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digital payments

China’s BSN to Launch Global CBDC Payment System Beta in 2021

China’s lead in the race for developing a Central Bank Digital Currency (CBDC) is unassailable at this point. The country is making further progress, with the government’s blockchain service network looking to release a CBDC network beta this year.

Safe, Low-Cost CBDC Payments

China’s Blockchain-based Service Network (BSN) has announced plans to launch a public beta for a global CBDC network, per a blog post. 

The BSN is a blockchain network that enables digital token and decentralized app (dApp) development. 

In the post, the state-sponsored network explained that it would invest a considerable amount in research and development this year. The network plans to focus on digital payments primarily as it is working towards launching a Universal Digital Payment Network (UDPN).

Speaking on digital payments, the BSN pointed out that stablecoins and CBDCs have become more prominent across the world as countries look to embrace e-payments fully. The network plans to launch a payment network based on all developed CBDCs in the next five years.

“This digital payment network will completely change the current payment and circulation method, enabling a standardized digital currency transfer method and payment procedure for any information system,” the BSN explained, adding that a convenient, cost-effective beta will be available in the second half of this year.

With the payment network, the BSN is looking to provide a standard digital currency transfer procedure. It aims to combine systems like insurance, banking, enterprise resource allocation, and mobile apps through dedicated application program interfaces (APIs) to make global payments safe and cheaper.

The payment network is one of BSN’s four objectives for the year. The other three include expanding its network, promoting its new private platform, and expanding its ecosystem. In addition, the BSN reiterated its commitment to enhancing blockchain capabilities to companies and governments worldwide.

China Forges On With Digital Yuan

So far, digital yuan has been one of China’s most ambitious economic and financial projects. Officially launched in late 2019, the project has gone through extensive tests last year and looks to be entering advanced testing phases.

Last year saw several firms and government agencies partner on testing the CBDC in several real-world situations, mainly through giveaways and retail spending. The developers haven’t relented in their efforts this year as they look to strengthen their research and testing base.

Last week, local news sources confirmed that the Agricultural Bank of China, one of the country’s largest state-owned banks, had launched ATMs for the digital yuan. As the reports explained, the machines were installed at specific branches within Shenzhen. Customers at these branches have been able to spend and convert the digital yuan tokens they got as a part of the government’s “red envelope” lottery – a project that saw the government hand out $3 million worth of the asset to 100,000 citizens.

The machines reportedly allow digital yuan deposits and withdrawals via a smartphone app. Users can also convert their savings and cash to the CBDC.

China’s BSN to Launch Global CBDC Payment System Beta in 2021

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By 2022, Most Payments will Migrate to ISO 20022, a Standard for Electronic Data Interchange between Financial Institutions, According to Payment Components

The team at Payment Components, a UK-based firm that’s empowering Open Banking with agile PSD2 and API frameworks (developing solutions for banks, corporates, and developers including BaaS while supporting Fintech payments), notes that with the introduction of new regulations and payment systems, managing a bank’s payment infrastructure is “becoming increasingly complex.”

Bank institutions have to integrate with new acquisitions, localize their proprietary technology stacks to the countries they move to, while also having to keep up with standard payment integrations. If banking platforms don’t complete these tasks, then their payments messaging “becomes siloed and causes system delays, errors, and increased costs,” according to Payment Components.

The Payment Components team asks how smaller banks and e-money institutions can “efficiently keep up with the constant stream of new releases?” The Fintech firm states that it has created a solution that lets banks manage all their payment flows “within the same system.”

The company explains:

“Each country has its own domestic payment service and each bank and group may have its own messaging system. So far, the dominant messaging standard used for the last decades has been SWIFT MT. But this international standard has reached its limits as the industry needed a messaging protocol able to carry more data and requiring fewer manual intervention.”

They added:

“The demand for instant payments is growing. In the UK, the use of Faster Payments has seen an increase with double digits quarter on quarter. And growth is similar all over the world.” 

Big Four auditing firm Deloitte reveals that real-time payments have helped with increasing and providing easier access to working capital. They’ve also improved the efficiency of the financial system by enhancing financial inclusion, while lowering the overall cost of payment systems. According to Payment Components, it should be clear that the trend is “moving towards instant payments and ISO 20022 is the messaging standard that can be used for all types of financial communication.”

