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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
J.P. Morgan Payments and Mastercard partnered to launch Pay-by-Bank, an ACH payment tool that leverages open banking.
Billers who offer consumers an option to a pay via ACH can integrate Pay-by-Bank into their existing payments page.
Pay-by-Bank is currently in a pilot phase with a small number of U.S. billers, but will be rolled out to more billers in 2023.
Today’s news proves you can indeed teach an old dog new tricks. ACH, a technology that is 50+ years old, is getting a makeover with open banking.
J.P. Morgan Payments and Mastercard have joined forces this week to launchPay-by-Bank, an ACH payment tool that leverages open banking and consumer-permissioned data to make it easy for users to pay bills directly from their bank accounts.
“We realized years ago that the way people think about money and commerce is changing,” said Mastercard North America Executive Vice President Chiro Aikat. “They want to pay and get paid how they choose, where they choose and when they choose. We’re excited by this new partnership with J.P. Morgan Chase, and our opportunity to empower people with enhanced payment experiences.”
Billers who offer customers an option to pay using ACH can integrate Pay-by-Bank into their existing payments page. Customers who opt to use the new technology will be prompted to find their bank, complete the bank’s account login process, and share their bank account information with JP Morgan Chase.
Pay-by-Bank makes for a better user experience. Consumers will no longer need to type in their routing and account number each time they go to pay a bill. As for the billers, they will not be faced with the liability of storing consumers’ account information.
“Billers and consumers both get greater payment choice,” said Aikat, “but the partnership also propels payments innovation on two fronts — in the ease of the user experience and in the security of data sharing.”
J.P. Morgan Payments Head of Payments and Commerce Solutions Max Neukirchen echoed this sentiment. “The technology behind Pay-by-Bank reduces the likelihood of unauthorized transactions and frees our clients from the need to retain — and the responsibility to securely maintain — consumer banking information,” Neukirchen said.
As an additional benefit to consumers, Pay-by-Bank leverages machine learning to estimate the optimal time to initiate the payment based on the consumer’s historical transaction behavior and risk patterns. This helps reduce the risk of non-sufficient funds for the consumer and helps ensure the merchant receives the payment on time.
Pay-by-Bank is still in a pilot phase with a small number of U.S. billers and merchants, but J.P. Morgan Payments and Mastercard anticipate they will expand the program next year.
Cryptocurrency Investment Platform Pillow Raises $18 Million
In a round co-led by Accel and Quona Capital, crypto investment platform Pillow has secured $18 million in Series A funding. Also participating in the round were Elevation Capital and Jump Capital.
Singapore-based Pillow enables individuals to save and invest in a variety of major cryptocurrencies. The company will use the capital to power expansion of its cryptocurrency savings and investment services into emerging markets in Africa and Southeast Asia. Pillow already operates in Nigeria, Ghana, and Vietnam. This week’s funding adds to the $3 million in seed capital Pillow secured earlier this year.
Founded in 2021, Pillow has more than 75,000 users in more than 60 countries on its app. Among the cryptocurrencies available are: Bitcoin, Ethereum, Solana, Polygon, and Axie Infinity, as well as USD-backed stablecoins, USDC and USDT. Pillow plans to support more than 20 different digital assets over the next few months. The company offers returns of more than 10% on its stablecoins and approximately 6% on Bitcoin and Ethereum. Pillow earns its money by investing user funds in DeFi protocols on blockchain networks.
BlueSnap and BitPay Team Up for Crypto Acceptance and Payout
Payment orchestration platform BlueSnapannounced a new partnership this week. The company is teaming up with cryptocurrency payments company BitPay to enable businesses to accept and make payouts in as many as 15 different cryptocurrencies – as well as seven fiat currencies. The currencies available include leading digital assets such as Bitcoin, Ethereum, Litecoin, Ripple, and Dogecoin. Five stablecoins pegged to the U.S. dollar and one stablecoin pegged to the Euro will also be supported.
Courtesy of the partnership, customers will be able to accept cryptocurrencies and be paid out in fiat currencies including the U.S. dollar, the Euro, the British pound, and the Mexican peso, as well as the Canadian, Australian, and New Zealand dollars.
