, Capital One’s new proposal includes billions in community development financing. It also allocates $575 million in philanthropic donations aimed at boosting homeownership and enhancing AI capabilities among small businesses.

“Our CBP will enable greater access to safe and affordable housing; expand access to credit so small business owners can sustain and grow their businesses; expand programs to help ensure that people have the skills necessary to seek out well-paying jobs and advance their careers; build high quality local infrastructure to facilitate the delivery of essential services; and support the development of schools, civic centers, and healthcare facilities that are vital to building strong and vibrant communities,” Capital One noted.

Satisfying Regulators

It’s not immediately clear if the proposal will be enough to satisfy regulators from the Federal Reserve and the Office of the Comptroller of the Currency (OCC). There have been concerns that the Capital One/Discover deal would continue the centralization of financial services among a few large banks and eventually lead to higher consumer costs.

The Fed and the OCC have scheduled a special meeting on July 19 to discuss the implications of the deal.

The post Capital One Pledges Billions in Lending, Philanthropy if Discover Deal Approved appeared first on PaymentsJournal.

With their newly upgraded Marriott Bonvoy Bold Credit Card, Marriott and Chase have introduced a new category: travel now, pay later. Taking inspiration from the increasingly popular buy now, pay later plans, Chase and Marriott are allowing cardmembers to break up qualifying travel purchases into equal monthly payments without incurring any interest or plan fees.

Cardmembers can travel now and pay later on purchases between $100 to $5,000 made directly with an airline or at hotels participating in Marriott Bonvoy. Members earn their usual points on these purchases. But Marriott also warns in its fine print that access to the plan is not guaranteed for all cardholders.

This highlights a potential sticking point in the Marriott plan. Last year, a report from the Consumer Finance Protection Bureau found that nearly 43% of respondents who had used BNPL services had also overdrawn a bank account in the previous 12 months. The study also found that BNPL borrowers have lower average credit scores than consumers who did not borrow using BNPL. Borrowers with precarious credit records would seem to be the kind of people Marriott would likely reject if they apply for the travel now, pay later plan.

A Bonus for Chase

This partnership benefits Chase at least as much as Marriott, according to Ben Danner, Senior Analyst, Credit and Commercial at Javelin Strategy & Research.

“It looks like Chase is positioning the card as an entryway into the highly popular Marriott Bonvoy program,” Danner said. “Chase adding its ‘Pay Over Time’ functionality to the Marriott Bonvoy Bold card is a great way to attract younger audiences that may be using BNPL for travel purposes. Chase also allows customers to earn points on their spending even if using the Pay Over Time feature, which is a nice bonus.” 

Marriott has been enlisting more notable partners in its benefits plans recently. Just last month, the hotel chain announced a collaboration with Starbucks, allowing travelers to earn both Starbucks Stars and Marriott Bonvoy points. In Q2 2024, Starbucks Rewards membership in the U.S. grew 6% over the prior year to nearly 33 million within 90 days.  

The post Marriott, Chase Enhance Credit Card with Travel Now, Pay Later Feature appeared first on PaymentsJournal.

The RTP Network, the instant-payments organization operated by The Clearing House, crossed a milestone by processing $1 billion in a single day for the first time on June 28. RTP, which is owned by 22 large global banks, also set quarterly records for transaction volume and value, handling 82 million transactions and totaling $55 billion. Payment volume grew 7%, while overall payment value jumped 30% in Q2.

This success followed numerous records set by the RTP Network in Q1, handling a then-record 76 million transactions valued at $42 billion.

The Clearing House didn’t announce the billion-dollar milestone until ten days after it happened because the organization wanted to determine the factors contributing to reaching this mark. Ultimately, the organization determined there was a myriad of elements involved.

“The increase in transaction value is due to broad adoption of the RTP network across a number of use cases, including account-to-account transfers, title insurance and mortgage closing payments, gig economy payouts, earned wage access, and more,” Margaret Weichert, Chief Product Officer at The Clearing House, said in a press release. “Banks and credit unions that have joined the RTP network are seeing how instant payments can grow deposits, while meeting member and customer expectations for instant payment availability, 24/7.”

Facing the Competition

The progress for RTP follows a year of competition with the Federal Reserve’s rival payments system, FedNow. A survey from earlier this year found that 61% of financial institutions have implemented RTP or are in the process of doing so.

