State regulators take first step to standardize licensing practices for Fintech payments — Conference of State Bank Supervisors — “Seven states have agreed to a multi-state compact that standardizes key elements of the licensing process for money services businesses (MSB). The agreement: If one state reviews key elements of state licensing for a money transmitter — IT, cybersecurity, business plan, background check, and compliance with the federal Bank Secrecy Act — then other participating states agree to accept the findings… Other states are expected to join this compact.”
Regulation
Egypt’s banks to use common QR code standard for mobile payments
CBE issues standard criteria for accepting electronic payment using QR code — Daily News Egypt — “The Central Bank of Egypt (CBE) has issued electronic acceptance criteria for payments through QR code… These unified standards will apply to all banks licensed to accept payments electronically in Egypt.”
Mastercard to add biometric security to online transactions in Europe
Mastercard establishes biometrics as the new normal for safer online shopping — Mastercard — “Consumers will have the capability to use biometrics, such as fingerprints or facial recognition, as a way to identify themselves when they shop and pay with Mastercard as of April 2019… This shift to biometrics is part of Mastercard’s new action plan to help banks, retailers and partners to prevent fraud and improve the consumer experience in the new digital environment. It also meets new regulatory requirements around Strong Customer Authentication set out by PSD2 and is aimed at ensuring a smoother consumer experience and reducing unjustified declines.”
Taiwan to provide mobile payment adoption incentives
Taiwan outlines measures to promote mobile payment usage — Focus Taiwan — “Premier Lai Ching-te on Tuesday urged government agencies to earmark spending to subsidize transaction fees in a way that makes the use of mobile payments for in-store purchases more attractive to consumers… The government has set itself the target of 90% of mobile phone users using mobile payments by 2025, a major increase from the current level of 13%.”
China’s central bank to begin testing QR code payments registration and settlement regulations from April
China’s central bank to standardize QR code payment — Xinhua — “The People’s Bank of China (PBOC) announced plans Wednesday to regulate QR code payment to contain risks arising from the popular service. Payment institutions must obtain proper permits to offer barcode-based payment services, according to a document released by the PBOC. Both banks and non-banking payment institutions must channel cross-bank transactions involving barcodes through the clearing system of the PBOC or other legal clearing houses… The standards will be put into trial use from April.”
China’s central bank caps static QR code transactions at US$76
China begins regulating QR code payments — The Verge — “The regulations will initially cap payments by traditional QR codes to 500 yuan, or about US$76. When additional security measures are applied, the cap can raise to 5,000 yuan, or around U$765. At an even higher security level, banks and payment processors are given discretion over the cap.”
Israel considers issuing a digital currency to speed up payments
Israel central bank mulls issuing digital currency for faster payments — Reuters — “The Bank of Israel is examining issuing digital currency as a means of creating a faster payments system as well as reducing the amount of cash in the economy, a central bank source said… The source, who spoke on condition of anonymity, also said the government was ready to legislate or include the issue in its 2019 budget and economic package if the central bank gave the green light.”
Central bank requires Chinese mobile payments providers to set aside customers’ prepaid funds
China’s central bank to raise reserve funds ratio of third-party payment firms to 50% — Reuters — “China’s central bank said it will gradually raise the reserve funds ratio of third-party payment firms to 50% by April 2018 from a current rate of 20%, as it continues to ramp up regulation of the industry… It will eventually ban non-bank payment firms from making any private investments with money deposited by users, which would see the reserve rate at some point increased to 100%.”
Chinese ride hailing giant Didi Chuxing enters the payments market
Didi Chuxing picks up a payment license — Caixin — “Didi Chuxing, China’s largest ride-hailing company, is speeding into the payments business, acquiring a much-coveted license to join the red-hot internet financial-services arena. Didi has agreed to fully acquire third-party payment-services provider 19Pay for 300m yuan (US$45.4m)… Last year, the PBOC said it would control the number of third-party payment licenses issued, making it increasingly difficult to get a license.”
Calling all payment, card and secure credential technology suppliers
2018 is set to be a pivotal year for banks, card issuers and secure credential providers around the world as new market entrants, regulatory environments and technical innovations place increasing pressure on traditional banking and card issuing business models... More
Australian banks ordered to cut contactless transaction fees
‘Let shoppers choose Eftpos’: Banks ordered to overhaul paywave systems by April — news.com.au — “Australia’s banks have been given a deadline of April next year to reduce fees charged on tap-and-go payments by giving customers the option of choosing Eftpos instead of credit… ‘It’s estimated that processing tap-and-go transactions through credit cards instead of Eftpos costs businesses A$290 [US$220m] million a year.'”