BlueSnap and BitPay noted in a statement that a growing number of retailers are accepting cryptocurrencies as payment, and that consumers were becoming increasingly “crypto curious.”
“By working with one of the most well-respected crypto companies in the industry, we’ll be able to make the new payment experience as frictionless as possible,” BlueSnap Managing Director for Europe Nihkhita Hyett said. “We look forward to making a real impact in this new space – through developing technologies like blockchain and cryptocurrency – as we foster greater innovation in payments, and further our growth across Europe.”
WSJ: NYDIG Lays Off a Third of its Workforce
According to reporting in the Wall Street Journal, institutional cryptocurrency custody firm NYDIG has laid off more than 100 of its workers, an amount believed to be approximately a third of the New York-based crypto firm’s total workforce. The layoffs took place over a number of weeks per the Journal’s sources, and come almost a year after NYDIG raised $1 billion in funding at a valuation of more than $7 billion. NYDIG mentioned using the capital to “further expand its world-class team across the globe” – though this was noted toward the end of the company’s funding announcement. Using the capital to “develop NYDIG’s institutional-grade Bitcoin platform” was noted in paragraph two.
More recently, NYDIG was in the headlines for the C-suite shuffle in October that had CEO Robert Gutmann and President Yan Zhao stepping down and returning to NYDIG’s parent company Stone Ridge Holdings. Gutmann and Zhao co-founded Stone Ridge, along with Ross Stevens, in 2012.
There has been no comment on the lay off report from NYDIG at this time.
Mastercard Teams Up with Blockchain Platform Paxos
Our last edition of 5 Tales highlighted Mastercard’s new Crypto Secure solution that helps card issuers assess the risk profile of crypto exchanges and other providers.
This week we share more news of Mastercard and its business in the crypto space. The company has announced a partnership with blockchain infrastructure platform Paxos that will enable financial institutions to offer secure cryptocurrency trading capabilities to their customers. Mastercard’s Crypto Source program will give its financial institution partners access to a suite of services that will enable them to buy, hold, and sell select crypto assets.
The suite of services provides technology and partnership support to enable FIs to buy, sell, and hold select digital assets; security management, including AML, transaction monitoring, and KYB; crypto spend and cash out capabilities; and crypto program management, including go-to-market optimization.
“What we are announcing today is a connected approach to services that will help bring the next billion users safely and securely into the crypto ecosystem,” Mastercard President, Cyber & Intelligence, Ajay Bhalla said.
Coinbase Expands in Europe – And Adds a Friend in Google
Cryptocurrency exchange Coinbase has had more than its fair share of less than pleasant news over the past few days. Today we read headlines about the company experiencing the largest outflow of Bitcoin since June. This follows reports of hundreds of Coinbase users in the Republic of Georgia who allegedly profited from a pricing glitch – and what Coinbase may have to do to get the money back.
Meanwhile, the San Francisco-based company continues to grow, expanding its operations in Australia earlier this month with a pair of new features. PayID will enable Australians to top up their Coinbase accounts directly with Australian dollars. Retail Advanced Trading will give local clients access to low volume-based pricing and trading tools with one unified balance.
And earlier this week, Coinbase introduced the man who will lead the company’s expansion in Europe: former Solarisbank Chief Operating Officer Daniel Seifert. The appointment comes as Coinbase gains momentum in the region, earning regulatory approval to offer its services to customers in Italy in July and the Netherlands in September. Coinbase VP of International and Business Development Nana Murusegan has called international expansion an “existential priority.”
But the biggest news of the week for the company is the announcement that Google has partnered with Coinbase to allow select customers pay for cloud services via cryptocurrencies starting early next year. The capability will be made possible thanks to an integration with Coinbase Commerce, which supports 10 cryptocurrencies including Bitcoin, Ethereum, Dogecoin, and Litecoin. Coinbase will earn a fraction of each transaction processed, according to the company’s VP of Business Development Jim Migdal.
