Australia bans some card fees; Revolut tops UK fraud reports

October 16, 2024 2:11 PM

Ripple has signed up several cryptocurrency exchanges as it launches its stablecoin. Citigroup starts a cross-border payment system, Mastercard and Worldline push new technology and more. Here's what's happening in the world of payments.

Adobe Stock

Revolut gets more UK fraud complaints than major banks

U.K. challenger bank Revolut was named in 9,973 fraud complaints in 2023, according to the BBC, which cited information recovered from the U.K.'s fraud reporting center under a Freedom of Information request.

This compares with 7,874 at Barclays, 7,395 at Lloyds, 5,467 at HSBC, 4,803 at Monzo and 1,029 at Starling.

Revolut has about 45 million customers globally, though the U.K. is its home country and largest market, with about 9 million customers. The BBC report comes as Revolut calls for Meta to reimburse victims of fraud linked to the social media giant's platform. Meta has started collecting information about fraud from U.K. banks, and Revolut says 62% of the scams that target the challenger bank globally derive from Meta's platforms.

In an email, Revolut's public relations office said, "We are sorry to hear of any instance where our customers have been targeted by ruthless and sophisticated criminals. Revolut takes fraud and the industry-wide risk of customers being coerced by organized criminals incredibly seriously."

Revolut contends that in 2023, it reduced the number of fraudulent transactions in the U.K. by more than 20% and prevented more than $600 million in potential fraud losses globally, while adding more than one million new consumers each month.

Revolut's financial crime prevention team makes up more than a third of the company's workforce, and the company has built artificial intelligence models to spot and block fraudulent transactions using hundreds of internal and external data points, Revolut said in its email, adding it "abides the same regulatory standards as any high street bank." —John Adams

Patrick T. Fallon/Bloomberg

Citi Token Services for Cash moves out of pilot phase

Citigroup's Citi Token Services for Cash went live Oct. 10, moving out of a yearlong pilot program between branches in New York and Singapore.

Citi Token Services for Cash allows institutional clients to process multimillion-dollar transactions with "24-7, always-on" cross-border payments and liquidity management between participating Citi branches, according to the bank. Citi has branches in more than 90 countries.

The service runs on Citi's private, ethereum-based blockchain rails and turns deposits into tokens to send from accounts in one country to another at any time.

"By using distributed ledger technology and smart contracts, Citi has created a patented programmable payment and liquidity platform, which will reduce costs and streamline processes," said Ryan Rugg, head of digital assets, treasury and trade solutions at Citi, in a statement.

The tokenization service can also help facilitate programmable payments in trade through smart contracts, which automatically release funds when certain conditions are met.

The worldwide commercial cash launch comes as Citi completed a successful pilot of the technology between two Panama-based shipping companies, CB Fenton and GAC Panama Shipping. Citi used its technology to replace guarantees and letters of credit with smart contracts backed by tokenized cash.

Citigroup this week also inked a deal with Mastercard in a global payments partnership.

Global banks have been working to roll out tokenized deposit and programmable payment solutions as blockchain technology gains wider adoption. JPMorgan completed a successful programmable payment pilot with First Abu Dhabi Bank. —Joey Pizzolato

Lisa Maree Williams/Bloomberg

Australia will ban some card fees

Australia's government plans to ban debit card surcharges in 2026 as part of a broader effort to lower costs for noncash payments.

The center-left government said consumers are paying more in fees as cash usage is being replaced by digital payments. More than $1 billion in debit surcharges were paid in 2023, according to the Reserve Bank of Australia. Sixteen percent of payments in Australia are made in cash, down from 32% in 2019, according to the RBA.

Visa and Mastercard control about 92% of the Australian card market, according to Statista.

The two American card brands are facing pressure to lower payment fees in several markets. The Canadian government recently announced plans to cut payment fees for small businesses by as much as 27%. The European Union has also lowered interchange fees.

In the U.S., the Department of Justice is suing Visa, attempting to reduce the company's incentives to merchants, merchant acquirers and digital wallets to use Visa for debit routing. Mastercard in 2022 settled with the U.S. government over the routing of tokenized card transactions for online merchants. Visa and Mastercard are also under pressure in the U.S. to lower interchange fees, and Congress is considering a bill that would tighten payment fee rules. —John Adams

Worldline turns to embedded payments to drive its recovery

French payment company Worldline has partnered with financial technology company Open Payment Platform to expand into embedded payments as it looks to improve its economic performance after a series of setbacks.

Embedded payments refers to integrating checkout directly into websites or apps, a process that's designed to increase e-commerce conversion by making it easier to pay for items without a tangible checkout.

