Real-time cross-border payments see widespread adoption amid G20 challenges

Real-time cross-border payments are gaining significant momentum as global consumers increasingly rely on them for seamless transactions, according to GlobalData’s 2024 Financial Services Consumer Survey. 

Many consumers rely on cross-border payments to send money to family and friends, while others use them to purchase goods, underscoring their growing importance in the international economy. However, despite the progress, challenges persist in meeting G20 targets for speed and efficiency across key markets.

The survey reveals that around 63% of global consumers use international real-time payments services to send money to family and friends and 51% use them only to pay for goods and services.

According to GlobalData’s Payment Instrument Analytics, the total volume of cross-border transactions in Europe alone will increase by 58% between 2023 and 2028. The G20 roadmap for enhanced cross-border payments aims to improve international payments' speed, access, transparency, and cost by 2030. In its most recent update in October 2023, the Financial Stability Board reported a shortfall against G20 targets in the proportion of retail services that make funds available to the consumers in an hour (42% vs target of 75%) and in one business day (76% vs target of 100%).

Several international initiatives, such as “Immediate Cross-Border Payments” developed by The Clearing House in the US, EBA Clearing in Europe, and SWIFT, are being developed to establish a 24/7 USD-EUR payments corridor to improve cross-border payments.

“As these developments and initiatives continue, the tradeoff between the ease of creating multilateral channels and the scalability of a truly global system will get harder to overcome,” said Stephen Walker, Lead Banking and Payments Analyst at GlobalData. “The failure of pan-Nordic initiative P27 illustrates the challenge of collaborating on and executing the vision of a cross-border settlement scheme across jurisdictions. The push for digitalisation of consumer payment methods will be key in driving down costs and improving transfer speeds.

“Simplicity and speed of the transfer process is the most important factors for consumers when choosing a cross-border payment provider. While progress has been tangible, there is scope to improve these measures and further reap the rewards from delivering these services.”

 

E-commerce fraud to exceed $107bn in 2029

The value of e-commerce fraud will rise from $44.3bn in 2024 to $107bn in 2029, a growth of 141%, according to a study from Juniper Research.

The study found that AI is fuelling the sophistication of attacks across the e-commerce ecosystem, with the use of deepfakes created using AI to defeat verification systems being a key threat. This threat, combined with rising levels of ‘friendly fraud’, where fraud is committed by the customer themselves, such as refund fraud, is increasingly threatening merchant profitability.

AI is enabling fraudsters to remain ahead of security measures and commit sophisticated attacks on a greater scale. By creating credible messages and a large number of synthetic identities, AI is facilitating higher quality attacks with an unprecedented frequency. These technologies are also highly scalable; empowering fraudsters to heavily automate their attacks and overwhelm rules-based prevention systems.

“E-commerce merchants must seek to integrate fraud prevention systems that offer AI capabilities to quickly identify emerging tactics,” said report author Thomas Wilson. “This will prove especially important in developed markets, where larger merchants are at higher risk of being targeted for fraud, such as testing stolen credit cards.”

Merchants are employing these same technologies to recognise emerging fraud patterns and react in real-time. Merchants must work to incorporate biometric identification into checkout processes to further secure transactions. By using methods such as liveness detection, merchants will be able to protect their business and customers from increasingly sophisticated AI deepfake fraud attempts.

 

ESMA publishes its first annual report on EU carbon markets

The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, is today publishing the 2024 EU Carbon Markets report. This first edition of the report provides details and insights into the functioning of the EU Emissions Trading System (EU ETS) market.

The report finds that prices in the EU ETS have declined since the beginning of 2023. This was due to a combination of lower demand for emission allowances from weak industrial activity, falling natural gas prices and decarbonisation of the European energy sector, along with increased supply following the decision to auction additional allowances to finance the REPowerEU plan.

Emission allowance auctions remain significantly concentrated, with 10 participants buying 90% of auctioned volumes, reflecting a preference by most EU ETS operators to source allowances from financial intermediaries.

The vast majority of emission allowance trading in secondary markets takes place through derivatives, reflecting the annual EU ETS compliance cycle where non-financial sector firms hold long positions (for compliance purposes) while banks and investment firms hold short positions.

