News in Brief

China Moving Cash Less?

The South China Morning Post has published its first China FinTech report. Mobile payments now account for four out of every five payments and for more than half the value of all non-cash retail payments for consumers and businesses. The report states that China’s massive domestic financial market has an estimated 87% of consumers using FinTech services, a $29 trillion mobile payment market in 2019.

For the last five years it has been illegal in China to sell, rent or lend out bank and mobile SIM cards. In China these are tied to people’s ID cards.

Guangdong province is currently having a crackdown and the Xinhua News agency reported that 2,421 people have been found guilty of bank card and mobile SIM card-related crimes over the past month. The punishment has been to bar them from making mobile and bank card payments for five years. They will now only be able to use cash. The paper reports that the punishment is ‘is tantamount to social exclusion’.

For the Everyday Purchase in France? Cash

Research carried out on 27/28 October 2020 for Brinks by IFOP shows that French attitudes to cash have hardly moved during the pandemic. In fact, for everyday purchases the use of cash has gone up 7% compared with May, reaching 74%.

More respondents claim to use cash regularly than contactless cards, 97% for cash compared with 86% contactless. The contactless payment figure is up 15% since March, but this has been at the expense of traditional card payments.

The survey says that 79% of people do not want a less cash world, 3% down on 2019. In addition to using cash for small purchases, bread, newspapers, tobacco etc., and for donations, gifts and tips, people also held cash as a precaution against payment system failure (84%), unexpected events (84%) and to prevent social exclusion (79%). When thinking about social exclusion, people included the elderly, associations and homeless people and those with poor internet connections.

The risk of cyber-attack was also mentioned, with 87% of people concerned about this.

Finally, the IFOP survey also reported that the French regard their privacy as important, with 74% wanting to retain cash as a safeguard.

MAS Moves Against Money Laundering

The Monetary Authority of Singapore (MAS) has announced that from the end of this year it will no longer issue S$1,000 banknotes, leaving the $100 as the highest value banknote. Although existing $1000 notes remain legal tender, MAS wants to phase them out to reduce money laundering and terrorism financing. It says that this step is in line with international norms and major jurisdictions.

WhatsApp Cleared to Operate in India

WhatsApp has finally got approval from the National Payments Corporation of India (NPCI) to use India’s United Payments Interface (UPI).

The Competition Commission of India recently dismissed a case which claimed WhatsApp had abused its dominate market position in messaging to move into the country's payments space. India’s payment market is highly competitive with Google Pay, Walmart's PhonePe and local outfit Paytm already well established.

Awards Indicate Direction of Travel

The Central Banking Publications 2020 FinTech and RegTech Global Awards give an interesting indication of what central banks are doing and what is valued at the moment, in particular around CBDCs and data analytics.

The field of CBDCs was evident, with Sveriges Riksbank winning the award for digital currency infrastructure. At the same time, the law firm Norton Rose Fulbright took the award for top technology adviser for its work with the Central Bank of the Bahamas on its CBDC project aligning the CBDC with current regulations, particularly around social inclusion.

Another private business, Soramitsu from Japan, won the prize for CBDCs for its work with the National Bank of Cambodia. Soramitsu worked to deliver financial inclusion through the soft launch of the digital riel project.

Aside from CBDCs, data and the use of advanced analytical tools featured heavily. The Bank of Israel won the prize for data management based on its work harnessing real-time data to keep abreast with fast-moving events – critical during the COVID-19 pandemic.

The Bank of England won the Techforward award for showing how forecasts could be improved by using machine learning tools to extract sentiment from text.

In a similar vein, the Bank of Thailand took the prize for artificial intelligence, which it has been using to extract meaning from text allowing the central bank to analyse board minutes of firms it supervises.

OneBanks Partners with Technology Companies

OneBanks, a UK start up bank, has recently announced two new partnerships, one with open banking pioneer Nuapay, a Sentenial company, and one with Trust Stamp.

OneBanks is working to create a new banking experience on the high street. It will provide fully manned, accessible kiosks in retail locations with limited or no banking facilities. To enable this, OneBanks is looking to work with new technology and open banking, and these two partnerships are part of this process.

Nuapay is a pioneer of open banking providing Account-2-Account payment solutions. Nuapay also offers customers direct debit and credit transfers and instant payment products, all through one platform. It claims its payment solution is easy to integrate through its APIs.

Trust Stamp is an AI-powered authentication company dual headquartered in Atlanta (US) and Cheltenham (UK). It offers a FinTech platform that extends the accessibility of traditional banking tools. Based on biometric identity solutions, the core technology preserves data privacy and security, while also providing a robust solution for identification in low-infrastructure, digitally and economically excluded communities.

Trust Stamp is integrating its privacy-preserving facial biometric technology into OneBank’s customer authentication systems to provide a secure, low-friction banking experience.

Bank of Canada Banknote Demand Up

The Bank of Canada’s third quarter report shows that banknotes in circulation have increased by 11% in the first nine months of the year compared with the same period in 2019, and with costs up 9% in the last quarter but down by 2% overall. Although transportation costs are up, R&D expenditure has been postponed.