Latest banking news, May 27, 2022

Latest banking news

May 27, 2022 9:00 AM

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Mastercard started an Experience Centre in Canada with the aim of developing stronger cybersecurity technology, Circle joined banks in opposing central bank digital currency and the blockchain company Ripple said it's mulling an IPO.

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

Mastercard unveils internet security hub

Andrew Harrer/Bloomberg News

In an effort to boost technology development for cybersecurity, Mastercard has introduced an "Experience Centre" in Vancouver, British Columbia. The facility will work with technology stakeholders to identify and build products that can mitigate digital payment risks. Mastercard will also feature emerging projects at the card network that are designed to secure digital payments. The Experience Centre is part of the larger Cyber Centre of Excellence, which was founded in 2020 and has filed more than 30 patents covering topics such as fighting malicious bots, locating fraudsters and reducing friction in payment processing. — John Adams

Circle pushes against digital dollar

Jeremy Allaire, chief executive of Circle Internet Financial Inc., speaks during a House Financial Services Committee hearing in Washington, D.C., U.S., on Wednesday, Dec. 8, 2021. Some of the biggest names in crypto are on Capitol Hill as lawmakers weigh new rules for the white-hot asset class. Photographer: Stefani Reynolds/Bloomberg

Stefani Reynolds/Bloomberg News

As the U.S. considers a central bank digital currency, the idea is drawing pushback from some banks and Circle, which supports the USDC stablecoin. Circle issued a letter to the Federal Reserve saying that many of the benefits of CBDC are "already being met by private sector innovations … through blockchain-based payment systems." Circle also argues public trust in government institutions and banks is declining, which could create headwinds for financial inclusion, which is one of the main goals of CBDCs. Circle was responding to a Federal Reserve discussion paper on the potential for a U.S. CBDC. The U.S. does not have a CBDC, though dozens of countries globally are developing or testing digital currencies. — John Adams

Klarna to cut 10% of workforce

Klarna AB Expected To List In Europe IPO Bonanza

A Klarna app icon on a mobile phone arranged in London, U.K., on Thursday, Jan. 21, 2021. Klarna AB, a Swedish payment provider for online shoppers, is still setting its sights on an initial public offering even after its latest funding round left it roughly twice as valuable as it was a year ago.

Hollie Adams/Bloomberg

Klarna, the buy now/pay later giant, said it will lay off about 10% of its global workforce, as higher inflation and interest rates add pressure to its business model. The Swedish company is seeking a fresh round of funding likely to cut its valuation, as borrowing costs rise for its short-term loans. Fitch Ratings published a report this week flagging intense competition driving down BNPL firms’ fees plus weaker asset quality and regulatory uncertainty as investor risks in the sector. — Kate Fitzgerald

PayPal, Experian invest in rental payment tech

David Paul Morris/Bloomberg News

With residential rent payments drawing more attention from fintechs, PayPal Ventures and Experian Ventures have made an investment in Jetty, a startup that digitizes rental transactions, one of the last remaining consumer payment types that is still largely check-based. Jetty supports security deposits, recurring rent payments and renters insurance. Jetty will use the funding to launch Jetty Credit, a credit-building service that reports rental payments to credit bureaus to help renters build credit scores. The size of the investment was not disclosed. — John Adams

Ripple will consider IPO when SEC legal dispute clears

Brad Garlinghouse.

The blockchain company Ripple is potentially interested in a public listing, but it's waiting for a conclusion to its two-year battle with the Securities and Exchange Commission. The SEC alleges Ripple sold units of the XRP cryptocurrency without registering the transactions with the SEC, violating securities laws. Ripple contends the digital coin is not a security. In an interview with CNBC in Davos, Ripple CEO Brad Garlinghouse said Ripple has reached a scale to support a potential IPO, and the company is growing despite the recent decline in the crypto market. He said a resolution to the SEC suit would provide clarity in the U.S. Ripple has grown over the past several years by providing blockchain technology to streamline processing for cross-border payments. — John Adams

Leader Bank has a new lending chief

Matthew Pierce.

Hand-out/Leader Bank

Leader Bank in Arlington, Massachusetts, promoted Matthew Pierce from chief credit officer to chief lending officer. Pierce joined the $3.2 billion-asset Leader Bank in 2008 as senior vice president of commercial lending. “Matthew is a natural collaborator and truly embraces Leader Bank's core values as a community bank … I am pleased that he will be overseeing new responsibilities and initiatives in his role as chief lending officer," Sushil Tuli, president and chief executive of the bank, said in a press release. —Frank Gargano

Epic Games scores a temporary legal victory

Epic Games has reached a legal agreement that allows it to use the internal payment system of the music site BandCamp on Android devices until Epic's court battle against Google is resolved. Epic acquired the internet music company BandCamp in March and filed an injunction to continue using BandCamp's payment rail instead of Google's payment system, as Google normally requires. BandCamp will place revenue from its 10% fees for sales into escrow, with the funds either going to Google or Epic depending on the final outcome of the case. Epic Games is battling the app stores on a couple of fronts, mostly over payment policies that require third-party developers to use the internal payment systems tied to marketplaces such as Apple's App Store. — John Adams

Jack Dorsey steps down from Twitter's board

Jack Dorsey.

Bloomberg

Former Twitter CEO Jack Dorsey stepped down from the company's board this week, about six months after resigning from Twitter. Dorsey, who had been CEO of both Twitter and Square, remains at Square, which has rebranded as Block. Dorsey has been an advocate for Bitcoin, making cryptocurrency trading a major component of Block's revenue. Block, which has its roots in supporting card transactions for small businesses, is also developing a cryptocurrency division called TBD. It has additionally released a white paper describing a protocol to exchange digital assets called tbDEX, which is designed to build a wider audience for cryptocurrency. Tesla CEO Elon Musk, who is one of the co-founders of PayPal, is attempting to acquire Twitter. — John Adams