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Brokers predict UK will miss inflation target this year - Industry roundup: 30 August

Brokers predict UK will miss inflation target this year

The vast majority of SME finance experts expect the UK government to miss its target of halving inflation by the end of the year, iwoca’s latest Q2 2023 SME Expert Index finds. The research, carried out with over one hundred SME finance brokers who submitted nearly 1,000 loan applications in June, reveals that three quarters (75%) expect inflation to remain above 5.4% at the end of the year. 

This would mean missing Prime Minister Rishi Sunak’s January target of halving inflation from 10.7% by the end of the year. While inflation fell to 6.8% in July, core inflation remained flat at 6.9%, and projections suggest August could see rates rise again. Fewer than one in eight brokers see the 5.4% target as achievable by December.

Four in five (81%) experts in small business financing believe continued high costs over the next year will significantly reduce SMEs' ability to grow their business. This indicates that the government’s other priority of growing the economy may also fall by the wayside if inflation is not curbed swiftly.

While the UK economy narrowly avoided a technical recession at the beginning of the year, concerns are mounting that recession may still be around the corner. The proportion of brokers who say their small business clients are ‘very concerned’ about the possibility of a recession has doubled since March to 20%. Seven in ten (71%) brokers say their small business clients are concerned about the possibility of a recession, up 8% from the previous quarter.


BofA launches global digital disbursements in Canada via Interac e-Transfer

Bank of America has announced the launch of Global Digital Disbursements to its commercial clients holding deposit accounts at the bank’s branch in Canada. The solution facilitates processing multiple B2C payments and C2B collections where the identifier is the person’s email address or mobile phone number. The bank is pitching the solution as a cost-efficient and customer-friendly payment option for companies wanting to replace cash or cheque payments.

In Canada, the solution is being offered via Interac e-Transfer, a money movement solution offered by Interac Corp., which provides payment and value exchange services across Canada to over 300 financial institutions. A similar solution is available in the US via Zelle and in 90 other countries via PayPal.

The use case for Global Digital Disbursements varies by industry and includes insurance companies that leverage its speed to make claim settlements. Companies in the technology sector appreciate the convenience of paying freelance employees or “gig” workers without the need to manage financial information. In emergencies, non-profits also value the ability to send financial relief electronically to people who may be physically displaced.

Canada is the first market where the request-for-pay feature will also be available with Global Digital Disbursements. It enables a company to send invoices to customers via text or email along with a link to pay the amount, driving faster receipt of payment.


Here we go: Banking Circle joins forces with FIFA Clearing House

Banking Circle has joined forces with the FIFA Clearing House (FCH) to process and streamline the payment of training rewards (solidarity mechanism and training compensation) corresponding to international player transfers efficiently and securely, in line with the mission of the FIFA subsidiary.

Through Banking Circle, the FCH will have access to direct clearing with central banks and a worldwide banking network, with the ultimate objective of centralising and automating payments between clubs while promoting financial transparency in the transfer system.

The FCH is a crucial element of the transfer system reform implemented by FIFA to promote and protect the integrity of professional football. It has been operating since November 2022 from its offices in Paris after being granted a licence by the French Prudential Supervision and Resolution Authority (Autorité de contrôle prudentiel et de résolution) to operate as a payment institution. In June 2023, the French amateur club SC Malesherbois became the first recipient of a payment processed by the FCH.

“We are delighted to be working with the FCH and supporting FIFA in its ongoing commitment to introducing fundamental changes to the football transfer system”, said Laust Bertelsen, CEO of Banking Circle. “Utilising Banking Circle’s accounts and payment rails will enable the FCH to streamline the payment process, while also reducing the costs and time incurred with each payment for the benefit of the football community.”


US Treasury and IRS issue proposed regulations for crypto tax reporting

The US Department of the Treasury and the Internal Revenue Service (IRS) have issued proposed regulations requiring brokers to report sales and exchanges of digital assets by customers. The proposed regulations cover a range of digital asset issues where there have been questions, including defining brokers and requiring proceeds to be reported to the IRS on new Form 1099-DA.

For sales or exchanges of digital assets that take place on or after 1 January 2025, the proposed regulations would require brokers, including digital asset trading platforms, digital asset payment processors and certain digital asset-hosted wallet providers, to report gross proceeds on a newly developed Form 1099-DA and to provide payee statements to customers. In certain circumstances, brokers would also be required to include gain or loss and basis information for sales that take place on or after 1 January 2026 on these information returns and statements so that customers have the information they need to prepare their tax returns.

The proposed regulations would also require real estate reporting persons, such as title companies, closing attorneys, mortgage lenders and real estate brokers, who are treated as brokers for dispositions of digital assets, to report the disposition of digital assets paid as consideration by real estate purchasers to acquire real estate in real estate transactions that close on or after 1 January 2025. These real estate reporting persons would also be required to include on Form 1099-S the fair market value of digital assets paid to sellers of real estate in real estate transactions that close on or after 1 January 2025.

Finally, the proposed regulations set forth gain (or loss) computation rules, basis determination rules and backup withholding rules applicable to digital asset sale and exchange transactions and propose many useful definitions.

Written comments regarding the proposed regulations must be submitted by 30 October this year. A public hearing has been scheduled for 7 November, with a second public hearing date for 8 November if the number of requests to speak at the hearing exceeds the number that can be accommodated in one day.


