Category: Payments

  • Fiserv’s FIUSD Stablecoin on Solana: Bridging Incumbent Rails With Crypto Speed

    Fiserv’s FIUSD Stablecoin on Solana: Bridging Incumbent Rails With Crypto Speed

    When a 40-year-old payments behemoth decides to mint its own stablecoin, the signal is clear: digital dollars are moving from crypto novelty to mainstream infrastructure. On 23 June 2025, Fiserv, whose software quietly handles nearly one in three U.S. card transactions, unveiled FIUSD, a dollar-backed token that will ride the Solana blockchain and plug straight into the company’s core banking and merchant-acquiring platforms. The headline might look like yet another “XYZ-coin.” Still, the strategic implications run deeper: FIUSD provides thousands of community banks, credit unions, and big-box retailers with a turnkey on-ramp to real-time, 24/7 settlement, without requiring them to interact with a crypto exchange. The token is slated to go live alongside a broader digital asset platform by year-end.

    Why Fiserv—and Why Now?

    Stablecoins have surged from fringe to Fortune 500 status in just five years. Visa settlements in the USDC, PayPal’s PYUSD, and Stripe’s pilot with USDC all demonstrated that there is demand for fiat-pegged tokens that move faster and more cost-effectively than card rails. Fiserv’s twist is to design FIUSD as a “bank-friendly” coin issued and fully reserved by partner custodians (Circle and Paxos) while giving Fiserv’s 10,000-plus financial-institution clients an API to mint, redeem or simply treat FIUSD like any other funding source. With a focus on interoperability, Fiserv is opening the door to the $256 billion stablecoin market—unlocking new growth for digital-asset infrastructure.

    Betting on Solana’s Throughput

    The decision to launch on Solana, rather than the more enterprise-tested Ethereum ecosystem, raised eyebrows. Fiserv executives told [Blockworks] that Solana’s combination of sub-second finality and transaction costs measured in fractions of a cent was the deciding factor; throughput north of 65,000 tps leaves headroom for real-time point-of-sale settlement without clog-induced fee spikes. In practice, Fiserv will abstract the chain away: merchants see dollars arrive in their bank accounts, not tokens in self-custody wallets. But under the hood, Solana’s speed allows FIUSD to clear between issuers, acquirers and merchants in near real time—an impossible feat on legacy ACH or even same-day card rails.

    Incumbent Allies Line Up

    The announcement wasn’t a solo act. PayPal will make FIUSD interoperable with PYUSD so balances can toggle at par value between the two coins, effectively knitting together two of the largest payment processors in the world. Mastercard, meanwhile, said it will pilot FIUSD acceptance across its global network, citing the token’s compliance controls and the chance to “abstract away crypto complexity for both consumers and merchants.” Mastercard’s existing partnership with Paxos made it a natural distribution ally—together, the collaborations give FIUSD an addressable footprint of millions of merchants and thousands of banks from day one.

    What Does “Bank-Friendly” Really Mean?

    Where most stablecoins chase retail flows or DeFi liquidity, FIUSD is engineered to slot inside existing core-banking risk and compliance systems. Fiserv’s core DNA—account processing for community banks—shows up in three design choices:

    • KYC/AML at creation. Only regulated institutions can mint or redeem; retail users receive FIUSD indirectly via their bank or a PayPal wallet.
    • No yield farming. Reserves sit in short-dated U.S. Treasuries, but interest accrues to the custodians, not token-holders, minimising the Howey-test debate.
    • ISO 20022 integration. Transaction metadata maps to the same fields banks already use, making back-office reconciliation a non-event.

    From Card Settlement to Cross-Border

    Fiserv is initially targeting merchant settlement: instead of waiting two days for card funds to clear, acquirers could pay merchants in FIUSD within seconds, then batch-redeem into fiat. But once the token is live, other use cases emerge organically:

    1. After-hours treasury. Banks can sweep surplus FIUSD into money-market tokens for weekend yield, then redeem back to dollars before Monday open.
    2. B2B cross-border. A U.S. manufacturer could pay a Mexican supplier in FIUSD; the supplier converts to pesos locally via Circle’s on-ramp, bypassing correspondent banks and SWIFT fees.
    3. Programmable commerce. Smart-contract escrow for high-value retail (think car down-payments) releases funds automatically when IoT data confirms delivery.

    Each scenario reinforces Fiserv’s role as the conduit. The more FIUSD circulates, the stickier Fiserv’s settlement layer becomes.

    Competitive and Regulatory Headwinds

    Of course, the lane is getting crowded. Visa’s USDC play, Stripe’s treasury-only stablecoin pilot and PayPal’s own mint all chase similar value pools. Fiserv’s best defence is incumbency: few rivals control both core banking software and merchant-acquiring rails. Still, regulators remain the wild card. The U.S. Congress has yet to pass a uniform stablecoin bill; Europe’s MiCA rules kick in next year; and Basel is finalising capital charges for tokenised deposits. Axios points out that FIUSD sidesteps some scrutiny by refusing to pay interest, but systemic-risk questions will grow if volumes spike.(axios.com)

    The Bigger Picture

    Stablecoins were once a crypto-native hack to arbitrage slow banking. Now they are morphing into digital cash instruments issued or white-labelled by banks themselves. Fiserv’s FIUSD crystalises that shift: a 90-billion-dollar incumbent is effectively saying, “the fastest way to modernise money is to tokenise it.” If the experiment works, stablecoin rails could start carrying a meaningful slice of the $11 trillion in annual U.S. card and ACH payments—without consumers ever knowing the difference.

    The question is no longer whether incumbents will adopt stablecoins, but whose token and whose rails will win the liquidity war. With FIUSD, Fiserv has placed a formidable bet that the answer might be: theirs.

  • Is Earned Wage Access Built for a High-Rate Environment?

    Is Earned Wage Access Built for a High-Rate Environment?

    For half a decade, earned-wage access (EWA) platforms have promised to eliminate the cash-flow anxiety of payday gaps. Workers finish a shift, tap an app and pull down the wages they have already earned instead of waiting two weeks for payroll to run. The idea seemed so obviously consumer-friendly that venture money poured in during the zero-rate boom.

    Then borrowing costs spiked, regulators sharpened their knives, and investors retreated to safer ground. By early 2024 CB Insights was calling on-demand pay “one of the cooling corners of consumer fintech.” That story abruptly changed this spring. In the ten weeks between early April and late May three of the sector’s most prominent names—Rain, Clair and DailyPay—announced fresh capital equal to almost US$200 million in new equity and credit. The cheques are smaller than 2021’s blow-out rounds, but they signal that earned wage access is not fading. Instead, it is being forced to reinvent itself for a world where money has a price and regulators are no longer on the sidelines.

    A funding pulse returns

    The momentum began on 8 April, when Los Angeles-based Rain revealed a US$75 million Series B led by Prosus, with existing backers QED and Invus doubling down. CEO Alex Bradford framed the raise as ammunition for a shift beyond wage advances into savings and small-ticket credit—all monetised inside the same employer-integrated app.

    Six weeks later, New York-based Clair followed with a US$23.2 million Series B at an undisclosed valuation. Upfront Ventures led the round, while Pathward, the federally chartered bank that originates Clair’s advances, renewed its warehouse line. Clair’s pitch is fully “embedded” earned wage access: instead of selling directly to employers, it integrates into payroll platforms like Gusto and TriNet so staff can stream wages from inside software they already use.

    Meanwhile DailyPay, the oldest unicorn in the space, has been lining up underwriters for a possible US IPO in the second half of 2025 that could value it between US$3 billion and US$4 billion. Although DailyPay’s last primary round dates to 2021, the company has continued to layer new revolving credit—US$760 million in total—to fund instant payouts while it waits for payroll reimbursements.

    Taken together, the transactions tell a simple story: money is still available for EWA, but only for providers that can show disciplined unit economics, regulatory traction and a credible plan to become more than a payday-loan replacement.