One area of success has been the RTP Network’s efforts to onboard smaller financial institutions. Roughly 90% of the financial institutions on its system have assets of less than $10 billion. At the same time, RTP now serves 225,000 unique businesses monthly, up from 105,000 a year ago. While businesses account for 80% of RTP transactions, 95% of those payments are received by consumers, according to TCH.

The network also reports a significant increase in consumer usage, with more than five million unique consumers sending instant payments every month, a figure that has doubled over the past year. RTP credits this growth in consumer usage to the widespread adoption of mobile wallets. 

The post RTP’s First Billion Dollar Day Highlights a Bang-Up Year appeared first on PaymentsJournal.

Macy’s sent a letter to its card users announcing an increase in the interest rate on its credit card to 34.49%, which appears to be a record high. Macy’s joins a group of other retailers now offering APRs over 30% on their store cards, including Petco, Good Sam, Michaels, and Exxon Mobil.

Store-only cards charge an average interest rate of 30.24%, according to figures compiled by Bankrate. By comparison, the average credit card interest rate is 21.19%, while the average retail credit card now charges an interest rate of 28.93%. That latter figure is also at an all-time high.

Two basic factors are causing rates to reach new heights. In addition to the Federal Reserve keeping interest rates high, retailers are seeking out sources of revenue to compensate for the Consumer Financial Protection Bureau’s push to lower late fees.  

The average credit card late fee is $32, but the CFPB has proposed capping it at $8. A federal judge struck down the ruling in May, but the decision is still winding its way through the courts, and many still expect it to take effect.

Seeking Revenue Sources

Store credit cards rely on late fees more than bank-issued cards, so the Macy’s fee represents an attempt to make up for that potential drop in late fee revenue. Some analysts estimate that Macy’s has derived nearly half its total profits from its credit cards in recent years.

“The lofty fees are not really surprising, especially given the retail category,” said Ben Danner, Senior Analyst, Credit and Commercial at Javelin Strategy & Research. “With the CFPB legislation cutting late fee revenue, issuers are compensating. Also, the Fed continues to keep the rate steady, so we won’t see a decline in credit card interest rates until those decline.”

The Fed Funds rate is currently at 5.33%, the highest since early 2001, and the prime rate is at 8.5%. Despite the 35% rate that Macy’s is charging, Danner believes there’s still room for rates to grow higher.

“There are no federally regulated maximums on credit card interest rates,” he pointed out. “Rates will continue to increase until we see a lowering from the Fed.”

The post Macy’s Credit Card Tests the Interest Rate Limits appeared first on PaymentsJournal.

The Consumer Financial Protection Bureau (CFPB) found that once many banks freeze accounts for suspicious activity, it can be difficult for consumers to regain access to their funds.

In many cases, financial institutions didn’t notify customers that their account had been blocked. In others, the banks notified their customers but failed to give them guidance on how to restore their accounts.

The CFPB also found instances where financial institutions stymied customers’ attempts to contact them by blocking calls from numbers associated with frozen accounts, or forwarding those calls to pre-recorded messages which didn’t offer solutions.

“These practices caused or were likely to cause substantial injury to consumers as those consumers were unable to access frozen funds for weeks or months,” the CFPB wrote. “In these instances, this injury was not reasonably avoidable as consumers would not have reason to believe their account activity would trigger a freeze. Additionally, institutions deprived consumers of the information needed to address the account suspensions.”

Extreme Countermeasures

There is no doubt that fraud poses a real threat to banks and credit unions that costs them millions each year. Criminals now have more advanced technology, and they are using creative methods to defraud institutions, including ransomware attacks, phishing, and deepfakes.

It’s estimated that the average extortion demand per ransomware attack is over $5.2 million, and credit unions have been increasingly targeted in recent months. In response, many banks have taken extreme countermeasures to protect their customers. Unfortunately, stringent prevention methods can lead to false positives and frozen accounts, which greatly inconvenience those customers.

Clear Guidance

To improve that experience, the CFPB recommended that institutions enhance their systems to give customers automatic notifications if their account is frozen. If a customer’s account is blocked, institutions should also give customers clear guidance on the next steps and provide a channel for users to contact the bank directly and address disputes.

Separately, the CFPB found that many banks still charge customers to retrieve basic account information like balance inquiries, statements, and printed check images. Banks and credit unions are prohibited by law from creating any barriers for customers who request basic banking information.

