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Mastercard partners with Network International to launch AI fraud-prevention solution – Industry roundup: 17 February

Small businesses gain access to open banking analytics via Finicity, a Mastercard company

Finicity, a subsidiary of Mastercard, intends to offer analytics options to its small-business customers in the US to assist lenders with better management of their risk profiles while expanding its credit models for small company loans and credit card lines.

Mastercard’s open banking aims to broaden customer options in financial experiences such as lending and credit decisions, secure account opening, account-based payments, and business financial management, said reports.

The majority of small businesses (85%) seek fast and simple access to funds, based on a recent Mastercard analysis on open banking and small business, following yearly decreases in traditional funding for small-business applicants.

In efforts to provide small businesses with more options, Mastercard purchased Finicity for US $825 million in November 2020. Jess Turner, Executive Vice President for global open banking and API, Mastercard, commented that small businesses are increasingly searching for more options in how they borrow funds, make payments and control their finances. Open banking offers lenders the owner-permissioned data and sophisticated analytics needed to empower small companies with broader options in the financial services arena.

The European Tech Champions Initiative attains full endorsement from five advanced markets in Europe

The European Investment Bank Group (EIBG) and five EU member states have joined forces to launch a pan-European effort to increase capital access for Europe's late-stage tech business ventures. Representatives from Italy, Germany, France, Belgium and Spain have reportedly signed the European Tech Champions Initiative (ETCI) directive, which will be managed by the EIBG’s European Investment Fund (EIF).

The ETCI aims to combine public resources from these five nations and the EIBG to invest in sizable venture capital (VC) funds, providing technology companies in Europe with the required funding to expand outside of the continent.

The initial contract term indicates that Spain, France and Germany each reportedly pledged €1 billion, while Italy and Belgium committed €150 million and €100 million respectively. In addition, the EIBG has reportedly invested an additional €500 million, raising the fund's current total to €3.75 billion.

The ETCI reportedly aspires to fill existing gaps in financing accessibility for late-stage start-ups, particularly those seeking to raise amounts greater than €50 million. Furthermore, the fund aims to contribute towards the development of an asset class for European institutional investors seeking to diversify their portfolios, while helping to foster Europe's high-tech landscape in support of local innovation and entrepreneurship in the future. Werner Hoyer, Head of the EIBG, commented that approximately €100 billion was invested in the European VC sector in 2021, which is reportedly more than 10 times what was recorded in 2015 and over three times the 2020 total of €35 billion.

Mastercard collaborates with Network International to combat card payment fraud

Mastercard, a global provider of payment technology, has joined forces with Network International, a prominent digital commerce provider in the Middle Eastern and African region, to combat payment card fraud via an artificial intelligence (AI) fraud-prevention solution.

The solution aims to significantly reduce expenses for its clients by addressing rising card payment fraud, address declines and chargebacks. Reports indicate that losses from payment card fraud are anticipated to reach US $49 billion by 2030. A recent Nilson Study reported that transactions where cards were not physically present accounted for 68% of card fraud losses in 2020. McKinsey predicts that AI technology may generate up to $1 trillion in value annually, notably in operations related to combating fraud.

The partnership is expected to roll out Mastercard's Brighterion AI technology throughout the region, offering acquirers and businesses access to transaction fraud screening and merchant monitoring, said reports. The Brighterion AI technology reportedly identifies the evident indicators of fraud and immediately warns acquirers and merchants to avert fraudulent transactions and exorbitant chargebacks.

The US SEC files lawsuit against TerraUSD stablecoin and its creator, Do Kwon, for misleading investors

The US Securities and Exchange Commission has reportedly filed charges against Terraform Labs, a defunct stablecoin blockchain, and its founder Do Kwon, a cryptocurrency entrepreneur, for fraud in connection with the failed TerraUSD stablecoin.

The US financial watchdog has reportedly charged Kwon and the Singapore-based crypto firm with promoting and selling inter-connected crypto asset securities, often through unregistered transactions, between April 2018 and May 2022. The SEC claimed that the company and its founder overstated the soundness of Terra USD, a stablecoin created by Kwon that was reportedly designed to retain its 1:1 peg to the dollar through its equivalent token Luna. Reports indicate that this case represents a significant step forward in the SEC's crackdown on the cryptocurrency industry.

The court filing also reported that Kwon and Terraform allegedly deceived investors by claiming falsely that Chai, a Korean mobile payment app, used Terraform to settle transactions. The lawsuit claims that Chai Payments did not actually execute payments on the Terraform blockchain.

Gurbir S. Grewal, Director of the Enforcement Division, US SEC, stated that the measures taken are intended to hold the defendants accountable for their roles in Terra's collapse, which caused a major upset for retail and institutional investors, as well as a major disruption in the cryptocurrency markets. In addition, the report adds that the Terraform framework was neither decentralized nor financially supported. It was reportedly a scam sustained by an alleged algorithmic stablecoin, whose price was set by the defendants rather than by any sort of mechanism.

The DCSA aims to address freight supply chain challenges and achieve 100% digital trade by 2030

The Digital Container Shipping Association (DCSA) members, which collectively account for nearly three-quarters of all containerized trade worldwide, have reportedly committed to transitioning 50% of original bills of lading to electronic versions (eBL) based on DCSA standards within five years, and 100% by 2030.

In container shipping, the bill of lading is manual-intensive, costly and unsustainable for the environment when executed on paper, said reports. McKinsey analysis found that it can account for up to 30% of the expenditures associated with trade documentation. The DCSA estimates that the sector could save US $6.5 billion annually in direct expenses if the document exchange is digitized.

The Electronic Trade Documents Bill, which is currently in debate in the UK parliament, intends to legally recognize digital trade documentation as equivalent to paper by mid-2023.

The DCSA is reportedly stepping up its participation globally as the countdown to 2030 approaches to ensure that its goal of achieving 100% eBL adoption is realized. Thomas Bagge, CEO, DCSA, commented that digital trade will help decrease emissions, improve trade and customer experience, and remove expenses from the supply chain.

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