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Mastercard hits out at WSJ story on credit card fees - Industry roundup: 8 September

Mastercard hits out at WSJ story on credit card fees

Last week, several media outlets (including CTMfile) covered a story from the Wall Street Journal (WSJ), which suggested that Visa and Mastercard plan to hike credit card fees. This week, Mastercard has come out fighting, stating that “…the story is wrong.”

A statement issued by Mastercard claims that the reporting relies upon a report produced by an advisory firm advocating for legislation currently under consideration in the US Congress. The statement outlined Mastercard’s position in the following four bullet points: 

  • Mastercard is not raising interchange rates in the US this fall and has no plans to do so.
  • Mastercard is not raising network fees in the US required for the processing of Mastercard transactions this fall.
  • The Authorization Optimizer service is the only Mastercard fee noted in the study cited by the Journal. It is not related to interchange. This service is designed to reduce the likelihood that subscription and recurring payments will be declined, with any related fees being de minimis in scope.
  • The article notes that Congress is considering legislation that could potentially lower costs for merchants, yet it fails to mention the negative consequences for consumers – compromised security, a loss of rewards programs and higher prices on goods and services. For example, after similar legislation pertaining to debit transactions was passed in 2010, the Federal Reserve of Richmond concluded that consumer prices increased.

The Mastercard comment closed with a dig at the reporting by the WSJ, stating: “Whether businesses are considering implementing a specific service or Congress is considering legislation, we believe these activities should only take place based on an accurate understanding of the facts and how our industry works.”

The WSJ report stated that the fee increases are scheduled to start next month, so merchants, treasurers and the finance community at large will not have long to wait to find out which side had a more accurate take on this story… watch this space.


ADB and Deutsche Bank sign risk sharing agreement to boost SCF in Asia

The Asian Development Bank (ADB) and Deutsche Bank have signed a risk participation agreement to enhance access to financing for small and medium-sized enterprises (SMEs) in Asia and the Pacific. The agreement was signed between ADB’s Trade and Supply Chain Finance Program (TSCFP) and Deutsche Bank AG through its Singapore branch.

Supply chain finance is critical to increasing trade by providing working capital to suppliers by leveraging their relationships with larger corporates. With short-term revolving facilities for supply chain finance transactions, this partnership can potentially support more than US$200m in additional trade in Asia and the Pacific annually.

The agreement should enhance Deutsche Bank’s ability to support SMEs and other corporate clients by releasing more capital for use in vital economic sectors in the region, like pharmaceuticals and agriculture.

TSCFP is helping banks in Asia and the Pacific improve their ability to provide supply chain finance, particularly to SMEs. ADB estimates the gap between the demand for trade finance and the money available for it is at least US$2.5 trillion, with SMEs the worst affected.


Casey’s General Stores, Delta Air Lines and Ultradent Products headline AFP’s Pinnacle Awards

Casey’s General Stores, Delta Air Lines, Inc., and Ultradent Products, Inc. are finalists for the AFP 2023 Pinnacle Awards, sponsored by U.S. Bank. A jury of treasury and finance professionals selected the finalists. Decisions were based on forward-looking solutions that progress the efficiency and effectiveness of their organization’s treasury and financial operations.

Voting is currently open to select the Grand Prize winner, which will be announced during the AFP’s annual conference this October in San Diego. U.S. Bank will make a $10,000 donation to a charity of the winner’s choice.

Casey’s General Stores’ entry focused on improving its antiquated branch banking model, which was consuming valuable resources and profoundly impacting both store operations and the Store Support Center. Casey’s implemented a smart safe program in all of its 2,550 stores. The fully scalable bank-agnostic solution uses just one platform partner and enables a standard, consistent process. As a result of this solution, Casey’s has seen store labour reduction of six hours per store per week, annual labour savings of approximately US$10.4m, and US$2m in annual bank fees saved.

Delta Air Lines’ entry focused on improving the passenger reimbursement experience. Previously, Delta relied on check issuance, which was an inefficient, manual process. To improve this experience, Delta implemented a technology solution that gave customers access to their compensation in real-time without having to provide banking details to agents. The solution is integrated with the company’s case management system, providing improved visibility and tracking. Over 205,000 electronic payments have been issued to passengers under the new system, amounting to over US$71m.

Ultradent Products entry focused on modernising its budget creation and reporting process, using existing tools, resources and people. Ultradent’s financial planning and analysis (FP&A) team consisted of only six people but maintained over 75 dashboards to feed more than 300 analysts to C-level across 181 countries. Partnering with IT Business Intelligence and Data Architecture teams, they built a driver-based planning system that automates forecasting and reporting processes to all levels around the globe. They developed predictive budgeting, minimised manual transformations and data duplication, and are working on creating automated error notifications. As a result of the modernisation, they delivered more monthly reporting information in four fewer days and could create a draft global forecast/budget in approximately 30 minutes.