    The interest-rate squeeze

    Those unit economics look starkly different now that the Federal Reserve’s policy rate hovers near 5.25%. Early providers such as FlexWage and Branch could finance same-day wage advances at commercial-paper rates close to zero. In 2024, funding costs jumped above 6%, and while the fed-funds curve now hints at gradual cuts, nobody expects a return to free capital.

    Rain’s answer is diversification: use its balance sheet not only for advances but also to seed short-term savings vaults and build credit products that carry explicit APRs. That spreads fixed costs and gives the company something to upsell once the novelty of instant pay wears thin. Clair’s approach is to push funding off its balance sheet entirely by partnering with Pathward; it earns SaaS-style platform fees from payroll vendors and let a bank, not a venture-backed start-up, shoulder the interest-rate risk.

    DailyPay, by contrast, doubled down on scale. Its US$760 million warehouse line is the largest in the category. The company pockets a US$3.49 convenience fee for instant transfers to cards and then earns float income during the two- to five-day lag before the employer reimburses it on payday. In a high-rate world float income is suddenly meaningful; DailyPay says its net interest margin rose 42% in 2024. But that spread will compress if the Fed eases or if employers negotiate shorter settlement windows.

    Regulatory clouds and silver linings

    While cost of capital is the obvious headwind, regulation is the existential one. The U.S. Consumer Financial Protection Bureau (CFPB) jolted the industry last July when it proposed treating paycheck advances as credit under the Truth in Lending Act. In February of this year, the agency rescinded a 2020 advisory opinion that had effectively granted safe harbor to advances repaid via payroll deduction. The message: if you charge fees or rely on tips, expect to comply with lending disclosures.

    DailyPay’s pre-emptive lawsuit against New York Attorney General Letitia James in April laid bare the stakes. The company wants a federal judge to declare its product a payment service, not a loan, before the state can try to shut it down. Other states are watching; California already regulates EWA under its deferred-deposit statutes, and Nevada introduced a “sunshine bill” last session.

    Paradoxically, an aggressive CFPB could benefit well-capitalised players. Rain and Clair both welcome bright-line rules: if advances are loans, they will simply disclose APR-equivalent fees—and trust that consumers will still prefer US$3 to a US$35 overdraft. Smaller start-ups that lack compliance budgets could wither, leaving the field to a handful of regulated specialists.

    Outside the U.S., the picture is even more fragmented. The UK Treasury has left EWA largely unregulated, preferring an industry code of practice, but the FCA says it will revisit that hands-off stance in 2026. Singapore’s MAS classifies EWA as “credit” if a fee is charged, although most local schemes remain employer-funded and fee-free. In Malaysia, Paywatch’s US$30 million Series A last year was accompanied by sandbox approval from Bank Negara, creating a template for Southeast Asian roll-outs.

    High-rate economics in practice

    In theory, earned-wage access is rate-neutral: the provider advances money that is already owed, so default risk should be near zero. In practice, two numbers matter—funding cost and take rate.

    Funding cost. A warehouse lender typically finances 90% of each advance; the platform funds the first-loss piece. When SOFR was 0.25%, an advance that stayed outstanding for three days cost pennies. At 5%, it costs four times as much. That is survivable if fees or interchange scale accordingly but punishing for fee-free models.

    Take rate. Most U.S. providers charge either (a) a fixed transfer fee of US$2–4; (b) a monthly subscription paid by the employer; or (c) a voluntary “tip jar.” Surveys show fewer than 15% of users tip more than US$1, so fee-free models generally lean on interchange earned when wages load onto a prepaid card. Interchange, however, is capped at 21 cents plus 5 basis points for regulated issuers in the U.S. under the Durbin Amendment, limiting upside just when funding costs peaked.

    Rain’s new equity lets it carry advances longer without passing costs to users; Clair’s bank-funded model eliminates warehouse spread but forces careful KYC and Bank Secrecy Act compliance. DailyPay, the only one with national scale, prefers to socialise funding costs by offering employers a zero-fee, next-day option (funded via ACH) and letting impatient workers choose whether the instant fee is worth it.

    Can the earned wage access model survive once rates fall?

    One might ask whether EWA depends on high rates to earn float income and therefore faces a revenue dip when the Fed finally cuts. Rain argues the opposite: if funding costs fall faster than interchange or fee income, gross margins expand. Clair is largely immune because it books software fees. DailyPay will lose some yield on idle balances, but management says a parallel plan to monetise marketplace offers—credit-builder loans, cashback rewards, even health-insurance referrals—will more than offset lost float.

    Beyond pay advances: the shift to holistic employee finance

    Every platform now markets itself as a financial-wellness suite rather than a point solution. Rain’s roadmap shows automated savings and micro-credit scored on payroll data. Clair is beta-testing retirement-plan contributions that sweep from earned balances. DailyPay already offers unpaid-invoice factoring for gig marketplaces, plus a Visa debit card that earns interchange on everyday spend.

    Investors like that story because it widens total addressable market. Employers like it because a single vendor can offer liquidity, budgeting and credit-building without complicating payroll files. For regulators, holistic finance may be easier to police: advances become one feature inside licensed credit programs rather than a quasi-bank service without a legal category.

    The verdict: cautious optimism

    Earned wage access is graduating from growth-hack gimmick to regulated financial infrastructure. Rising rates exposed fragile balance sheets, but they also proved that mature platforms can pass the economic stress test. Fresh capital for Rain and Clair, together with DailyPay’s IPO plans, suggests investors believe the sector can navigate both cost of capital and regulatory scrutiny.

    The coming 18 months will bring two decisive milestones. First, the CFPB must finalise its interpretive rule; whatever the bureau writes will ripple across state capitals and perhaps push Congress to revisit the Truth in Lending Act’s payroll exemptions. Second, public-equity markets will judge DailyPay’s prospectus. If the IPO prices near the whispers—around 4x revenue—it will set a benchmark venture funds can underwrite, and Series B cheques like Clair’s will multiply.

    For now, the spring funding pulse tells a simple tale: salary streaming is not dead. It is just maturing, swapping blitz-scale hype for bank partnerships, treasury discipline and the slow work of persuading regulators that a US$3 fee for instant access to money you have already earned is a service, not a loan shark in fintech clothing. If the pioneers can land that argument, high rates will prove a pothole, not a cliff edge—and the next generation of workers may wonder why anyone ever waited for payday.

  • Visa Protects Pay-by-Bank Buyers—A Payments Gamechanger?

    Visa Protects Pay-by-Bank Buyers—A Payments Gamechanger?

    When Visa formally switched on its Pay-by-Bank rail in the UK on 2 June 2025, the headline feature was not speed—open-banking payments have been real-time for years—nor reach, thanks to Faster Payments. The news was the guarantee: a card-style dispute-resolution rule set that promises to reimburse consumers if a transfer goes wrong. Visa says the scheme gives account-to-account (A2A) payments “a similar level of protection typically associated with cards,” positioning Pay-by-Bank as a like-for-like alternative at checkout.

    The move arrives at a delicate moment for open banking. Despite impressive growth—Open Banking Limited recorded 130 million UK payments in 2023, up 90% year-on-year—cards still account for more than three-quarters of UK e-commerce volumes. Consumer surveys repeatedly point to two blockers: habit and fear of losing chargeback rights. Visa’s guarantee tackles the second.

    What the Guarantee Actually Covers

    Details sit inside the Visa Product & Service Rules, but public statements outline three pillars:

    1. Reimbursement for unauthorised or erroneous payments (mirroring card “zero liability” rules).
    2. A formal dispute-resolution window in which consumers can raise a claim via their bank app.
    3. Scheme-level arbitration if the merchant and consumer fail to agree.

    Under the hood, the service rides Pay.UK’s Faster Payment System. Visa’s API handles tokenisation, transaction messaging and dispute flows; settlement occurs in near real time, while the guarantee obliges participants to prefund a liability pot for refunds.

