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Industry roundup: 19 January

Advanced Fraud Solutions has become Nacha's preferred partner for account validation

As a preferred partner, Advanced Fraud Solutions will join the selected group of Nacha-recognized innovators by providing products and services in line with Nacha's fundamental strategy to advance the ACH network. Jane Larimer, President and CEO, Nacha, stated that the ACH network is essential to enabling individuals and businesses to send and receive payments quickly and securely. Advanced Fraud Solutions will be the latest Nacha Preferred Partner to support a quick and steadfast ACH network.

Advanced Fraud Solutions, a payment fraud detection provider, boasts the industry's largest deposit fraud database and has over 10 years of account-level historical data from thousands of contributing financial institutions, processors and third-party sources. Over 750 banks and credit unions across the country rely on Advanced Fraud Solutions to catch fraudulent deposits before they impact their bottom line.

Ted Kirk, Vice President of Strategic Partnerships, Advanced Fraud Solutions, commented that TrueACH® with account validation, the latest product by Advanced Fraud Solutions, will ensure regulatory compliance and enable financial institutions to move funds securely across the ACH network. TrueACH® with account validation is a new ACH tool that allows clients to see the status of their account and authorized users.

To find out more about Nacha's growing community of preferred partners and how they can support your payment needs, please visit www.nacha.org/Preferred-Partner.

The inauguration of the Pan-African Payment and Settlement System

H.E. Nana Addo Dankwa Akufo-Addo, President, Ghana, and H.E. Dr Mahamudu Bawumia, Vice President, hosted and chaired the commercial launch of the Pan African Payment and Settlement System (PAPSS) in Accra, Ghana. This platform upgrade will save Africa over US $5 billion in payment transaction costs annually. Additionally, it will help accelerate transactions on the continent, supporting the operationalization of the African Continental Free Trade Area (AfCFTA).

Akufo-Addo praised the African Export-Import Bank (Afreximbank) and the AfCFTA Secretariat for building a payment system, using PAPSS as a major step in eliminating excessive reliance on continental outside parties, and acceleration in intracontinental trade and investment. He further added that this long-awaited launch is the result of months of effort, determination and dedication to achieving the goals set for the commercial growth of the continent. In addition, all central banks in Africa will be able to ensure a smoother transfer of funds, an improvement to Africa’s previous payment infrastructure.

Developed by Afreximbank, PAPSS aims to promote intra-African trade by transforming and facilitating the payment along with clearing and settlement of cross-border trade across Africa. Professor Benedict Oramah, President and Chairman of the Board of Directors, Afreximbank, commented that they are committed to building a single market throughout Africa through the AfCFTA. Additionally, PAPSS provides a state-of-the-art financial market infrastructure that connects African markets, enabling immediate cross-border payments in Africa’s local currency for cross-border trade.

Afreximbank, the key settlement agent for PAPSS, has partnered with participating African central banks to provide settlement guarantees on the payment system and overdraft facilities to all settlement agents. PAPSS plays a key role in effectively eradicating African financial borders, formalizing and integrating African payment systems, and promoting and accelerating the massive AfCFTA-induced growth trajectory in intra-African trade.

Mike Ogbalu, CEO, PAPSS, stated that the payment system is not intended to compete with or replace existing payment systems, but is designed to facilitate the connection of all payment systems together in an interoperable, efficient and affordable network. Additionally, PAPSS revalues ​​currency and domesticates payments within Africa to connect each part of the continent, leading to Africa’s prosperity.

PAPSS provides a solution to the fragmented payment and settlement systems that have long hindered intra-African trade, according to Afreximbank. Historically, more than 80% of African cross-border payment transactions originating from African banks had to be routed abroad for clearing and settlement through international banking relations. Furthermore, this created many challenges, from payment delays to operational inefficiencies to compliance concerns with payment systems in different regions.

PAPSS, with efficacious pilots in six countries in the West African monetary zone, offers many benefits and efficiencies for trade payments within Africa, including:

  • Minimizing cross-border payment cost, duration and timing variability across Africa.
  • Reducing commercial bank liquidity requirements for cross-border payments.
  • Enhancing the monitoring process of cross-border payment systems by central banks.

