Apple to expand iPhone payments, Australia works on BNPL rules

June 12, 2024 11:53 AM

An iOS 18 update will enable a Tap to Pay-like system for peer-to-peer payments. Meanwhile, will BNPL rules be different in Australia than in the U.S.?

Additionally: Santander warns about fraud workarounds, Stripe adds hotel clients and more.

Here's what's happening around the world.

Dhiraj Singh/Bloomberg

Apple expands the iPhone's payments power

The technology giant, which has a long strategy of using Apple Pay to encroach on bankers' turf, is adding features designed to make it easier for iPhones to make payments while accessing other financial services such as buy now/pay later lending.

As part of recent additions Apple is making via its upcoming iOS 18 operating system, Apple announced a Tap to Cash feature that enables people to tap their iPhones together to make payments. Users can additionally redeem incentives and access installments from linked debit or credit cards through the upgrade Apple Pay.

Tap to Cash is an advancement of Apple's Tap to Pay, a similar technology that merchants can use to support mobile point-of-sale payments without an attachment such as a dedicated card reader.

Also referred to as soft POS, Tap to Pay has attracted banks, digital payment companies and firms that sell merchant services such as point-of-sale technology.

Android offers similar technology, and along with Apple covers most of the Tap to Pay market, which is seen as a way to put payments in the background of a larger experience that emphasizes checking into an app at the start of a shopping journey rather than at the end. That creates more of an opportunity for merchants, card issuers and the technology giants to accrue data that can be used for marketing and cross-selling.

While Apple does not provide payments processing (and instead partners with banks or third parties), as the company that enrolls users in Apple Pay, Apple can gain an advantage when negotiating these partnerships with financial institutions.

Other iOS 18 updates announced this week include new content for Tickets in Apple Wallet and a standalone passkey app to manage login credentials across multiple devices.

These upgrades join other Apple moves into finance, including the company's BNPL feature and Apple Card. As part of Apple's payments expansion, the technology company this week announced BNPL lender Affirm as an option at checkout for iPhones and iPads, and Synchrony as a financing option and an additional way to access loyalty programs.

"This provides users with additional payment choices, and offers the ease, convenience and security of Apple Pay alongside the features users love in Affirm, flexibility, transparency and no late or hidden fees. We'll plan to share more details at a later time," Affirm said in a statement. —John Adams

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How Australia's potential BNPL rules differ from those in the U.S.

Australian regulators are preparing legislation that would impose new rules on buy now/pay later lending, including requiring lenders to perform credit checks for new borrowers.

The rules, which could take effect later this year, will create a new category called "low cost credit." That would create a compliance burden that was targeted specifically to BNPL and similar installment products from fintechs.

"We want Australians to enjoy the benefits of BNPL, while knowing there are strong consumer protections … if it looks and acts like credit, then it should be regulated as such," Stephen Jones, assistant treasurer and minister for financial services, said in a release.

In the U.S., the Consumer Financial Protection Bureau's BNPL proposal would regulate the product in line with credit rules. BNPL lender Klarna has pushed back on the CFPB's proposal, calling instead for a separate regulatory approach. —John Adams

JPMorgan Chase advances iPhone payments in Canada

One of Tap to Pay's biggest supporters among banks, JPMorgan Chase this week extended the payment option to merchant clients in Canada.

Sephora will be the first JPMorgan client to deploy Tap to Pay for iPhone in Canada, starting with about 130 stores. Sephora was also the first adopter of JPMorgan's Tap to Pay in the U.S. when the bank debuted the technology in 2023.

Tap to Pay is considered a step toward checkout-free retail, a payment method most associated with Amazon's Go stores. In this model, in-store technology such as specialized cameras are used to identify items as shoppers take them from the shelves, then charge the shopper's e-commerce accounts automatically.

In an earlier interview, Michael Marienllo, managing director and global head of communications for payments at JPMorgan, said: "Both Tap to Pay and cashierless tech bring a focus on mobile payments and all the ways they can improve the checkout experience by not requiring the customer to stand in line. Looking toward the future, we expect to see a hybrid, omnichannel approach, where some merchants may offer shoppers the ability to pay as they walk out for smaller ticket items and offer Tap to Pay for services and higher value purchases." —John Adams

Santander wrestles with Facebook fraudsters in the U.K.

Santander says it has saved about 1,900 U.K. consumers from fraud attacks via Facebook Marketplace between December and May, but also warned that crooks have come up with a workaround that is succeeding in fooling consumers.