BMO launches mobile wallet for virtual cards with Mastercard and Extend

BMO has announced that its Commercial Bank clients in the US and Canada can now access better payment management functionality with the launch of Extend for the BMO app. The app features new functionality allowing cardholders to create and push virtual cards to their employees’ mobile wallets, enabling them to spend wherever contactless payments are accepted.

BMO says it is the first global Mastercard issuer to offer contactless virtual cards through its cobranded Extend for BMO app – an expansion of the payments functionality BMO announced in 2022. With the ability to create, send, and manage virtual cards that enable simplified payments online, in-app, and now in-store, BMO says it is enabling its corporate card clients to manage travel and business expenses on the go more easily.

For businesses, in-store contactless payments represent an opportunity to use virtual cards almost anywhere to manage spending more efficiently. BMO clients using Extend for BMO to issue virtual cards also benefit from tighter spending controls, along with streamlined receipt and reconciliation processes.

“By offering mobile wallet functionality for physical cards and now virtual cards and contactless payments, BMO is equipping our corporate card clients with convenient tools to manage their businesses and make financial progress,” said Derek Vernon, Head, Treasury and Payment Solutions (TPS) Product Management and Payments Modernization, BMO Commercial Bank. “We’re making banking faster and simpler for our clients by investing in sophisticated technology and partnering with organisations like Mastercard to deliver to customers the innovative, secure digital payment tools they have come to expect from a digital-first bank.”


MSCI expands Google Cloud partnership to accelerate generative AI investment solutions 

MSCI has announced an expansion of its partnership with Google Cloud to accelerate the development of generative AI solutions for the investment industry. Powered by Google Cloud’s generative AI platform Vertex AI and climate technology, including BigQuery Geospatial and Earth Engine, the solutions are designed to help MSCI clients better manage portfolio risks and opportunities and make informed investment decisions.

The partnership will focus on three key areas, the first being risk signals. MSCI will combine its proprietary data and analytics with Google Cloud’s generative AI solutions to provide an overview of portfolio and enterprise-level risk designed to significantly reduce clients' time to analyse and arrive at actionable insights. This solution will help portfolio and risk managers more easily synthesise and rapidly act on significant volumes of risk signals from their portfolios while also fostering greater collaboration between risk and portfolio management teams to build more resilient portfolios.

A second area is conversational AI. Google Cloud’s generative AI will also power MSCI’s new conversational AI solution for its portfolio and risk management solutions. This capability will use natural language processing to simulate human language and generate responses, enabling clients to answer questions and surface information about their portfolios and MSCI data, models, and solutions.

Finally, the partnership will focus on climate generative AI. MSCI and Google Cloud will use Google’s generative AI technologies to help investors measure and manage portfolio exposure to climate risk and identify low-carbon investment opportunities. With these AI technologies, MSCI says it will make it easier for investors to identify, synthesise, and communicate the broad range of climate exposures across asset classes.


N26 integrates iDEAL to simplify payments in the Netherlands

Digital bank N26 has announced the integration of local payment service iDEAL to its 100% digital banking experience in the Netherlands. Now available to the first N26 customers in the Netherlands, the integration will be gradually rolled out in the market and allow all the country’s N26 customers to make payments and transfers through iDEAL without leaving the N26 app. Additionally, integrating iDEAL will enable customers to execute peer-to-peer payment requests through Tikkie - a popular peer-to-peer payment service in the Netherlands.

Cashless payment adoption continues to climb in the Netherlands, with 91% of the population embracing digital payments and debit card usage. Used in around 70% of e-commerce transactions in the country, iDEAL is the most popular online digital payment service, with over 1 billion transactions per year. Having introduced the ability to top up N26 accounts directly with iDEAL in 2021, N26’s latest integration will allow customers to access the full functionality of iDEAL’s payment solutions directly within their N26 app.

With the integration of iDEAL, N26 customers will be able to buy and pay online with their N26 app without knowing the beneficiary's bank details. Payment details will be filled out automatically in the N26 app by scanning a QR code or through payment links on e-commerce websites. Customers only need to review and confirm the payment within their app for the money to be transferred to the beneficiary’s account through a regular SEPA Credit Transfer. To initiate this transfer, N26 leverages iDEAL’s relevant beneficiary details to proceed with regular compliance checks and execute the requested payment.


Membrane Finance launches euro stablecoin on Solana

Finnish fintech Membrane Finance has launched the first euro stablecoin on the Solana blockchain. EUROe’s expansion to Solana brings a native euro stablecoin to the blockchain, enabling new use cases such as foreign exchange, euro-denominated debit card payments, and blockchain-native value storage for Europeans while also ensuring compliance in anticipation of the Markets in Crypto Assets (MiCA) set to take effect in 2024.

EUROe is a MiCA-compliant euro stablecoin, changing fiat euros into blockchain-enabled digital money. It can be created and redeemed in a 1:1 ratio, without fees, by anyone with a EUROe Account. The stablecoin is backed by 100% bankruptcy-protected cash and 2% CET1 equity capital in European financial institutions or banks.

The stablecoin has been previously available on Ethereum, Polygon, Arbitrum One, and Avalanche. Solana’s addition to the EUROe ecosystem opens a native fiat bridge between all five blockchains and the traditional financial system. 

In addition to creating euro-denominated on-chain applications, developers can use the EUROe Account API to automatically move euros between supported blockchains and the traditional financial system. Among others, the EUROe Account API enables automatic corporate treasury balancing to ensure sufficient funds both on- and off-chain. Moving euros between Solana and the SEPA system becomes as easy as making a single API call with EUROe.

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