Payments News

Visa Messaging Relentless

Visa carried out a Consumer Payment Attitudes study in Singapore in October 2022. It found that nearly 90% of Singaporean consumers regard cashless payments and mobile banking to be the most eco-friendly option.

Such a headline and report quietly reinforce perceptions and messages about payments without any balancing information or discussion about the alternatives. For example, that account-to-account payments have a lower impact than card or mobile wallet payments. Or that the gap between cash and digital payments hasn’t actually been measured on a basis that can be sensibly compared.

A recent report by Galaxy Digital found that the estimated annual energy consumption of the banking system was twice that of Bitcoin, with banks, data centres accounting for over 90% of their energy use. K33 Research has published work by Arcane Research that showed the climate footprint of Bitcoin was 37 Mt CO2, while the total Global Green House emissions of the digital tech industry are some 1,600 MT. Data centres used 191 Mt, watching YouTube and gaming 40 Mt, networks 199 Mt and end user devices 440 Mt.

SBV Promotes Cashless Payments in Vietnam

The State Bank of Vietnam (SBV) has asked domestic and foreign commercial banks, along with payment service providers (PSPs), to promote cashless payments. Vietnam has a national digital transformation plan for 2022-2025.

SBV wants banks and PSPs to consider offering preferential programmes for digital payments, including lower payment service fees. SBV has recommended that they work with utility companies, e-market places and retailers, such as restaurants and shopping centres, to run promotional events and to advertise cashless payments.

SBV has told the banks and PSPs to implement these programmes as part of Cashless Day 2023, on 16 June, through to the end of the month.

People entitled to social security policy should be exempt from account maintenance fees and cash withdrawal fees.

Calls to Regulate Apple Pay

Apple Pay is entering the financial services sector, along with other big tech platforms. In Australia, the Commonwealth Bank (CBA) wants the federal government to move fast to regulate them.

Known as the network effect, the popularity of Apple’s iPhone’s means that innovations get adopted at scale swiftly. CBA cites the need for consumer protection and maintaining financial stability. There are also concerns about anti-competitive self-preferencing, anti-competitive tying, and unreasonably preventing customer switching.

For the authorities, the challenge is understanding and balancing off Apple’s claim that restricting third party access to its Near Field Communication (NFC) antenna safeguards the customers, seamless experience for switching cards whilst also making it easier for hackers to get to the data on iPhones and Apple Watches. CBA claims that by putting the ‘tap and go’ payment function directly on its NFC chips, Apple forces payments through Apple Wallet.

CBA has also raised the issue of the fees charged to financial institutions by Apple for digitising their payment cards to work on Apple Pay. Apple has history in this area, charging 30% commission rates for paid apps and in-app purchases.

Apple also stops developers from offering alternative payment methods by making this a violation of its App Store rules. Last month Australian app developers joined a class action against Apple and Google over this practice.

Mobile Payments Fall in Macao

Around the world the headlines are of the rise in mobile payments. Unusually then, the Monetary Authority of Macao has published statistics showing the number of transactions carried out by local mobile payment tools decreased by 4.3% from the previous quarter to 69.6 million in the first quarter of 2023, with the value of those transactions down 1.4% to MOP 7.2 billion.

At the same time, the number of personal credit cards issued rose by 1.3% and debit cards by 2.2% quarter to quarter. Credit card turnover increased 10.9% in the first quarter.

No explanation of these changes was given.

New Series on Widening Financial Inclusion

Finextra is investigating new thinking about how to include the unbanked, underbanked and others not in the traditional banking system in benefiting from standard-offer financial services products and services. In every country the numbers involved are significant.

There is not one solution, of course. The answer may be new, more sensible and affordable services and options than those currently offered and education on the realities of money management and budgeting. But there are deep-set societal, demographic, and economic hurdles for the unbanked that make ‘obvious’ solutions hard to do. The lack of profit in these groups means the world of commerce and capitalism lack the normal market motivations to help these people.

The consequence of not having a higher-level credit score and solid credit history is that people either can’t access the financial marketplace at all or they are forced to pay higher costs and assume higher risks. Traditional financial services credit scoring and risk management models are not well positioned to solve this problem.

Payday loans or similar products may solve an immediate problem for individuals, but they come at a cost that tends to suppress or permanently lower income, rather than raise it through interest on savings or investments; bad habits are built instead, often continuing for generations. Payday loans often have double-digit monthly interest rate.

Examples of solutions are Stellar Fi’s platform for members to have their bills registered and paid automatically every month for a very small fee. With the service, they also get those on-time payments reported to the three national credit bureaus, thus opening doors to building better credit in a sensible, affordable way.

RBI Invests in Payment Resilience

The Reserve Bank of India (RBI) has introduced a parallel payment system designed specifically for when catastrophic events disrupt the usual payment rails, the Lightweight Payment and Settlement System (LPSS).

The conventional system uses Retail Time Gross Settlement (RTGS), Universal Payment Infrastructure (UPI) and National Electronic Funds Transfer (NEFT), which are designed for large transaction based on complex wired networks with advanced IT infrastructure.

LPSS will operate with minimum hardware and software and will be only used as required facilitating uninterrupted functions of essential payments services such as bulk payments, interbank payments and provision of cash to participant institutions. The goal is to act like Uninterrupted Power Supply (UPS) systems do during power outages.