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No more credit cards, pay with your smile – Industry roundup: 18 May

Smile at checkout! Mastercard launches biometric facial recognition to retailers

Payments giant, Mastercard, revealed that they will soon allow consumers to smile and wave their hands to pay. Mastercard has announced that it will soon launch a new Biometric Checkout Program that will include a set of standards that banks, merchants and technology providers will comply with when customers pay using biometrics. Research indicated that 74% of global consumers have optimistic views about biometric technology, and the market for contactless biometrics is expected to reach US $18.6 billion by 2026.

Mastercard’s testing of biometric systems has commenced for physical stores using facial recognition instead of contactless cards, smartphones or PINs. According to Mastercard, its Biometric Checkout Program would enable shoppers to scan their faces with a retailer's smartphone app to match their portrait with a bank card stored on file. This technology claims to be similar to how Apple Inc.'s iPhone uses Face ID to approve payments and unlock devices.

Ajay Bhalla, President, Mastercard Cyber & Intelligence, observed that many consumers are embracing digitalization and new technologies due to the pandemic, and consumers around the world have actually asked for more digitization of their retail experiences.

Mastercard’s pilot program began this week at five St. Marche supermarkets in Sao Paulo, Brazil. The stores will reportedly use an app developed by Brazilian startup Payface, one of the small businesses sponsored by Mastercard as part of its StartPath engagement program. Additionally, Mastercard has plans to introduce this technology globally (Middle East, Africa, Asia, and Latin America are in the works) in collaboration with companies such as NEC Corp. and Fujitsu General Limited.

Mastercard stated that facial recognition is just one of many technologies currently being tested by retailers, banks and payment companies to eliminate cash and reduce fraud. Other features such as age verification for individuals purchasing restricted store items is currently in research mode.

Synergistic collaboration combats payment fraud per Deutsche Bank

Deutsche Bank has released its latest white paper, “A corporate guide to payment fraud prevention,” which examines the increasing need for companies, banks and technology providers to work together to identify and address payment fraud weaknesses and build strong coordinated defences against these risks.

Payment fraud has become one of the most concerning and rapidly increasing threats facing corporate treasurers in recent years, as criminals are targeting businesses of all sizes and industries that use advanced technology. The Association of Financial Professionals (AFP) recently discovered that 71% of the organizations that participated in its annual survey were victims of payment fraud in 2021. The payments industry is faced with constant struggles to keep up with new fraudulent methods such as fake invoice scams, man-in-the-middle attacks, and business email breaches.

Stefan Fruschki, Head of Transaction Surveillance & Cross-Product Governance, Deutsche Bank, commented that companies' fraud prevention strategies continue to improve. However, fraudsters' strategies are also ready to avoid them. In order to counter this, companies, banks, technology providers and other payment chain players bring their own skills and knowledge, but isolating these ideas and approaches does not lead to significant synergies.

The paper concludes that combatting fraud in each of these silos is limited and not as effective. Additionally, the industry can become more efficient, streamlined and effective in fraud prevention with a cohesive collaboration of individual teams. The paper further examines the role each of these stakeholders plays to help minimize risk, in addition to incorporating the views and examples of industry experts in each case.

Deutsche Bank recommends ways organizations can mitigate fraud risks by 1) raising awareness of common risks and practices among employees, 2) reviewing processes to ensure consistency and security, 3) performing a customized organizational risk assessment that outlines clear separation of tasks across branches, legal entities and jurisdictions, and 4) implementing innovative technology solutions to detect attempts as soon as possible.

SMEs’ digital finance capabilities improved across Asia via 5 partnerships with DBS

By the end of 2022, DBS, a multinational and financial services group headquartered in Singapore and operating across 18 markets, is expected to launch five new platform partnerships with integrated digital and supply chain finance capabilities to benefit more than 15,000 small and medium-sized enterprises (SMEs) across Asia.

According to a press release, DBS stated that this new project effort will help companies adapt to trade turmoil and geopolitical tensions by digitizing funding opportunities offered through trading platforms. Future digital platforms are anticipated to benefit SMEs in Singapore, Hong Kong, China, India and Indonesia in areas such as e-commerce, logistics and commodities.

Raof Latiff, Group Leader of Ecosystems, DBS, commented that companies are under pressure to keep up with digital development while addressing ongoing global supply chain disruptions and economic headwinds. To ease some of that burden, Latiff said the bank will continue to leverage their extensive suite of digital solutions to help organizations address challenges and further enhance their adaptability to changing environments. In addition, in 2021, more than 9 out of 10 of DBS’s supply chain financial transactions across Asia were processed via digital platforms. DBS is said to have been providing same-day digital supplier onboarding services to corporate clients since 2019.

Furthermore, reports noted that this joint effort is in line with DBS's strategy to further develop and adopt digital trading platforms and embedded digital finance solutions across multiple sectors to enhance the flexibility and resilience of supply chains.

A $100 million risk-sharing facility for Africa through US-based Citi bank and UK’s BII alliance

A recent press release reported that British International Investment (BII) and US-based bank Citigroup, Inc. have signed a US $100 million risk-sharing facility aimed at quadrupling lending to small businesses across Africa.

The agreement between Citi and BII, the UK's development finance institution, will enable Citi to expand its supply chain lending across the continent while targeting small and medium-sized enterprises (SMEs) that struggle to access finance. The report stated that the new Master Guarantee risk-sharing agreement will increase Citi's supply chain finance volumes in Africa by up to $400 million. Specifically, the partnership is expected to provide local currency-denominated capital to high-risk markets for small and medium-sized enterprise lending, and BII is noted as absorbing some of the potential risks such as borrower default or currency fluctuations causing losses.

Under this facility, BII states that it will act as a guarantor for Citi's supply chain finance facilities, mitigating associated risks. The goal is to increase the continent’s productivity and economic inclusion.

Fastest growing fintech Zilch launches BNPL 2.0 in the US

Zilch, a next-generation payments and Buy Now, Pay Later (BNPL) platform, with a BNPL 2.0 business model that is said to work directly with consumers, has newly launched in the US (Miami-FL headquarters) with over 150,000 pre-registered customers. It has plans for more growth as well, according to Philip Belamant, founder, and, Albert Periu, US CEO, Zilch. The expansion of the business in the US will be led by Periu, and they expect to hire more than 100 employees within the next year and are aiming for a potential market of 125 million users in the long run.

Zilch, initially launched in the UK in July 2018, made plans to expand into the US after growing to more than two million customers in the 18 months since its launch in the UK, with more than 250,000 new users added monthly, making it one of the world’s fastest growing fintechs and largest BNPL providers in the country.

According to reports, U.S. consumers paid $120 billion in fees and delinquent charges in 2020, leading the company to expand further to help consumers. In less than five years, Zilch has raised US $400 million in debt and equity from Goldman Sachs among others, making the valuation over $2 billion in its latest Series C funding round.

Reports claim that London-based Zilch differentiates itself from competitors like Klarna by offering cashback that can be used to discount large purchases through a partnership with Mastercard. Furthermore, it was stated that Zilch does not deal directly with merchants, and the core product BNPL can be accepted wherever Mastercard is used. It was also noted that customers can pay over 6 weeks, in four instalments, or in lump sum. However, payments in full can benefit from discounts and cashback. In partnership with Mastercard, Zilch can be used in 38.7 million retail stores worldwide.

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