The payments firm further noted:

“There are a huge number of benefits to managing payments with a new protocol such as the ISO20022. Firstly, it can transfer a lot more data and therefore enable banks to build informational structures and make data-driven decisions. Secondly, it offers long term benefits for the economy as it allows for more flexibility and innovation in the financial sector.”

Payment Components explains that it’s a protocol that serves as an “enabler” since it provides a more organized way to take care of payments messaging. Two of the primary features are that messaging components are reused instead of having to be created “from scratch” for each message, and the format (syntax) is separate or distinct from the semantics. This reportedly makes it a lot easier to understand messages wherever they might be coming from, the Payment Components team noted.

They also mentioned:

“ISO20022 is there to help improve communication, understand messages from other institutions, and enhance cooperation. The vast majority of the payments around the world will have migrated to the ISO20022 by 2022.”

The Fintech firm continued:

“SEPA, the EURO area payment integration initiative, also utilizes ISO20022 to offer low-value transfers at minimal cost and real-time payments throughout the SCT Inst scheme. That’s why the best strategy is to implement a system that can manage all types of payment protocols.” 

They further noted that it’s one that manages to stay up to date with new releases, and can also integrate with ISO20022, SWIFT MT, SEPA and proprietary payment protocols. With an Internet-based end-to-end solution, banks and financial institutions may add digital payments to their core system in “a simple plug-in application.” They also mentioned that the upfront time and investment required to install it is “minimal,” and the system is “specifically built to integrate seamlessly with different banking core systems.”

Payment Components claims that being able to stay up-to-date with the latest releases and payment infrastructures does not have to be costly and time-consuming. We also don’t have to work with fragmented legacy systems, because with payment systems such as aplonHub, your bank may use the same technology that Fintech firms use and take advantage of the latest payment standards “without creating more siloes,” according to Payment Components.

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Digital Banking: Fintech Unicorn Revolut’s Customers Spent 2.6x More on Online E-Commerce than On In-Store Purchases

Digital bank Revolut notes in its end of year review that “it goes without saying that 2020 has been a year like no other.” It has definitely impacted all our lives, including how we spend our money and the way we save, the Fintech firm confirmed.

While most people have had to remain indoors a lot more than they might have expected to or liked, staying home also has its benefits, according to Revolut. Many people might have saved a lot of money they’d normally spend while dining out or other costs related to commuting to work and other physical business locations.

As mentioned in a blog post by Revolut, the way we’ve all spent our funds has been “a little different too – we’ve supported our local businesses more, ordered our groceries online and sent digital cash gifts to friends and family across the country and the world.”

A Revolut user spent “on average £561 this year on travel, which is less compared to an average of £997 in 2019.” The digital bank’s customers spent “on average £338 this year on transport, which is less compared to an average of £458 in 2019.”

The Revolut team further noted that the bank’s clients “on average made 3.3 times more transactions on groceries than restaurants this year.” While sharing more details on consumer behavior and spending, the digital bank revealed that its customers “on average spent 2.6 more times on online shopping than on in-store purchases this year.”

As noted by the Fintech firm, its clients spent “on average £287 with top takeaway vendors (Deliveroo, Just Eat, Uber eats, Wolt, Glovo, takeaway.com) this year, up from an average of £182 per user in 2019.”

While sharing other updates, the Revolut team confirmed:

“From January 1, 2021, new regulations will come into effect across Europe which require most types of Internet payments to be made with an extra security layer called 3D Secure (or 3DS). These same regulations will also require card issuers to decline certain payments if they weren’t processed using this extra security layer.”

What these changes mean for consumers is that large online payments without the merchant asking customers to complete 3DS will be declined by Revolut as part of its “regulatory obligations.”

As explained by the Revolut team, 3DS adds additional security to card payments made via the Internet. The bank does this by asking its customers to verify their payments in the Revolut app before they approve it with the merchant.

So even if a bad actor or fraudster gains access to a customer’s card details, they won’t be  able to use them to conduct digital payments “where 3DS is involved.” The card holders would receive an alert asking them to verify the payment and can reject it with just a tap in their Revolut app. (Note: to learn more about this update, check here.)

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Instant Digital Payments Network for Logistics, Relay Payments, Secures $35.3 Million in Capital

Relay Payments recently secured $35.3 million in capital from nine investors according to a Form D filing with the US Securities and Exchange Commission (SEC).

