Latest banking news, April 29, 2022

Latest banking news

April 29, 2022 4:02 PM

Block is taking on Canada's biggest banks with an expansion of its Square Loans offering, and a convenience chain is suing Mastercard over a multimillion-dollar penalty it paid to the card company in connection with a 2019 data breach.

Scroll through to see what you might have missed this week in banking, payments, crypto and more.

Block expands small-business lending to Canada

Tiffany Hagler-Geard/Bloomberg News

Block is expanding its small-business lending product, Square Loans, to Canada. It will work similarly to the way it does in the U.S., with businesses paying back the loans through a percentage of future payments. Block (formerly Square) argues Canada is a good bet for small-business lending; it released internal research that found about 70% of Canadian small businesses have never used traditional funding, and 46% of small-business owners said they use personal credit cards to fund their businesses. Block also offers checking and savings accounts along with the loans in a small-business banking bundle, as part of a pandemic-era play to provide liquidity and other banking services through a single relationship. — John Adams

Wawa sues Mastercard over breach penalty

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The convenience chain Wawa claims the $10.7 million penalty it paid to Mastercard following a 2019 breach was illegal, and it has sued the card company, asking for a $32 million judgment for reimbursement and damages. The breach involved malware that lifted credit card details at Wawa's network of 842 locations in Pennsylvania, New Jersey, Delaware, Maryland, Virginia, Washington, D.C., and Florida. In 2021, Wawa paid the penalty through Bank of America, the chain's card issuer. Wawa now says the payment was against Mastercard's standards and was not based on losses to Mastercard or insurers due to the security breach. Wawa in 2021 also paid more than $9 million to settle a class action tied to the breach, and promised to spend $35 million to update its security. Wawa and Mastercard did not return requests for comment by deadline. — John Adams

Scammer gets 16 months behind bars

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A convicted Rhode Island serial bank fraudster received 16 months in federal prison and three years of supervised release, the Justice Department announced. Nestor Concepcion, 26, pleaded guilty in January to conspiracy to commit bank fraud and three counts of bank fraud, all crimes dating to 2020, while he was on supervised release following a prior conviction for a similar scheme. Concepcion masterminded a plan to deposit counterfeit checks and scam banks out of $71,717.77. In addition to his prison sentence, he was ordered to pay back $33,635, the amount the banks actually lost. The U.S. Postal Inspection Service investigated the crime. — Chana R. Schoenberger

Blackhawk, movie theater chain tie NFTs to gift cards

Jeenah Moon/Bloomberg News

The Giftcards.com unit of the payments fintech Blackhawk Network is partnering with the blockchain wallet Bitski and AMC Theatres on a promotion that ties nonfungible tokens to incentive marketing, one of the early NFT use cases for the payments industry. The multiplex chain will give the first 100 consumers who purchase a gift card of $50 or more a limited-edition NFT from Jon Shelley, an artist also known as Kryptoz. Recipients will access promotions within the NFT by accessing a portal on Giftcards.com. The NFTs will follow the art and style of earlier Kryptoz collections, but will be specifically tied to the AMC promotion. NFTs are digital representations of art or other content that rely on blockchain technology. Payment companies are pursuing opportunities in processing payments for NFT purchases and using NFTs as part of loyalty campaigns and fundraising. — John Adams

'Natural experiment' in everyday bitcoin use

An employee demonstrates the usage of a bitcoin ATM at the BITPoint Japan headquarters in Tokyo on May 25, 2017.

Akio Kon/Bloomberg News

Last year’s move by El Salvador to legalize bitcoin led to a “natural experiment” in whether the cryptocurrency could be used in daily transactions. A new working paper from the National Bureau of Economic Research evaluates El Salvador’s experience, which included requiring that all businesses take bitcoin for all payments and encouraging residents to download the Chivo Wallet app. The results, however, don’t show the widespread adoption that crypto boosters predicted. "Despite the government’s ‘big push’ and a large fraction of people downloading Chivo Wallet, usage of bitcoin for everyday transactions is low and is concentrated among the banked, educated, young, and male population,” wrote the researchers, Fernando E. Alvarez (University of Chicago), David Argente (Pennsylvania State University) and Diana Van Patten (Yale University). The paper is “Are Cryptocurrencies Currencies? Bitcoin as Legal Tender in El Salvador.” — Chana R. Schoenberger

Call for national financial inclusion strategy

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Thirty-eight public- and private-sector organizations released a letter calling for the U.S. Treasury Department to establish a presidential commission to create a national, interagency financial inclusion strategy. “Making sure that every person in America has easy access to safe and affordable bank accounts, payment tools, saving and retirement accounts, credit, insurance, and safety net programs when needed would be a critical — and monumental — step,” the letter, dated April 26, says. “Such a commission would … have the responsibility of supporting a financial system … [that ensures] emerging technologies are designed in an inclusive and equitable manner.” Signatories include Capital One, Citigroup, DailyPay, Hope Credit Union, PayPal and Varo Bank. — Miriam Cross

First Mutual in Ohio has a new CFO

First Mutual Holding in Lakewood, Ohio, promoted Andy Shook from senior vice president of finance to chief financial officer. FMHC, which oversees institutions such as the $2.2 billion-asset First Federal Lakewood in Lakewood, Ohio, and the $104 million-asset First Mutual Bank FSB in Belpre, Ohio, succeeds Margaret (Peggy) Wichman, who had been CFO since January 2019, according to her LinkedIn profile. “His collaborative leadership style, ability to manage multiple priorities and his solutions-driven approach have earned the respect of regulators, board members, leadership teams and colleagues from across our enterprise," CEO Thomas J. Fraser said in a press release. — Frank Gargano