Latest global payments news

ByKate Fitzgerald, John Adams, Bloomberg News

May 24, 2023 11:40 AM

This week in global news: Canada cuts Visa and Mastercard fees; PhonePe draws new funding; and more.

Here's what's happening around the world.

Daniel Acker/Bloomberg

Canada cuts Visa, Mastercard interchange rates for certain merchants

Canada's government has reached an agreement with Visa and Mastercard that will reduce the interchange rate for smaller merchants' instore credit card transactions to 0.95%, the Toronto Star reports. The change, applying to merchants with annual Visa sales volume of under $300,000 and annual Mastercard sales volume of under $175,000, goes into effect in the fall of 2024. Affected merchants will see credit card swipe fees decline by about 10 basis points, according to the report. Canada's card networks agreed to the cut after reaching a settlement last year in a 2011 class action that also granted permission for merchants to introduce surcharges for accepting credit cards. The average interchange fee on a Canadian Visa card currently is 1.4%, according to a separate report from CBC, Canada's public broadcaster. —Kate Fitzgerald

Carla Gottgens/Bloomberg

Westpac adds Apple's iPhone payments tech

Australia's Westpac has adopted Tap to Pay for iPhone, which enables merchants to accept payments on Apple devices without requiring add-on hardware. Merchants can enable the technology through the bank's EftPOS Air iOS app on an iPhone. Often referred to as softPOS, smartphone payment acceptance is expanding quickly as companies that sell technology to merchants look for opportunities to enable payments with minimal upgrades required. Adyen, Worldline and Stripe are three examples of payment companies that have added softPOS over the past year, often pairing the technology with added e-commerce services. SoftPOS is also considered a faster and more practical option than checkout-free retail, which is still in its early stages and works mostly in smaller store layouts. —John Adams

ACI Worldwide adopts Swift's cross-border tech

Payments software firm ACI Worldwide has added Swift Go to its bundle of international payments technology. Swift Go uses the messaging service's Global Payments Innovation B2B payments technology to add speed and reduce overhead for smaller cross-border payments (typically less than $10,000). Swift added the technology to counter the influence of firms such as Wise and Remitly, which have attracted small-business clients with cross-border payment services. "Seamless and instant cross-border payments, whether high or low value, are increasingly becoming the norm for our customers. Leveraging Swift Go will enable banks to improve the customer experience and stay competitive in the growing cross-border payments market," said Craig Ramsey, head of real-time payments at ACI Worldwide, in a release. —John Adams

PhonePe raises a fresh $100 million

General Atlantic led a $100 million round of investment in PhonePe this week, bringing the Indian digital payments firm to $850 million in total funding, nearing its goal of $1 billion. PhonePe's other investors include Ribbit Capital, TVS Capital Funds, Tiger Global and Walmart. Walmart acquired PhonePe as part of the retail giant's 2018 acquisition of Indian e-commerce firm Flipkart. Walmart has since separated PhonePe from Flipkart, part of a Walmart strategy to apply PhonePe's payment technology to other regions such as Mexico, where Walmart operates the local Cashi payments app. Walmart hopes to use its experience with PhonePe in India to speed adoption of digital payments and banking in Mexico. —John Adams

Singapore bolsters recruiting of AI talent

Visa will open a technology and product development hub in Poland, and will hire more than 1,500 technology product development workers over the next several years. It will be Visa's first development center in Eastern Europe, and the center will recruit workers from Ukraine as that country works to rebuild its financial sector following damage from Russia's invasion. While many fintechs have downsized over the past year as the technology economy corrects following expansion during the pandemic, Visa, Mastercard and other incumbent payment companies have added staff. The companies have particularly focused on data technology and new uses for artificial intelligence and machine learning. —John Adams

Australia to regulate buy now/pay later like credit firms

Australia's government moved to regulate buy now/pay later finance firms under credit laws, drawing the line on a months-long process aimed at tightening requirements on the maturing industry. Firms will need to adhere to responsible lending obligations and hold Australian credit licenses, according to Stephen Jones, the nation's minister for financial services. They'll also face a range of minimum standards on conduct and products. Buy now/pay later has "provided a valuable source of competitive pressure on traditional credit products, such as credit cards or payday loans," he said in the text of a speech Monday. "But with those opportunities have come new and growing dangers to consumers, which up until now have been largely unregulated and unchecked."

The new laws will impact consumer credit firms from Zip Co. to Afterpay Ltd., which compete with banks to provide interest-free credit that's typically repaid in installments. It's an industry that boomed during the pandemic but has struggled in recent months amid soaring interest rates and the threat of stricter regulation. Jones said he expects a final bill to be introduced into parliament by the end of this year after draft legislation that will be shared for consultation before that. —Adam Haigh and Georgina McKay, Bloomberg News

Klarna rejigs U.K. senior team after country head Marsh steps down

Klarna Bank AB is reorganizing its U.K. leadership after country head Alex Marsh stepped down from the Swedish consumer credit firm, citing personal reasons. Marsh said in a LinkedIn post he was leaving Klarna after "an amazing rollercoaster journey" lasting almost five years. He said a recent family death had "underlined the importance of prioritizing what matters most — our family and loved ones." The firm has not announced a direct replacement for Marsh and is reassigning his responsibilities, according to a spokesperson. Analytics director Abby Vickers has taken over Marsh's regulatory role as Klarna branch senior manager. —Aisha S Gani, Bloomberg News

Turkey central bank reverses credit card rule ahead of runoff

Turkey's central bank reversed a rule intended to limit demand for cash and gold, after facing a backlash from citizens ahead of a presidential runoff election on May 28. The strict regulation from Monday — a day after President Recep Tayyip Erdogan just failed to win another term in the first round of voting — was designed to defend the lira, which has weakened just over 1% this week. It created confusion among banks and led some to stop providing cash advances or limit the use of credit cards.

Lenders are no longer required to hold low-yielding government bonds for customers' gold purchases or cash advances taken out using credit cards, according to a letter sent to banks and seen by Bloomberg on Friday. The central bank declined to comment. —Beril Akman and Selcan Hacaoglu, Bloomberg News