    Why Protection, Not Price, May Be the Catalyst

    Open-banking advocates have long pitched A2A as cheaper and faster than cards, yet adoption in high-income markets has lagged. A recent Financial Times piece noted that consumer awareness, trust and card incumbency still hinder Pay-by-Bank growth in Britain “despite years of investment”. Visa’s own 2024 Nordic study found that fully 48% of respondents would try A2A “only if buyer protection matched cards.” In other words, price is secondary; perceived safety is primary.

    Merchant maths tell a similar story. Card acquiring fees average 1.4% in UK online retail, yet many merchants hesitate to remove cards because a single high-profile fraud event costs more—in refunds and reputation—than the savings from cheaper rails. Visa’s guarantee shifts that risk calculus: merchants still pay a (yet-undisclosed) service fee, but the liability for fraud or non-delivery now sits inside a familiar rulebook rather than in bespoke contracts.

    The Scale of the Opportunity

    If protection closes the trust gap, Pay-by-Bank could eat into the “everyday card” segment: utilities, telecoms, streaming subscriptions and, eventually, one-click retail. Visa claims that broader A2A adoption could unlock £328 billion in UK economic output across five years. Even a modest share shift—say 5% of the UK’s £250 billion annual e-commerce spend—would reroute over £12 billion through Faster Payments.

    For banks the draw is stickier users and fee income on dispute processing; for fintech aggregators like Plaid the prize is richer transaction metadata (mandate IDs, refund statuses) that they can resell to merchants for reconciliation.

    Questions Visa Hasn’t Answered Yet

    Who funds refunds?
    Card schemes push chargeback costs to acquirers, who pass them to merchants. Visa’s Pay-by-Bank will need a similar waterfall—likely a prefunded pool plus merchant debit—yet participants have not disclosed fee tables. Without clarity, merchants cannot model total cost of acceptance.

    Will banks throttle volumes?
    Open-banking APIs still suffer time-outs: Open Banking’s April dashboard showed a 0.47% failed-call rate and 0.14% outright rejects. If disputes rise, some banks may cap transaction sizes or velocities, limiting the scheme’s appeal for high-ticket merchants.

    Can the guarantee scale beyond the UK?
    The launch is UK-only, leveraging Faster Payments’ instant settlement and Pay.UK’s central infrastructure. Replicating protections in the eurozone would mean mapping to SCT Inst and myriad local consumer-protection regimes; in the US, FedNow has no scheme-level guarantee. Visa must convince regulators—and banks—that its rules can sit atop disparate clearing houses.

    Competitive Ripples

    Mastercard, which entered open-banking via its 2019 acquisition of Finicity, already pilots a “liability shift” for account-based payments in the Netherlands. Specialist PISPs such as TrueLayer and GoCardless tout variable recurring payments (VRP) with optional insurance wrappers. Visa’s move may force rivals to hard-bake indemnities rather than sell them as add-ons.

    Card issuers face a defensive dilemma: encourage Pay-by-Bank to keep volume inside the Visa/Mastercard orbit, or resist and risk ceding ground to open-banking-native challengers. Early evidence suggests embrace: Nationwide and NatWest appear on Visa’s partner list, betting that a bank-branded app journey beats a third-party overlay.

    Regulatory and Consumer-Duty Context

    The UK’s Consumer Duty pricing-transparency review in May 2025 put cross-border providers on notice for muddled fee disclosures. Domestic A2A players felt the tremor, too: any “zero-fee” claim must show FX mark-ups and dispute-resolution timelines. Visa will need to publish its guarantee rules in plain English and prove that refunds arrive promptly—standards already baked into card chargebacks.

    On the infrastructure side, the Joint Regulatory Oversight Committee (JROC) is drafting mandatory service-level agreements for open-banking APIs. If SLAs land near card-network uptime (99.999%), A2A could become a high-availability rail suitable for energy and telecom direct debits, not just ad-hoc P2P transfers.

    Merchant Economics: Case Scenarios

    Utility bills – A water company paying 0.9% interchange on card autopay could cut the fee to perhaps 0.3% under Visa A2A (exact pricing TBD) and gain instant settlement. The catch: integration. IT teams must map mandate IDs to legacy billing cycles.

    E-commerce checkout – A £45 apparel order routed via A2A saves 60 pence in fees versus cards, but the retailer must still cover the guarantee risk component. If that premium lands at ~0.2%, net savings fall to ~0.5%—a margin but not a revolution.

    Subscriptions – For streaming services wrestling with chargeback fraud, a bank-verified mandate plus Visa guarantee could lower involuntary churn and clawback costs. But acquiring gateways will compete aggressively on blended pricing; merchants may demand a revenue-share to migrate users.

    Consumer Experience: Will They Click?

    Friction matters. Card-on-file requires no extra step; Pay-by-Bank asks for authentication inside the banking app. Though Visa claims a single mandate can enable one-click repeat use, the first checkout step remains longer than typing the CVV. Unless merchants surface explicit benefits—“instant refund if we ship late,” “no credit-card surcharge”—consumer inertia may persist.

    Trust is the wildcard. A 2024 Visa survey found 72% of UK adults “feel safer” knowing a retail purchase can be reversed; only 38% said the same about bank transfers. The guarantee must close that perception gap quickly, otherwise protection exists only on paper.

    Outlook: Necessary, Not Sufficient

    Visa’s guarantee is a critical puzzle piece for A2A adoption, but not a silver bullet. Protection narrows the trust deficit; experience (fast, low-friction auth) and economics (meaningful savings after scheme fees) must follow. Regulators will scrutinise transparency under Consumer Duty, and banks will demand a revenue share commensurate with risk.

    Still, the launch reframes the conversation. Pay-by-Bank is no longer a low-cost, high-risk alternative; it is a premium rail backed by the same dispute machinery that built card dominance. Whether that promise convinces shoppers to click “Pay from Bank” instead of “Visa” is the question every merchant, PISP and issuing bank will watch over the next holiday peak.

  • Australia’s New BNPL Rules Mean Credit Scores Will Never Look the Same

    Australia’s New BNPL Rules Mean Credit Scores Will Never Look the Same

    Buy-now-pay-later has been the feel-good payments story of the past decade: interest-free instalments, a tap-and-go checkout, no bank-manager questions. By mid-2024, Australia had approximately 7 million active BNPL accounts with an average transaction value of A$136. Yet the same scale that made Afterpay and Zip household verbs, has also drawn regulator heat. On 10 June 2025, the heat crystallised into law. From that date, every BNPL operator must:

    • hold an Australian Credit Licence (ACL),
    • run credit and affordability checks, and—most explosively—
    • report all applications, limits, and defaults to the mainstream credit-reporting bureaus.

    The rules sit inside the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Act 2024 and ASIC’s new INFO 285. They pivot BNPL from a “tech hack” around the National Credit Code to a fully-fledged consumer credit.

    Why this moment matters

    Until now, BNPL providers could decide whether to ping a bureau or stay off-grid; most chose the latter to preserve the frictionless sign-up that drove growth. On the other hand, consumers often mistakenly believed instalments were invisible to lenders. ASIC’s guidance is blunt: providers that miss the licence deadline “may be engaging in unlicensed conduct if they continue to operate.”

    Hidden within those compliance paragraphs is a structural jolt to personal finance. Every Afterpay sign-up, every Zip limit increase, every missed Klarna instalment, will now flow into the same credit files that decide mortgage rates. Finder’s latest spending survey shows 33% of Australians—about 6.9 million people—regularly spend more than they earn, a pattern propelled by easy instalments. From June, that behaviour could now negatively influence credit scores.

    What changes for providers

    The licensing package is rigorous but familiar to anyone who issues credit cards. BNPL firms must:

    • lodge an ACL application (or variation) by 10 June;
    • prove minimum base capital of A$150,000 (A$250,000 if holding customer funds);
    • integrate bureau data into underwriting, not just KYC;
    • join the Australian Financial Complaints Authority and embed dispute-resolution timelines;
    • hand ASIC an annual compliance report plus an auditor-signed financial statement four months after year-end.

