Key developments of interest over the last month include:

• Europe: European Commission issues separate consultations on an EU retail payments strategy and an EU digital finance strategy. The deadline for responding to these consultations is 26 June 2020.
• United States: the Federal Deposit Insurance Corporation has conditionally approved a deposit insurance application from an industrial loan company for the first time in over a decade.
• France: Bank of France issues a call for applications to experiment with central bank digital currency for interbank settlements. The deadline for submissions is 15 May 2020, and successful applicants will be selected in July 2020.

In this Newsletter:

• Regulatory Developments
• Payment Market Developments
• Surveys and Reports

For previous editions of the Global Payments Newsletter, please visit our Financial Services practice page.

Regulatory Developments

Europe: Launch of consultations on EU retail payments strategy and EU digital finance strategy

On 3 April 2020 the European Commission issued a public consultation to help inform a retail payments strategy for the EU, with the strategy due to be published in Q3 of 2020.

The consultation does not include questions on payment-related aspects of cryptocurrencies as these are covered in the Commission's pre-existing consultation regarding the regulation of cryptoassets, including stablecoins.

The key objectives of the consultation and the anticipated retail payments strategy are:

• The development of fast, convenient, safe, affordable and transparent payment instruments, with pan-European reach and "same as domestic" customer experience.
• The creation of an innovative and competitive European retail payments market.
• Ensuring access to safe, efficient and interoperable retail payments systems and other support infrastructures.
• Improved cross-border payments, including remittances.

Also on 3 April 2020 the European Commission issued a public consultation in preparation for proposing a digital finance strategy/FinTech action plan in Q3 of 2020. This strategy will set out what should be the priorities over the next five years, and what policy measures will be implemented to achieve these.

The consultation seeks views on:

• How could the regulatory framework be technology neutral and innovation-friendly?
• How could fragmentation of the single market for digital financial services be removed?
• What additional measures may be needed to advance the data economy?
• How can the digital operational resilience of the EU financial system be enhanced?

The consultations will both close on 26 June 2020.

United States: Authorisation for industrial loan company to accept insured deposits granted

On 18 March 2020 the Federal Deposit Insurance Corporation (FDIC) conditionally approved Square's application for deposit insurance in relation to its de novo industrial loan company (ILC) charter. Square is a payment service provider and it currently makes business loans. It plans to issue loans through the ILC subsidiary in due course.

By way of background, an ILC charter is a special bank charter that is eligible for FDIC deposit insurance, but is exempted from Bank Holding Company Act of 1956 (BHCA) requirements such that corporate owners of ILCs are not required to be registered as bank holding companies as with other types of bank charters. Because of this BHCA exemption, they have faced pushback from the banking industry on the basis that the established principle of separating commerce from banking would be undermined. The FDIC did not approve deposit insurance applications for ILCs since 2006 until granting Square's application (and another ILC’s application – Nelnet – on the same day).

Square's application was approved subject to certain conditions. For example, Square must maintain capital at higher levels than typical FDIC-insured banks. In addition, although the bank’s holding company (Square, Inc.) is not required to register as a bank holding company, in connection with the FDIC deposit insurance approval, it was required to execute agreements that contractually impose many of the same requirements as apply to bank holding companies, including serving as a source of financial strength for the bank, ensuring the bank maintains sufficient capital and liquidity, and consenting to examination, reporting, recordkeeping and other requirements intended to provide safeguards to protect the bank and the FDIC’s Deposit Insurance Fund.

The approval of Square's application may encourage other FinTech firms delivering financial services to consider an ILC charter.

France: Bank of France calls for applications to experiment with central bank digital currency (CBDC)

On 27 March 2020 the Bank of France issued a call for applications to experiment with CBDC for interbank settlements. It said that the project has three objectives:

• To show how the following use cases can be achieved through CBDC based on different technologies:
  • Payment in central bank money against delivery of listed or unlisted financial instruments.
  • Payment in central bank money against the digital currency of another central bank.
  • Payment in central bank money against digital assets.
• To determine the benefits of introducing CBDC and how it could foster financial innovation.
• To analyse the potential effects of CBDC on financial stability, monetary policy and the regulatory environment.

The deadline for applications is 15 May 2020. Applicants will then be interviewed in June 2020, and on 10 July 2020 the successful applicants will be selected. The results of experiments will be used to contribute to the EU's research into CBDC.

See further information here.

