Monzo preps for another U.S. push, Stripe adds iPhone payments in U.K.

March 6, 2024 1:25 PM

Monzo raises a $430 million investment to accelerate its expansion in the U.S.; Stripe adds support for Tap to Pay on iPhone; and more in this week's global payments news roundup.

Adrian Dennis/Photographer: Adrian Dennis/AFP/

Monzo raises funds, plans U.S. push

A group of firms has invested $430 million in London-based digital bank Monzo, raising its valuation to $5 billion and providing funds to accelerate its expansion in the U.S. Alphabet's venture unit, CapitalG, was part of the round. Other investors included HongSang, Tencent and Passion Capital. Monzo's valuation had fallen as far as about $2 billion at the end of 2022, though the 9-year-old company became profitable for the first time in 2023, according to CNBC. Monzo plans to renew its ambitions to gain market share in the U.S., following a halt in its U.S. banking license application in 2021 amid regulatory pressure. Monzo told the Financial Times it would seek a partner for its U.S. business this time around, instead of attempting to obtain a banking license. Monzo did not provide comment by deadline. —John Adams

Stripe adds iPhone POS tech to the U.K.

Stripe has enabled U.K. businesses to accept Tap to Pay for iPhone, which enables smartphones to accept contactless payments without additional hardware. Stripe has supported Tap to Pay in the U.S. for about a year. The technology is designed for businesses of all sizes, though it is often positioned for small businesses or sole proprietors who don't necessarily require a traditional point of sale system to accept card payments. Apple, which developed the Tap to Pay technology, does not act as a payment processor, requiring partners to manage the transactions. That has opened an opportunity for payment companies to add Tap to Pay, which is also known as softPOS, as a way to add a low-cost payment option. Banks, including TD Bank and JPMorgan Chase, are embedding Tap to Pay into mobile banking apps as a springboard to sell other financial services to small businesses as part of their merchant acquiring strategies. —John Adams

The Central Bank of Ireland in Dublin.

Jason Alden/Bloomberg

Irish Central Bank official bemoans lack of payment progress

The Central Bank of Ireland is pushing a new long-term payments strategy following concerns that the country's banking system is not adopting real-time payments and other innovations quickly enough. In an address at a Banking and Payments Federation of Ireland forum, Vasileios Madouros, a deputy governor at the Central Bank of Ireland, told the trade organization that there are areas in which Ireland is lagging behind other countries. "Despite the infrastructure of instant payments being available since 2017, material providers of payment accounts in Ireland have not yet implemented or adopted it," Madouros said. "The deployment of open banking, especially streamlined payment initiation flows through 'one-click checkouts' has been slow and its potential remains largely untapped."

Madouros called on banks to ensure that Irish consumers and businesses can benefit from these payment innovations. He also said access to cash needs to be protected, as does security and resilience in Ireland's payment system. Ireland has emerged as a financial technology hub in recent years, though the country's financial system has also suffered issues, such as the central bank storing consumer data for too long under the law, and a technology error that resulted in ATMs dispensing too much money. —John Adams

Paytm-affiliated bank hit with fresh regulatory pressure

India's banking regulators have fined Paytm Payments Bank about $663,000 for transactions linked to illegal activities, part of a series of regulatory moves against the bank over the past two years. Groups that organized and managed online gambling used Paytm Payments Bank accounts to store the money and to route payments, reports Alarabiya News and other local media outlets. Paytm Payments Bank told local media it shut the unit associated with those transactions about two years ago, adding that it has improved its monitoring and reporting capabilities.

Paytm, the large India-based digital payment company that has indirect ties to Paytm Payments Bank, is eliminating its links to the bank, which has faced several know-your-customer investigations in recent years. The Reserve Bank of India barred Paytm Payments Bank from adding new customers in March 2022 due to regulatory concerns, according to Reuters, which reports Paytm Payments Bank has continued servicing existing customers. The RBI in February banned Paytm Payments Bank from adding new deposits and extending new credit products amid the investigation. One97, which owns Paytm, owns 49% of Paytm Payments Bank. Vijay Shekhar Sharma, the founder of Paytm Payments Bank who owns the other 51%, has stepped down from the payment bank's board, according to TechCrunch. Paytm did not provide comment by deadline. —John Adams

Mastercard, Loop collaborate on financial inclusion in Saudi Arabia

Mastercard and digital payments technology firm Loop have partnered to sell credit card and digital payment products to both consumers and businesses in Saudi Arabia. The card network and Loop have an exclusive issuing agreement, and the two companies will combine scale in an effort to attract more customers into the financial system. Loop has a payments license from Saudi Arabia's central bank and, along with Mastercard, is part of the country's Vision 2030 initiative to use digitization to improve the quality of life in Saudi Arabia. Mastercard's Vocalink unit and IBM partnered with the Saudi government to launch the country's real-time payment system in 2021. —John Adams

