Payment News

Is Aadhaar Unreliable?

Moody’s Investor Service has published a report on ‘Decentralised Finance and Digital Assets’. In it, it has raised concerns that the Aadhaar identification system, which is based on biometric technologies, is unreliable due to India’s hot and humid conditions, resulting in ‘service denials’.

India transfers official welfare benefits such as those from the Mahatma Ghandhi National Rural Employment Guarantee Act (MGNREGA) through the Aadhaar-based payment system (ABPS) to avoid wage payment failures when people change bank accounts. State governments have until the end of the year to adopt ABPS.

Moody’s acknowledges that decentralised ID (DID) systems give users more control of their data, reducing online fraud, but that DID’s bring their own challenges, such as giving the technology owner of social media companies monopolistic levels of influence.

Alipay Creates a Payment Ecosystem for Asia

Ant and Alipay are creating a payment ecosystem for Asian e-wallets for use everywhere in Asia.

The ‘Alipay+-in-China’ (A+China) Program allows users of 10 leading mobile wallets in Malaysia, Mongolia, Singapore, South Korea, Thailand, Hong Kong SAR and Macao SAR, to use home e-wallets on the Chinese mainland, covering a total population of over 175 million.

It gives travellers the option to bind their international bank cards to an updated international version of Alipay to enjoy mobile payment and digital life services while in China.

Outside of China, Alipay+ covers five million merchants in 56 markets. It works with over 20 mobile payment partners across Asia which together serve over 1.4 billion consumer accounts. The A+China Program extends Alipay+ service to reach its merchant network in China with its tens of millions of points of sales (POS).

This introduction of the A+China Program is happening ahead of the Hangzhou Asian Games. Ant Group is the Official Payment Partner of the Asian Games.

Crypto Regulation Tracker Goes Live

Atlantic Council has now added a cryptocurrency tracker to go with its CBDC tracker. It has analysed 60 countries that now have regulated cryptocurrencies. The regulated actors can be cryptocurrency issuers, exchanges, traditional financial institutions, service providers, or miners.

The tracker categorises the legal status into whether all activities are permitted (legal – 32 countries), where one or more activity is not permitted (partial ban – 19 countries) and where all activity is limited (general ban – 8 countries).

Regulatory categories for actors in the crypto sector are tax policy, requirements to combat money laundering and terrorist financing, consumer protection rules, and licensing and disclosure obligation.

The website includes key findings and an overview of regulatory authorities.

BSP Continues its Push for a Digital Society

The Bangko Sentral ng Pilipinas (BSP) wants to create a more digital society. It has recently said that until its tricycle drivers and market vendors accept digital payments throughout the country, the Philippines cannot be a cashless society.

The BSP is driving a number of initiatives to make this possible, for example reforms such as the Paleng-QR. As well as reaching these day-to-day payment activities, BSP is also addressing reforms to boost resilience of thrift banks, particularly against external shocks. The thrift banks have until June 2024 to submit plans and then a further two years to complete them. Previously the requirement for these plans had only applied to domestic systematically important banks.

The BSP wants banks to bolster their digital infrastructure, develop user-friendly mobile apps, and implement innovative solutions. Collaboration with fintechs offers an opportunity to harness advanced technology, enhance services and streamline operations. They need to design accessible products for marginalised populations, but with a strong commitment to data security and privacy in order to bolster customer trust.

Banks Get Serious About the Metaverse

Payment on the metaverse is going to be a big deal. In the metaverse you can jump into an AI gaming world and immerse yourselves in an alternative reality, and the gaming industry is now bigger than Hollywood and music combined. SuperData Research says the global gaming market was valued at $159.3 billion in 2020, the music industry $19.1 billion and the movie industry $41.7 billion.

Following Microsoft’s acquisition of OpenAI and ChatGPT, Amazon has just investedb$4 billion in Anthropic, an AI start-up company. Things are hotting up.

While we may ask what banking will look like in the AI-driven, gaming-based metaverse, banks like JPMorgan and Deutsche Bank are already looking at creating the virtual banks of tomorrow.

Tim Alexander, Head of Global Brand and Marketing at Deutsche Bank, said: ‘The metaverse is where our target group of tomorrow is. We want to find out how we need to present ourselves as a brand here in order to be relevant to these people in the virtual world. Because in the future, more and more clients might visit us in virtual worlds.’ 

But how will payments be made? With what currency? Could there be a visual version of today’s currency?

A2A Payments Can Be Win-Win for Consumers and Merchants

Account-to-Account payments (A2A) are made directly from the customer’s bank account to the merchant’s bank account. A quick and low cost payment solution. Payment can either be ‘pushed’ from the payee to the receiver, or as a pull payment, initiated by the collecting party.

Although the motivation for using A2A is different for each party, it needs to be easy to do. India and Brazil are examples of making this work.

The Indian government has made changes to offer everybody access to a bank account, basic insurance and a smartphone. The Unified Payment Interface (UPI) has delivered an effective accessible platform for payments bringing together a financial inclusion campaign, mobile numbers, and digital identities. The system offers access to financial services, collects demographic data on its residents, and stores residents’ mobile phone numbers for communication and performing digital transactions.

Brazil’s central bank created an instant payment platform, Pix, to speed up payments and transfers and boost financial inclusion.

Vested interests may seek to slow A2A in advanced economies, but they offer real benefits and are likely to be hard to stop.