Coinbase made its Finovate debut in 2014. More than 100 million individuals and companies use Coinbase’s technology to buy, sell, and hold cryptocurrencies.
Although not getting as much attention these days as the metaverse or Web3, the potential impact of quantum computing in financial services certainly has the attention of the industry’s biggest players. This week, Mastercardapproved the first cards for issuers that meet EMVCo contactless specifications to protect cardholders from attacks from quantum computers as well as traditional computers.
“Technology has the potential to open new opportunities for both consumers and fraudsters,” President of Cyber & Intelligence at Mastercard Ajay Bhalla said. “That’s why future-proofing security is critical.”
Quantum computing involves leveraging the capacities of quantum physics to solve certain computational problems faster than traditional computers. Much of the buzz over quantum computing is related to the purported ability of quantum computing to defy even the most rigorous encryption protocols. And while some of these concerns may have been overblown, at least in the short term, the ability of quantum computers to solve certain complex problems faster than the most advanced supercomputers currently available makes them a potential source of major financial crime if adequate safeguards are not in place.
To this end, Mastercard introduced new, quantum-resistant Enhanced Contactless specifications in January 2021. Referred to as “Ecos” the new specifications are designed to provide greater convenience for merchants and financial institutions, enhanced trust thanks for next-generation algorithms and cryptographic key strengths, and enhanced privacy to deliver protection when account information in shared between the card or digital wallet and checkout.
“As the ecosystem continues to evolve, more connected devices and the Internet of Things are going to create more user demand, and an even greater need for constant innovation to build next-generation capability, helping to ensure that technology never outpaces trust,” Bhalla said when the Ecos specifications were unveiled. In the months since then, Mastercard has teamed up with EMVCo to continue to develop the Ecos-compliant technology with the goal of making it an industry standard for contactless acceptance. In a statement, Mastercard cited a Juniper report that indicated that contactless payment devices will top 12.5 billion by 2027. The value of contactless transactions is similarly expected to grow, reaching $10 trillion worldwide by 2027.
“By bringing quantum-era technology to contactless payments, we are taking steps to future-proof security and privacy protection as much as possible,” Bhalla said this week. “These new cards will deliver that greater peace of mind, while also providing consumers and merchants a seamless transition from today’s contactless experience.”
Mastercard’s embrace of quantum computing has been marked in 2022. In July, the company announced a multi-year strategic alliance with D-Wave Systems, the world’s first commercial supplier of quantum computers. In February, Mastercard’s Foundry Live Series presentedThe Quantum Advantage, a look at the potential impact of quantum computing in financial services.
The collaboration will enable merchants to rely on a chargeback alert system that notifies them in the event of an impending chargeback. Notifications are made via the ChargebackZero dashboard, which combines a variety of alert types from card issuers with ChargebackZero’s dispute management tools. The alerts allow merchants to identify and revolve customer disputes with the customer’s issuing bank in near-real time. By preventing chargebacks, including chargebacks that occur post-authorization, the partnership will make it easier for merchants to accept more orders without increasing their exposure to potentially fraudulent activity.
Ethoca offers a suite of solutions to help merchants and issuers eliminate chargebacks, reduce card not present (CNP) fraud, recover lost revenue, and improve the customer experience with a better dispute resolution process. Ethoca’s Consumer Clarity solution connects issuers to merchant order and account history details in real time. This gives issuer call center agents with the data they need to manage real-time conversations with cardholders when disputes arise. Ethoca also offers its Ethoca Alerts technology, which provides issuers and card-not-present merchants with access to a global collaboration network that enables them to share fraud and customer dispute data in real time, rather than in weeks as is normally the case with chargebacks.
Headquartered in Toronto, Ontario, Canada, Ethoca made its Finovate debut at FinovateFall in 2015. In the years since then, the company has inked partnerships with fellow Finovate alum TSYS, as well as Pegasystems, BlueSnap, and Cartes Bancaires. Ethoca agreed to be acquired by Mastercard in the spring of 2019 for an undisclosed sum. Calling Mastercard “a natural home,” Ethoca CEO Andre Edelbrock said the acquisition would “bring our services to more places and more people, ultimately contributing to the beset possible online payment experience.”
