Canada cuts interchange, Klarna teams with Adyen

ByKate Fitzgerald, John Adams, Ken McCarthy, Bloomberg News

December 6, 2023 12:36 PM

Canada's government has finalized arrangements with Visa and Mastercard to cap credit card interchange for small businesses; Klarna is expanding its work with the Dutch payment processor Adyen; and more.

Here's what's happening around the world.

Alexey Novikov/Adobe Stock

Canada cuts small-business credit card interchange fees below 1%

The Government of Canada has finalized agreements with San Francisco-based Visa and Purchase, N.Y.-based Mastercard to reduce the credit card interchange fees small businesses pay to banks for in-store transactions to 0.95% from about 1.4%, according to a press release on Tuesday. The card networks also agreed to adjust their rules so that interchange fees small businesses pay for online transactions will fall by 10 basis points. Agreements with the card networks, affecting more than 90% of Canada's credit card-accepting businesses, will take effect in the fall of 2024, the release said. Overall, small businesses' interchange fees will decline by about 27% from existing levels, amounting to small-business savings of about $1 billion over five years, the release said.

Currently the average interchange fee for a credit card processed in Canada on Visa's network is 1.4% and some credit cards charge merchants up to 3% per transaction, CBC News reported earlier this year. Jurisdictions in Asia, Europe and the U.K. have cut credit card interchange below 1% in recent years. In the U.S.,the Federal Reserve recently proposed lowering the cap on debit card interchange, while Sens. Dick Durbin, D-Ill., and Roger Marshall, R-Kan., are co-sponsoring the Credit Card Competition Act which aims to cut credit card interchange fees for merchants by mandating a lower-cost card-processing option. —Kate Fitzgerald

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Irish banks cancel plans for instant mobile payments service

Dublin-based Synch Payments DAC, an instant account-to-account mobile payments service planned by a coalition of Irish banks in 2020, has ceased operations after determining its business plan wasn't feasible, according to a press release. Yippay, supported by the Bank of Ireland, Permanent TSB and KBC, among other large banks, envisioned developing a simple mobile app supporting all payment types, but the concept fizzled due to a combination of factors, the release said. Fintech Futures reports that despite hiring Italy-based payments technology firm Nexi and receiving permission from Ireland's central bank to build the app, further development would require approval from the EU. —Kate Fitzgerald

Klarna adds Adyen as a merchant acquirer

Swedish lender Klarna has expanded its partnership with Dutch payment processor Adyen, which has long offered Klarna's buy now/pay later product over its network of more than 150 million consumers and 500,000 retail clients. Adyen will now serve as Klarna's merchant acquirer, commencing in Europe, North America and Asia in 2024. The deal will add payment flexibility and improve processing speed, Adyen contends. "Adyen's financial technology platform combined with Klarna's various consumer offerings will raise the standard of payments and consumer experiences worldwide," said Pieter van der Does, co-founder and co-CEO of Adyen, in a release. Klarna, which recently returned to profitability after about four years, has been adding new services in multiple markets as it attempts to recover from a slump that has impacted the entire financial technology market. Adyen has bolstered its point-of-sale payments technology over that past year as it expands in the U.S. and other markets outside of Europe. —John Adams

U.K. fines payments 'cartel'

The Financial Conduct Authority has fined Dollar East, Hafiz Bros Travel & Money Transfer Limited and LCC Trans-Sending a total of about $200,000 after the companies confessed to fixing prices for digital transfers in Glasgow. The companies coordinated in 2017 on exchange rates between U.K. pounds and Pakistan Rupees for transfers from the U.K. to Pakistan, according to the FCA. Hafiz Bros aided the scheme despite not having a transfer branch in Glasgow, the FCA said. "We saw evidence of these businesses operating as a cartel, working together to fix their prices and exchange rates on money transfers," said Sheldon Mills, executive director of consumers and competition at the FCA, in a release. "This behavior can lead to customers being ripped off, and it erodes public trust." The FCA said the fines were reduced because the companies admitted to their behavior. The FCA in recent months has taken a stronger stand against payment firms over issues such as cryptocurrency marketing and social media activity. —John Adams

Wise, Allica bank in money-transfer pact

The U.K. fintech Wise announced a partnership with Allica Bank to provide U.K. businesses with an option to send money internationally. Allica, a challenger bank, says the deal will enable its customers to make global payments "directly and seamlessly" to 160 countries supported by Wise. Allica's business customers that want to expand and operate internationally will be able to use their current accounts to send international payments with transparent fees and no exchange rate markups, according to the release. The Wise Platform integration will allow Allica customers to complete the entire process of making an international payment within their own banking app. Additionally, customers will know upfront the total fees for making an international payment and be able to guarantee the exact amount is received by their recipient. —Ken McCarthy

Mastercard, MDP team up in Middle East and Africa

Mastercard is working with the Egyptian payment processor MDP to offer services to banks and non-financial institutions in the Middle East and Africa. The partnership will allow MDP to become a "one-stop-shop processing services hub" integrating Mastercard's digital assets and white-label applications with the payment processor's products. "By bundling Mastercard's digital assets with our products, we are offering issuer banks the ability to roll out new segment-focused solutions, like youth banking, family banking and digital lending," said Ahmed Nafie, CEO of MDP, in a release. —Ken McCarthy

Taxpayers in Swiss city can settle bills with Bitcoin, Tether

The Swiss city of Lugano started to accept cryptocurrencies for paying taxes, fines and all other invoices from the municipality. Individuals and businesses can settle bills in Bitcoin or the Tether stablecoin by scanning a QR code, already a feature on regular Swiss invoices, Lugano authorities said in a statement on Tuesday. The back-end process underpinning the system is handled by digital-asset broker Bitcoin Suisse AG.

Lugano, located in the country's south, close to the Italian border, joins other Swiss government entities like the city and canton of Zug and the town of Zermatt in accepting crypto for payments, Bitcoin Suisse said in a separate statement. Neighboring Liechtenstein has also announced plans to accept Bitcoin to pay for state services. The chief executive officer of Tether's issuer, Paolo Ardoino, keeps a base in Lugano. — Bastian Benrath, Bloomberg News