EU gives payments industry 18 months to implement strong customer authentication
Payment Services Directive (PSD2): Regulatory Technical Standards (RTS) enabling consumers to benefit from safer and more innovative electronic payments — European Commission — “The RTS makes strong customer authentication (SCA) the basis for accessing one’s payment account, as well as for making payments online. This means that to prove their identity users will have to provide at least two separate elements out of these three: something they know (a password or PIN code); something they own (a card, a mobile phone); and something they are (biometrics, eg fingerprint or iris scan)… The use of SCA will become mandatory 18 months after the entry into force of the RTS, ie once the RTS is published in the Official Journal of the EU, scheduled for September 2019.”
Bank of Canada reports on the potential of digital currencies
Central Bank Digital Currency: Motivations and implications — Bank of Canada — “This paper addresses the question of whether a central bank should issue digital currency that could be used by the general public. It begins by discussing the possible motivations for a central bank to issue a digital currency. The paper then sets out a benchmark central bank digital currency (CBDC) with features that are similar to cash. The implications of such a digital currency are explored, focusing on central bank seigniorage, monetary policy, the banking system and financial stability, and payments.”
UK government expands open banking project to credit cards, e-wallets and prepaid cards
UK’s Open Banking project expanded — Open Banking — “The OBIE [Open Banking Implementation Entity] has now been asked by the CMA9 and Her Majesty’s Treasury to create open banking standards for all payment account types covered by the European Union’s second Payments Services Directive (PSD2). This means customers using credit cards, e-wallets and prepaid cards will also be able to take advantage of open banking services.”
Danish consumer council raises Apple Pay competition concerns
Apple Pay accused of unfair competition in Denmark — The Copenhagen Post — “The Forbrugerrådet Tænk consumer council is not sure that Apple Pay is operating in compliance with Danish law, and it has asked the Concurrence og Forbrugerstyrelsen competition and consumer agency to investigate… ‘We have reported Apple Pay because we believe this new payment app is in violation of our competition law and the EU rules governing this area,’ Forbrugerrådet Tænk chairperson Anja Philip told DR Nyheder.”
US to open up banking market to non-banks?
US regulator says time to review mixing banking with other businesses — Reuters — “US regulations that bar companies such as Wal-Mart Stores Inc from providing banking services need to be reviewed as they reduce competition thereby concentrating more risk among a smaller number of banks, a US banking regulator said… Noreika on Wednesday said that allowing non-financial companies to run banks could strengthen the banking system by boosting competition and increasing diversity. The OCC is exploring providing a charter specifically for financial technology providers such as payment processor Square Inc.”
India’s central bank implements new rules for mobile wallet issuers
Master Direction on Issuance and Operation of Prepaid Payment Instruments — Reserve Bank of India — “The Master Direction lays down the eligibility criteria and the conditions of operation for payment system operators involved in the issuance of semi-closed and open system PPIs [Prepaid Payment Instruments] in the country. All entities approved/authorised to operate payment systems involving the issuance of PPIs shall comply with these directions.”
EU regulators raid banks over fintech access concerns
Antitrust: Commission confirms unannounced inspections concerning access to bank account information by competing services — European Commission — “The European Commission can confirm that on 3 October 2017 its officials carried out unannounced inspections in a few Member States concerning online access to bank account information by competing service providers… These alleged anti-competitive practices are aimed at excluding non-bank owned providers of financial services by preventing them from gaining access to bank customers’ account data, despite the fact that the respective customers have given their consent to such access.”
Reserve Bank of India to issue guidelines for interoperable mobile wallets
Statement on Developmental and Regulatory Policies — Reserve Bank of India — “In line with the Vision for Payment and Settlement Systems in the country, the revised framework will pave the way for bringing interoperability into usage of PPIs [Prepaid Payment Instruments]. Interoperability amongst KYC-compliant PPIs shall be implemented within six months of the date of issuance of the revised Master Directions, which will be issued within a week, ie by October 11, 2017.”
UK’s Payment Systems Regulator outlines PSD2 enforcement process
The PSR confirms how it will monitor and enforce new EU rules on access to payment systems — Payment Systems Regulator — “The PSR will monitor and enforce particular rules, covering requests by payment service providers (PSPs) to get access to payment systems. Under these rules, banks and payment system operators must treat the requests in an objective, proportionate and non-discriminatory way.”