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Industry roundup: 22 December

Mastercard, Thales and FPC launch biometric cards in Poland

New methods to initiate payments continue to evolve from emerging technologies created by payments providers. Biometrics is one of the latest methods making its way into the payment world at a fast pace. If a person can choose between remembering a password and using a fingerprint, which would be most desired? Biometric IDs are a form of ID that recognizes and analyses a person based on their physical and behavioural characteristics. The features include fingerprints, eye retina and iris scans, speech recognition, facial patterns, and body movements including walking.

In Poland, Bank Pocztowy is starting to issue biometric payment cards to customers after testing with partners Fiserv Polska S.A. (FPC), Mastercard and Thales. The banks began issuing cards on December 20, stating that they will strengthen security and support secure distance transactions. The packaging and distribution of fingerprint-enabled cards is developed by Thales, a global leader in advanced technologies. Mastercard's biometric technology along with its partner's fingerprint card are supplied by Thales, which was scheduled for announcement at the end of October. Partners announced an agreement to provide biometric credit cards in Jordan in early December. Bank Pocztowy’s corporate customers currently have access to the card, and it is expected to be available to small to medium businesses in January. Additionally, the companies commented that the biometric sensors are said to be more effective than sensors on mobile devices.

Agata Kontrym-Woś, member of the Board and sales director for Banking & Payment Services, Thales DIS Poland, commented that cashless payments have revolutionized the world of payments in Poland, and Bank Pocztowy is able to provide Polish customers their first EMV biometric card. This latest solution in Europe has only been available to French customers. Kontrym-Woś further added that Bank Pocztowy values ​​its customers and chooses innovation and convenience. New cardholders benefit from the security and speed of their transactions, contributing further to the digital transformation of the market. According to the announcement, card payments make up 62% of all transactions in Poland.

Marcin Ledworowski, Director of Economics and IT, Bank Pocztowy, stated that the partnerships will help reach further milestones on the road to digitization of the banking sector, which provides customers with innovative yet secure solutions. Looking ahead, Ledworowski also commented that further developments will expand the use of the biometric card to individual consumers.

Biometric cards could become mainstream as early as next year, according to a recent Smart Payment Association Report.

 

Emerging global digital payment methods: Visa Direct connecting multiple regions and currencies

According to a new Visa survey, the use of digital payments to send money to family and friends globally is growing exponentially. Furthermore, the survey reported that nearly one-quarter (23%) of US adults transfer funds from the United States to other countries, and about two-thirds (65%) of those remittance users plan to send funds to another country for the holiday celebrations.

The global payments ecosystem has evolved by the increased adoption of digital payments aimed at improving daily lives according to data highlighted by Visa. Additionally, Visa stated that digital remittances are the recommended method; digital-only transactions are already the most prevalent, and the mainstream (59%) of remittance users surveyed either sent or planned to send money via a digital-only platform.

Ruben Salazar, Global Head, Visa Direct, personally commented that sending money home to El Salvador was a complicated and cumbersome process when he was moving between many countries throughout his career due to work opportunities. The development of Visa Direct now helps connect five billion cards and bank accounts in 200 regions and 160 currencies, significantly simplifying and speeding up global cross-border remittance processes.

International payments, also known as remittances, are payments made by individuals in the United States, often to to support families in other countries. According to Visa, approximately eight hundred million people around the globe obtain monies from family and friends to pay for groceries, utilities, and education. However, in the past, remittances have been fragmented, costly and time consuming.

Today, digital transformation and payment innovation solutions help remove hindrances by enabling simpler methods to facilitate international money transfers.

Visa’s payment solutions enable funds to move swiftly and securely with Visa's expansive network. Visa Direct works with global remitters to enable and simplify digital cross-border remittances around the world. This will further generate new opportunities for financial inclusion and wealth accumulation.

Below are some of the cross-border payment methods used and emerging international digital trends from Visa’s survey:

  • More than half (51%) of the surveyed U.S. adults plan to remit payment during the holidays. Annually, payments are remitted for the following main reasons:
    • 46% to help someone unexpectedly in need.
    • 31% for holiday gifts.
    • 32% for other special occasions, although about one-third (29%) of the people surveyed state they routinely send funds to support friends or family in other countries.

 

  • The most popular way to send money is via digital-only transactions, and 39% say their use of digital money transfers will increase.
  • 59% of surveyed people who send money abroad plan to use a purely digital platform.
  • 41% have used or plan to use a digital method that requires them to go to a physical location such as a bank.