Ethoca serves more than 5,400 merchants in 40+ countries and more than 4,000 card issuers in more than 20+ countries. Eight of the top ten North American ecommerce brands, 14 of the top 20 North American card issuers, and six of the top ten U.K. card issuers use Ethoca’s technology to eliminate chargebacks, prevent fraud, and recover lost revenue.
Uber is launching a new debit card with tandem checking account.
The Uber Pro debit card is made available via partnerships with Mastercard, Marqeta, and Branch.
Uber Pro cardholders can receive up to 7% cashback on fuel purchases.
Uber’s latest attempt to attract more drivers to its platform comes in the form of a debit card with a tandem checking account. Late last week, the rideshare company announced the Uber Pro debit card.
The new debit card comes courtesy of partnerships with Mastercard, Marqeta, and Branch, a workforce payments platform that caters to gig economy workers and contractors. The card offers Uber drivers up to 7% cash back on gas purchases when they achieve Diamond status as an Uber Pro driver.
The Uber Pro card comes with a checking account powered by Branch, which will automatically deposit cardholders’ earnings into their account after every trip. Branch offers a unique take on earned wage access by enabling workers to access their paycheck as they earn it. The card currently has a wait list and will launch in the coming weeks.
This latest announcement comes three years after Uber originally introducedUber Money, a debit card and mobile app powered by Green Dot, and five years after the company launched its Barclays-powered credit card.
The launch of the Uber Pro card comes alongside a handful of other driver-related announcements from the ridesharing company. The Uber app will now offer drivers a range of nearby trips to choose from, show drivers their exact earnings upfront before they accept a trip, and offer enhanced benefits to Uber Pro drivers.
These driver-focused benefits are in part an effort to smooth out the supply and demand issue that Uber is facing. The nationwide labor shortage, combined with high fuel prices, has historically made it difficult for Uber to attract drivers. In May, Uber CEO Dara Khosrowshahi said, “Our need to increase the number of drivers on the platform is nothing new nor is it a surprise … there’s a lot of work ahead of us, but this is a machine that is rolling.”
This week’s edition of Finovate Global takes a look at recent fintech developments in Germany where green banking, embedded finance, and open banking are the themes at the top of this week’s fintech headlines.
First up, Berlin-based Sustainability-as-a-Service innovator ecolytiqannounced that it was teaming up with Slovakian financial institution Tatra Banka. The climate engagement fintech will provide Tatra Banka with the technology the firm needs in order to launch new green banking functionality on its online banking brand, Blue Planet. The new feature, which will be made available to Tatra Banka’s more than 600,000 customers, will enable users to monitor the impact their transactions may have on the environment (for example, with CO2 emissions), provide users with ideas on how to reduce their environmental impact, and offer rewards for spending that is environmentally friendly.
Founded in 2020, ecolytiq demonstrated its technology at Finovate’s developer event, FinDEVr 2021, which was held as a part of FinovateSpring that year. Putting accurate data at the center of the ability to move toward greater environmental sustainability, ecolytiq demonstrated how its open knowledge graph and streaming technology keep its data relevant and current. More recently, the company announced a strategic partnership with exceet Card Group, makers of sustainable payment cards made from wood and, the following month, teamed up with French sustainable neobank Green-Got.
Peter Golha, a director at Tatra Banka said that the institution believed it had a a role to play in the transition toward a more environmentally sustainable economy. “Not only have we a chance to change our own trajectory, but also a chance to live the topic of sustainability alongside our clients,” Golha said.
Founded in 1990, Tatra Banka was the first private bank to be established in Slovakia. Winner of the TREND Bank of the Year award for two years in a row, Tatra Banka announced this spring that it had achieved its greatest profit to date, reporting $164 million (EUR 162.1) in consolidated profits for the financial year 2021.