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India’s United Payment Interface (UPI) is set to connect with four other Asian central banks to establish an instant cross-border retail payments platform by 2026. Overseen by the Bank of International Settlements (BIS), this initiative could be the beginning of a wider retail network spanning across South and Southeast Asia. While the other countries involved have established some form of cross-border payment relationships in the past, India’s entry into this system could be a game changer.

BIS plans to link each country’s instant digital payment system as part of Project Nexus, its initiative to enhance cross-border payments. In addition to India, Malaysia, Thailand, Singapore, and the Philippines will be the founding members of the platform. Indonesia will serve as a special observer with expectations of joining later. According to the BIS, Project Nexus was tested with a trial run involving Malaysia, Singapore, and the Eurosystem in 2022.

“The collaboration between the Asian central banks will help revolutionize instant cross-border payments,” said Elisa Tavilla, Director, Debit Payments at Javelin Strategy & Research. “Domestic real-time systems are becoming ubiquitous, but real-time cross-border payments are still evolving. International instant payment interoperability is essential for today’s global real-time digital economy.”

India Leads the Way

While the other countries maintain a steady pace of instant payments, India’s UPI handles more digital transactions than any other system in the world. UPI’s total transactions surpassed the 100 billion mark in 2023, solidifying India as the largest and most significant player in the new system.

“Even with just the first wave of connected countries, Nexus has the potential to connect a market of 1.7 billion people globally, allowing them to make instant payments to each other easily and cheaply,” said Agustín Carstens, General Manager at the BIS, in a statement.

Other Nations Have Connected

Historically, there have been some ad hoc connections between the participating countries. A cross-border payment system launched in October 2023 facilitated payments for goods and services between residents of Singapore, Thailand, Malaysia, and Indonesia.

Last year, Singapore and India also announced a link between their respective real-time payments schemes to allow for instant mobile phone fund transfers between the two countries. Singapore has established connections  with Thailand and is working on a similar link with Malaysia. 

A new entity, the Nexus Scheme Organisation (NSO), will be responsible for managing the Nexus protocol. It will be wholly-owned by the central banks from participating countries, including Bank Negara Malaysia (BNM), Bangko Sentral ng Pilipinas (BSP), the Monetary Authority of Singapore (MAS), the Bank of Thailand, and the Reserve Bank of India. BIS will play an advisory role.

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The NFC Forum announced that consumers could soon conduct multiple functions in a single contactless transaction.

The near-field communication (NFC) standard makes tap-and-go payments possible for most of the world’s 4.5 billion smartphone users. According to the Forum, which includes experts from Apple, Google, Sony, and others, multi-purpose tap will harness NFC’s ability to both read and write data across a connection.

A customer purchasing alcohol, for instance, could verify their age, purchase a product, earn loyalty points, and receive a digital receipt in a single tap. The Forum also touted the tech’s ability to transform mass transit; multi-purpose tap could be used for both purchasing and validating tickets in a single location.

The New Gold

The NFC Forum emphasized how multi-purpose tap could blend payments and loyalty programs. A customer could pay at the point of sale and their rewards account would automatically receive relevant discounts and loyalty points. Merchants could use multi-tap NFC to send targeted ads to their customers. The tech also gives retailers access to a wealth of consumer shopping data.

“Customer data is the new ‘gold’ as industry leaders look to map and understand spending habits,” the NFC Forum wrote. “Connected and dynamic loyalty programs enable merchants to monitor trends, allowing them to be agile and make informed decisions that help them meet the needs and wants of their customer base. In turn, this can help drive high-value behaviors and profitable spend.”

The Ideation Stage

The technology’s ability to mine consumer data from their devices raises privacy concerns that the Forum didn’t address in their report. Those concerns are magnified by the increasing amount of data that consumers store in digital wallets, including their government-issued identification.

Multi-purpose tap NFC is still a developing technology, however, and the Forum called on the community to offer insights.

“While multi-purpose tap is undoubtedly an exciting prospect that looks set to transform how our devices interact with each other, it is important to recognize that it is still in the ideation stage,” the Forum wrote. “NFC Forum is carefully evaluating the requirements of each market that multi-purpose tap stands to benefit to ensure that its unique value is accentuated as needed for each individual use case.”

The post Mobile Payments Could Soon Include NFC Multi-Purpose Tap appeared first on PaymentsJournal.

The Supreme Court has ruled that a convenience store has the right to challenge a 2011 Federal Reserve ruling setting a cap on debit card swipe fees. Corner Post, a truck stop based in North Dakota, argued that the Fed’s swipe fee cap was higher than the “reasonable” limit established by the 2010 Dodd-Frank Act.

