Mastercard pushes global open banking; Standard Chartered seeks ESG clients

August 14, 2024 1:33 PM

Monzo suffers an outage that leaves thousands of customers unable to make payments. Two years after halting payments following Russia's invasion of Ukraine, American Express gets permission to sell its assets in Russia. That and other news from the world of payments.

Lionel Ng/Bloomberg

Mastercard courts issuers with expanded open banking

Mastercard has partnered with data company Argyle to support income and employment verification for the card network's open banking-powered lending service.

The card network will make Argyle's technology available across Mastercard's international issuer network, enabling banks to reduce the manual documentation required to apply for a loan.

Mastercard's open banking technology powers the connection between the applicant's bank accounts and the lender. With the applicant's permission, these lenders can use analytics that measure the potential borrower's financial health by assessing changes in account balances over time, cashflow trends and payment records for bills such as rent and utilities. Small businesses can also make their data available to Mastercard to expedite their small-business loan applications.

Through partnerships such as the Argyle collaboration, Mastercard is seeking a global market for open banking, which could provide a boost to the payment company's diversification. Both Mastercard and Visa are building services businesses that aren't reliant on fees from card transactions at the point of sale as regulations and pressure from fintechs squeeze interchange revenue.

Tapping open banking is a big part of that strategy for Mastercard, which acquired data-sharing technology from its 2020 purchase of Finicity. Open banking refers to sharing financial, payments and other data between banks and third parties through application programming interfaces and other similar technology that powers easy integration. Customers can use open banking to buy products from other providers without having to establish distinct relationships with the third parties.

Mastercard's recent open banking-related collaboration deals include bank technology seller FIS, buy now/pay later lender Zip, JPMorgan Chase and Verizon.

In an earlier interview , Jess Turner, executive vice president of open banking at Mastercard, said, "Consumers and businesses own their data; they should control it and benefit from its use." —John Adams

Standard Chartered encourages clients' ESG policies

In an effort to reach corporate clients who aren't concerned about the political and regulatory uncertainty that complicates environmental, social and governance strategies, London-based Standard Chartered is tying financial rewards for customers who meet certain targets.

The bank's ESG Cash Account links interest rate or payment fees to the client's ESG performance compared with an external benchmark, the ESG success of the client relative to competitors or the client's ESG improvement over past performance.

The benchmark and the client's success are required to be relevant to that client's business, and there are rules that govern a minimum level of ambition or goal-setting. Standard Chartered's ESG account is launching in Hong Kong and Singapore, with additional markets to be added in the coming months.

In a recent interview on CNBC, Chief Executive Bill Winters said environmentally conscious investing can have a positive impact on business, adding he wasn't concerned about political pushback against the strategy in the U.S. and other countries. —John Adams

Monzo outage temporarily cuts off payments

U.K. challenger bank Monzo suffered a technology glitch on Tuesday that kept thousands of customers from making payments for about two hours.

About 2,500 complaints concerning Monzo access were filed with Downdetector.com, with hundreds more complaints posted on social media. Three-quarters of the Downdetector postings were about "mobile banking" with most of the rest related to "funds transfer."

In an email, Monzo's public relations office said the incident was resolved as of midday Tuesday London time, and all of its customers have been moved back to the fintech's normal operating systems.

A technical issue caused Monzo to be unable to process some card payments and outbound transfers, and consumers were temporarily moved to backup systems that successfully processed 99.99% of transactions. Other functions such as ATM access, balance checks and customer contact centers were unaffected.

Monzo is in the midst of a U.S. expansion, a strategy that follows a $430 million investment that included Alphabet's venture unit in March. Monzo in 2021 halted an earlier attempt to obtain a U.S. banking license, citing regulatory concerns. It plans to partner with a regulated partner for its new U.S. initiative. —John Adams

Wise gets clearance to expand payments in India

The Reserve Bank of India has granted a license to U.K. payments firm Wise that enables the company to compete more directly with banks in the cross-border transfer market.

Wise was previously limited to $5,000 per transaction for outbound payments from India. The new license lifts that limit, helping a strategy to offer lower-cost larger cross-border transactions that are processed mostly by international banks.

The U.K. fintech will update its payment-processing systems to follow Indian tax and financial reporting regulations. Wise has entered into a series of partnerships with firms such as data aggregator Plaid and digital payment company Bluevine to create a network geared toward easing the international payment process.

Wise competes with other payment firms such as Ripple and banks to execute international payments without relying on correspondent banks to manage compliance and foreign exchange conversions, thus cutting time and fees. —John Adams

Amazon adds Barclays card to its European payments strategy

Amazon and Barclays have launched a co-branded payment card in the U.K., building on an earlier partnership that offers an installment payment option for e-commerce purchases.

The new card offers 1% rewards on Amazon purchases and 0.5% rewards for non-Amazon spending. Prime members earn 2% cash back from Amazon purchases during shopping events such as Prime Day.

Consumers can also track rewards balances and redeem rewards for Amazon gift cards in the Barclaycard app.

Amazon and Barclay's existing installments program is a reusable credit account that can finance purchases via monthly payments. That exists alongside Amazon's buy now/pay later option which is available through BNPL fintech Affirm.

Amazon has recently entered a similar card co-brand partnership in Europe with Banco Santander that had initially launched in Germany earlier this year. —John Adams

Russia revokes American Express' banking license

The Russian central bank canceled American Express' banking license, following the company's request to liquidate its holdings in the country.

Amex is one of thousands of financial services and payment companies that suspended operations in Russia after its 2022 invasion of Ukraine. But Russian President Vladimir Putin required companies to gain approval to exit the country or sell stakes in their Russian businesses, according to Reuters, adding Amex is the 300th largest financial institution in Russia in terms of assets.

Putin's revocation of Amex's license this week allows the company to sell those assets and follows a request from Amex to formally exit the country. Amex didn't respond to a request for comment by deadline. —John Adams

Cash usage sets record at UK postal system

U.K. post offices handled more than $4 billion in cash in July, totaling deposits, withdrawals or transfers. It's the highest month ever, beating the previous record of about $3.7 billion, which was set just two months earlier in May.

These numbers could grow more. The Financial Conduct Authority has issued regulations to ensure access to cash. The FCA requires banks to answer queries from consumer and community groups about the availability of cash access points, with an FCA investigation that follows. If the FCA finds an availability gap, the regulator can require the bank or banks in the area to keep branches and ATMs open until an alternative method to access cash becomes available.

While cash and checks are more expensive than digital payment methods, a large segment of the economy is reliant on paper payments, leading to regulations in multiple countries to protect access. —John Adams

HSBC won't shut branches in short term

As the FCA rules go into effect, at least one U.K. bank says it's delaying plans to downsize its branch network.

HSBC said it won't close branches until at least 2026 and will invest about $70 million upgrading its network of 327 branches.

HSBC also recently opened cash pods, or a slightly larger version of an ATM that can be deployed quickly in underserved areas.

The bank's branch network has shrunk significantly, with HSBC closing more than 740 branches since 2015. —John Adams