Second, German financial management platform for businesses Airbank inked a deal with Klarna Kosma this week. Klarna Kosma is an open banking platform launched by Swedish e-commerce innovator Klarna this spring. Seen as a rival to fellow Finovate alum Tink and its open banking platform, Klarna Kosma offers financial institutions, fintechs, and merchants connectivity to more than 15,000 banks in 24 countries around the world via a single API. Kosma was made possible in many ways by Klarna’s acquisition of direct, bank-to-bank payments company SOFORT in 2014, and Klarna has been developing and expanding the service ever since.
“Over the past year, the demand for Open Banking services from financial institutions and fintech startups has reached a tipping point,” Klarna Kosma VP Wilko Klaassen said. “(This) is why we have built a dedicated business unit which brings together engineering, product management, sales and marketing all together in the same team to focus on this $15 billion, fast-growing market.”
Airbank will leverage its new relationship with Klarna Kosma to “accelerate” its expansion into European markets and beyond. Airbank enables businesses to consolidate their bank accounts in a single location, allowing them to more easily automate bill management, make payments, and manage their finances. Companies also can use Airbank’s platform to track their financial transactions and forecast future liquidity. The partnership with Klarna Kosma will make it possible for Airbank to securely access account information from thousands of banks around the world, expand more aggressively, and better serve its SME customers that have global requirements.
“By the end of this year, we will serve over 50 counties, making Airbank the most comprehensive global banking solution for SMEs in the industry, with the ability to connect bank accounts from almost anywhere in the world,” Airbank founder and CEO Christopher Zemina said. “We are delighted to have Klarna Kosma as an experienced and dynamic partner that shares our ambition to shape the future of B2B financial management.”
Lastly, early in the week we learned that Berlin-based embedded finance startup Monite had teamed up with Codat, a U.K. firm that offers a universal API to enable access to consented business data from banking, accounting, and ecommerce platforms. The partnership will enable both SaaS platforms and financial institutions to integrate invoicing and billing functionality into their apps. This will allow platforms and institutions to offer businesses a unified solution for managing their financial operations.
In a statement, the CEOs of both Monite and Codat praised the great variety of financial apps and platforms dedicated to serving SMEs. The challenge, according to both Monite CEO Ivan Maryasin and Codat CEO Pete Lord, is that the variety can be overwhelming for many small businesses. “What’s still missing are the ‘super apps’ that bring everything together,” Maryasin said. “It can be time-consuming to manage and get the most out of them all,” concurred Lord.
Founded in 2020, Monite has raised $7.8 million in funding for its technology that empowers financial institutions and platforms to offer financial services such as multi-banking, AP automation, invoicing, and more to their customers. London, U.K.-based Codat neared unicorn status last month upon raising $100 million in Series C funding. The investment took the company’s total funding to more than $176 million and gave Codat a valuation of $825 million. The round was led by JPMorgan Partners, and featured participation from Plaid and Shopify.
Specifically the partnership will seek to develop “quantum-hybrid” solutions to solve problems in consumer loyalty and rewards, cross-border settlement, and fraud management. The two companies will use D-Wave’s annealing quantum computers and quantum hybrid solvers through the Leap quantum cloud service to deliver real-time access to quantum applications powered by Mastercard’s network.
“People expect hyper-personalized experiences,” Mastercard Chief Innovation Officer Ken Moore said. “Quantum computing’s unique ability to analyze huge numbers of potential combinations can deliver optimal solutions that will improve efficiency and provide choice.” Moore said that the partnership will explore applications of quantum computing technology that offer “practical, real-world” solutions in financial services.
The world’s first commercial supplier of quantum computers, D-Wave is the only firm building both annealing quantum computers and gate-model quantum computers. D-Wave’s technology has been used to solve challenges in a wide range of fields including logistics, drug discovery, cybersecurity, and financial modeling. Founded in 1999 and headquartered in Burnaby, British Columbia, Canada, D-Wave has partnered with firms such as NEC Corporation, Volkswagen, Lockheed Martin, and the University of Southern California. PSP Investments, Goldman Sachs, and BDC Capital are among D-Wave’s investors.
“D-Wave and Mastercard have a shared vision of harnessing the power of technology to positively affect business and society,” D-Wave CEO Alan Baratz said. “This alliance supports that vision by delivering quantum innovation that will tackle increasingly complex problem sets across applications like loyalty programs, fraud management and anti-money laundering in financial services and, ultimately, unlock more value for customers.”