Singapore: MAS announces COVID-19 support package for FinTech companies

On 8 April 2020 the Monetary Authority of Singapore (MAS) announced a $125 million support package for the financial and FinTech sectors to deal with the immediate challenges arising from COVID-19. As part of the package, the following support will be provided:

• Support for manpower costs in the form of training allowances, job support schemes and salary subsidies.
• Support for operational costs in the form of course fee subsidies, discounts on rental costs and digital acceleration grants.
• Support for access to business opportunities in the form of digital acceleration grants, self-assessment tools and APIX Cares (a digital platform for sales engagement).

The above measures seek to support workers, enhance operational readiness and accelerate digitalisation across the sectors. Initiatives supporting the FinTech ecosystem in Singapore have been compiled into this infographic published by the MAS.

The Singapore Fintech Festival has also organised the 'SFF Green Shoots Series' aimed at supporting the FinTech community through a series of online conferences.

Europe: EBA publishes statement on consumer and payment issues in light of COVID-19

On 25 March 2020 the EBA published a statement on consumer and payment issues in light of COVID-19. Regarding payments, the EBA:

• Calls on payment service providers (PSPs) to contribute to measures that limit the spread of COVID-19, including facilitating consumers' ability to make contactless payments. It encourages PSPs to increase, where possible, the limits up to the maximum thresholds of EUR50 per transaction, as allowed under the strong customer authentication (SCA) exemption for contactless payments.
• Undertakes to support issuing and acquiring PSPs' efforts to focus on customers by removing the obligation for national competent authorities to report by 31 March 2020 their readiness to meet the SCA requirements for e-commerce card-based transactions.
• Confirms that all other requirements set out in the EBA's October 2019 opinion on the migration to SCA remain unchanged, but it will continue to monitor events and assess whether additional measures need to be taken.

United Kingdom: Updates on UK regulation during COVID-19 outbreak

In light of the COVID-19 outbreak, UK regulators have made various statements on on-going regulatory initiatives:

• Card-acquiring market review: On 16 March 2020 the Payment Systems Regulator (PSR) published an update on its market review into the supply of card-acquiring services. The regulator plans to publish an interim report for consultation in June 2020, which will be followed by a programme of stakeholder engagement. The review will then conclude with a final report. However, the PSR is mindful of the potential impact of COVID-19 on the format and timings of the review.
• FCA extended consultation/call for input deadlines: On 17 March 2020 the FCA announced that it is extending the closing dates for a number of consultations and calls for input to 1 October 2020, including:
  • CP19/32: Building operational resilience: impact tolerances for important business services.
  • Call for input on open finance.
• Confirmation of Payee (CoP): On 20 March 2020 the PSR stated that banks directed to implement CoP should aim to roll it out by 30 June 2020 if they cannot meet the original 31 March 2020 deadline. The PSR will not take any formal action in respect of delays to implementation before 30 June 2020, but banks should refund victims of fraud if CoP would have prevented it.
• Strong customer authentication (SCA): On 31 March 2020 the FCA stated that it supports the use of contactless payments and welcomes the industry's initiative to increase the contactless limit. It is very unlikely to take enforcement action if a firm does not apply SCA when the cumulative amount of transaction values has exceeded EUR 150 or there are five contactless transactions in a row, provided the firm sufficiently mitigates risks of unauthorised transactions and fraud. The FCA recognises the current circumstances are likely to affect the planned implementation of SCA for e-commerce by 14 March 2021 and it will work with industry to agree any required timeline changes. For firms that have not yet met the SCA requirements for online banking and are facing further delays due to COVID-19, the FCA will consider further measures on a case-by-case basis. It will continue to monitor the situation and is keeping its decisions under review.
• Access to cash: On 8 April 2020 the PSR published an update on its work supporting access to cash during the COVID-19 outbreak. The PSR says that its immediate priority is to work with the other members of the Joint Authorities Cash Strategy group, authorities and the industry to support cash access, while also ensuring the safety of firms' workforces. The update includes a list of FAQs from across the sector in relation to cash and payments. The PSR will continue to add to this list.

United Kingdom: PSR publishes annual plan and budget

On 31 March 2020 the PSR published its annual plan and budget. This publication sets out the PSR's key aims and activities for the year 2020/21 alongside its expected costs. The PSR has also published a related factsheet.

