PayPal stablecoin draws pushback, Santander warns of 'love scams'

September 6, 2023 11:46 AM

In global news this week, a member of the European Central Bank's board said private sector digital coins like PayPal's could harm competitive balance, Santander makes candy harts with romance scam slogans, and more.

See what's happening around the world.

Alex Kraus/Bloomberg

European Central Bank official slams PayPal's stablecoin

A member of the European Central Bank's board used PayPal's stablecoin as a reason to argue for a central bank digital currency in the European Union. In an address to a European Parliament finance committee, ECB board member Fabio Panetta said private sector digital coins could harm competitive balance. "Private providers of payment services, including PayPal, have no incentive to limit the take-up of their stablecoins or the range of services they provide. Quite the opposite: their objective is to expand their customer base and gain market share," Panetta said, adding that while the market entry of big technology firms or other large payment providers may initially promote innovation, competition could be severely hampered if they attain a monopolistic position. "This would not be the case with a digital euro. A digital euro would be introduced by public authorities, under a European regulatory framework. It would pay due attention to orderly adjustments in the financial sector while offering payment service providers a platform for innovations with pan-euro area reach," Panetta said. U.S. regulators are also expected to examine PayPal's potential impact on the U.S. payments market. While there are a handful of CBDCs, they are mostly in smaller markets. Most larger economies, such as the U.S., U.K. and EU are still debating digitizing their currencies. PayPal did not provide comment by deadline. —John Adams

Switzerland battles reputation that its banks hide crooks' money

Swiss regulators have written rules that will create higher anti-money-laundering standards than the European Union. The regulations would increase liability for banks, consultants and lawyers with the intent of pressuring them to monitor risks stemming from their operations and clients. The government is also attempting to bolster oversight of trusts and other legal entities that manage funds that have ties to the country's banks. The rules will be presented to Switzerland's parliament in early 2024. The Swiss government is trying to counter the image that the country is a haven for criminals to hide money, according to Reuters. While the country exchanges bank information with regulators in more than 100 countries, the corporate ownership of some accounts and beneficiaries are concealed, often resulting in complaints from foreign regulators. —John Adams

Santander warns about 'love scams' by offering candy

Santander is collaborating with U.K. dating expert Anna Williamson to offer candy that has phrases crooks use to trick consumers into a banking scam. Language such as "I'll pay u back," "my funds are frozen," and "U know me" are often used in the U.K. to get people to send money to an account that is tied to a criminal or a fraudulent organization. Santander also released research that found 31% of U.K. consumers have been targeted by a scammer who used romance as part of the lure, with total losses exceeding $40 million in 2022. And 83% of victims said the alluring language used by the scammer was the main factor in falling for the scam. In the U.S. romance scams cost more than $500 million yearly, according to the Federal Trade Commission. —John Adams

Mastercard invests in financial literacy in Egypt

Mastercard has partnered with Ingiz, a financial management firm based in Egypt. The partners will launch a digital payments app that is focused on young consumers and includes educational materials and financial services. Ingiz's products include prepaid cards for parents and their children, with features that enable transfers, saving and spending. There are also gamified features and monitoring tools for parents. Ingiz will access Mastercard's digital payments technology and its international network of merchants and partners. Mastercard referenced its Payments Index, which found 40% of Gen Z and Millennials who initially accessed payments via online or mobile channels are less likely to shop and pay in-person, creating pressure on merchants and financial institutions to reach young consumers through digital means. —John Adams

Alipay's cross-border app expands in the Philippines

Ant Group, which operates the Alipay+ international digital payments and marketing product, has added four Asian regional mobile wallets that support merchants and consumers in the Philippines. The wallets include AlipayHK, which is based in Hong Kong; South Korea's Kakao Pay; Malaysia-based Touch 'n Go e-wallet; and the China-based Alipay. Travelers from these regions that are shopping in the Philippines can make "own currency" payments via these wallets. Ant is responding to the recovery in travel following the opening of China's economy after the pandemic. Ant cited statistics from the Philippines Department of Tourism that found 3 million tourists visited the country between January 1 and July 18, 2023, up more than 500% from the prior year. South Korea is the top country of origin for that travel. —John Adams

NatWest uses alternative programming for payments upgrade

NatWest has accessed the Icon Payments Framework to support the U.K. bank's payments upgrade project, which will bring the bank in line with the ISO 20022 payment messaging standard that guides real-time settlement. NatWest will deploy a processing program that complies with Single Euro Payments Area processing standards as well as protocols for credit transfers and direct debit. Icon Payments Framework is a development organization that uses low-code technology. That refers to a programming method that replaces code with visual cues that are designed to be easier for non-technical users to access to perform updates. —John Adams

JPMorgan Payments adds to its Middle East footprint

JPMorgan Payments has partnered with Network International, a United Arab Emirates-based digital commerce technology company, as part of an effort at the bank to boost its merchant acquiring business in the Middle East and Africa. Network International will provide a mix of payment acceptance and card processing technology, as well as access to a network of merchants and other clients in the region. The company additionally works with government agencies and other financial institutions. JPMorgan offers merchant acquiring and other payment services in more than 160 countries and 120 currencies, making it one of the world's largest payment providers. The bank recently added Apple's Tap to Pay technology, which enables iPhones to accept payments without extra hardware, to broaden payment acceptance options. —John Adams

Paytm founder says he’s looking for chances to raise stake

Billionaire Vijay Shekhar Sharma, the founder and chief executive officer of India's biggest digital payments company, said he'll look to raise his stake as Paytm approaches profitability. "There is never a day that I would not buy more equity in Paytm," Sharma told Bloomberg News in an interview on Monday. "The single largest shareholder of Paytm is now an Indian, that is myself, and I believe this is definitely a key milestone." Sharma became the biggest investor in Paytm, officially called One97 Communications, after he acquired shares from China's Ant Group, according to a disclosure on Sunday. Sharma holds 19.42% of the company, replacing AntFin, which now owns 9.9%. The move helps assuage concerns that a prominent Chinese company was running one of India's best-known tech firms at a time tensions between the two countries are rising. —Sankalp Phartiyal, Bloomberg News

Brazil moves to put a 100% cap on credit card rates. They now average 450%.

Brazil's lower house of congress approved a bill that limits the growth of credit card debt to 100% of its original amount as part of a plan to rein in interest rates of about 450% a year that are charged on consumers who fall behind on payments. Lawmakers voted 349-24 in favor of the proposed cap on Tuesday evening. It now must clear the Senate before President Luiz Inacio Lula da Silva can sign it into law. Once it becomes law, credit card issuers would have 90 days to submit their own regulatory proposal that will need approval from Brazil's national monetary council. If they fail to do so, the proposed cap would take effect. Brazil's banking lobby Febraban said in a statement that such caps may render a considerable portion of cards issued in Brazil economically unviable, reducing the amount of credit available. The bill approved by lawmakers also sets rules for Desenrola, a consumer debt renegotiation program. —Daniel Carvalho, Bloomberg News