Courtesy of Tencent, Block (formerly known as Square), and existing investor Insight Partners, Indonesian consumer payments platform Flip has secured a $55 million addition to its Series B round. Also involved in the funding were a handful of individual investors including Checkout.com CEO Guillaume Pousaz, DoorDash executive Gokul Rajaram, and former Venmo COO Michael Vaughan.
No updated valuation information was included in the funding announcement. The company has raised a total of $120 million since inception three years ago. Flip raised $48 million in Series B funding in December 2021.
Flip enables millions of Indonesians to access P2P payments with interbank transfers to more than 100 Indonesian banks. The company also offers international remittances, e-wallet top-ups, and business solutions for employee payroll, customer refunds, invoice and supplier payments, as well as international transfers. More than $12 billion in transactions a year are processed on Flip’s platform.
“The growth opportunity of the Indonesian digital economy is vast with its massive population and favorable demographics, Flip co-founder and CEO Rafi Putra Arriyan said. “We are laser-focused on helping millions of Indonesians, both individuals and businesses, execute various money transactions at a low cost through our platform.”
Flip plans to use the new capital to increase headcount, especially with regard to engineering and product development. The company also will invest in new products and technology development to both enhance quality of service and power further expansion.
Crypto may be a fighting word in El Salvador these days, which has hitched its economy to the fate of digital assets like nowhere else. But the move to bring cryptocurrency-based solutions to Latin America is still going strong. Visa announced late this week that it is launching the first crypto cards in Latin America – targeting Brazil and Argentina for the debut of its new products.
As reported in Crypto News and other media outlets that picked up the story from Expansión, Visa has partnered with a number of fintech companies in the region to issue cards that will enable users to receive cashback in Bitcoin when they make payments. In Argentina, Visa’s partners include cryptocurrency exchange Lemon Cash, which will offer 2% Bitcoin cashback Visa cards. Visa also has teamed up with Argentinian cryptocurrency trading platform Satoshi Tango and Crypto.com. In Brazil, Visa is working with Alterbank and Zro Bank.
“The cryptocurrency ecosystem continues to gain momentum in the region with increased investment, more consumer adoption, and more crypto-enabled use cases,” Visa SVP of Products and Innovation for Latin America and the Caribbean Romina Seltzer said. “We will continue to build on our strong strategy to build the future of crypto and payments for our customers, clients, partners, and consumers.”
Here is our look at fintech innovation around the world.
Sub-Saharan Africa
Following up on its acquisition of U.S.-based Global Technology Partners, African digital payments network MFS Africa announced a $100 million equity and debt extension to its Series C round.
A look at the companies demoing at FinovateSpring in San Francisco on May 18 and 19. Register today and save your spot.
Mastercard takes the uncertainty out of digital payments with Smart Payment Decisioning Tools. Advanced data analytics and ML make payments faster, more convenient, and safe.
Features
Better onboarding experience
Reduce ACH returns, failure & fraud
NACHA Verification for WEB debit rule
Why it’s great
Mastercard’s Smart Payment Decisioning Tools reduce risk in ACH payments and optimize cost and speed through open banking.
Presenter
Serenie Gagon, VP Product Management Gagon is an experienced product evangelist with deep expertise in the payments space. Gagon is responsible for strategic vision and payment enablement roadmap through open banking. LinkedIn
While much of the financial world is united in its efforts to distance itself from Russia as the country’s leader, Vladimir Putin, orders his forces continue their invasion of neighboring Ukraine, many of those in the cryptocurrency world are decidedly more ambivalent.
Is this a function of the underlying libertarian spirit that powers much of the enthusiasm for digital assets? Or is this just a reflection of a relatively young industry that is not yet ready to take on the responsibilities that its growing role in the financial world will eventually demand?
First, the ask. At the beginning of the week, Ukrainian Vice Prime Minister and Minister for Digital Transformation Mykhailo Fedorov took to social media to ask cryptocurrency exchanges to block transactions from Russia. Federov’s request was not just directed at the Russian government, or the country’s notorious oligarchs, but for everyday Russian users of cryptocurrencies, as well.