The report builds on ESMA’s 2022 report on the trading of emission allowances, mandated in the context of rising energy prices and a three-fold increase of emission allowances’ prices in 2021. The 2024 EU Carbon Markets report was drafted in line with ESMA’s mandate under the EU ETS Directive that is establishing a system for greenhouse gas emission allowance trading in the EU. The ESMA carbon markets report will be produced annually as per ESMA’s mandate.

 

EET Fuels agrees $650m financing facilities

EET Fuels, owner of the Stanlow refinery in the UK, has successfully agreed $650m in receivable financing and trade credit financing facilities in this quarter. The company says this demonstrates market confidence in its decarbonisation strategy. 

EET Fuels is the first low carbon process refinery as it plans to reduce emissions by 95% by the close of the decade. Industrial carbon capture and use of blue hydrogen are at the heart of the company’s strategy.

The facilities secured to support this strategy include:

• A new receivable facility with ABN AMRO Bank for $150m.
• An extended and upsized HCOB and UMTB facility to $200m for receivable financing.
• A trade credit financing for $300m with an international oil company.

EET Fuels’ continuing operational improvement and delivery of its energy transition strategy, including the creation of a major UK energy transition hub at Stanlow, is central to these new relationships. 

The new facilities widen EET Fuels’ strategic and financing partnerships including with major European banks and established trading partners.  This enables the company to also develop customer offerings, growing relationships and sales volumes. The new financing facilities further strengthen EET Fuels’ balance sheet.

“Knowing our decarbonisation strategy has the backing of major financing partners, we can continue to develop and invest in our business with confidence,” commented Satish Vasooja, Chief Financial Officer at EET Fuels.

“These new facilities strengthen our balance sheet, adding flexibility to our financing arrangements and demonstrate that major financing partners are aligned to our core strategy, including cost optimisation and continued performance improvement,” added Tarun Naruka, Head of Corporate and Structured Finance at EET Fuels.

 

Citi closes transaction to support financial inclusion in El Salvador

Citi has structured a social impact and trade loan for Banco Cuscatlán that will channel productive credit to small and medium enterprises (SMEs). The funds will finance activities linked to the local economy, promoting inclusive economic growth in the country.  

The loan marks Citi’s first social trade transaction of this type for a Salvadoran financial institution and is part of the bank’s international commercial loan offering. The amount approved is $15m, which will go toward giving small businesses better access to financing they can use to expand their operations, contribute to the economy, and create jobs.

This transaction supports Citi’s Social Finance goal to enable access to basic services and economic opportunities for 15 million low-income households, including 10 million women, in emerging markets and supports Citi’s goal to finance and facilitate $1 trillion in sustainable finance by 2030.

“This loan demonstrates Citi’s capacity to adapt its foreign commercial and working capital products to help its clients reach their social and sustainability goals, with a direct impact on communities in our country and the region,” commented Ana Cristina López, Citi Country Officer of Citi El Salvador.

 

Fabrick and TerraPay look to innovate cross-border payments in Europe

Fabrick, an open finance operating company, is expanding its geographical footprint by partnering with TerraPay, a company simplifying global money movement. Initially focused on the Italian market, this partnership is designed to enable businesses to access a unified platform that streamlines payment processes, reduce operational costs, and ensure compliance with regulatory requirements.

The partnership builds on Fabrick’s presence in Italy, Spain, and the UK. Following the recent acquisition of finAPI, which enabled Fabrick to enter the strategically important DACH region, Fabrick has continued to solidify its position in Europe’s digital payments landscape.

With TerraPay’s global network spanning 7.5 billion bank accounts, 12 billion cards and 2.4 billion digital wallets across 145 countries and by leveraging Fabrick’s banking-as-a-service platform model, the two say they are creating a unified platform with tailored offerings that streamline payment processes, enhance security, and elevate the customer experience for businesses and financial institutions. TerraPay’s global infrastructure also aligns with Fabrick’s mission to support open finance across different domains, including cross-border payments.

TerraPay will also become a member of Fintech District, Fabrick’s fintech ecosystem aggregator. This will give TerraPay access to a network of over 300 fintechs.