Payments News Digest 30 June 2023

US: Fed's faster-payments service draws near to late-July debut, watched closely by all players

With FedNow's launch less than a month away, American fintechs are anxious to ensure that their sector enjoys the kind of infrastructural accessibility that banks are entitled to. The service goes live in late July though the exact date has yet to be declared. "We're tracking it closely," Stripe executive Will Gaybrick told Axios, although that particular payments high-flier has yet to set FedNow-centred solutions in motion. "I really do think real-time payments are going to be a big deal. As I understand FedNow, there isn't yet a mandate, so banks don't have to implement it," he added. "For things to completely change the landscape of payments, you need universal coverage."

Assuming that mass uptake takes place, retail giants Kroger and Walmart see faster payments as a way to deliver better service to their customers, not least in the case of refunds, responsible for much avoidable delay noted Walmart's senior director of payments services in remarks reported by an attendee at an industry event last month.

Beyond this use case and P2P transfers, FedNow is designed to handle bill payments, salaries and government disbursements, among other things, although it will confine itself to "baseline functionality" such as account-to-account transfers and bill pay in its first release. According to the operator, 57 organisations are now certified as ready for the service.

Europe: Union's political leadership throwing weight behind both payments challengers and monetary digitalisation

European Commissioner Mairead McGuinness set out the case for a digital euro in the Financial Times this week, citing the emergence of CBDCs in other jurisdictions as one of the motives. She also singled out the benefits for financial inclusion and noted that "Europe's current payment systems are national or international – we don't have truly European options and are overly reliant on companies such as Visa, Mastercard or PayPal". Although the idea remains controversial and some argue the risks are too high, hers is the most prominent voice yet to come out strongly for a European Central Bank digital currency.

The rhetorical intervention comes as the EU set about establishing the legal foundations for a digital euro, while parliament were also presented with new proposals aimed at improving competitiveness in payments and also guaranteeing cash access for citizens. The competitiveness piece is designed to build on the technical unbundling brought about by the revised Payments Services Directive (PSD2), which is now fully implemented across member states but has failed to materialise the level of API-based access for fintechs that was envisaged by PSD2's architects: "We are going to clearly identify the obstacles that the fintechs should never have been encountering," an official commented.

China: Payments giants linking with Western networks for credit-card acceptance

From Beijing comes unconfirmed news that visitors using the big Chinese payment-apps may soon avoid having to open a local bank account to fund their transactions. The long-anticipated removal of the onerous requirement delivers on initiatives that had been paused since the beginning of this decade because of the pandemic.

Before long, according to credible but unnamed sources, overseas visitors to China wanting to "pay like a local" will be able to link Visa-branded cards to their WeChat apps. A similar move has also been announced for foreign users of Alipay, which will be linkable with Mastercard-branded credit or debit cards.

Other stories of interest this week...

Europe: Clearpay BNPL winds down EU business
India: Apple restarts talks for UPI-based Apple Pay launch
Latin America, Asia-Pacific, Europe: Visa to acquire Pismo for $1bn
UK, Global: Higher interest rates help Wise triple profits

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