Payments, Banking & FinTech roundup: June 2022

There have been a number of regulatory updates in June, with work to tackle online fraud, and Open Banking milestones also making the news.

One of the biggest talking points of the month was Money 20/20 Europe. Here are our key takeaways from day one and day two of the annual FinTech event, held in Amsterdam this year.

Banking Circle was in attendance, and held interviews with industry experts from our stand. Listen to us catching up with some of the speakers from the conference, in partnership with The C Suite Podcast here.

For us, a highlight during June was announcing that Banking Circle, mandated by Bluecode and TWINT, will provide cross-system foreign exchange and settlement services based on EMPSA interoperability specifications. The German-Austrian Bluecode and the Swiss TWINT are the first mobile payment systems to become interoperable with one another.

Meanwhile, our Head of Onboarding, Patrick Green, took part in a panel session at EBAday, joined by speakers from EBA, DXC, and Erste, focusing on whether Know Your Customer (KYC) challenges can be tackled through a utility model. Read our wrap-up of that session here.

We also hosted our latest Knowledge Circle webinar: ‘Selling cross-border; can payment processors solve the FX challenges for merchants?’, bringing together a panel of experts from EWPN, FIS Worldpay, Continuum Commercial Solutions, and our own Nick Tubb, Global Head of FX Sales at Banking Circle. Read the wrap-up here, and watch the session again here.

In another webinar, this time hosted by The Paypers, we discussed the role traditional financial services play in the crypto universe, alongside experts from Mode, Ripple and Kraken. Watch that again here or read our wrap-up.

In our final webinar of the month, in association with Finextra, we explored re-bundling financial services in the collaborative ecosystem, discussing the landscape as Payments businesses and Banks aim to stake a claim at the increasingly competitive e-commerce marketplace. Watch it on demand here.

In other news, we announced that we have further simplified B2B payments by adding Dynamic Sender Name to the suite of solutions available to Payments businesses, further increasing flexibility with payment solutions fit for purpose.

Here are some other important stories from the industry you may have missed in June:

EBA calls for PSD2 and E-Money Directive to merge

The European Banking Authority (EBA) has called for PSD2 to be merged with the Electronic Money Directive following calls from the European Committee (EC) for feedback on the directive.

The EC is planning to review the relevance of PSD2, especially in the wake of market developments regarding new market players, services and technologies.

The EBA recognises that some PSD2 objectives have begun to materialise, but it highlights that there are still a number of issues and challenges to address. As such, the authority has offered over 200 proposed amendments, with one of these being the idea to merge PDS2 and E-Money Directive.

The public consultation launched by the Commission has published two papers – a questionnaire for the general public and one for industry experts, with the deadline for submissions closing on July 5th. Read more on that here.

New report chapter from BIS champions CBDCs

A pre-released chapter of a new report from the Bank for International Settlements (BIS), concludes that anything crypto can do, central bank digital currencies (CBDCs) can do better.

In the crypto-focused chapter of its ‘2022 Annual Economic Report’ the BIS argues that cryptocurrencies have fundamental flaws that make them unsuitable as the basis of a monetary system, and that while tokenisation and programmability are genuine advances, private, decentralised blockchains are not required to reap their benefits.

The report claims that “rather than relying on central bank money and trusted intermediaries, crypto envisages checks and balances provided by a multitude of anonymous validators so as to keep the system self-sustaining and free from the influence of powerful entities or groups.”

See the report here.

AISPs removed from AML regulations in the UK

The UK Treasury has taken the decision to remove the need for Account Information Service Providers (AISPs) from its money laundering, terrorist financing and transfer of funds regulation, on the basis that AISPs do not directly contact customers’ funds, and therefore present a low risk.

65% of respondents supported the move, believing that AISPs are unlikely to influence any kind of money laundering activity, with no evidence to suggest that financial criminals use AISPs as a vehicle.

Despite the decision, Payment Initiative Service Providers (PISPs) will not be removed for now though. There had been discussion for PISPs to follow suit, however the government is keeping them “within scope for now.”

Read more about that here.

P27 nears testing with Swiss banks

Following almost two years of implementation, P27 has indicated that it will soon be ready to transition from working with prospective participants to actual customers.

Instant payments are at the top of P27’s agenda, with 13 banks connected to Swedish instant payments solution, Swish, first in line to test the Nordic payments platform by the end of the year, with P27’s Customer relations Director, Jacob Groth, claiming “we’re doing everything we can to realise our vision and ambition.”

Find out more about that here.

UK financial regulators to be given powers over Big Tech cloud providers

UK financial regulators will be given powers to test the resilience of big cloud providers such as Google, Microsoft, Amazon, and IBM, as well as perform on-site inspections, following concerns about the reliance of banks on a small number of Big Tech cloud providers.

The Bank of England’s Financial Policy Committee last year concluded that this could increase financial stability risks and that greater direct regulatory oversight of the resilience of the services they provide was needed.

The update is expected to allow regulators to:

  • Request information directly from critical third parties on the resilience of their material services to firms, or their compliance with applicable requirements;
  • Commission an independent ‘skilled person’ to report on certain aspects of a critical third party’s services;
  • Appoint an investigator to look into potential breaches of requirements under the legislation;
  • Interview a representative of a critical third party and require the production of documents;
  • Enter a critical third party’s premises under warrant as part of an investigation.

Government outlines plans for BNPL regulation

Plans to bolster Buy Now, Pay Later (BNPL) regulation have been outlined by the UK Government.

The proposed changes include forcing providers to conduct credit checks and register with the Financial Conduct Authority (FCA), as is currently the case for other loans. Rules will also be amended to ensure advertisements are “fair, clear and not misleading.”

It comes following the closure of a consultation from the Treasury that looked into concerns that the largely unregulated BNPL sector was sending consumers into debt.

View the proposal here.

​​PSR outlines upcoming card fee market reviews

The Payment Systems Regulator (PSR) has outlined the way it plans to undertake two market reviews focusing on card fees.

One review will consider scheme and processing, whilst the other will investigate cross-border interchange fees, with both reviews focusing on Mastercard and Visa.

The PSR has stated that the reviews will “inform any decisions on the steps we might need to take to promote effective competition or to address any harm”, and comes after it was discovered that the fees paid by acquirers had increased significantly from 2014 to 2018.

The PSR also highlighted that cross-border interchange fees have also “increased significantly” over the past year, and it wishes to determine whether these fees indicate that the market is working well.

Find out more about that here.

UK Open Banking users hit 6 million

Active users of Open Banking have now surpassed six million in the UK, which signals an increase of more than one million users since January, when figures were last published.

It’s also been revealed that businesses and consumers made five million payments using Open Banking technology in May 2022, again up on January’s figures, which were just under four million.

See the stats here.

FCA taking steps to combat online fraud

The Financial Conduct Authority (FCA) has revealed it is scanning approximately 100,000 websites a day in an attempt to detect potential scammers and allow it to “identify and prevent harm sooner.”

Between May 2021 and April 2022, it identified 1,966 potential scams – up a third on the previous year.

The FCA has said that it is continuing to improve its data, technology and capabilities to act decisively in consumers’ interests, as well as making it easier for firms to report incidents to the body,

As part of the commitment, the FCA is recruiting “a significant number of skilled roles” to help it meet its goals.

Read more on the strategy here.

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