    INFO 285 makes clear that an ACL for “credit provider” automatically covers BNPL, but licences that only authorised “intermediary” activity must be varied. The regulator expects most players to require a variation rather than a new licence, yet even a variation demands board-level governance and capital calculations that some venture-backed start-ups have never undertaken.

    The bureau ripple: stronger profiles—then a hangover

    Credit bureaus like Equifax, Illion, and Experian have lobbied for years to capture BNPL data, arguing it fills “thin” files for younger borrowers. They won that argument on 10 June. Every application became an enquiry entry; every on-time repayment can lift a score; every late fee, if overdue long enough, lands as a default.

    Short-term, bureau files should get richer. A 22-year-old who pays Afterpay religiously might see their credit score rise, making a first-car loan cheaper. But a missed A$100 GoCardless instalment—common when wages hit different weeks—could shave 50 points, enough to bump a mortgage rate. Finder’s personal-finance analysts reckon 38% of Gen Z and Gen Y admit to overspending via BNPL. Their “buy now, regret later” habits will show up in black and white.

    The bureau change also neuters a common BNPL marketing pitch: “won’t affect your credit.” From June, every homepage disclosure must warn that usage will be visible, or risk breaching ASIC’s longstanding truth-in-advertising obligations.

    Knock-on effects for banks and retailers

    Banks stand to gain. Mortgage underwriters finally get a full view of discretionary credit. Commonwealth Bank had already argued that the blind spot distorted affordability tests; CEO Matt Comyn’s 2021 Senate testimony called for bureau reporting across the sector. For lenders, the reform should reduce surprises and lower delinquency risk.

    Retailers face a mixed bag. BNPL drove basket-size growth, but also led to higher refund costs and increased fraud. Licence obligations will raise provider operating costs. Afterpay and Zip have not published revised merchant-discount rates, but executives concede compliance will “tighten margins” (Zip’s commentary in its August 2024 results call). If fees rise, merchants may shift back to cards or bank account-to-account alternatives like PayTo.

    Will the licence deadline stick?

    ASIC knows start-ups move slowly. A transitional window lets firms keep operating if they file an application that ASIC “accepts for lodgement” by 10 June. However, acceptance is the first step; substantive approval can take up to nine months. Lawyers warn that conditions could include capital top-ups, director background checks, and live underwriting audits.

    Industry bodies want more time. The Australian Finance Industry Association urged Treasury to stage obligations—licence first, bureau reporting later—arguing that some technology stacks cannot plug into Illion or Equifax in weeks. Treasury’s explanatory memorandum rejects a long delay, citing “urgent consumer-protection need,” but hints that enforcement will be “proportionate.”

    Still, ASIC’s track record on unlicensed lenders is clear: it has prosecuted payday operators within weeks of a deadline lapsing. Expect the regulator to make an example of any BNPL brand that continues to sign new customers without an accepted licence application.

    International context: from light-touch to level playing field

    Australia is not alone. The UK’s FCA, after four years of consultation, is drafting BNPL rules that echo credit-licence and bureau-reporting requirements. New Zealand’s Credit Contracts Act amendments took effect last year. But Australia’s 10 June line-in-the-sand is arguably the sharpest globally—no proportional carve-out for “low-limit” offers, no indefinite sandbox.

    Why the urgency? Inflation and arrears. RBA data show household repayment stress at a ten-year high; Zip’s BNPL late-fee income grew 24% in FY 2024. The government’s May 2025 budget papers flagged “longevity of inflation expectations” partly tied to “unsecured consumer credit growth via BNPL.” Legislators concluded that letting millions of micro-loans stay off the radar would undermine monetary-policy tightening.

    What consumers should do now

    Financial counsellors are bracing for calls in July when the first bureau alerts hit. The National Debt Helpline advises users to:

    • download their free credit report before 10 June to establish a baseline;
    • set up alerts with bureau apps to catch score swings;
    • align pay cycles with instalment schedules to avoid accidental misses.

    They also warn that reversing BNPL defaults is harder than disputing, say, a mobile-phone bill: platform terms often state that fees compound once an instalment is overdue.

    A turning-point for the business model

    BNPL thrived on a loop: frictionless sign-up drives volume, volume drives merchant-discount revenue, revenue subsidises free instalments. Compliance filings, bureau integrations and responsible-lending checks slow the loop and add cost. Providers may pivot toward longer-tenor, interest-bearing plans or morph into regulated line-of-credit products.

    Zip already reports that credit-loss rates fell from 2.7% to 1.8% after trialing bureau checks on new users, conceding that upfront diligence costs less than downstream collections. Investors rewarded the news with a 9% share-price bump. Afterpay, now owned by Block, has piloted soft credit pulls in Canada since 2024; executives say Australia will “adopt similar underwriting signals.”

    The business model survives, but the word “loan” finally catches up with the marketing slogan “pay later.”

    Final word

    10 June 2025 was not just a compliance deadline; it’s the day BNPL grows up. Providers became licenced credit shops, consumers gain (or lose) bureau points with every tap, and Australia’s credit files gain unprecedented granularity on small-ticket debt.

    For borrowers, the trade-off is transparency: instalments may aid a thin file, but missed payments will bite harder. For providers the calculus shifts from land-grab to sustainable risk pricing. And for regulators, the reform is a test case—if bureau reporting and licensing curb arrears without killing innovation, other markets will likely follow Australia’s blueprint.

    The era of invisible instalments is over; from 10 June the bills came due—in both dollars and credit scores.

  • Trust Bank’s Rapid Rise: From Pilot to Powerhouse

    Trust Bank’s Rapid Rise: From Pilot to Powerhouse

    Singapore’s cloud-native Trust Bank just filed results that would make even marble-and-mahogany incumbents blush. Revenue for 2024 vaulted from S$39 million to S$97 million – a 148% surge – while operating losses narrowed from S$128 million to S$93 million. The figures come straight from the bank’s FY-2024 statement, which also noted that costs rose only 4% thanks to an AWS-heavy stack that scales with compute, not branch rent.

    Momentum extends beyond the P&L. Trust crossed the one-million-customer mark earlier this year—roughly a quarter of all Singaporean adults—and deposits doubled to S$3.8 billion. Cheap float now funds a fast-growing personal-loan marketplace that syndicates risk back to Standard Chartered, the bank’s 40% shareholder, letting the parent earn spread while the offspring earns fee.

    How did a young digital bank scale so fast? Start with FairPrice Linkpoints, which lures shoppers without so much as an MRT billboard. Add a no-annual fee credit card, then layer in a loan engine that pulls instant credit data and issues offers in-app; by December the loan book had trebled year-on-year.

    Unit economics look healthier each quarter. Deposit costs hover a hair above 1%, while personal-loan APRs live comfortably north of that. With revenue up 148% and expenses almost flat, Trust shaved a cool 27% off losses in twelve months—progress the Monetary Authority of Singapore will take as proof that digital challengers can grow responsibly.

    Rivals are watching. Grab-backed GXBank just dangled QR-code cashback to seed its own flywheel, and DBS is stuffing extra perks into PayLah!, yet neither can match Trust’s cost-to-income optics while paying downtown rent. Meanwhile MAS is sharpening capital rules that will reward lean balance sheets; Trust’s modern platform could earn it a lighter regulatory lift right when competitors face heavier buffers.

    Risks remain. Promotional APRs will fade, nudging credit losses higher, and next year’s GST-voucher PayNow disbursement may tempt rate-hungry savers to shop around. Still, analysts who once called break-even “aspirational” now pencil it in for late-2025, betting that loan growth plus ultra-cheap funding will finish the job.

    A rare sight in digital banking: profit on the horizon

    Trust Bank just showed that in a saturated, fully banked market you don’t need branches—or even profit yet—to build a nine-figure business. What you do need is a supermarket loyalty loop, a feather-weight tech stack, and the patience to let deposits compound. If costs stay lean and the loan book keeps growing, Singapore could see something rare in digital banking: profits in sight, and sooner than expected.