Worldline in the past year has downsized and suffered through a stock decline and a lowered financial outlook. It also reported a net loss of more than $1 billion in 2023 after posting a profit of more than $300 million in 2022.

The company will combine its point-of-sale system and merchant-acquiring capabilities with OPP's technology to reach online platforms and marketplaces, enabling Worldline to compete with rivals such as Stripe and PayPal, which offer low-cost digital connections to payment processing. Worldline will first deploy OPP's technology in the European Union, with the U.K. and Switzerland later. —John Adams

Ripple lines up distribution for its stablecoin

Blockchain firm Ripple has enlisted several cryptocurrency exchanges to build scale for its Ripple USD coin.

Uphold, Bitstamp, Bitso, MoonPay, Independent Reserve, CoinMENA and Bllish will distribute the stablecoin, which Ripple envisions as a way to entice more traditional companies to adopt distributed finance and other forms of digital assets.

Ripple will combine RLUSD with its XRP ledger, the technology that supports cryptocurrency transactions and cross-border payments, to build a network for international transactions.

Stablecoins, which are backed by traditional currency such as U.S. dollars or euros, are designed to be less volatile than other cryptocurrencies, and as such more amenable to retail payments. Ripple over the years has built a network of financial institutions and fintechs that use XRP to support cross-border payments without using correspondent banks, providing a potential addressable market for its stablecoin.

PayPal has also introduced its own stablecoin, PYUSD, which PayPal hopes will expand the payment use cases for its large network of consumers, merchants and its cryptocurrency investing service for PayPal and Venmo users. —John Adams

New Zealand banks to rollout Confirmation of Payee in November

New Zealand retail banks are planning a phased rollout of Pay.UK's Confirmation of Payee technology starting in November, according to the New Zealand Banking Association.

Confirmation of Payee is an anti-fraud service that allows consumers to check the name of the recipient or business associated with a bank account before a payment is made to ensure that the payment is going to the correct entity. CoP is managed by Pay.UK, the United Kingdom's national retail payments operations.

Participating banks include: Australia and New Zealand Banking Group, ASB Bank, Bank of China, Bank of New Zealand, China Construction Bank, The Co-operative Bank, Heartland Bank, Industrial & Commercial Bank of China, Kiwibank, Rabobank, SBS Bank, TSB Bank and Westpac, according to the association. The phased rollout will begin in November and should be completed by the end of April 2025.

"The phased approach is similar to how banks implemented Confirmation of Payee in the United Kingdom," said New Zealand Banking Association Chief Executive Roger Beaumont in a statement, noting that the banks are working with Obconnect, an open banking and CoP service provider. —Joey Pizzolato

Mastercard picks South Africa for faster card push

Mastercard and ACI Worldwide will accelerate speed for card payments processing, starting in South Africa ahead of a broader global rollout.

South African merchants will have near real-time access to funds from in-store card payments, unlike the one day or more time frame for most card payments in stores.

ACI Worldwide will assist Mastercard in enabling merchant acquirers to adopt standards for real-time processing. A future project will enable missing banks and other countries to process real-time card payments.

The card network is marketing the collaboration as a way for merchants to manage their liquidity by better marching sales, inventory and consumer payments. Real-time payments for other transactions such as bill payments and supply-chain transactions are also positioned as a way to mitigate overdraft and to manage cash flow.

"As consumer expectations and the needs of businesses change, we are ensuring payments meet the evolving speed of customers' lives." said Gabriel Swanepoel, southern Africa country manager for Mastercard, in a release. —John Adams

UK pay-by-bank company Banked acquires Australian A2A firm

Pay-by-bank firm Banked last week acquired Australian-based account-to-account payments company Waave for an undisclosed amount as the U.K.-based firm looks to expand its reach on the continent.

For Banked, the acquisition of Waave opens a key relationship with Chemist Warehouse, one of Australia's largest online pharmacies. Banked first entered into the Australian market in May 2024 through a partnership with the National Australian Bank to help increase pay-by-bank adoption with Australian merchants.

Waave was founded in 2022 and has secured $1.4 million in a seed funding round, according to Crunchbase. The company has been working with the Chemist Warehouse to deploy a pay-by-bank solution for Chemist Warehouse's online and brick-and-mortar stores in 2025. That partnership was a "critical" factor in Banked's acquisition, according to the company.

The acquisition comes as more companies look toward A2A and pay-by-bank options amid merchant pushback on swipe fees. Visa last month said it was planning to upgrade its pay-by-bank model in the U.K. next year. Walmart also has plans to launch a pay-by-bank option in the U.S. in 2025. —Joey Pizzolato