“It’s crucial to freeze not only the addresses linked to Russian and Belarusian politicians,” Federov wrote on Twitter, “but also to sabotage ordinary users.”
In the same way that some people have criticized the international sanctions regime against Russia for allowing a loophole when it comes to energy – specifically banning oil and gas exports from Russia – Federov and others have warned that not restricting, if not outright eliminating, Russian access to cryptocurrencies is a critical flaw in the effort to financially squeeze the Russian economy.
In response to this request, many nations have taken action. France’s Finance Minister, Bruno le Maire, said that the EU would include cryptocurrencies in its sanctions. The Financial Conduct Authority in the U.K. has reminded its U.K.-based and regulated cryptocurrency companies of their obligations to respect the sanctions policy against Russia. Even those cryptocurrency firms that are not regulated have been encouraged to support the sanctions regime. “We would urge unregulated member(s) to take action to ensure your platforms do not become a loophole for sanctioned Russians,” U.K. cryptocurrency organization Crypto UK said in a statement.
In the U.S., while some lawmakers have encouraged the government to help ensure that Russians are not using cryptocurrencies to skirt sanctions, the Biden Administration appears less concerned about that threat – at least on the large scale. Carol House, director of cybersecurity for the National Security Council said this week that “the scale that the Russian state would need to successfully circumvent all U.S. and partners’ financial sanctions would almost certainly render cryptocurrency as an ineffective primary tool for the state.” If anything, it seems that U.S. authorities are somewhat more concerned about potential theft and cybersecurity issues surrounding cryptocurrency companies than they are of Russians using these firms and exchanges for what would otherwise be legitimate purposes.
The response from cryptocurrency companies – including some of the largest firms like Binance and Kraken – have suggested that while they are comfortable blocking the accounts of sanctioned Russians, banning all Russians from their platforms is, for these companies, a bridge too far. At least for now.
“We are not political, we are against war, but we are here to help the people,” Binance founder and CEO Changpeng Zhao said, explaining his company’s position. “There are a few hundred individuals that are on the international sanctions list in Russia, mostly politicians, and we follow that very, very strictly.” But Zhao added that Binance draws a line “between the Russian politicians who start wars and the normal people, many normal Russians do not agree with war.”
Similarly, Kraken CEO Jesse Powell tweeted, “I understand the rationale for this request (to block Russians from Kraken’s platform) but, despite my deep respect for the Ukrainian people, Kraken cannot freeze the accounts of our Russian clients without a legal requirement to do so.”
That said, Powell noted, “Russians should be aware that such a requirement could be imminent.”
Additionally, it should be added many cryptocurrency companies are not agnostic to the conflict in the Ukraine and have lent their support to the Ukrainian cause. Federov expressed his, and his country’s, appreciation for the efforts of firms like Polkadot, which donated $5 million, as well as Solana and Everstake, which have created a joint effort called Aid for Ukraine in partnership with the country’s Ministry of Digital Transformation.
“This will certainly contribute to the Ukrainian victory as well as support civil people,” Federov said on Twitter earlier this week. “We will win – the best people (are) with us.”
FinovateEurope 2022 is only a few weeks away. Register today to save your spot at our annual European fintech conference: March 15 digitally and live in London on March 22 and 23.
Here is our look at fintech innovation around the world.
Yesterday, Mastercardunveiled two new clients for its Mastercard Track Business Payment Service. The New York-based payments giant announced that BMO and Moneris Solutions Corporation have joined Mastercard Track.
Mastercard launched the new service for Canadian businesses earlier this year. Mastercard Track creates efficiencies for business users by simplifying and automating the exchange of payments data between buyers and suppliers. The service seeks to modernize the $135 trillion B2B payments market.
“Current business payment processes often require manual reconciliation work that can be very labour intensive,” said Sasha Krstic, President of Mastercard in Canada. “The availability of Mastercard Track through our new partnerships with BMO and Moneris will help Canadian businesses gain freedom from an inefficient process by simplifying and automating the exchange of payments to make B2B payments work harder, faster and smarter.”