The Atlanta-headquartered Fintech firm (located at The Battery Atlanta) offers an end-to-end instant digital payments platform for logistics firms and has been operating quietly or mostly under the radar during the two years since its launch.

As first reported by Biz Journals, the Fintech firm had also acquired $7.7 million in funding back in July 2020, according to an SEC filing (also confirmed by PitchBook data and Crunchbase).

Relay Payments is managed by its co-founders, company CEO Ryan Droege and President Spencer Barkoff. Lee Fixel is serving as a Director at Relay Payments. He’s a New York-based investor working with Addition, a VC firm.

Addition is a $1.3 billion fund that makes strategic investments in early- and growth-stage firms or businesses. Fixel has previously worked as partner at Tiger Global Management, where he made investments in Eventbrite, an event ticketing service provider, and also invested in Peloton, a fitness platform.

Droege and Barkoff are also listed as co-founders of RoadSync, a virtual payments network platform for logistics firms that’s currently being managed by CEO Robin Gregg. RoadSync was previously called MyLumper. Droege and Barkoff founded Relay Payments after leaving RoadSync back in 2018.

As noted on Relay Payments’ official website, customers that use the service “see savings on the first transaction and meaningful ROI.” An extra 45 minutes are also added back to customers’ hours of service per transaction now that “payments on the dock are instant,” the Relay Payments website states.

The Relay Payments team also mentions:

“The drivers are the backbone of everything we do. Our driver council is a platform for drivers to work with Relay Payments on creating the best payment experience in the industry.”

Relay Payments’ management had recently announced that they were looking to hire Account Executives and BDRs. These professionals are expected to join the firm’s Revenue Team. Relay Payments says it aims to “keep America running through COVID-19 and beyond.”

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G7 Seeks Crypto Regulation, German Finance Minister Blasts Libra Yet Again

Olag Scholz, the Finance Minister of German, is a man that has taken a very hardline stance against Libra, the crypto project of Facebook, for some time now.

Recently, Scholz had taken part in yet another meeting between the G7 countries, where they partly discussed crypto regulations. There, Scholz doubled down on his anti-Libra narrative, claiming the currency was a “wolf in sheep’s clothing.”

Agreeing To Regulations Of Crypto Being Paramount

While Scholz and his anti-Libra arguments are nothing new, there was merit in the G7 meeting: The central banks of the UK, US, Japan, Francy, Italy, Germany, and Canada all agree about one thing: The need to regulate digital assets.

The latest coverage when it comes to the global regulation of cryptocurrencies made it clear that the G7 nations’ central bankers and finance officials are all in agreement with their desire to regulate crypto. The US Treasury Department said as much after the virtual meeting, revealing in a statement that the G7 is showing “strong support” when it comes to the need for crypto regulation at large.

Ceasing All The Opportunities

The G7 held unanimous agreement for crypto regulation, primarily thanks to the crypto space gaining popularity to such a degree. With proper regulations in place, the illegal activities done through crypto could be curbed, as well.

The discussions themselves cited various “ongoing responses” to the crypto space. In the discussions, the crypto landscape was described as ever-evolving, including that of the national authorities’ various efforts in preventing their use for malicious, illegal activities.

Of course, when the prospect of crypto regulation came to bear, Scholz took the chance to criticize Libra, something he’s been against since its announcement. Libra has been having quite a time in trying to legitimize itself in the eyes of regulators and central banks, who are none too keen for a private company to hold significant financial power.

As it stands now, Libra was forced to rename itself to Diem to try and distance itself from the massive backlash, but Scholz has yet to let up, and is predictably against launching Diem in Europe, let alone Germany.

Agreement On Finance And its Future

In a public statement, he reaffirmed his commitment to keeping Diem out of Europe and German at large, stating that currency monopoly must remain in the hands of the state. Regardless of an individual’s personal views about it, the man is in a position to make Libra’s push into Europe a very uncomfortable experience.

Some productive things did occur in the meeting, however: The G7 all agreed that digital finance is the future, and had mutually agreed to support digital payments, as a result. The US Treasury, in particular, highlighted how digital payments could see to easing the problems faced when using traditional payment systems by lowering costs and reducing inefficiencies.

G7 Seeks Crypto Regulation, German Finance Minister Blasts Libra Yet Again

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