The PSR's key aims are to:

• Monitor the development of the New Payments Architecture to ensure its resilience and that it considers users' interests.
• Work with LINK, the FCA, the BoE, HM Treasury and industry stakeholders to ensure access to cash through ATM networks.
• Assess the Contingent Reimbursement Model (CRM) Code and Confirmation of Payee (CoP) to ensure that the market for card-acquiring services works well.
• Monitor the effect of the CRM Code and CoP on preventing authorised push payment (APP) fraud, and encourage more PSPs to join the CRM Code.
• Continue to tackle anti-competitive conduct in payments systems and markets.

The PSR will continuously review its work in light of COVID-19. It expects that much of the work described in its annual plan will continue, though the methods and timetable may be revised.

United Kingdom: FCA publishes Business Plan for 2020/21

On 7 April 2020 the FCA published its Business Plan for 2020/21. The FCA states its aim to move towards a regulatory approach that's increasingly focused on end outcomes for consumers, markets and firms. The Business Plan reflects this approach, honing in on just 5 key priorities and the outcomes it wants to deliver against them in the medium-term. Given the uncertainties created by COVID-19, the FCA will keep its plans under review as the situation develops and may publish an update to its Plan in due course.

Regarding payment services, the FCA will work with the Payment Systems Regulator (PSR), the government, the BoE and other regulators to ensure that:

• Consumers can transact safely with payment firms. There will be an increased focus on evaluating firms’ systems and controls while monitoring the emerging risks, so as to minimise fraud, money laundering and other financial crime.
• Payment firms meet their regulatory responsibilities - including safeguarding customer funds - while competing on quality and value.
• Consumers and SMEs continue to have access to a variety of payment services.

Banks and payment firms should note that the FCA will monitor firms’ financial strength and the number of operational incidents and outage times (with an expectation that these will reduce), and assess if firms have adequate systems and controls to prevent financial crime (again with an expectation of reduction to be measured through its regulatory returns).

See further information here.

United Kingdom: PSR considers the issue of long-term funding for no-blame APP scams

On 6 April 2020 the PSR published speaker's notes from a conference call with representatives of the payments industry and other authorities to discuss authorised push payment (APP) scams. During the call, the issue of long-term funding arrangements for "no-blame" APP scams was discussed. There is temporary funding available currently, but Pay.UK announced in November 2019 that there was no industry consensus for participants in the Faster Payments Service (FPS) to reimburse blameless victims of APP fraud by paying a levy into a fund.

The PSR noted some of the reasons for this lack of consensus. For example, a firm's individual incentive to invest in fraud control may be reduced because of the shared fund, and some PSPs believed that such an initiative should be voluntary, not mandatory.

In terms of next steps, the PSR identified three possible options:

• Continue with the current approach and work within the existing rules.
• Return to the idea of an FPS rule change.
• Rely on action by the PSR which it may be able to take post-Brexit by diverging from PSD2 (or look to legislative change).

Global: Financial Stability Board (FSB) publishes Stage 1 report on enhancing cross-border payments

On 9 April 2020 the FSB published its Stage 1 report which assesses the existing arrangements and challenges for cross-border payments. This report serves as the first part of a three-stage project by the FSB to create a roadmap to enhance cross-border payments. This is in accordance with one of the G20's priorities, according to which cross-border payments should be faster, cheaper, more transparent and more inclusive so as to benefit economies worldwide.

The report notes:

• Existing obstacles to cross-border payments include:
  • Fragmented data standards / lack of interoperability.
  • Complexities with compliance, including AML/CTF and data protection regulations.
  • Outdated legacy technology platforms.
  • The need to involve intermediaries to hold precautionary funding.
• Financial innovation is offering opportunities to enhance cross-border payments, but this entails its own challenges, e.g. operational soundness and legal enforceability.
• Public authorities have an important role in co-ordinating the regulation and supervision of entities in the cross-border payments ecosystem.
• The anticipated roadmap will need to include a variety of approaches and timeframes to adapt to diverse entities in different payment system networks around the world.
• The roadmap could explore the following topics:
  • Operational improvement of payment infrastructure.
  • Standardisation of data and market practice.
  • Legal, regulatory and oversight framework in relation to cross-border payments.
  • Monitoring progress and sharing information.

The report was due to be submitted to the G20 ahead of their virtual meeting on 15 April 2020.

Europe: EPC launches public consultation on changes for Single Euro Payments Area (SEPA) Credit Transfer and SEPA Direct Debit scheme rulebooks

On 12 March 2020 the European Payments Council (EPC) launched a public consultation on the change requests it has received in relation to the SEPA Credit Transfer and SEPA Direct Debit scheme rulebooks. This consultation is held to ensure that the SEPA payment schemes reflect the needs of PSPs and their customers, in addition to technological changes.