Using Mastercard Track will help BMO and Moneris modernize the business payments process for their customers. Ultimately, the service will free up working capital for businesses by offering them more control of their payments and helping them to optimize cash flow management.
Derek Vernon, Head of Payments Modernization of BMO’s North American Commercial Deposits and Corporate Card division said that the service “enhances the digital experience by offering a universal solution to simplify and automate B2B payments.” Specifically, Vernon noted that Mastercard Track will help reduce supplier friction and facilitate quicker speed-to-spend.
Mastercard is a public company listed on the New York Stock Exchange under the ticker MA. It has a market capitalization of $364 billion. Michael Miebach took the helm of the company as CEO in January of last year.
The news is flying a bit under the radar. But from China to Bahrain to Jamaica, central banks are beginning 2022 having made major moves recently in support of digital assets.
We covered China’s CBDC announcement earlier this week. In short, the People’s Bank of China, the country’s central bank, made its digital yuan wallet available via both the Android and Apple app stores. Select Chinese citizens in a wide range of provinces – including Shenzhen, Shanghai, and Chengdu – will be able to download the e-CNY wallet. The Chinese government hopes that there will be significant use of the technology in the weeks leading up to the Winter Olympics in Beijing, which could represent a showcase for the digital currency.
Halfway around the world, the Central Bank of Bahrain (CBB) announced that it has successfully completed its test with Onyx by JPMorgan’s JPM Coin System. The test, the first of its kind in the MENA region, enabled Bank ABC to launch real-time payments for Aluminum Bahrain (ALBA) in the U.S. JPM Coin is a permissioned system that provides payment rail and deposit account ledger services that allow participants to transfer U.S. dollars that are held on deposit with JPMorgan.
“We at the Central Bank of Bahrain are extremely pleased to announce the success of this test which aligns with our vision and strategy to continually develop and enrich the capabilities extended to the stakeholders within our financial services sector in the Kingdom using advanced and leading emerging technologies,” Central Bank of Bahrain Governor Rasheed Al Maraj said in a statement.
JPM Coin is the inaugural product offering from JPMorgan’s Onyx, a blockchain-based platform that facilitates the exchange of value, data, and digital assets. Onyx was formed in 2020.
Several hundred miles to Bahrain’s west, the Bank of Jamaica (BOJ) announced that it also has completed a cryptocurrency pilot. Here, the digital asset is a central bank digital currency (CBDC), which has been undergoing testing in the island nation for the past eight months. The project was conducted in partnership with Irish fintech eCurrency Mint, a company with a 10+ year pedigree in innovation on CBDCs. The stated goal of the initiative was to determine “whether a central bank digital currency along with the attendant technology solution could be successfully implemented in Jamaica.”
Three specific tasks were part of the test: minting of the CBDC, issuing the CBDC to wallet providers, and distributing CBDCs to retail customers. This final component of the test involved wallet provider NCB, and the successful onboarding of 57 customers who conducted person-to-person, cash-in, and cash-out transactions with small businesses as part of an NCB-sponsored event in December called “Market on the Lawn.”
In the wake of the successful test, the Bank of Jamaica has planned a national roll-out of its new CBDC in the first quarter of 2022. The roll-out will feature the continued onboarding of new and existing customers by NCB, the introduction of two additional wallet providers, and a test of transactions between customers of different participating wallet providers to establish interoperability.
Note that Jamaica’s Caribbean neighbor, the Bahamas, launched its CBDC, the Sand Dollar, in October of 2020. The Sand Dollar is the the world’s first official central bank digital currency to reach full circulation.
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Here is our look at fintech innovation around the world.
Among the country’s largest commercial banks, Taiwan’s Taipei Fubon Bank teamed up with Avaloq to build a wealth management platform for its private banking business in Hong Kong. Avaloq won Best of Show at FinovateAsia in 2018.
Indonesia’s central bank unveiled a new retail payments system, BI-Fast, that will reduce the cost of money transfers.