 

  • Digital money transfers provide speed, convenience and security, and U.S. adults who use digital remittances state the following benefits:
  • 40% say it makes international transfers easier.
  • 36% note that it ensures funds are sent securely, confidentially, and expeditiously.
  • 44% state friends and family members receive their funds very quickly, while nearly half (47%) of those who sent checks or money orders said it took between two days to more than two weeks for people to receive the funds.

For more information on Visa Direct, please visit: https://usa.visa.com/run-your-business/visa-direct/money-movement.html

 

B2B and B2C payment methods expand further into Africa’s footprint.

Pipit Global, an international cash payments platform, and Cellulant, a pan-African payments company, have expanded their partnership agreements to include 18 countries in sub-Saharan Africa. The partnership will provide existing and emerging financial institutions, e-commerce retailers, billers and billing platforms, mobile money and e-wallet providers, digital financial services providers and their customers with both B2B and B2C payment services.

Remittances into sub-Saharan Africa and intraregional SSA remittances are still strong despite the pandemic. In 2020, SSA inflows fell by only 1.4%, according to World Bank figures. (This figure excludes the exceptional case of Nigeria, where economic factors beyond the pandemic had a significant impact on remittances.) Remittances in the region recovered to pre-pandemic levels in 2021 with an increase of 6.2%. The movement of remittances to sub-Saharan countries exceeds Foreign Direct Investment and portfolio flows while reaching the levels of Official Development Aid. The remittance costs into and intra Africa remain a substantial challenge for both senders and receivers and an obstacle to development.

According to IT News in Africa, the average international transfer cost in sub-Saharan Africa continues to be the highest at 8.2%. The cost of remittances within the area is even higher. For example, a $200 transfer between Tanzania and Uganda costs a steep 23%.

The partnership between Pipit and Cellulant develops "designated" transfers. As an alternative of the traditional peer-to-peer cash remittance model, migrants can pay invoices and e-commerce directly to their suppliers. This model guarantees that the invoice will be paid and eliminates the possibility of "leakage" if the money sent is not used for its intended purpose. Furthermore, the risk of the recipient associated with cash collection is reduced. The direct billing model fees are significantly lower than traditional remittance fees, resulting in significant savings for both senders and receivers of remittances.

Philipe Walsh, CEO, Pipit Global, commented that Pipit Global originated with the purpose of facilitating collaboration in the payments world. Making cash a core element of the digital economy while maintaining it and allowing it to switch between the two companies will bring true equality and freedom, and ultimately global development and equality. Walsh further added that the partnership with Cellulant turns these developments, goals and objectives into a concrete reality.

Expansion into new markets took place five months after the two companies announced a partnership that will allow them to enable remittances into Nigeria, Kenya, Uganda, Tanzania, Mali, Senegal and Ghana at lower rates. David Waithaka, Chief Business Officer for Enterprise, Cellulant, stated that enterprises, households and the economy will continue to experience transformational change as digital payments progress into the footprint.

As noted in SDG 10, technology and digital payments have been identified as a driving force to reduce remittance transaction costs to less than 3% by 2030 and reduce domestic and international inequality.

 

Progression of blockchain payments: JP Morgan and Siemens make the move

JP Morgan and Siemens, the largest industrial manufacturing company in Europe, are collaborating on a project to develop a blockchain-based payments system for the German industrial group, according to the press release earlier this week. The innovative Distributed Ledger Technology (DLT) payment system developed by JP Morgan will be an original application created for Siemens.

According to the Financial Times, Siemens, which currently utilizes the digital pay-per-use payment system due to high payment volumes, will be able to further expand their payment options using the blockchain payment system.

Due to shifting trends, Siemens aims to use this payment model and take advantage of blockchain technology that continues to emerge, particularly where cryptocurrencies such as Bitcoin have been built. The Financial Times commented that new digital business models continue to emerge, while older ones are not able compete, a comment by Siemens.

Siemens will be able to automate the transfer of money between accounts through JP Morgan’s blockchain division, Onyx, in US dollars. By 2022, euro denominated payments are expected to be supported by the new payment system. This infrastructure is designed to automate the various steps and actions required to record and verify payments. In addition, programmable payments such as direct debits and automatic transfers will be accepted.

Banks are now beginning to integrate their DLT systems into their business operations, as they appear to trust blockchain compared to cryptocurrencies. This development shows that more and more major brands are interested in using blockchain technology to increase efficiency and reduce the cost of their day-to-day operations.

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