Latest global banking news

December 7, 2022 9:25 AM

In global news this week, the EU cracks down on buy now/pay later; France conducts digital currency test, Tencent launches cross-border payments, and other news.

Here's what's happening around the world.

Tencent launches brand for cross-border payments

Chinese technology firm Tencent is leaning into the growth in cross-border payments by forming a new brand, Tenpay Global, and introducing inbound remittances to WeChat in an effort to facilitate P2P payments into China. Tenpay Global consolidates several existing business lines, including e-commerce, global payments and personal remittance services. These services are available to financial institutions via an application programming interface. In a new tweak to its P2P product, qualified WeChat users can receive remittances from outside China directly to the balance of their WeChat wallet. Tencent's WeChat and Ant's Alipay are two of the largest financial services apps in China, and are often cited as models for U.S. payment companies that are building financial super apps. —John Adams

EU tightens rules for BNPL, other online credit

The European Parliament has updated rules designed to shield consumers from risks stemming from short-term online credit, such as buy now/pay later lending. The update toughens the rules that require an assessment of a borrower's ability to repay, limits on fees and interest and regulations on advertising — such as warnings about the dangers of borrowing in digital channels. Advertising that suggests a BNPL loan will "improve" a consumer's financial health, or can serve as a substitute for saving money, is also being restricted. The new rules cover loans of up to about $100,000. Regulators in the U.S. are also scrutinizing BNPL lending. —John Adams

U.K. issues tougher regulations for financial marketing

The Financial Conduct Authority has issued new rules for financial promotions to guard against messaging the regulator says may be misleading or illegal. The FCA will require authorized firms to undergo screening before the firms approve financial promotions on behalf of third parties that the FCA has not authorized. This gives the FCA greater oversight, since the preexisting rule allowed authorized firms to approve promotions from unauthorized firms. The FCA is also requiring firms to report back to the regulator on earlier financial promotions that had been approved, another move to preemptively spot noncompliant advertising. The FCA has been strengthening its marketing regulations for most of the past year, noting it has removed or amended more than 5,000 promotions from authorized firms between January and October, up from 564 in 2021. —John Adams

CBA collaborates with fintech to boost merchant appeal

The Commonwealth Bank of Australia has partnered with London-based payment orchestration platform Paydock to develop a set of merchant tools covering payments, technology integration and fraud prevention. The product, called PowerBoard, adds a layer that allows merchants to plug into support card payments, mobile wallets and other digital payments. The platform is also designed to support authentication and reduce reliance on third parties to provide different payment and merchant services. The bank is aiming Paydock at retailers, travel firms, insurance technology companies and non-profit users. CBA is offering Paydock on a white-label basis, and is the platform's exclusive distributor in Australia. —John Adams

UBS invests in AI compliance firm

Switzerland's UBS took part in a $20 million Series B Capital Raise in Shield, a Tel Aviv-based workplace technology provider that financial services firms use for compliance. Shield's platform uses artificial intelligence to detect abuses of corporate rules, perform behavior analysis and reduce toxic workplace culture. Shield plans to use the funds to expand in its existing markets and move into new countries, such as the U.S., as well as expand its technology to automate surveillance of employee communications. It also plans to open a research and development hub in Lisbon. —John Adams

France, Luxembourg test CBDC

France and Luxembourg's central banks have tested the Venus initiative, which used an experimental central bank digital currency to settle a payment of about $110 million. The European Investment Bank issued a digital bond under Luxembourg regulations and used a permissioned distributed ledger to settle the transaction to France using a token version of a euro. Goldman Sachs, Santander and Societe Generale were also part of the test. Banque de France said the test shows that a digital asset can be issued, used for a payment and settled inside the eurozone within one day. Other entities, such as the Federal Reserve Bank of New York Fed and the Monetary Authority of Singapore, are also testing cross-border payments using CBDCs, considered a key step toward interoperability of the currencies between countries. —John Adams

Women-led startup headed by ex-JPMorgan banker raises funding

Visa Foundation and Mastercard Foundation Africa Growth Fund invested in the first institutional fund raising by Nigerian equity and gender-focused firm Aruwa Capital Management. The two firms helped raise more than $20 million for the Nigerian company to invest in women-led enterprises facing capital challenges on the continent, Lagos-based Aruwa said in an emailed statement. Others who contributed to the funding include closely held Nyala Venture and family businesses from Africa, Europe and the US, it said. Founded in 2019 by Adesuwa Okunbo, an ex-investment banker at JPMorgan Chase Co., Aruwa plans to invest $500,000 to $2.5 million "in women-focused small and growing businesses in Nigeria and Ghana," in sectors including healthcare, renewable energy and financial technology, it said. —Emele Onu, Bloomberg News

Argentine fintech Ualá to start giving personal loans in Mexico

Argentina's Ualá, the fintech company backed by George Soros, Steve Cohen and Tencent Holdings, will begin offering loans for its clients in Mexico through its alliance with Mexican bank ABC Capital. The service will be offered through ABC and allow for loans of up to 20,000 mexican pesos ($1,011) between 12 and 36 months, according to Ualá chief executive officer Pierpaolo Barbieri. Uala announced the purchase of ABC in November 2021, with the acquisition still pending regulatory approval. "It's a key milestone for what we're building in Mexico," Barbieri said in an interview. "It's also one of the great benefits of having a banking license, which allows us to offer more complex products." —Carolina Millan, Bloomberg News