Some of the change requests being consulted on include:

• The migration of all ISO 20022 XML-based messages specified under the rulebooks to the 2019 version of the ISO 20022 messaging standard in November 2022.
• The introduction of a handful of specific transaction reason codes.
• Allowing several requests for Status Update to be filed within a single message.
• Aligning the rulebooks with the Funds Transfer Regulation.
• The settlement of SCT inquiry fees and/or interest compensation.

Change requests that are broadly accepted by stakeholders and are technically and legally feasible will be progressed.
The consultation will end on 9 June 2020. The EPC will then publish the updated rulebooks and implementation guidelines in November 2020, which will enter into force the following year.

Europe: European Commission publishes study on the Interchange Fees Regulation (IFR)

On 11 March 2020 the European Commission published a study on the application of the IFR for card-based payment transactions.

The main objective of the IFR was to address the diversified and obscure interchange fees, which hindered single market integration and distorted competition to the detriment of retailers and consumers.

In summary, the study finds that the IFR's main objective has been achieved. Some of the key points reported are as follows:

• The limitation of interchange fees resulted in savings exceeding €2 billion annually.
• Interchange fees for consumer cards decreased by 35% between 2015 and 2017. As a result, charges for retailers and retail prices for consumers fell.
• The EU saw a 54% increase in the number of card payments between 2014 and 2018, therefore increasing market integration.
• Competition in payment services seems to have increased, as seen in the growth of digital payment services.

The study will help inform the report on the application of the IFR which the Commission will submit later this year.

Italy: Developments relating to PSD2

On 6 April 2020 the Italian government approved a draft Legislative Decree introducing corrective and supplementary provisions to the Italian implementation of PSD2 and the Interchange Fee Regulation (IFR) (Draft Decree). The main provisions of the Draft Decree are:

• Where the liability of a PSP is attributable to another PSP or to an intermediary, that PSP or intermediary shall compensate the first PSP for any losses incurred or sums paid in the case of non-execution, defective or late execution of payment transactions initiated through a payment initiation service provider.
• Entities providing account information services only are no longer required to join the Bank of Italy's out-of-court dispute resolution systems.
• Sanctions for failing to comply with the IFR.

On 8 April 2020 the Bank of Italy published instructions on the application of PSD2. Under these instructions:

• The administrative procedure for granting an exemption from the fall-back solution to account servicing PSPs that have opted for a dedicated interface should be concluded within 45 days.
• Any issues related to dedicated interfaces should be promptly reported to the Bank of Italy, by completing a form and sending it to RIV@pec.bancaditalia.it.
• To benefit from the corporate SCA exemption:
  • Transactions should be monitored.
  • Secured communication channels complying with encryption and confidentiality requirements should be used.
  • Secured authentication mechanisms must be applied.

These must be evidenced to the Bank of Italy annually by completing a form and providing a report on operational and security risks.

See further information here.

France: Prudential Supervision and Resolution Authority (ACPR) incorporates EBA guidelines on fraud reporting

On 6 April 2020 the ACPR published a notice to confirm the application of the EBA guidelines on fraud reporting under PSD2 (EBA/GL/2018/05) as amended by the EBA guidelines published on 22 January 2020 (EBA/GL/2020/01) (see the consolidated guidelines here).

These guidelines set out how PSPs should report fraud to their competent authorities, and how competent authorities should aggregate this data to provide to the EBA and the ECB.

After the initial guidelines were published, the European Commission clarified the interpretation of PSD2 in relation to SCA. Therefore, the guidelines were amended to introduce two new data fields for reporting transactions where SCA is not applied for reasons other than an exemption under the Commission Delegated Regulation (EU) 2018/389. These changes aim to ensure that these transactions are reported consistently and accurately across the EU/EEA.

The system through which statistical data on fraud should be reported to the ACPR will progressively be updated until 2021 in order to implement and fully comply with the EBA guidelines.

United Kingdom: Joint Money Laundering Steering Group (JMLSG) consults on new chapter of AML/CTF guidance

On 17 March 2020 the JMLSG published its proposed text of new sectoral guidance to incorporate into its AML/CTF Guidance. This new sector (Sector 22) relates to cryptoasset exchange providers and custodian wallet providers in light of the Money Laundering and Terrorist Financing (Amendment) Regulations 2019 (SI 2019/1511).