  • ECB Opens Digital Euro Sandbox to 70 Companies

    ECB Opens Digital Euro Sandbox to 70 Companies

    When the European Central Bank (ECB) first pitched a “digital euro” back in 2020, sceptics complained the project lived inside a lab no merchant or fintech could ever see. That complaint ended on 5 May 2025, when ECB opened a digital-euro innovation platform and quietly emailed access keys to about 70 external organisations – supermarkets, mass-transit operators, neo-banks, card schemes, even a US Big-Tech wallet – chosen from more than 100 applicants.

    The platform is not a marketing stunt; it is a “mini-Europe in the cloud.” Participants receive an SDK, sandbox settlement nodes and a 200-page rulebook that simulates identity checks, offline transfers, fee logic and privacy thresholds. The brief is brutal: “Break things, find frictions, propose fixes, and report back by December.”

    Politics on a stopwatch

    Law-makers are still haggling over the Digital-Euro Regulation, yet the ECB is sprinting ahead. Board member Piero Cipollone told Reuters he hopes for a political deal “by early 2026,” after which a public launch would need two to three years. By pushing the tech into public view now, the Eurosystem signals the project is no longer “if” but “when” – and that the code will be battle-tested before politicians finish their fight.

    How the plumbing is laid out

    Ledger Insights obtained early documentation that sketches a three-layer stack:

    1. Core settlement, run by the Eurosystem, handles finality in central-bank money;
    2. Intermediary layer, where banks and PSPs hold customer accounts or wallets under a harmonised rulebook;
    3. Value-added layer, open to anyone who wants to bolt on cashback, credit, loyalty or IoT triggers.

    Two wallet flavours co-exist. Account-based wallets live at a PSP and work online; bearer wallets reside in a secure element or hardware card and can spend offline up to a €300 limit (the threshold still floats in the legislative draft, but €300 is the ECB’s test setting). Larger top-ups must flow through KYC rails and are logged for AML monitoring.

    Who is inside the sandbox?

    Names are under NDA, but Global Government Fintech confirmed a French grocery chain, a Baltic rail operator, three neo-banks and at least one US payment wallet are in the cohort. A transit operator will test tap-in/tap-out with automatic delay refunds; a subscription platform will prototype the EU’s “right-to-withdraw” by sending instant refunds back to a consumer’s wallet if they cancel within 14 days – use-cases the ECB itself highlighted in a recent speech.

    What the ECB wants to learn

    • Integration latency: can a Tallinn fintech plug the SDK into its app in weeks, not quarters?
    • Hardware costs: will a supermarket in Seville need new terminals, or can the existing NFC readers treat the digital euro like another EMV token?
    • Offline realism: can a wallet-to-chip transfer clear when both phones have zero signal inside a Pyrenees ski tunnel?

    Those answers feed directly into the final legislative debate. If merchants prove the digital euro lands with zero scheme fees and no terminal upgrades, lobbyists will have a tougher time calling it “expensive.” If offline transfers glitch, privacy hawks may demand higher limits to keep the CBDC as cash-like as possible.

    Fee fight déjà vu

    Officially, the ECB says merchant fees should be “no higher than today’s most efficient digital means” (read: SEPA instant, which is near-free). Yet intermediaries are allowed to levy charges for optional extras. Expect a tug-of-war reminiscent of SEPA’s interchange cap fights: merchants will want a zero-fee rail, PSPs will argue they need revenue to cover AML, fraud and tokenisation costs. The platform lets both sides run the numbers before the Eurogroup decides whether to legislate a hard cap.

    Deposit drain or digital shield?

    European bankers fear a runaway CBDC could hoover up deposits and jack up funding costs. One Italian trade group told La Repubblica the digital euro might “cost the industry €880 million a year in lost float”. The ECB counters with tiered remuneration: small balances earn zero or tiny interest to keep them cash-like; larger balances could earn less than a savings account, discouraging hoarding. Those dials can be tuned in the sandbox.

    A blockchain hedge – but conventional at core

    Purists may be disappointed: the prototype settlement engine is classic RTGS, not a public blockchain. Distributed-ledger tech appears only in the value-added layer, where participants can tokenise point-of-sale rewards or NFTs if they see fit. That conservative stance contrasts with the BIS Innovation Hub’s freshly launched Project Pine, which tokenises green bonds entirely on smart contracts. The ECB’s message is pragmatic: get resilience and interoperability first; slide in cool tech later if it serves a purpose.

    Why this matters outside Euroland

    If the sandbox shows a cash-like euro that clears cross-border within seconds and costs merchants pennies, pressure ratchets up on other CBDC projects: the Fed (still “studying”), the Bank of England (consultation phase) and big emerging-market pilots like India’s e-rupee. Big-Tech wallets face a strategic fork: integrate the digital euro or risk losing 350 million customers to a sovereign wallet embedded in every banking app.

    Stable-coin players are watching, too. Circle’s new Circle Payments Network touts USDC settlement in 30 seconds for a tenth of a card fee; Visa just answered by piggy-backing Banking Circle’s local-clearing memberships, extending Visa Direct’s instant map without touching crypto. The digital euro’s sandbox gives Brussels a chance to set a usability bar that private tokens must clear to stay relevant.

    Frictions looming on the horizon

    Legislators must still decide how much anonymity is “cash-like enough.” The draft allows bearer wallets up to €300 and offline transfers up to €1000 a month, but civil-liberty NGOs already call that “panopticon lite.” Payment-aggregator lobbies want holding limits above €3000 so consumers don’t juggle multiple wallets—one Ledger Insights survey found 27 percent of respondents would park some of a €10 000 windfall in a digital euro if limits rose. Politicians will weigh those numbers against bank-funding fears.

    A second friction is interoperability with existing instant rails. SEPA Instant processes euro transfers in <10 seconds, but uses commercial-bank money. If the digital euro clears in one second but triggers complex AML disclosures for a €25 dinner, PSPs could steer merchants back to cards or wallets. The sandbox is the only safe space to find those pain points before real users revolt.

    What happens next?

    Participants must deliver technical reports by December. The ECB will then publish a public “lessons learned” and hand the thick dossier to legislators who will finalise the Digital-Euro Act. If Brussels reaches Cipollone’s early-2026 deadline, the Eurosystem could green-light a production build in Q4 2026 and start rolling out wallets in 2028—just in time for the next EU budget cycle and, perhaps, before FedNow’s real uptake among US consumers eclipses card share.

    For now, the sandbox is live, the NDA signatures are dry, and 70 firms have a brief to try and break the ECB’s dream money before hackers and speculators get the chance. The sooner they break it, the smoother Europe’s first digital cash could land in our phones—and the less likely it is to blow up under the weight of 340 million users tapping “Pay.”

  • Payment Aggregator Licences Are India’s Next Fight Club

    Payment Aggregator Licences Are India’s Next Fight Club

    The Reserve Bank of India’s payment aggregator stamp has quietly become the most coveted badge in Indian fintech. Since January 2025, the central bank has issued just nine final approvals—PayU, BillDesk, Adyen and, in the past week alone, Quicktouch and Getepay—while hundreds of hopefuls remain in limbo. The figure is striking, given that over 185 companies applied for authorisation more than two years ago. A payment aggregator licence is beginning to look like a scarce operating permit—one that could decide who gets to dictate price, data access and bargaining power in India’s booming merchant-acquiring market.

    Licence scarcity and the coming knife-fight over merchants

    Every entity that touches customer funds on behalf of an online merchant must now hold a payment aggregator licence or risk being switched off. That alone invites turf wars, but scarcity supercharges them: with each new approval the remaining unlicensed rivals watch their addressable market shrink. Several fintechs have already whispered that licensed incumbents are nudging merchants to sign exclusivity clauses, arguing that “RBI-authorised” status shields them from regulatory surprises. Once the payment aggregator cohort settles around perhaps 60–70 entities, a plausible end-state given current approval rates, competition among the survivors could get messy.