Business owner optimism soars to 21-year record high in US

PNC’s latest semi-annual survey of US small and mid-sized businesses shows that owner optimism for the outlook of their own business in the next six months has reached a 21-year high amid strong expectations for sales, profits and demand.

Despite PNC economists’ predictions for a shallow recession starting in early 2024, business leaders' outlook about their own companies has risen sharply, with over three-quarters (77%) feeling highly optimistic compared to 49% a year ago and 60% in the spring.

In addition, owners’ outlooks for the national, local and global economies have also improved significantly. Almost half (47%) are highly optimistic about the local economy, compared to 29% last fall. About a third (34%) are highly optimistic about the national economy compared to 22% a year ago.

Profit and demand expectations are higher, with 55% expecting profits to rise (compared to 46% last fall) and 64% expecting an increase in demand in the next six months (compared to 57% a year ago). Expectations for sales are similar to the spring survey, with 62% expecting an increase. Nearly two-thirds (65%) attribute their greater optimism for their business to confidence in their ability to run it.

Interestingly, business leaders’ top concern in the next six months has shifted from supply chain disruptions to costs. Nearly a quarter (23%) are most concerned about the cost of materials, up from 9% last fall, while 14% are most concerned about labour costs, up from 4% last fall. The portion worried about supply chain disruptions dropped to 10% from 25% last fall. More than four in 10 (43%) of construction firms say material costs are their top concern.


Visa expands stablecoin settlement capabilities to merchant acquirers

Visa has announced it is expanding its stablecoin settlement capabilities to the Solana blockchain and is working with merchant acquirers Worldpay and Nuvei. Through live pilots with issuers and acquirers, Visa has already moved millions of USDC between its partners over the Solana and Ethereum blockchain networks to settle fiat-denominated payments authorized over VisaNet.

When consumers use Visa cards to make a purchase at any of the millions of Visa-accepting merchant locations around the world, they can experience the convenience of nearly instant payment authorisations. But what they don’t see is that the funds used for their purchase need to move between their bank (the issuer) and the merchant’s bank (the acquirer). This is where Visa’s treasury and settlement systems enable the clearing, settlement and movement of billions in daily transactions, ensuring the correct amount in the preferred currency is received from the issuer and sent to the acquirer. This process happens seamlessly between nearly 15K financial institutions and over 25 currencies globally.

“By leveraging stablecoins like USDC and global blockchain networks like Solana and Ethereum, we're helping to improve the speed of cross-border settlement and providing a modern option for our clients to easily send or receive funds from Visa’s treasury,” said Cuy Sheffield, Head of Crypto, Visa. “Visa is committed to being on the forefront of digital currency and blockchain innovation and leveraging these new technologies to help improve the way we move money.”


CBA strengthens digital lending capabilities with acquisition of Waddle

Commonwealth Bank of Australia (CBA) has announced its venture-scaling arm, x15ventures, has entered an agreement to acquire cloud-based invoice lending platform Waddle. CBA has an existing partnership with Waddle through its Stream Working Capital product, which allows its business customers to unlock cash tied up in unpaid invoices with a digital cash flow solution connected to business accounting software like Xero, MYOB and QuickBooks.

Acquiring Waddle and bringing the technology in-house will enable CBA to accelerate the growth of its Stream Working Capital product while continuing to benefit from the automation and flexibility of the Waddle platform.

CBA Group Executive Business Banking, Mike Vacy-Lyle, said acquiring Waddle further supports the bank’s focus on simplifying finance – making it easier for businesses to access funds through its Stream Working Capital product and providing the best digital experiences to its customers.

Completion of the transaction is expected to occur reasonably soon after satisfaction of customary conditions.

“Access to working capital is vital for many businesses and Stream Working Capital offers greater flexibility, simplicity and faster access to cash flow,” Vacy-Lyle said. “We launched Stream Working Capital as a digital solution to use outstanding invoices as loan security, with the loan size reducing as invoices are paid. This digital end-to-end solution was a first for a major Australian bank. Through acquiring the Waddle platform, we can continue to provide the best integrated digital working capital solution in the market and support more of our customers with faster funding assessments and approvals.”


Standard Chartered and Allen & Overy launch payment regulations guide

Standard Chartered, in collaboration with global law firm, Allen & Overy, has published the first Guide to Payment Regulations, which outlines the prevailing regulatory frameworks and related licensing schemes for payments and e-money services. Covering eight key markets in Asia, the guide aims to support corporates and fintechs in navigating the rapidly evolving payments landscape and allows them to consider various factors that impact them as they expand their businesses across borders.