The new sectoral guidance covers the following areas:

• The scope of the Money Laundering Regulations.
• The AML/CTF risks in this sector.
• Risk management.
• Customer due diligence (CDD).
• Dealing with suspicious transactions.

Some of the risks pinpointed include the anonymity, immutability, and cross-border and decentralised nature of cryptoasset transactions. The guidance therefore identifies high-risk factors firms should be alive to, such as transactions using privacy-enhancing features (such as stealth addresses) or instances where the customer tries to send cryptoassets to a newly created address or to exchange cash with anonymous electronic money.

The JMLSG will accept comments on the proposed sector until 18 May 2020.

Europe: CJEU passes judgment on agreements between banks relating to multilateral interchange fees (MIF)

On 2 April 2020 the CJEU published its judgment on a preliminary ruling from the Hungarian Supreme Court in the case of Gazdasági Versenyhivatal v Budapest Bank Nyrt and others (Case C‑228/18). This preliminary ruling related to the applicability of Article 101 TFEU to MIF agreements.

The case concerned an agreement between banks which applied a uniform MIF to transactions using Visa and MasterCard credit cards. The Hungarian Competition Authority determined this agreement to be anti-competitive as it set a MIF and the MIF was made to be a uniform amount. The credit card companies who implemented the agreement and some of the banks involved with its creation appealed the authority's decision.

As the MIF in the disputed agreement was standardised by fixed amounts, rather than minimum and maximum limits, the CJEU ruled that such MIF agreements would not be considered anti-competitive "by object", unless the terms, objectives and context indicate otherwise.

Global: International Monetary Fund (IMF) speech on CBDCs

On 19 March 2020 the IMF published a speech given by its Deputy Managing Director, Tao Zhang, on central bank digital currencies (CBDCs).

The speech outlined some of the benefits of CBDCs, including:

• Increased efficiency of payments systems and decreasing costs.
• Increased financial inclusion as CBDCs may provide a means of payment without individuals needing a bank account.
• More stability and increased competition in the payments sector.
• Enhanced monetary policy due to increased financial inclusion.
• Counter privately issued digital currencies which may be difficult to regulate and present greater risks to financial stability.

The speech also outlines some of the risks of CBDCs, such as:

• Negative impacts on the banking industry if money is moved from deposits to CBDC holdings.
• The impact on the central bank's balance sheet and how to allocate funds across banks.
• The central bank assuming more risk as it might be involved with dealing with customers, building front-end wallets, maintaining technology, monitoring transactions, and being responsible for AML/CTF issues.

As CBDCs could have cross-border implications, the IMF is conducting more research into CBDCs and is working with various international organisations.

Global: IOSCO publishes report on global stablecoins

On 23 March 2020 the International Organisation of Securities Commissions (IOSCO) published a report on the regulatory issues arising from global stablecoins.

The report states that global stablecoin initiatives may, depending on their structure, have similar features to regulated securities. Therefore, a global stablecoin arrangement may be subject to securities regulations and IOSCO Principles and Standards.

The paper starts with an overview of different stablecoin designs, before moving to a hypothetical case study that raises many global financial regulatory issues. The issues identified include:

• Systemic risk if a stablecoin is scalable or already has a large user base.
• Market integrity risks arising from market immaturity, illiquidity or a lack of reliable information for participants.
• Consumer and investor protection.
• Cyber risk and operational resilience.
• Governance, competition and data issues.
• AML/CTF risks arising from the potentially anonymous nature of stablecoins.

The report will assist the work of the Financial Stability Board (FSB) on stablecoins. The FSB is planning to issue a report on regulatory issues raised by global stablecoins in April 2020.

See further information here.

Global: FSB consults on high-level recommendations in relation to global stablecoins

On 14 April 2020 the FSB issued a consultation setting out 10 high-level recommendations to address the regulatory and supervisory challenges arising from global stablecoins. These recommendations were created in response to the G20's mandate to examine regulatory issues in relation to global stablecoins.

The consultation contains:

• A description of global stablecoins and how they may differ from other cryptoassets and other stablecoins.
• The potential risks raised by global stablecoins.
• An outline of the existing regulatory and supervisory approaches to global stablecoins and the potential gaps in these frameworks.
• The challenges arising in a cross-border context.
• The proposed high-level recommendations for regulatory and supervisory responses, including the need for multilateral action.