The decision reversed a lower court’s dismissal of the 2021 lawsuit by Corner Post, based on the store missing a six-year statute of limitations that generally applies to such litigation. The Supreme Court stated that this period under the Administrative Procedures Act does not start ticking “until the plaintiff is injured by final agency action.”

The North Dakota Retailers Association and the North Dakota Petroleum Marketers Association had initially filed the suit, which was dismissed for being outside the limitation period. The groups then added Corner Post as a party to the suit, with the idea being that it hadn’t been harmed by the regulations until the store’s debut in 2018. The ruling opens the door for future challenges to even longstanding federal regulations, simply by recruiting newly incorporated plaintiffs.

The Falling Cap

Before the Dodd-Frank Act directed the Fed to cap swipe fees, retailers paid as much as 44 cents per transaction, making it difficult for small businesses to accept debit cards. The Fed then set the limit at 21 cents per transaction, although retailers had expected—and hoped for—a much lower cap. In 2015, the Supreme Court upheld a lower court’s ruling backing the regulation.

Last year, the Fed proposed reducing the current cap to 14.4 cents per transaction. However, the National Retail Federation (NRF) suggested that the limit should be closer to 10.5 cents per transaction. The fees are determined by Visa, Mastercard, and other card processing networks.

The decision highlights that the swipe fee battles are far from over.

“Interchange fees remain a contentious issue for businesses, issuers, and regulators,” said Elisa Tavilla, Director of Debit Payments at Javelin Strategy & Research. “The Federal Reserve is currently reviewing the over 2,500 comments it received in response to its proposal to lower the cap to 14.4 cents. No matter the outcome, debates around swipe fees won’t be settled anytime soon. It’s possible that more cases like Corner Post’s could follow suit.”

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The Internal Revenue Service has finalized its rules for next year’s tax reporting, and crypto platforms will be required to report all transactions.

Capital gains from the sale of crypto or digital assets have already been considered taxable, but there were no concrete guidelines in place. For tax year 2025, however, crypto platforms must provide their customers with the newly developed 1099-DA form, similar to the form brokerages send to document capital gains from stocks.

The primary aim of the IRS, which falls under the purview of the Department of the Treasury, is to crack down on tax evasion. It’s estimated that the new regulations will capture around $28 billion that wasn’t previously reported.

“These regulations are an important part of the larger effort on high-income individual tax compliance,” said IRS Commissioner Danny Werfel. “We need to make sure digital assets are not used to hide taxable income, and these final regulations will improve detection of noncompliance in the high-risk space of digital assets.”

Immediate Regulation

The new guidelines only apply to platforms like Coinbase that take assets into their custody. Because most crypto transactions happen on custodial platforms like Coinbase and Kraken, the IRS felt there was an immediate need to regulate them.

Decentralized platforms that facilitate exchanges between users won’t be regulated yet, but the IRS still plans to issue a ruling on those platforms later in the year.

The IRS considered stablecoins, a type of crypto that has increasingly been adopted by major payments companies, less volatile. Under the new rules, stablecoin transactions under $10,000 won’t have to be reported. In addition, NFT gains under $600 don’t have to be reported.

Community Backlash

The crypto community has been critical of the IRS’s attempts to institute tax laws on digital asset transactions. The crux of their argument is that crypto isn’t a security like a stock and shouldn’t be regulated like one.

In recent months, that difference of opinion led the Securities and Exchange Commission to take actions against the major crypto platforms—including Coinbase—for operating as unregistered securities brokers.

As the latest action by the U.S. government, the IRS regulations created a backlash in the crypto community. Some crypto groups have called the tax guidelines burdensome, invasive, and damaging. However, there could be some positive ramifications from the laws.

“These regulations are about capital gains taxes, and it’s understandable,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “No one likes to be taxed, but it’s the norm. I don’t think there will be a significant effect from this, as it’s applicable in traditional finance and capital markets. If anything, it could be viewed as a positive step toward a regulatory framework in which the crypto industry is accepted and solidified.”

The post Crypto Platforms to Report Transactions to the IRS appeared first on PaymentsJournal.

Coinbase and Stripe announced a strategic partnership that will give their respective platforms’ capabilities in handling fiat-to-crypto and crypto-to-fiat transactions.