    Pricing caps: the next round starts at 0.3%

    Into this mix walks a debate over merchant discount rates. A lobbying letter from the Payments Council of India, leaked late April, urges the Prime Minister’s Office to back a 0.3% MDR on large-ticket UPI transactions. Aggregators argue they need the fee to subsidise compliance overhead that now includes quarterly system audits, escrow maintenance and real-time fraud reporting. Consumer groups counter that any MDR will be passed straight to shoppers. RBI has not endorsed the PCI number, but officials tell journalists the Bank is “open-minded about sustainable economics” so long as small merchants stay shielded.

    The outcome matters because payment aggregator licences re-bundle costs that used to sit with disparate gateways and processors: escrow interest lost, collateral for settlement guarantees, periodic CERT-In audits, tokenisation infrastructure. Licensees need a revenue line to pay for those. If the MDR debate lands above zero but below 0.5%, the fight will turn on who can squeeze the most operating leverage from scale, data science and interchange rebates. Cut the cap any lower and only the best-funded aggregators will survive, cementing early movers’ dominance.

    Enter the Digital Competition Bill

    Scarcity and pricing power would normally bring the Competition Commission into the ring after the fact. This time the referee may arrive early. The Draft Digital Competition Bill (DCB), based on recommendations of the Committee on Digital Competition Law, is being polished for Parliament’s monsoon session and will give regulators ex-ante powers to label “systemically significant digital enterprises” (SSDEs) across nine “core digital services”, including payments. If passed in its current form, the bill could force the largest payment aggregators—think aggregators processing ₹1 trillion-plus a year—to pre-clear any preferential pricing, self-preferencing or exclusivity clauses and to open key APIs on fair, reasonable and non-discriminatory (FRAND) terms.

    Combine that with the RBI’s licensing scarcity and you get an intriguing tension: the central bank is narrowing the field to enforce safety and soundness, while the competition authority is preparing to police the victors for gate-keeping. Lawyers call it regulatory twin peaks; founders are already calling it a compliance minefield.

    A preview of the first skirmishes

    • Data access. Under RBI rules, aggregators must store customer card data only in tokenised form after August 2025, but they still retain rich behavioural metadata. Smaller payment processors fear licensed payment aggregators will amass an information advantage that can be parlayed into credit-scoring or loyalty-adtech businesses, precisely the kind of cross-market leverage the DCB wants to nip.
    • Bundled services. Several newly licensed aggregators are also offering point-of-sale hardware and SME loans. Competitors argue that tying escrow settlement to working-capital pricing could become anti-competitive if merchant lock-in raises switching costs. The DCB’s clause against “bundling that forecloses the market” would make such packages contestable.
    • On-soak and off-soak routing. Foreign card networks hope licensed payment aggregators will still let merchants route high-value payments over cards instead of UPI. If a handful of SSDE payment aggregators were to steer that volume preferentially to their own UPI-first pipes, the Competition Commission could intervene on grounds of discriminatory access.

    What’s next for payment aggregators

    Within the next month RBI is expected to publish an updated list of in-principle approvals and returns. Observers will parse whether household names like PhonePe or Google Pay finally move from the “pending” column to “authorised”, reshaping competitive dynamics overnight. Parliament’s monsoon calendar will signal whether the Digital Competition Bill is tabled in July or pushed to the winter. If both timelines hold, India’s biggest payment aggregators could find themselves juggling RBI compliance audits and ex-ante competition filings in the same quarter.

    For merchants and developers the message is: today’s supplier choice will decide tomorrow’s bargaining leverage. For investors, a payment aggregator licence is clearly gold—but fight club rules apply. In the coming mêlée over MDR caps, API access, and SSDE thresholds, everyone may trade blows. And the first rule of India’s next fintech fight club? You talk about fees, data, and power—because the regulators certainly will.

  • Tech Awards Mask the Pain of Cross-Border Payment

    Tech Awards Mask the Pain of Cross-Border Payment

    When Singapore-based Thunes walked away with The Asian Banker’s “Best Cross-Border Payment Technology Platform” trophy on 22 May 2025, the LinkedIn applause was instant. The post trumpeted a Direct Global Network that now reaches “7 billion mobile wallets in 130 countries” and moves money in “real time and securely.” For a moment it felt as if the hardest problems in moving value across borders might finally be solved: an all-digital rail, API-driven, with near-instant settlement in almost any currency.

    But the awards circuit—PayTech, Asian Banker, Global Finance, etc.—rarely lingers on the messy 20 percent of each transaction that still goes wrong. Ask a corporate treasurer in Bogotá why a supplier in Lagos received funds two days late, or an Indonesian e-commerce seller why a Thai customer’s refund bounced, and the answers trace back to the same set of frictions that industry studies have catalogued for years. Glittering plaques can obscure the gritty mechanics of “the last mile”: KYC name mismatches, wallet-to-wallet incompatibility, restricted operating hours, capital-control checks, batch processing cut-offs, and opaque foreign-exchange spreads. Awards celebrate the front-end promise; frictions lurk in the back-end plumbing.

    The Award-Season Optics vs. Everyday Reality

    Awards panels naturally reward scale—number of countries, currencies, endpoints—and speed under lab conditions. Thunes certainly scores well on both. Yet every cross-border payment player, from Swift to the newest stablecoin remitter, must eventually traverse local clearing systems, weekend cut-offs and compliance checkpoints that can erase theoretical gains. A Deutsche Bank white paper for the G20 Roadmap captures the paradox in one line from Swift’s Shriyanka Hore: “Around 90 percent of wholesale payments reach the end-beneficiary bank within an hour, but only 60 percent are credited to customer accounts in that timeframe.” The missing 30 percent is where reputational risk lives—and where clients feel it most.

    Where the Friction Hides

    1. The Last-Mile Crediting Gap
    Faster front-end transmission is only half the journey; value must clear local settlement rails that still close at 17:00 or observe Friday–Saturday weekends. Batch posting means a transfer that races through Swift gpi or a fintech’s instant API might wait in a queue until the domestic processor spins up again. In markets with capital-control regimes (China’s SAFE quotas, Nigeria’s FX windows, India’s ODI checks…) additional manual review can add hours or days. None of this shows up in award-entry speed tests, which usually benchmark the “happy path.”

    2. Wallet-to-Wallet Interoperability
    Thunes’ latest Mobile Wallet report pegs global wallet transaction value at a projected US $17 trillion by 2029, yet names “lack of interoperability” as the sector’s biggest brake on inclusive commerce. When a Kenyan M-Pesa holder wants to pay a freelancer on Indonesia’s GoPay, two separate e-money regimes and a pair of domestic KYC frameworks collide. Even where both wallets plug into the same cross-border network, payout ceilings, stored-value caps, or disallowed business categories can trigger a manual exception. The user sees only “transaction rejected,” not the four middleware hops that failed to translate one wallet’s data schema into the other’s.

    3. Data Fragmentation and AML Screening
    The Financial Stability Board convened its first Forum on Cross-Border Payments Data in Basel on 20 May to tackle precisely this pain point—harmonising data so compliance checks stop acting as a drag chute. Divergent name-order conventions, address formats and identity codes give screening algorithms false positives that bounce otherwise clean payments for human review. Fintech “platform of the year” submissions seldom quantify how many transactions leave the straight-through-processing lane because the street number landed in the wrong field.

    4. Transparency Deficits and Hidden Spreads
    The UK Financial Conduct Authority’s May review of international-payment disclosures found “notable inconsistencies” in how providers show total cost under the Consumer Duty rules. Even a network that advertises “zero fees” may bury a 250-basis-point FX mark-up in the rate. Retail senders rarely separate speed from cost; a Tuesday arrival instead of Monday feels like a glitch, but a £14 shortfall on a £500 transfer is chalked up to “the bank.” Awards shy away from FX transparency because benchmarks are fragile—the cheapest provider can become the priciest after one central-bank rate hike.