The proposed recommendations, in summary, call for regulation and supervision that is proportional to the risks of each global stablecoin arrangement, and stress the need for multi-sectoral cross-border co-operation. Authorities should also ensure that global stablecoin arrangements have suitable governance, risk management, data storage and recovery frameworks.

The deadline for responses is 15 July 2020. These will be published on the FSB's website unless respondents expressly request otherwise. The final recommendations will be published in October 2020.

Russia: Draft bill for a regulatory sandbox for FinTechs is submitted to Russian parliament

According to press reports, on 17 March 2020 Russia's Prime Minister Mikhail Mishustin introduced a new bill to the State Duma which creates regulatory sandboxes to test emerging technology. Testing will not be limited to technology that will be used in financial services. Instead, technology to be used in other sectors such as medicine, transportation and education will also be tested. The bill also indicates that sandboxes could be set up locally on a regional level.

The Bank of Russia will supervise the sandboxes testing FinTech projects. These sandboxes will be subject to less regulation than previous sandboxes. For example, those testing blockchain and cryptocurrency will be exempt from requirements relating to capital, fund reserves and maximum risk limits per borrower.

Currently, the Bank of Russia is already running a regulatory sandbox for FinTech projects, but they do not allow projects to be tested on real customers, while the draft bill does.

The bill will proceed through parliament, and will be voted on in due course.

See further information here and here.

Global: CPMI and World Bank report on payment aspects of financial inclusion (PAFI)

On 14 April 2020 the Committee on Payments and Market Infrastructures (CPMI) and the World Bank published a report on PAFI. The report builds on the PAFI guidance contained in their 2016 report.

The new report provides an overview of FinTech developments and innovation relevant to PAFI. This includes new technologies such as cloud computing; new products such as stablecoins; and new means of access such as mobile wallets.

The report then looks at the opportunities and challenges presented by FinTech used to improve access to payment accounts. For example, the report notes the potential efficiency gains and improved user experience, as well as the risks arising from data protection and cyber resilience.

As a result, the report recommends increased international and cross-sectoral co-operation and the continued assessment of regulatory and supervisory frameworks. The report also sets out FinTech-focused key actions for various stakeholders.

Europe: European Commission statement on application date for currency conversion transparency requirements under CBPR2 in light of COVID-19

On 9 April 2020 the European Commission issued a statement reminding PSPs of the application date of 19 April 2020 for currency conversion transparency requirements under the revised Cross-Border Payments Regulation ((EU) 2019/518) (CBPR2).

The Commission recognises that applying the new requirements in the current circumstances linked to the COVID-19 crisis may pose some challenges. It understands that National Competent Authorities may consider the necessity to enforce the new rules in a flexible manner, taking a reasonable approach towards PSPs' ability to implement the new rules while at the same time preserving the stability and continuity of online banking interfaces under the present circumstances.

United Kingdom: FCA guidance following European Commission statement on application date for currency conversion transparency requirements under CBPR2 in light of COVID-19

On 16 April 2020 the FCA updated its webpage on information for firms on coronavirus (COVID-19) response to provide guidance on its approach to the application of the currency conversion transparency requirements under the revised Cross-Border Payments Regulation ((EU) 2019/518) (CBPR2) following the European Commission's related statement on 9 April (see the separate item on this).

The FCA states that it expects firms to comply with the requirements (which apply from 19 April 2020) where they can, and if not, to implement these obligations as soon as possible. However, it will take a reasonable approach towards enforcement of the implementation of the new rules in the light of the need to preserve the stability and continuity of online payment services. This may mean assessing the immediate need to meet the new transparency obligations against the risk of introducing non-essential risk or a significant reduction in a firm’s capacity to deliver frontline services to customers in the present circumstances.

Payment Market Developments

Europe: Modulr joins Visa as a principal issuing member

On 10 March 2020 UK-based electronic money institution, Modulr, announced that it has become a principal issuing member of Visa. The partnership will provide extra functionality to the services Modulr offers, including optimised pricing and increased speed to market. Modulr plans to use the membership to expand in Europe and launch consumer and business cards.

Southeast Asia: Wirecard partners with Grab to boost digital payments

On 11 March 2020 Wirecard announced its entrance into a payments partnership with Grab. Grab is a popular app in Southeast Asia which offers various services ranging from ride-hailing to financial products. Pursuant to this partnership, Wirecard will process card transactions made via the GrabPay e-wallet using its digital financial platform. These transactions may take place both online and offline at physical stores. Wirecard will also expand GrabPay's reach as more merchants will accept it as a payment method.