Under the agreement, Stripe and Coinbase will benefit from three key integrations. First, Stripe users will have the option to receive crypto payouts in stablecoin USD Coin (USDC) on Base. Customers will also be able to convert fiat to USDC.  

Finally, Coinbase will integrate Stripe’s fiat-to-crypto onramp into Coinbase Wallet, allowing Stripe users to purchase cryptocurrencies using credit cards or Apple Pay.

A Long Time Coming

Although Stripe started accepting crypto payments in 2014, it halted crypto transactions in 2018 because of bitcoin’s volatility. The payments processor has been hinting at a return to crypto support for some time, and the new integrations with Coinbase are expected to launch as early as this summer.

Coinbase’s Layer 2 Network, Base, has become a popular option because it offers increased efficiency at a lower expense. USDC is a stablecoin on Base that tracks the U.S. dollar one-to-one.

Stablecoins have been increasingly adopted by major payments processors, in part because they provide a secure medium to transfer funds cross-border. Stripe asserts that its USDC support will facilitate more efficient cross-border transfers to 150 countries.

Ups and Downs

The partnership is another positive step for Coinbase, which has experienced an impressive Q1 fueled by a surge in the crypto market. One reason for the uptick was the approval of bitcoin ETFs, most of which are managed by Coinbase.

However, it hasn’t been all good news for the crypto exchange recently. Coinbase has continued to fight legal battles with the U.S. Securities and Exchange Commission, which contends that many of the funds and tokens on the exchange should be considered securities, implying that Coinbase has been operating as an unregistered broker.

Consequently, Coinbase brought its own allegations against the SEC, suing the commission for refusing to release documents related to previous Ethereum probes. While its unclear how the crypto exchange’s legal issues will end, the partnership with Stripe has so far been dubbed a victory for both platforms, and a significant step toward mainstream crypto adoption.

The post Stripe to Accept Crypto Again After Coinbase Deal appeared first on PaymentsJournal.

Fintech startup Rainforest has received $20 million in Series A funding, marking another significant milestone in its embedded finance journey.

According to TechCrunch, the company also signed dozens of new companies to its platform and increased its payments volume 17 times in the past six months.

Rainforest stated it has more than doubled its valuation in the same period, though it declined to provide specific financials. This growth was achieved by building an embedded finance platform geared directly toward software platforms, unlike most competing solutions that are aimed at merchants.

“There are too many payment products akin to fast food—they fill you up, but you’re sluggish, not nourished,” said Rainforest CEO and founder Joshua Silver. “(It’s the) same for a SaaS. Software companies can increase revenue per customer by two to five times by adding fintech, earning more revenue from embedded finance than from their core product. But that’s only possible when it’s fueled the right way.”

A Different Model

Rainforest has come a long way since its 2022 founding and believes it can differentiate itself because it was designed as an embedded finance company from the start. The company earns revenue from transaction fees, so its clients only pay for what they use. So far, the platform has added support for Apple Pay, 3DS, and Plaid.

Many of its competitors are payment processors who bolted on embedded finance solutions along the way.

Embedded Era

It’s not immediately clear if Rainforest will be able to continue its rise in an extremely crowded and competitive space. However, there’s no doubt that the era of embedded finance is approaching. The U.S. market for embedded finance reached $2.6 trillion in 2021 and is forecasted to exceed $7 trillion by 2026.

The industry is booming because companies increasingly want to offer a wider array of financial services directly in their apps, without becoming fintech companies themselves due to compliance and regulatory risks.

“The market we’re in right now is massive and nowhere close to being penetrated,” Silver said. “There are thousands of mid-market vertical SaaS platforms in the U.S. alone. UBS estimates total U.S. small-to-medium business (SMB) processing volume at $2.2 trillion, and an increasing portion of that volume is being processed through SaaS platforms as SMBs move away from traditional processors.”

The post Startup Rainforest Aims for SaaS-Centric Embedded Finance appeared first on PaymentsJournal.

As members of the older generation spend more of their lives online, they become increasingly susceptible to fraud. Fortunately, new tools are available to help combat scammers.

Charlie—a banking services fintech designed for individuals 62 and over—launched an anti-fraud feature called SpeedBump, focused on slowing down unlawful transactions to allow sufficient time to prevent them.

Whenever a new payee or an unfamiliar device is added to an account, or when an account owner transfers more than $100, SpeedBump pauses the transaction for up to six hours. During this pause, Charlie sends notifications to the account owner through the app, text, and email about the transaction. The delay is designed to be long enough to reverse fraudulent transactions but not so long as to interfere with ordinary financial activities.