    5. Liquidity and Pre-Funding
    A Thunes insight brief notes that mobile-money operators and wallets in emerging markets struggle most with the liquidity side of settlement, tying up working capital to pre-fund multiple currencies. When a corridor swings sharply, think Argentine peso in an election week, FX spot markets widen and settlement agents demand larger collateral buffers. The extra daylight overdraft fee rarely appears in an awards-night acceptance speech.

    Why Awards Matter—And Why They Miss the Point

    Industry prizes are not mere vanity; they compress complex vendor-selection criteria into a signal that a CIO can explain to a procurement committee. They also drive positive peer pressure. Thunes’ 2024 haul of three Pay360 trophies accelerated similar feature upgrades at smaller competitors scrambling to stay relevant. Yet awards create a highlight-reel bias. Because judges rely on submitted case studies, they inevitably celebrate best-case performance rather than everyday averages.

    Imagine judging an airline solely on its on-time arrival rate for direct flights between major hubs while ignoring baggage-mishandling rates on connecting routes. Cross-border payments awards function much the same way: they spotlight corridor routes with well-oiled correspondent banks and minimal regulatory tripwires—New York → London, Singapore → Sydney—while the jagged edges of, say, remittances from rural Malaysia to Ethiopian wallets remain offstage.

    The Metrics We Should Track

    The G20 Roadmap has already codified four headline targets—cost, speed, access, transparency—by end-2027. But within those pillars lie more nuanced indicators that would make awards more honest:

    • Last-mile crediting ratio: What share of payments hit the beneficiary’s actual account within the same hour the intermediary bank received funds? (The current 60 percent average is the industry’s dirty secret.)
    • True cost per US $200 remittance: After FX, fees and inbound charges, how much ends up in the recipient’s pocket? The target is three percent; the real-world mean still hovers closer to six in many corridors.
    • Interoperable wallet coverage: How many wallet brands in emerging markets can a platform pay out to without manual reconciliation?
    • Exception-handling time: From initial reject to successful resubmission, how long? Hours, days? The number drives customer-support costs and user trust but almost never appears on award slides.

    Platforms unwilling to publish these numbers risk becoming the payments equivalent of a sedan that touts 0–60 mph acceleration but omits the recall rate on its transmission.

    Signs of Progress

    To be fair, the gap between award hype and operational grind is narrowing. Three developments merit cautious optimism:

    1. ISO 20022 Migration and API Harmonisation
      The gradual retirement of MT messages in favour of structured ISO 20022 data is eliminating some of the “truncated formats” friction the G20 flagged. Richer data reduces false-positive sanctions hits and automates reconciliation at the beneficiary bank. Thunes and its peers increasingly build ISO-native pipes, which means fewer Swift translation layers and, in theory, quicker straight-through crediting.
    2. Domestic Fast-Payment System Interlinking
      ASEAN’s bilateral QR linkages (PayNow-PromptPay, DuitNow-PayNow, InstaPay-PayNow) are not just retail experiments; they foreshadow low-value B2B flows that skip correspondent banks entirely. As real-time domestic rails extend operating hours, the batch-cut-off problem shrinks. Settlement friction moves from the core to the edges: KYC and liquidity management.
    3. Data Forums and Consumer-Duty Enforcement
      The FSB’s new data forum aims to standardise what information must ride with each payment, while the FCA’s tough stance on transparent pricing creates regulatory teeth. Providers that oversell speed but bury cost will face a compliance backlash that status-fortifying awards cannot deflect.

    What This Means for Thunes—and Everyone Else

    Thunes’ accolade is deserved: its acquisition of U.S. state licences and its one-API access to 80 currencies genuinely expand what mid-tier banks and platforms can offer their users. But the plaudit describes a starting line, not a finish. The next 18 months will test whether the company can:

    • Raise its hour-one crediting ratio in hard-currency-controlled markets.
    • Demonstrate wallet payouts that clear local regulatory checks at the same failure rate as domestic transfers.
    • Publish exception-handling SLAs that survive FCA consumer-duty scrutiny.

    Competitors will watch because the first cross-border network to make all of those metrics public—and still win awards—sets a new industry bar.

    Conclusion: Celebrate the Plaques, Audit the Plumbing

    Awards like “Best Tech Platform” capture a snapshot of what technology can already do under optimal conditions. They are useful signposts, but they do not guarantee a smooth ride on every route or for every customer segment. Cross-border payments remain, as one Deutsche Bank analyst put it, “a crowded fridge of ingredients that may or may not cook into a dinner.” The dinner often fails at the last mile, long after the award photos have been posted.

    For journalists, regulators and corporate users, the task is to keep poking at the gap between the marketing highlight reel and daily performance. Celebrate the engineers and network architects who reduce friction, yes—but keep asking for the horror-story statistics alongside the success stories. Until the day that exception queues empty and every US $200 remittance lands within three minutes at no more than three percent cost, the biggest prize in cross-border payments remains unclaimed.

  • Kakao Pay’s 80-Fold Profit Jump: From “Pocket Change” to Profit Engine

    Kakao Pay’s 80-Fold Profit Jump: From “Pocket Change” to Profit Engine

    South Korea’s fintech poster-child has finally proved it can turn small-ticket QR swipes into hard cash. Kakao Pay’s first-quarter net income surged to ₩14.4 billion (US $10.3 million)—up from a wafer-thin ₩167 million a year ago, an eye-watering 80-fold leap. Operating profit flipped from red to black at ₩4.4 billion, while revenue climbed 20 % to ₩211.9 billion.

    How did a “free” wallet mint money?

    1. Credit-scoring turns data exhaust into fees.
    Last summer Kakao Pay rolled out a first-party credit score for its 41 million users. Lenders now pay the platform every time they pull a score to price a micro-loan—a revenue line that didn’t exist in 2024. Management told analysts the scoring API processed “double-digit million” calls in Q1, feeding high-margin B2B income straight to the bottom line.

    2. Investment “containers” finally scale.
    The company’s ETF-style Mini-Fund product—so popular it once crashed servers at midnight launches—crossed the ₩5 trillion AUM mark in March. Fee income from those bite-sized funds grew more than 110 % year-on-year, according to the earnings deck. (Kakao Pay does not disclose the take-rate, but rivals charge 10–30 bps.)

    3. Cross-border remittances hit critical mass.
    Kakao Pay’s corridor to Thailand, Vietnam and the Philippines rode Lunar New-Year remittance peaks; transaction count jumped 47 % versus Q1 2024, while FX spreads narrowed only marginally—fatting the yield on each won.

    4. Offline QR finally matters.
    Convenience-store and taxis were early adopters, but the step-change came when Starbucks and CU minimarts switched on Kakao Pay’s Barcode NFC flow nationwide. Offline GPV is still smaller than online but grew 40 % over the quarter, pushing blended payment margins higher because QR fees are essentially zero-variable-cost traffic.

    Why the leap looks sustainable

    • Cost discipline. Headcount fell by 4 % after a winter restructuring, shaving ₩9 billion off fixed costs.
    • Low credit risk. Unlike BNPL rivals, Kakao Pay doesn’t underwrite most loans on balance sheet; banks do. Rising KORIBOR therefore hurts partners more than the platform.
    • Regulatory tailwinds. The Financial Services Commission’s MyData 2.0 rules, effective April, require explicit user opt-ins for data sharing—an inconvenience for smaller apps but a moat for Kakao Pay’s 20 million-plus MyData users.

    The super-app angle

    Kakao Pay’s numbers reopen an old debate: can payments be a profit centre or are they just a gateway drug for lending and investing? The latest quarter suggests the answer is “both”—if your wallet lives inside the country’s most downloaded chat app and you mine the resulting data vein with ruthless efficiency.

    • Engagement begets monetisation. User stickiness (nine opens per day on average) lowers CAC for every upsell – from credit card comparison to pet insurance.
    • Data begets credit. Proprietary behavioural scores keep loan delinquencies below the banking system average, ensuring partners keep paying for scores.
    • Trust begets volume. A wallet tethered to KakaoTalk enjoys built-in KYC and a grievance-handling path most fintech newbies would kill for.