Under the bank's fraud protection system, consumers transferring funds through mobile or online banking for Facebook Marketplace answer a set of questions about the item they are purchasing. If consumers have not seen the item before purchase, the bank stops the transaction and the consumer is encouraged to see the item in person or to use a more secure payment method such as a card.

But about 500 consumers were tricked during the three-month window, mostly by changing their response to security questions to enable a payment to go through. The average loss per theft has been about $800, according to the bank.

"Fraudsters can be incredibly manipulative. The fact that in just a few months hundreds of customers felt the need to attempt to sidestep our fraud-prevention measures by changing their answer so they could proceed with the purchase, goes to show the level of pressure that these criminals are placing on unsuspecting victims," Chris Ainsley, head of fraud management at Santander, said in a release. —John Adams

India's real-time payment rail reaches Peru

Peru's central bank has asked India's United Payments Interface to help construct a real-time payment system based on UPI.

The Peruvian government says it's trying to improve financial inclusion and security, and recruit new participants to the country's digital payments market. The UPI network has spurred much of India's payments technology growth over the past decade, and its model has expanded to other countries that are attempting to digitize their payments market.

India is the world's largest real-time payments market, with nearly half of global real-time payment volume in 2023. That is far larger than markets such as the U.S. and Europe, though there are signs of faster expansion in Europe and the U.S. —John Adams

Stripe signs French partnership to expand hospitality payments

Stripe will be the primary payment partner for Accor, a Issy-les-Moulineaux, France-based hospitality firm covering more than 40 hotels brands in more than 110 countries.

Accor, which has a network of about 5,600 hotels, is attempting to build an e-commerce business to support hotel-related payments and non-hotel products such as restaurant bookings, spa services and other travel-adjacent experiences.

Accor has previously worked with multiple payment companies and is looking to consolidate processing and improve a disjoined process.

"Anyone who's booked a hotel room knows the frustration when the payment doesn't work as it should," said Eileen O'Mara, chief revenue officer at Stripe, in a release. In addition to payments, Stripe has added accounting, tax calculators, money management and analytics in an effort to expand the products it sells to merchants. —John Adams

Klarna expands online checkout reach in the U.K.

Klarna has signed a partnership to provide checkout support for three Sainsbury's brands: Argos, Habitat and TU. Sainsbury is a British supermarket chain.

Shoppers will be presented with Klarna payment options, as well as Klarna's buy now/pay later loans. Klarna has 20 million consumers in the U.K., according to the company.

Sweden-based Klarna recently added a debit card that is available to consumers who previously used Klarna to make a purchase, repaid the BNPL loan on time, and passed a credit check. —John Adams

Citigroup adds U.S. dollar clearing in the Middle East

Citigroup and Emirates NBD have partnered to launch dollar payments clearing at all times.

Emirates NBD is the first bank in the region to use Citigrouip's U.S. dollar clearing service to process cross-border dollar-denominated payments for corporate and retail clients. The service is available initially in the United Arab Emirates and Saudi Arabia, with plans to expand across NBD's network in the Middle East, Turkey and Africa and other global locations.

"Consumers demand instant payment capabilities no matter where they are in the world, and our collaboration with Emirates NBD is an important step in our journey to creating a multibank solution that is designed to deliver an end-to-end, 'always on' experience for participant banks and their customers," said Shahmir Khaliq, head of services for Citigroup, in a release. —John Adams

U.K. restricts fintech owned by Uruguay’s first billionaires

U.K. regulators imposed a series of restrictions on a fintech owned by Uruguay's first-ever billionaires as part of a widening crackdown on payments firms that process hundreds of millions of dollars worth of transactions every day.

The Financial Conduct Authority has barred Larstal from providing payments services or taking on new customers without the watchdog's written approval, according to a posting on the FCA's website. The company, which operates as AstroPay and is part of a global payments empire overseen by Andrés Bzurovski Bay and Sergio Enrique Fogel Kaplan, specializes in processing transactions for high-risk clients, filings show.

The FCA has been trying to improve standards among so-called electronic money institutions — payments firms that are lightly regulated. The agency has authorized scores of EMIs, including AstroPay, to operate in the U.K. in recent years, but is now concerned that the sector is rife with fraud and poor anti-crime controls.

Fogel said in an emailed statement that AstroPay and the FCA "mutually agreed to voluntarily suspend" the company's EMI license. The move followed discussions with the regulator and "the realization that the license held was not necessary to conduct its business at this time," he said. An AstroPay spokesperson said separately that the company had "voluntarily placed restrictions to improve operational capabilities."

A spokesperson for the FCA declined to comment. —Charlotte Hughes-Morgan and Donal Griffin, Bloomberg News