The focus on older victims is warranted. The FBI’s Internet Crime Complaint Center estimates that there was $1.6 billion in losses among elderly Americans from January to May 2024, up nearly $300 million from the same period last year. In all of 2023, a total of $3.4 billion losses were reported.

Time to Think

Time is a crucial factor in many internet fraud attempts.

“Scammers rely upon a sense of urgency,” said Jennifer Pitt, Senior Analyst, Fraud and Security at Javelin Strategy & Research. “When anyone has been presented with a fearful or urgent situation, if they have not prepared ahead of time for what they will do, the automatic fight, flight, freeze, or fawn response kicks in. The brain wants to get rid of that fearful or urgent situation as soon as possible. In the case of scams, unfortunately that oftentimes means fawning and providing money or information to appease that person—which the victim may not realize is a scammer.”

Pausing transactions for a few hours disrupts the immediate response to the urgency of the situation, allowing the person to take a breath and think rationally. While the transaction is paused, SpeedBump also sends educational resources and scam tips, helping jog the person’s memory about recent correspondence, account changes, or transactions. This gives them time to reconsider and potentially prevent fraudulent activity.

“Since older adults are often more trusting than younger ones, intentionally breaking the brain’s automatic urgency responses will be key to fighting fraud perpetrated against older adults,” said Pitt. “As fraud fighters, we need to start thinking outside the box. These products do just that.”

The post A New Tool for Fighting Scams: Hitting the Pause Button appeared first on PaymentsJournal.

Pix, Brazil’s successful instant payment system, is expanding beyond its home country’s borders. Foreign tourists visiting Brazil will now be able to use Pix for their purchases. Pix Roaming, announced as a brand-new offering from Brazilian fintech PagBrasil, will allow foreign nationals within Brazil to complete transactions instantly where Pix is accepted. This service includes all the usual benefits usually of paying with Pix, including discounts.

In the past few months, PagBrasil also introduced International Pix, which enables Brazilians traveling outside Brazil to use Pix at participating physical stores. International Pix has been available in Uruguay, Argentina, Chile, and selected locations in the United States—and is now being introduced in Spain, with expectations of further expansion.

With both services, users can initiate Pix transactions through multiple channels, including mobile banking apps, online banking platforms, or digital wallets. Consumers simply choose Pix at checkout and either scan a QR code or enter a Pix code to complete the transaction.

“Pix is now responsible for 90% of bank transactions in Brazil,” PagBrasil CEO Ralf Germer said in a prepared statement. “What we have done at PagBrasil is to enable a multitude of ways that Brazilian tourists abroad, and foreign tourists traveling to Brazil, can utilize Pix services – providing businesses and consumers innovative and seamless means to leverage Pix inside and out of the country.”

The cross-border Pix services follow similar offerings in Southeast Asia, offered through Alipay+. The central banks in that region have collaborated to allow instant payment systems using QR codes between countries such as Thailand, Singapore, Vietnam, Sri Lanka, and Hong Kong.

Pix Takes Off

Since its launch in 2020, Pix has garnered more than 160 million users. Digital commerce in Brazil grew from 68% among adults in 2020 to 90% by 2023. As a result, Brazil’s digital marketplace, valued at $275 billion, now ranks fourth worldwide in digital buyers and captures more than half of Latin America’s market share.

“Pix Roaming gives foreign visitors to Brazil another option to pay for purchases,” said Elisa Tavilla, Director of Debit Payments at Javelin Strategy & Research. “International tourists and business travelers can pay like locals using Pix, without having to worry about currency conversions with cash or card. For merchants, Pix roaming transactions are treated like all other Pix transactions. It’s a new convenient, seamless payment option that would benefit both visiting shoppers and local businesses.”

The post Take Your Pix: Brazil’s Instant Payments Are Heading Abroad appeared first on PaymentsJournal.

American Express announced it will buy dining and event reservation company Tock for $400 million. The cash purchase will be the credit card company’s latest foray into the dining sector, following its acquisition of Resy in 2019.

The Resy and Tock apps cater to higher-end restaurants, which will expand their reach to American Express’s more affluent user base. Amex hopes to secure these fine dining establishments to be fully American Express exclusive or to offer preferred rewards to Amex customers.

The move is part of a growing push by credit card companies to expand beyond traditional points-based rewards programs and offer cardholders additional perks. In a similar vein, American Express also announced the purchase of Rooam, a mobile payments app that has gained traction in stadium, arena, and restaurant applications.