In addition to providing a summary of market-specific payment and e-money services regulations, the guide also draws on the expertise of the two organisations in addressing the most common themes corporates and fintechs face when they scale their businesses in their home markets or across borders. One of the report's top themes is whether licensing requirements apply to B2B e-commerce platforms.

Payments is one of the most disrupted domains within the financial services industry due to continued technological innovations, the exponential growth of fintechs, and the alternative solutions they present. This has translated to frequent reviews and changes to payments regulations to ensure that the financial ecosystem remains safe and secure. This makes keeping abreast of all these regulatory developments a challenge for corporates and fintechs looking to provide or facilitate payment services across markets in Asia, Africa and Middle East.

The current version of Guide to Payment Regulations covers Mainland China, Hong Kong, India, Malaysia, South Korea, Thailand, Taiwan and Singapore, with plans for an updated iteration to include another seven markets.


Assuro partners with Digital Vault Services on digital guarantees

Assuro, a provider of digital bank guarantee solutions in Australia, has announced its agreement to licence the technology of Digital Vault Services (DVS) through a signed memorandum of understanding (MoU). Assuro says that the strategic partnership marks a significant step to it introducing a digital guarantee solution to the Australasian market. The company is working with many clients to go live with the first digital guarantees in Q1 2024.

“By combining Assuro's guarantee management solution, local expertise and network with Digital Vault Services’ mature state digital guarantee technology, we aim to revolutionise the way businesses handle their digital transactions,” commented Leon Weston, CEO at Assuro.

“Our technology is well established in Europe with a large network of corporates and financial institutions issuing digital guarantees to hundreds of beneficiaries via our existing offering ‘Guarantee Vault’,” added Jaime Gimeno, Co-CEO at Digital Vault Services. “We look forward to working with Assuro in bringing the benefits of this technology to corporates, the public sector and financial institutions in Australasia.”


SAP and Google Cloud add GenAI solutions for enterprises to open data cloud

SAP SE and Google Cloud have announced an expanded partnership to help enterprises harness data and generative AI. The companies will combine their integrated open data cloud using the SAP Datasphere solution with Vertex AI to launch new generative AI-powered industry solutions, starting with automotive and introducing new capabilities to help customers improve sustainability performance.

By integrating generative AI into SAP software and Google Cloud’s open data cloud, customers can deploy new solutions that use information from SAP Datasphere and from virtually any other data source to improve business insights, analysis, and decision-making.

For the automotive industry, the two firms will launch solutions that use Google Cloud’s generative AI models via Vertex AI and data from Catena-X, the open data ecosystem supported by SAP software for the automotive industry. With Catena-X, automotive companies can securely exchange data about their entire value chains to increase operational performance, enhance customer experiences and accelerate innovation. With this solution, automotive customers can combine data sets from Catena-X with SAP software data to build and train generative AI models that optimise their work with automobile manufacturers, suppliers and end customers. For example, by enabling more effective data sharing, generative AI can help identify and mitigate potential vehicle problems before they cause recalls, improve safety through increased knowledge about hazardous road and traffic conditions and increase product quality by predicting defects better.

The partnership also plans on increasing enterprise sustainability. Customers can use Vertex AI and SAP Datasphere to create generative AI solutions that accelerate companies’ sustainability programmes. The new AI-powered functionality is designed to help organisations combine mission-critical business data in SAP Datasphere and the SAP Sustainability Control Tower solution with third-party ESG data sets and Google Cloud’s generative AI models. As a result, businesses will be able to create bespoke sustainability reports, automate AI-powered sustainability alerts throughout the supply chain and enhance decision-making with deeper analyses of environmental impact and financial benefits, among other things.


Bank of Canada and evolutionQ research quantum-safe technologies for digital currencies

Quantum-cybersecurity company evolutionQ will contribute to a Bank of Canada research project involving quantum-safe cybersecurity technologies for greenfield digital currencies. 

The research will explore the profound impact of integrating quantum-safe encryption methods and crypto-agility as design goals for digital currencies. By embracing cutting-edge cryptographic techniques and fostering a forward-thinking approach, evolutionQ promotes robust quantum-risk mitigation, enhancing the integrity and resilience of the increasingly digitised economy.

The code developed during the research will be released as open source to allow developers and researchers to explore the new cryptographic methods and propose improvements or modifications, accelerating the development of quantum-safe technologies.

The Bank of Canada is exploring technologies and technical ecosystems that may inform decisions concerning the development of a potential Canadian digital dollar. Through the engagement with the Bank, evolutionQ will analyse proactive approaches to meet the advances in cryptography, including quantum computing, to improve the security posture of central bank digital currencies.

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