PAPSS also has a continent-wide framework for comprehensive legislation, regulation and operations, including standardized rules, formats, governance agreements, Know Your Customer (KYC) and money laundering prevention procedures, payment confirmation and final settlement. Additionally, the prerequisites for participating in PAPSS are compliance with its defined rules and standards.

Visa's new cloud-based payment solution opens up a variety of acceptance opportunities

According to the press release, Visa announced a new platform called Visa Acceptance Cloud (VAC), which enables payment service providers (PSPs) to integrate transaction software into digital devices other than standard payment terminals.

VAC is an extension of Tap to Phone, a mobile point-of-sale (POS) product released by Visa two years ago.

  • Tap to Phone allows merchants to accept contactless payments using Android smartphones and tablets. VAC goes one step further and enables acceptance on almost any digital device, not just terminals, smartphones and tablets.
  • For example, a retail technology company, Nobal Technologies, accepts payments via smart mirrors using VAC. Services such as Visa's Buy Now Pay Later (BNPL) program, fraud management tools and data analysis solutions can also be integrated with VAC.

VAC can facilitate Visa to find unique purchasing opportunities to increase volume. Previously, payments were made at checkout in-person, but VAC enables fintechs to purchase in a variety of innovative methods, such as digital advertising displays and unmanned kiosks. With these new payment options, Visa will become a more lucrative partner working with fintechs, and this will help to increase the reach and volume of the network.

According to Visa, VAC is an illustration of how point-of-sale (POS) is changing as technology providers and payment players innovate and bring new transactional experiences to the market. Other examples include autonomous checkouts and hand scan payments (biometrics), both of which can threaten traditional point-of-sale devices. These methods may reflect a wide range of trends that enable convenient payments anywhere, in any format. As technology progresses, new in-person purchasing methods can emerge that require little customer effort.

China's digital yuan wallet continues to rise in the digital currency space: 260 million individual users to data

Zou Lan, head of financial markets, People’s Bank of China (PBOC), stated that the central digital yuan wallet is one of the fastest growing apps in China today. Additionally, about one-fifth of the population, 261 million individual users, have set up eCNY wallets, with transactions worth 87.5 billion yuan (US $ 13.78 billion) in digital fiat currency. 

China has piloted the use of digital yuan in many major cities, including Shenzhen, over the past two years. People had to join the raffle first and apply to become an early user. In early 2022, the PBOC made the eCNY wallet available on the iOS and Android stores in China.

According to TechCrunch, the digital yuan is not a manifestation of cryptocurrencies banned in China. The PBOC classified Bitcoin and others as highly volatile, speculative and of no intrinsic value, and notes that cryptocurrencies can be a tool for money laundering. On the contrary, eCNY acts as a legitimate digital version of China’s currency issued and in circulation by the central bank, or "M0". In fact, regulators intend to use e-yuan payments without the internet using near-field communication (NFC) technology, a short-range wireless technology enabling transfer between devices quickly.

According to a 2021 research report published by the Working Group pertaining to eCNY research and development at the central bank, the digital yuan objectives are:

  • Diversify the forms of cash provided to the public by the central bank.
  • Meet general demand for digital cash and support financial inclusion.
  • Support fair competition, efficiency and security of retail payment services.
  • Embrace the international initiative to consider improving cross-border payments.

The eCNY wallet is currently available for download in the Chinese app store, but only users from the list of pilot cities and upcoming Winter Olympics can log in to fund their account and spend virtual currency. In order to convert cash to eCNY, users need to transfer funds from any commercial bank approved by PBOC to operate and distribute digital currencies, including digital banks such as Tencent-backed WeBank and Ant-backed MyBank.

PBOC stated in a report that eCNY aims to "complement" rather than replace WeChat Pay or Alipay, China's popular payment services. For example, like cash, eCNY can support the anonymity of low-value transactions, or large amounts of money can be sent by the provincial government to the city paid with eCNY using the traceable features of digital currencies to prevent corruption.

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