Middle East and Africa: Samsung assists with Mastercard's Pay on Demand platform

On 12 March 2020 Mastercard announced its partnership with Samsung to drive digital and financial inclusion through Mastercard's Pay on Demand platform. This platform brings together financial institutions, manufacturers and telecommunication providers to help consumers access mobile devices based on a pay-as-you-go model. By promoting digital inclusion, individuals and SMEs can carry out digital transactions, build up a history and therefore gain access to other financial products, such as credit and insurance. The Pay on Demand platform will launch in the Middle East and Africa in early 2020. Additional regions will be added later this year.

Europe: Wirecard embeds Klarna payment methods into online checkout systems

On 12 March 2020 Klarna announced that all three Klarna shopping methods (Pay Now, Pay Later and Klarna Financing) can be embedded into online checkouts through all-in-one integration with Wirecard. Wirecard serves as the single point of contact for the merchants it works with. It can therefore integrate Klarna's payment options into merchants' checkout webpages and process all payments via Klarna. Wirecard covers merchant risk and Klarna covers consumer risk, so payments are guaranteed. Currently, this all-in-one integration is available to consumers in nine European countries. The scope will be expanded to additional countries later this year.

Europe: Cryptocurrency can be used to make mobile payments through Google Pay

On 17 March 2020 Coinbase announced that its debit card (Coinbase Card), funded by cryptocurrency, can now be added to Google Pay wallets. In this way, users can make mobile payments with cryptocurrency for the first time. Coinbase Card payments through Google Pay are currently available to customers in Belgium, Croatia, Denmark, Finland, France, Italy, Norway, Poland, Slovakia, Spain, Sweden, the UK and the Republic of Ireland. Coinbase aims to expand to other European countries later this year.

China: TransferWise expands remittance capabilities in China

On 17 March 2020 TransferWise announced its partnership with Alipay. This partnership will allow TransferWise's users to instantly transfer within seconds Chinese yuan from 17 currencies to Alipay users, which number more than 1.2 billion worldwide. These transfers can be done quickly and easily – all users need is the recipient's name and AlipayID. As many Chinese people live abroad, this partnership serves as a major expansion of TransferWise's remittance capabilities.

Australia: Archa to create a corporate credit card for SMEs with open banking technology

On 18 March 2020 i2c, a provider of open banking technology, announced a corporate credit programme with Archa. This programme is designed for SMEs. For example, it does not require a personal guarantee, and it is designed to help SMEs manage their business spend with an app. The corporate card will use i2c technology to access multiple data sources and AI to streamline risk assessment and provide instant credit for expense accounts. The i2c platform will also enable businesses to set spending limits and notifications, and obtain real-time reports.

United Kingdom: ClearBank partners with Temenos to provide payments in the cloud

On 19 March 2020 ClearBank announced a partnership with Temenos. ClearBank is a cloud-based clearing bank while Temenos provides a cloud-native payments platform. Together, they will provide banks with end-to-end service and access to real-time payments services, including Bacs, CHAPS and FPS, in the cloud. This cloud-native banking technology will reduce the time to market, cost and complexity involved in offering seamless payments services.

Spain: BBVA updates digital banking platform Global Net Cash

On 19 March 2020 BBVA announced that the bank has updated its digital banking platform, Global Net Cash. Global Net Cash was created with the aim of simplifying cross-border business transactions. It provides clients with access to historical data for their global accounts; access to BBVA's digital banking platforms with a single sign-on session; and basic payment management.

With this update, Global Net Cash has new features including:

• A mobile app providing access to information about accounts, payments and collections in real time.
• Access to historical data in relation to a client's BBVA and third-party bank accounts globally.
• Ability to manage global payments and establish authorisation processes.

Global: GSMA Inclusive Tech Lab launches interoperability test platform

On 24 March 2020 GSMA, an industry organisation representing the interests of mobile network operators worldwide, launched its interoperability test platform through its Inclusive Tech Lab. Interoperability is key to ensuring that financial systems operate seamlessly.

The platform links the GSMA Mobile Money API (an API for mobile money transactions and management to connect service providers with mobile money operators) and Mojaloop (open-source software). In this way, the platform provides the industry with an open-source and secure environment to allow participants to test their systems across different use cases.

Third-party service providers and digital financial services providers can test their software in this end-to-end ecosystem, and different entities and APIs can be tested.