“Dining and entertainment are critical features of credit card rewards programs,” said Ben Danner, Senior Credit and Commercial Analyst at Javelin Strategy & Research. “American Express will certainly leverage Tock’s dining reservation platform and Rooam’s payment platform to provide bonus offerings for its card members, which tend to be affluent and likely to use these promotions.” 

A More Fitting Clientele

The move comes after recent news that eBay will drop American Express as a payment option. The online marketplace said it made the decision because Amex has high interchange fees and there are many other payment options available.

American Express is likely a better fit with clientele-focused, fine dining apps like Resy and Tock. Amex leadership said that since the acquisition of Resy, the number of engaged users has tripled, the number of restaurants on the platform has increased fivefold, and there’s been a solid rise in diners seated.

Sought-After Dining

Chicago-based Tock, which was acquired by Squarespace in 2021, books reservations and tickets for around 7,000 restaurants, wineries, and venues. Some of the sought-after restaurants on its platform include New York’s Scandanavian restaurant Aquavit and Northern California’s Chez Noir bistro. These restaurants will now be a part of American Express’s dining platform.

“Now, we can connect even more premium customers with the most exciting restaurants, while providing merchants and restaurants more technology to help their businesses thrive,” said Howard Grosfield, President, U.S. Consumer Services at American Express in a prepared statement. “We will be able to offer restaurants the tools to deliver more personalized hospitality, facilitate pre-paid experiences like tasting menus, and provide more convenient ways for customers to pay the bill.” 

The post American Express Buys Tock in Bid for Fine Dining Market appeared first on PaymentsJournal.

Buy now, pay later upstart Zilch secured $125 million through a debt agreement with Deutsche Bank. Previously, Zilch received credit from Goldman Sachs, but its rapid growth required a credit plan that could match its increasing demands.

Zilch asserted that the deal with Germany’s largest bank will help the company triple its sales in the next few years. The BNPL lender also announced its intention to become a publicly traded company as soon as next year.

The Deutsche Bank deal allows for an additional $190 million in credit if Zilch continues its positive trajectory. The fintech stated that this agreement is the first of many debt deals it plans to ink over the next few months.

Value From Debt

Zilch has generated more than $3.17 billion in gross merchandise value (GMV) since its launch in 2018. The company reported that it can produce $30 in GMV for every $1 of debt raised. By that math, the initial $125 million from the Deutsche Bank deal is expected to deliver $3.75 billion in value.

Following the rapid adoption of its Pay in 6 Weeks plans, Zilch announced the launch of its Pay in 3 Months program earlier this year for purchases over $95.

Carving Out a Niche

Zilch’s product line is one of the reasons it has been able to carve out a niche in an industry where larger companies have faltered. Apple recently announced it was shutting down its BNPL service, Apple Pay Later, partly due to increased competition from companies like Affirm, Klarna, and Zilch.

Another reason Zilch has gained traction is its multiple revenue streams. The fintech earns revenue through both interchange fees and commissions paid by retailers to appear in its app.

The post BNPL Contender Zilch Gets $125 Million Boost appeared first on PaymentsJournal.

The Chinese government is continuing its efforts to control and standardize the country’s sizable bank wealth management sector, aiming to  curb financial risk for investors—and keep their money within China. The banking regulator has given small banks a 2026 deadline to stop selling wealth management products unless they establish a separate wealth subsidiary to handle these transactions.

A 2018 regulation required banks to set up a wealth management subsidiary, but regulators did not provide a timeline for compliance. By standardizing Chinese banks’ wealth management businesses, regulators hope to attract more investment domestically.

The wealth management market in China is substantial and growing. According to a 2023 study from PwC, China has 2.62 million individuals with investable assets of more than 10 million remnibi, about $1.5 million U.S. dollars. China’s gross national savings as a percentage of GDP is at 45%, compared to 26% in the EU and 18% in the U.S. The Chinese government aims to ensure that these savings remain within the country.

But there’s a caveat: many wealthy individuals are leaving China.  In fact, China is expected to see an outflow of 128,000 millionaires in 2024, according to the Henley Private Wealth Migration Report. The report indicates that concerns over economic trajectory and geopolitical tensions are the primary reasons for this exodus.