    Competitive and policy implications

    StakeholderWhat Kakao Pay’s quarter signals
    Toss & Naver PayNeed to match credit-scoring APIs or watch SME lending partners defect.
    BanksPlatform partnerships can deliver volume and profit—time to renegotiate revenue-share tiers.
    Card networksOffline QR momentum shows merchants will bypass plastic if mobile loyalty points come bundled.
    RegulatorsProfitable wallets weaken the “payments need fees to survive” lobby—expect tougher caps on interchange and FX spreads.

    Risks to watch

    • Fee-cap talk: Lawmakers mulling a 0 % interchange on QR transactions could clip offline margins.
    • Data rules abroad: Kakao Pay’s planned Southeast-Asia push must navigate patchier privacy regimes than Korea’s; the MyData playbook may not port cleanly.
    • Super-app saturation: User fatigue is real; squeezing one more banner into KakaoTalk risks a WeChat-style backlash.

    Outlook: pocket money, meet platform economics

    Management won’t promise another 80-fold jump, but they do guide for double-digit revenue growth and “mid-single-digit operating-margin” for 2025—a far cry from last year’s loss-making sprawl. In other words, the “payments can’t turn a profit” chorus just lost its star example.

    For investors and rivals alike, Kakao Pay’s Q1 is a reminder that in a dense, ultra-digital market like Korea, monetisation doesn’t hinge on jacking up transaction fees. It depends on wringing insight—and therefore new products—out of the data exhaust that payments throw off. When you crack that code, even pocket-change QR swipes can compound into billions.

  • When Algorithms Stand Guard: How AI fraud prevention Became the Silent Bouncer of Global Payments

    When Algorithms Stand Guard: How AI fraud prevention Became the Silent Bouncer of Global Payments

    When you tap your phone in a Seoul metro station or type a card number into an e-commerce site in Sydney, a machine-learning model is already asking hundreds of questions about you: Does this device usually shop at this hour? Is the shipping postcode new? Are the keystrokes too perfect, as if copied and pasted by a bot? The interrogation lasts less than the blink of an eye – yet it now decides the fate of almost every payment on the planet. This is AI fraud prevention in a nut shell.

    In the past week, three of the world’s biggest payment networks and a major processor published fresh performance figures showing just how dominant artificial intelligence has become in fraud defence. Mastercard’s AI stack is today screening about 159 billion transactions a year, scoring each one in 50 milliseconds and lifting fraud-detection rates by as much as 300 percent over the rule-based systems of a decade ago.

    Visa’s newest open-ecosystem platform, rolled out in April, helped a Nordic banking consortium cut phishing losses by 90 percent in only three months; it can score any payment rail, not just Visa cards.

    And at its Sessions 2025 conference Stripe revealed a Payments Foundation Model trained on 100 billion data points; the company says the model improved large-merchant fraud detection by 64 percent overnight once it went live in April 2025.

    Processor Adyen is seeing something similar: merchants that switched to its AI-driven Protect tool cut their manual risk rules by 86 percent, freeing both engineers and shoppers from checkout friction.

    How the new sentries work

    All four companies employ slightly different flavours of machine learning, but the essential recipe is the same. Each transaction is broken into dozens—sometimes hundreds—of features: device fingerprint, IP range, issuing country, historical basket size, typing cadence, etc. These ‘signals’ are fed into an ensemble of models that includes gradient-boosted decision trees (still the workhorse for tabular payment data). These deep neural networks excel at pattern recognition, and in Mastercard’s case, graph-based models that map relationships among buyers, merchants, and devices to expose mule rings and synthetic identities.

    The magic is not just the maths, but the scale of the training set. A single PSP rarely sees enough bad transactions to spot the latest fraud mutation early. Visa, Mastercard, and Stripe solve the data-scarcity problem by pooling signals from hundreds of billions of historical transactions, creating a base layer of “fraud priors” that smaller merchants can fine-tune to their risk appetite. Stripe’s Foundation Model goes a step further by pre-training on unlabeled events, effectively teaching itself what “normal” looks like, before adding supervised learning for known fraud patterns. Because the model is foundational rather than task-specific, Stripe can retrain overnight when attackers shift tactics, whereas a legacy system might need weeks of manual rule-writing.

    Visa’s new platform shows another evolution: rail-agnostic scoring. Instead of fencing off card fraud from real-time account-to-account (RTP) fraud, the AI engine ingests data from both rails and looks for behavioural anomalies across them. That is how it spotted the phishing scheme that plagued Norway’s Eika Gruppen banks: the same compromised credentials were attempting micro-payments over mobile and larger pulls over ACH. A rule set built for one rail would have missed the cross-channel pattern; the adaptive model stitched it together and pushed a real-time block that saved Eika 90 percent of its phishing losses.

    Mastercard layers behavioural biometrics on top of transaction data. The company’s Decision Intelligence Pro watches how a user holds a phone, the pressure of thumb taps, and even the micro-pauses between characters. Those signals are rolled into the risk score that issuers receive alongside the authorisation request, giving banks an extra dimension of certainty without asking customers for another one-time password.

    Adyen’s insight is that conversion and risk are two ends of the same lever. Its AI does continuous back-testing: if the model guesses that relaxing a rule for first-time shoppers in Singapore will bring five extra approvals for every fraud dollar lost, the platform proposes the change and measures the outcome. Over time the manual rules that merchants once wrote by gut feel fall away, 86 percent of them in the average pilot, leaving the algorithm to balance acceptance and loss with surgical precision.

    Why AI succeeds where rules struggle

    Fraud today mutates too quickly for static rule books. Botnet rentals, deep-fake identity kits, and state-sponsored mule rings can pivot within hours. Machine-learning models adapt almost as fast, especially those retrained daily on cloud GPUs. They excel at spotting weak correlations spread across dozens of attributes, the pattern a human analyst cannot see because no single attribute looks suspicious. And because the decision is a probability, not a binary yes/no, acquirers can set a confidence threshold that fits their risk tolerance, shaving away costly false declines that once reached 22 percent of online orders.

    Equally important is explainability. Regulators from Brussels to Mumbai are writing AI-governance playbooks that demand answers to “why was this transaction refused?” Visa and Mastercard now supply a ranked list of risk factors alongside each score; Stripe embeds a feature-importance chart into its Radar dashboard; Adyen offers a playback tool that shows merchants which rule—algorithmic or manual—pushed a payment into review. None of these features existed in the early AI models from five years ago, but without them, central banks could have forced companies to roll back the tech on fairness grounds.

    Privacy and localisation constraints add another twist. India bars raw cardholder data from leaving the country, while the EU’s GDPR restricts how long personal data may be stored. The networks respond with federated learning or synthetic training sets: the model is dispatched to the data, learns patterns on-site, and returns only the weight updates, never the sensitive inputs. That engineering hack keeps the global model’s brain growing without shipping citizens’ raw details across borders.

    The road ahead—bots versus bias

    None of the networks is declaring victory; as fraud shrinks in one channel it often re-emerges in another. Synthetic-ID attacks have migrated from cards to instant-credit products, while authorised push-payment scams—where the victim is tricked into approving the transfer—are soaring across Asia’s real-time rails. AI can spot odd behaviour, but when the consumer willingly presses “send,” policy and education have to fill the gap.

    Bias will also stay on the agenda. If the training data over-represent one demographic as risky, the model will too, potentially locking honest shoppers out of e-commerce. Mastercard says its governance office runs quarterly fairness audits; Visa is publishing model-risk-management white papers; Stripe open-sourced one of its fraud-detection datasets so that academics can probe for hidden bias.

    Yet the trajectory is clear. A decade ago fraud engines were bolt-ons; today they are the core runtime of global payments. With trillions of dollars and the user experience of billions of shoppers at stake, the quietest employee in the stack—the algorithm that lives between “Pay Now” and the green tick—has become the most indispensable. If your checkout process still relies on last year’s static rule set, you are already playing catch-up against adversaries, and competitors, driven by ever-smarter code.