Latvia: Paysafecash launches in Latvia enabling online cash purchases

On 1 April 2020 payments platform Paysafe launched Paysafecash in Latvia. Paysafecash is a secure and convenient method to pay for online goods and services without paying online. It is designed for consumers who do not have a bank account or payment card, or those who do not want to input sensitive financial data online. Payments are made through the generation of QR codes and subsequent payment at physical Paysafecash payment points. This removes the need for a customer account or the online input of financial data. With the addition of Latvia, Paysafecash now operates in 26 countries.

Hong Kong: Virtual bank, Mox, launches external pilot

On 9 April 2020 Mox launched services to selected external customers. The aim of this pilot is to collect feedback and prepare for the launch to the general public later this year. Mox is the result of a partnership between Standard Chartered, Hong Kong-based telecommunication providers and Trip.com. Mox allows users to instantly set up and manage a bank account via the app fee-free. In addition to a digital card, Mox also provides physical cards which are numberless to enhance security.

Surveys and Reports

Global: Juniper Research reports that value of e-commerce transactions globally will reach $4.8 trillion by 2024

On 24 March 2020 Juniper Research published a brief report on the future of e-commerce transactions globally. It predicted that the total value of e-commerce transactions globally will reach USD $4.8 trillion by 2024, with the Chinese market as a major player.

The report also states that growth will be driven by emerging markets, e.g. regions in Latin America, Africa and the Middle East. As a result, Juniper Research encourages PSPs to seek opportunities in emerging markets to compensate for slower growth in developed markets. Measures promoting financial inclusion, e.g. QR code payments and mobile financial services, will facilitate this.

The research also notes the effect of open banking on digital innovation and the increasing popularity of mobile wallets. Juniper Research therefore recommends that card networks join open banking initiatives and invest in omni-channel solutions.

Singapore: Visa study illustrates popularity of digital banks

On 24 March 2020 Visa published research findings into the interest in digital banking. The research study was conducted with 511 Singaporeans ranging from 18 to 65 years old.

Some of the key statistics and takeaways include:

• Nearly 65% of respondents were open to using digital banks. This number would rise if such banks built their experience and reputation.
• 63% of respondents said that they were keen to bank with new start-ups.
• Respondents said that they were attracted to sign-up promotions, innovative products and services, and access to better rewards.
• When asked what services respondents would use a digital bank for, the most popular services were money transfers to individuals, paying bills and payments at retail stores.

The study is part of a regional research project being conducted in Southeast Asia.

Global: Visa report on impact of COVID-19 on payment volumes

On 30 March 2020 Visa reported to the US SEC on the impact of COVID-19 on its business.

The report records a decrease in US credit card payment volumes by 7%, and in cross-border transaction volumes by 19%, when compared to this time last year.

The report also notes that Visa may experience financial loss due to the following factors:

• Merchant, acquirer and issuer failures and credit settlement risk, especially in relation to the retail, travel and hospitality industries.
• Third party failures, e.g. outages at network providers.
• Increased cyber and payment fraud risk due to rise in online activity.
• Changes to Visa's normal operations, e.g. if Visa's data centres, employees or systems are affected by COVID-19.
• Increased volume of client and regulatory requests for information and support.
• Extra regulatory requirements, e.g. pursuant to government initiatives to reduce payments costs.

Global: Bank for International Settlements (BIS) research bulletin on likely impact of COVID-19

On 3 April 2020 BIS published a research bulletin outlining the likely impact of COVID-19 on the payments sector.

The bulletin notes the following:

• The perception that cash can harbour the virus may increase the use of mobile, card and online payments. Such developments may differ across societies and between different groups of consumers.
• A move to cashless payments could open a "payments divide" potentially leaving unbanked and older consumers behind. This might have a material impact in the UK where there are currently 1.3 million unbanked consumers.
• The COVID-19 outbreak may propel research into resilient and accessible central bank digital currencies (CBDCs).

Australia: AUD $1 billion spent through digital wallets in March 2020

On 9 April 2020 the Commonwealth Bank of Australia published a press release on digital wallet transactions. According to analysis carried out by the bank, a record number of digital wallet transactions (36 million) took place in March 2020 in Australia. This amounted to a total spend of AUD $1 billion, which represents an increase of 17% from February 2020, and an average spend per transaction of $28.

According to the press release, these statistics illustrate that people do perceive mobile payments to be a safe and secure payment method. In light of COVID-19, mobile payments are also being encouraged over contactless payments as they remove the need to enter a PIN on a payment terminal entirely, regardless of a transaction's value.

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