Stabilizing Investment Opportunities

Keeping wealth management funds at home is a key goal for China’s government, especially now that the real estate market has become riskier for investors. “Many developers have become non-viable but have avoided bankruptcy thanks in part to rules that allow lenders to delay recognizing their bad loans, which has helped mute spillovers to real estate prices and bank balance sheets,” the IMF noted in its February 2024 report China’s Real Estate Sector: Managing the Medium-Term Slowdown.

The decisions surrounding wealth management can be seen in the context of reducing the risks associated with domestic investments.

“China’s move toward a greater separation of banks and wealth management makes sense in the context of curtailing systemic risk,” said Greg O’Gara, Lead Analyst, Wealth Management at Javelin Strategy & Research. “The separation of these businesses would allow for greater regulatory oversight and lessen the possibility of risky financial products being widely disseminated to institutions and retail investors.

“Economic pressure to address gaps in the banking system, such as we’ve seen in real estate, has inevitably cast an eye on the wealth management sector,” he said. “This is a likely catalyst for greater concern in the Chinese financial sector and adds to the mandate of greater regulatory scrutiny.”

The post Wealth Management in China Faces Increasing Regulation appeared first on PaymentsJournal.

Apple will no longer offer Apple Pay Later, its buy now, pay later service launched last fall, which allowed Apple Pay users to split transactions of $1,000 or less into four interest-free payments.

The announcement follows news that Apple will integrate BNPL programs from Affirm and others into Apple Pay in its upcoming fall iOS update. The tech giant made this move away partly due to Apple Pay Later’s limited scope; the BNPL service was only available to U.S. users.

Like a Credit Card

It’s not immediately clear if Apple shut down its BNPL operations because of recent actions by the Consumer Financial Protection Bureau. The CFPB recently issued an interpretive rule stating that BNPL services should be regulated like credit cards. This means providers must issue monthly statements, disclose fees, and handle disputes like a credit card company.

Another reason Apple likely moved away from BNPL is the company was handling all of Apple Pay Later’s financial operations in-house. It was conducting credit checks and loan decisions through a wholly-owned subsidiary.

Ceding Ground

Apple Pay Later put Apple in direct competition with BNPL-first companies like Klarna and Affirm, which offer a much wider array of loans. Apple’s shift away from BNPL is one of the rare times the company has ceded ground in its fintech aspirations.

In its upcoming update, in addition to leveraging BNPL plans from other providers, Apple will also integrate Google Chrome and Windows support into Apple Pay to expand its customer base beyond iPhone users.

Though the issuance of new Apple Pay Later loans will be discontinued immediately, users with open loans will still have access to the program until their loans are paid off.

The post Apple Shuts Down In-House BNPL Service appeared first on PaymentsJournal.

Google has begun notifying some of its advertisers that, as of July 31, it will accept only bank-based payments. 

Last week, Jeremy Brandt of We Buy Houses posted the text of the email he received from Google on X, formerly Twitter. The email read, in part: “Accepted forms of payment include check or wire transfer via the Monthly Invoicing billing method (recommended), or via Direct Debit for those choosing to remain on the Automatic Payments billing method (if available in your region).”

Google says the change in payment methods offers flexibility and control benefits for the affected high-growth accounts. However, Brandt said that the change will cost the company $250,000-plus a year and does not benefit the customer in any way.

Growing Pains

This change reflects a challenge many merchants face as their businesses grow. Startups seeking to attract customers want to make it easy for them to try their services. Card payments enable new customers to sign up easily, and the card authorization process ensures payment is guaranteed by the card issuer, allowing the service to be delivered immediately with no delays.    

As businesses mature, the calculus changes.

“Payment card fees are expensive relative to ACH and other bank payment options, especially for a B2B product like Google Ads where payments can weigh heavily toward purchasing and rewards cards that carry higher acceptance fees for merchants,” said Don Apgar, Director of the Merchant Payments Practice at Javelin Strategy & Research.

“Google Ads is a well-established business, where many larger customers spend heavily and have built entire sales funnels,” he said. “As the larger customer relationships mature, the benefits of card payments diminish for Google, leaving only the higher costs.  On a $10,000 monthly invoice, the cost for Google is 3% or $300 to process a card payment, versus 10 cents or so for an ACH.”  

The Onus on Larger Customers

It’s important to note that Google is not discontinuing card acceptance altogether. Ginny Marvin, Google Ads Liaison, shared an update on X, indicating that the company informed a select group of advertisers about changes to their billing options. Newer and smaller customers will still have the option to pay with a card.