Central bank tightens rules on accepting cards and cash in Chinese stores

As China goes increasingly cashless, PBOC says cash payment is still alive — South China Morning Post — “The central bank in China, the world’s largest mobile payment market, is urging individuals and companies to not refuse or discriminate against cash payment… The PBOC said cash should be accepted alongside the debit card at all business outlets, with the exception of e-commerce and unstaffed stores. Businesses have one month from Friday to make necessary adjustments to avoid being investigated for breaches by the authorities.”


Chinese consumers have now deposited $150bn with Alipay and Tencent

PBOC to raise reserve funds ratio for third-party payment firms to 100% — Caixin — “The two largest third-party payment firms, Alipay and Tenpay, combined hold nearly 1tn yuan (US$151bn) of customers’ funds, about 90% of the total reserve funds… Reserve funds are prepayments from online shoppers held temporarily by payment companies that can then earn income on the cash by depositing it in banks or even buying government bonds… The requirement means payment firms such as Alibaba Group Holding Ltd backed Alipay and Tencent Holdings Ltd’s Tenpay can no longer invest money deposited by their respective clients.”


EBA issues opinion on strong customer authentication requirements under PSD2

Opinion of the European Banking Authority on the implementation of the RTS on SCA and CSC — European Banking Authority — “The regulatory technical standards (RTS) on strong customer authentication (SCA) and common and secure communication (CSC) underpin the new security requirements under PSD2… The EBA has decided to issue an opinion in order to respond to a number of the numerous queries the EBA and competent authorities have received from market participants and aims to provide clarity on the implementation of certain aspects of the RTS that were published.”



Ant Financial to pivot away from Alipay?

Exclusive: Ant Financial shifts focus from finance to tech services: sources — Reuters — “Ant Financial Services Group, the dominant Chinese fintech company, is shifting its main focus to technology services and away from payments and consumer finance as Beijing’s crackdown on financial risk deepens, four sources with knowledge of the matter said… They said the move was propelled, in part, by growing regulatory pressure on Ant’s core financial businesses, including payments, micro lending, credit rating and wealth management.”


SEC charges founder of former mobile payments unicorn Mozido with fraud

SEC charges fintech company founder with scheme to defraud investors and misappropriate funds — US Securities and Exchange Commission — “The Securities and Exchange Commission has charged Michael Liberty, the founder of the fintech startup now known as Mozido Inc, with a scheme to trick hundreds of investors into investing in his shell companies instead of Mozido. Liberty and his accomplices then allegedly stole most of the more than US$48m raised to fund a lavish lifestyle that included private jet flights, multi-million dollar residences, expensive cars, and movie production ventures.”


Central bank fines Alipay for breaching data protection regulations

Alipay is stepping up data protection after PBOC fine — Yicai Global — “Alipay, the fintech platform run by Ant Financial Services Group, is looking to improve its data collection processes after China’s central bank fined it for breaching data protection regulations… Alipay published misleading video campaigns and its collection of personal financial information failed to meet minimum security requirements, the regulator said, adding that the firm also used data inappropriately.”


Swedish central bank issues cashless society warning

‘Being cash-free puts us at risk of attack’: Swedes turn against cashlessness — The Guardian — “The Riksbank governor, Stefan Ingves, called for new legislation to secure public control over the payments system, arguing that being able to make and receive payments is a ‘collective good’ like defence, the courts, or public statistics… ‘It should be obvious that Sweden’s preparedness would be weakened if, in a serious crisis or war, we had not decided in advance how households and companies would pay for fuel, supplies and other necessities.’”


China opens up its payments market to foreign companies

China allows foreigners to enter $27tn payments market — Bloomberg — “Foreign players can start applying for payment licenses and will be treated the same as local firms, the People’s Bank of China said in a statement on Wednesday. Applicants must set up local units, establish payment infrastructure — including disaster recovery systems — and store client information domestically, the central bank said.”


US regulators simplify licensing process for fintechs

State regulators take first step to standardize licensing practices for Fintech payments — Conference of State Bank Supervisors — “Seven states have agreed to a multi-state compact that standardizes key elements of the licensing process for money services businesses (MSB). The agreement: If one state reviews key elements of state licensing for a money transmitter — IT, cybersecurity, business plan, background check, and compliance with the federal Bank Secrecy Act — then other participating states agree to accept the findings… Other states are expected to join this compact.”



Mastercard to add biometric security to online transactions in Europe

Mastercard establishes biometrics as the new normal for safer online shopping — Mastercard — “Consumers will have the capability to use biometrics, such as fingerprints or facial recognition, as a way to identify themselves when they shop and pay with Mastercard as of April 2019… This shift to biometrics is part of Mastercard’s new action plan to help banks, retailers and partners to prevent fraud and improve the consumer experience in the new digital environment. It also meets new regulatory requirements around Strong Customer Authentication set out by PSD2 and is aimed at ensuring a smoother consumer experience and reducing unjustified declines.”


Taiwan to provide mobile payment adoption incentives

Taiwan outlines measures to promote mobile payment usage — Focus Taiwan — “Premier Lai Ching-te on Tuesday urged government agencies to earmark spending to subsidize transaction fees in a way that makes the use of mobile payments for in-store purchases more attractive to consumers… The government has set itself the target of 90% of mobile phone users using mobile payments by 2025, a major increase from the current level of 13%.”


China’s central bank to begin testing QR code payments registration and settlement regulations from April

China’s central bank to standardize QR code payment — Xinhua — “The People’s Bank of China (PBOC) announced plans Wednesday to regulate QR code payment to contain risks arising from the popular service. Payment institutions must obtain proper permits to offer barcode-based payment services, according to a document released by the PBOC. Both banks and non-banking payment institutions must channel cross-bank transactions involving barcodes through the clearing system of the PBOC or other legal clearing houses… The standards will be put into trial use from April.”



Israel considers issuing a digital currency to speed up payments

Israel central bank mulls issuing digital currency for faster payments — Reuters — “The Bank of Israel is examining issuing digital currency as a means of creating a faster payments system as well as reducing the amount of cash in the economy, a central bank source said… The source, who spoke on condition of anonymity, also said the government was ready to legislate or include the issue in its 2019 budget and economic package if the central bank gave the green light.”


Central bank requires Chinese mobile payments providers to set aside customers’ prepaid funds

China’s central bank to raise reserve funds ratio of third-party payment firms to 50% — Reuters — “China’s central bank said it will gradually raise the reserve funds ratio of third-party payment firms to 50% by April 2018 from a current rate of 20%, as it continues to ramp up regulation of the industry… It will eventually ban non-bank payment firms from making any private investments with money deposited by users, which would see the reserve rate at some point increased to 100%.”


Chinese ride hailing giant Didi Chuxing enters the payments market

Didi Chuxing picks up a payment license — Caixin — “Didi Chuxing, China’s largest ride-hailing company, is speeding into the payments business, acquiring a much-coveted license to join the red-hot internet financial-services arena. Didi has agreed to fully acquire third-party payment-services provider 19Pay for 300m yuan (US$45.4m)… Last year, the PBOC said it would control the number of third-party payment licenses issued, making it increasingly difficult to get a license.”



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