News in Brief

Allied Universal Wins Battle for G4S

Allied Universal has offered 245 pence in cash for each G4S plc share and agreement on the terms of the offer have been reached. This values the company at £3.8 billion, representing a premium of about 68% to the closing price of G4S shares on 11 September 2020, and an 11% premium to the highest closing price in the previous year. GardaWorld had offered 235 pence per share, some 4% less. G4S Directors intend unanimously to recommend that their shareholders accept the offer.

A joint statement announced the news,stating that the two companies combined will have revenues of approximately $18 billion and ‘a strong international platform and an extensive portfolio of blue-chip clients across the public and private sectors.’ The new business will employ over 750,000 people. 

However, this three month battle may not be over. GardaWorld has now said its previous offer was not its final offer (contradicting a previous statement) and made the following announcement to the market, 'GardaWorld is considering its options and a further announcement will be made when appropriate. G4S shareholders are strongly advised to take no action at this time'.

Allied has 28 days to produce a formal offer document under the UK’s Takeover Panel rules. The California-headquartered company has already won US antitrust clearance for the deal.

Lloyds Bank Cashback Incentive to Retailers

Lloyds Bank, one of the UK’s major high street banks, is looking to offer financial incentives for 500 selected retailers and businesses, who are its customers, to offer cashback to their customers. The aim is to ensure cash is available in areas where it is hard to get cash, where there aren’t ATMs, bank branches, post offices or cashback.

Cashback will be limited to £100 and must be part of a transaction at the shop. This initiative, in partnership with Visa, builds on a 2019 pilot.

Belgium Moves to Consolidate ATM Network

Earlier this year Belgium’s four largest banks announced that they would create a new shared ATM network in order to serve their customers and to minimise the banks’ costs. This will be known as Batopin (Belgian ATM Optimisation Initiative) and it will be run by Auriga on behalf of Belfius, BNP Paribas Fortis, ING and KBC.

Auriga will manage every aspect of the ATM network, including software (development, maintenance and security), asset management and cash management (monitoring, transaction processing and cash supply).

The software platform will be based on Auriga’s WinWebServer, a key element of which is the ability to replace existing ATMs with latest next generation ATMs.

South Africa to Stop Using Cheques

From 31 December South African banks will no longer accept or issue cheques. A joint announcement was made by the South African Reserve Bank (SARB), Financial Sector Conduct Authority, Payments Association of South Africa and the Banking Association South Africa, following a consultation document that was issued at the start of October.

A long list of reasons was given for this decision, including the ageing interbank cheque processing infrastructure and the length of time taken to process cheques.

Fraud was also cited as a challenge, including educating and protecting consumers from it. One effect of fraud has been a reduction in the number of places accepting cheques, which has reduced their usefulness.

Finally, the COVID-19 pandemic has also reduced usage further.

Decline in cheque usage around the world is widespread. In the first quarter of 2020 the Federal Reserve reported that the volume of cheques processed in the US fell below one billion for the first time, to 999 million.

Legislation Requiring Cash Acceptance Moves Forward

The Washington DC Council has given preliminary approval for legislation to require most retailers to accept cash. Washington DC has a large unbanked or underbanked community, estimated by the Council chairman to be about 30% of its residents. The legislation will need a second vote, sign off by the mayor and then a final review by Congress.

Issues of safety and security have been raised by some businesses and trade groups. In addition, the Mayor has expressed concerns whilst acknowledging the exclusion issues many face. Some businesses would be exempt, including parking lots, and all businesses would be exempt during the current health state of emergency.

The states of Massachusetts and New Jersey already passed similar laws, as have the cities of Philadelphia and San Francisco. Other jurisdictions are considering it, and even Congress has considered a nationwide law.

From 19 November, businesses in New York face a fine of $1,000 for failing to accept cash. The law says a business must accept bills in denominations of $20 or under as a payment option. For the first violation the fine is $1,000 after which it increases to $1,500. Businesses are not required to accept bills over $20.

PhonePe Raises $700 Million to Grow

PhonePe is an Indian digital payments platform that allows people to send and receive money, pay at shops, pay utility bills, make investments and more from their phones. It has announced that it will spin off from the e-commerce platform Flipkart, owned by Walmart, so that it can compete head on with big players such as Google, Amazon and WhatsApp. FlipKart will remain the largest shareholder.

In the four years since it started, PhonePe has gained 100 million monthly active users who generated a billion digital payment transactions in October 2020. It has 250 million registered users in total. It is raising $700 million in primary capital to give it the capital to grow.

Privacy Matters

Few countries are finding COVID contact tracing easy, but it is regarded as core to managing the disease. The Australian National Contact Tracing Review wants access to contact details of people who have made a transaction where there is a COVID hotspot. The review noted that ‘privacy rules will apply, and, in some jurisdictions, legislative change may be required’.

South Korea has used credit card transactions to track people exposed to Covid-19 since the early days of the pandemic.