Visa Direct extends its footprint in the Middle East

Visa has partnered with Bahraini fintech Easy Financial Services to enable the Visa Direct instant transfer service for EasyPay's consumers. These consumers will be able to fund accounts through Visa banking partners, enabling cross-border transfers for consumers in Bahrain, and connecting customers in Bahrain to Visa's international network. Visa has made several investments in the past two years to expand its ability to support cross-border payments in emerging markets. Visa partnered with Thunes, a Singapore-based digital wallet, in 2022, to improve financial inclusion for underbanked consumers and small businesses. Around the same time, Visa announced a $1 billion investment to build payment technology in Africa between 2022 and 2027. Visa has also recently invested in developing payment technology in Saudi Arabia. —John Adams

Visa, Western Union expand partnership to more than 40 countries

Visa and Western Union are expanding their cross-border money-movement partnership, doubling the number of countries where customers can send funds. The agreement between the payments-network giant and wire-transfer company, which runs to 2031, allows customers to send money to eligible Visa cards and bank accounts in more than 40 countries, including Poland, Peru and Pakistan — up from 20 in 2020, according to a statement Tuesday. Visa executives previewed the expanded relationship during an earnings call in January.

Past iterations of the partnership focused on serving consumers in North America and Europe, said Chris Newkirk, Visa's head of commercial and money-movement solutions. The new agreement expands the services "to be truly global," he said. The partnership now covers Visa card issuance, integration between payments network Visa Direct and Western Union and other services. —Paige Smith, Bloomberg News

JPMorgan joins French payment fray in tie-up with Visa rival

JPMorgan Chase will join France's Cartes Bancaires CB, giving the payment network more heft to compete with U.S. rivals Visa and Mastercard. The Wall Street giant was the first U.S. bank to be approved as a principal member of Cartes Bancaires and is aiming to offer the option to French merchants by the end of the year, according to a statement Monday.

The move should allow it to provide "competitive transactions costs" for those French clients, the company said. That's because while more than 95% of cards branded with Cartes Bancaires also have the ability to be routed over Visa and Mastercard's networks, it's typically cheaper for merchants to run those transactions over Cartes Bancaires.

"Joining the Cartes Bancaires network was mainly a demand from our merchant clients, as the use of the network can be cheaper than other card networks," Ludovic Houri, JPMorgan's co-head of payments and commerce solutions for Europe, the Middle East and Africa, said in an interview. "We wanted a seat at the table, like a European bank, and we want to support the Cartes Bancaires network." —Alexandre Rajbhandari, Bloomberg News

Klarna investors push for more control in post-IPO structure

Klarna Bank's largest shareholders have asked the company to consider creating a special class of shares that would hand early investors more control over company decisions after its public debut. If the proposal passes, then current shareholders, a list that includes the likes of Chief Executive Officer Sebastian Siemiatkowski and Sequoia Capital, would be given shares that carry greater rights than common shares, according to people familiar with the matter.

Victor Jacobsson, a Klarna founder who has left the company but remains a significant shareholder, has privately opposed any structure that would give special shares to Siemiatkowski, the people said, asking not to be identified discussing a private debate. Tension between the two co-founders was one of the factors in the recent drama over governance involving Sequoia Capital, one of Klarna's biggest backers.

"There are no proposals of introducing any new special rights to any individual or select group of shareholders," a spokesperson for Siemiatkowski said in an emailed statement. "Sebastian has supported, together with Sequoia and Bestseller, the removal of currently held special rights, for the benefit of the company and all the shareholders collectively," noting it was part of the push to create a U.K. holding company and was communicated to investors in November.

Representatives for Klarna, Sequoia and Jacobsson declined to comment. A spokesperson for Bestseller didn't immediately respond to a request for comment. —Mark Bergen and Aisha S Gani, Bloomberg News

India tells banks to stop exclusive deals on credit cards

India's central bank told the nation's lenders to stop entering into exclusive agreements with credit card networks, in a surprise move that may deal a blow to the world's largest payments firms including Visa and Mastercard.

Banks and nonbank lenders must stop "any arrangement or agreement with card networks that restrain them from availing the services of other card networks," the Reserve Bank of India said on its website Wednesday. Lenders and the card networks such as Visa and Mastercard currently require customers to agree to terms that aren't "conducive to the availability of choice for customers," it said.

Banks will now need to provide an option to their customers to choose from multiple card networks at the time of issue, while existing cardholders may select their networks at the time of the next renewal. The move may impact Visa and Mastercard the most in India as they charge various fees based on their card offerings, including for use overseas. Cards from Rupay, part of India's homegrown National Payments Corporation, don't succumb to network registration fees and are typically free for domestic usage.

The new directive will not apply to credit card issuers with fewer than 1 million active cards and won't impact issuers using their own authorized network for such cards, the RBI said. This may largely shield card networks such as American Express Co. as it uses its own network. —Anup Roy, Bloomberg News