German cash use slips, India pressures crypto exchanges

ByKate Fitzgerald, John Adams, Bloomberg News

January 3, 2024 9:10 AM

Germany, traditionally a cash-heavy economy, is seeing a rise in debit card use. Meanwhile, Indian regulators accuse several crypto exchanges of violating anti-money-laundering rules.

Krisztian Bocsi/Bloomberg

Cash-loving Germany sees payment card growth

Germany — where consumers and businesses have long preferred cash over payment cards for everyday transactions — saw permanent changes in payment habits following the pandemic, according to new data. Statista reports that the percentage of point-of-sale transactions made with cash in Germany declined to 39% in 2022 from 55% in 2017, propelled by the desire for touchless payment options to avoid viral contamination. Debit-card transactions during the same period rose to 39% of POS transactions from 25%, while digital wallet transactions inched up to 9% from 5% in 2017, and use of prepaid cards rose to 3% from 2%. Digital and card payments continue to gain momentum across Europe, while cash payments remain popular in Germany and Austria, according to a report by Deutsche Bank. —Kate Fitzgerald

Chris Ratcliffe/Bloomberg

India moves to block crypto exchanges

India's Financial Intelligence Unit contends that about a dozen cryptocurrency exchanges are operating "illegally" because they are not complying with local anti-money-laundering regulations. The regulator has sent notices to the exchanges, which include Binance, Kraken and Mexc, and has asked India's IT Ministry to block the exchanges. The FIU contends the exchanges, while operating offshore, still fall under local risk management guidelines. Location is often a source of friction between India's government and foreign firms. India has sparred with Visa and Mastercard, for example, over rules that require the U.S.-based card companies to store data inside India. More recently, India granted domestic payment licenses to a group of fintechs including RazorPay, Cashfree and Open. —John Adams

ABN Amro invests in environmental tech fund

Dutch bank ABN Amro has made an undisclosed investment in SET Fund IV, which focuses on data and digital companies that reduce carbon emissions. Investment firm SET Ventures, which like ABN Amro is based in Amsterdam, manages a portfolio that includes energy, engineering and logistics software firms. ABN Amro has pledged to invest more than $1 billion of startup capital in green energy through direct investment, investments in funds and other forms of capital. The SET infusion is the bank's third investment as part of that strategy. Banks increasingly face competition from fintechs that are also investing in carbon-reducing technology, and Mastercard recently expanded the use of its carbon calculator. —John Adams

Worldpay partners with crypto payment firm Alchemy

Payment technology and merchant services firm Worldpay is collaborating with Alchemy Pay, a company that enables transfers from crypto to traditional currency. The partnership enables Alchemy's on and off-ramp portals to access Visa and Mastercard. The partners aim to improve the user experience when buying and selling crypto via credit and debit cards, with plans to expand the partnership to include NFT purchase via Alchemy's payment system. By associating with Worldpay, which supports payment processing for more than one million merchants and 50 currencies globally, Alchemy can potentially reach a broader and more mainstream audience for cryptocurrency payments. In most cases, cryptocurrency payments involve a transfer between crypto and traditional currency before funds go through the merchant's point of sale. —John Adams

Indonesia raids bitcoin miners

Law enforcement in Indonesia have raided 10 locations that were allegedly being used to steal electricity to mine bitcoin. The sites included more than 1,000 bitcoin mining machines, and more than two dozen people were taken into custody, Coindesk and other crypto media sites report. The suspects allegedly tapped into utility poles belonging to a local utility to obtain electricity which they used to mine bitcoin, a process that uses computers to solve cryptographic problems to produce new cryptocurrency. Bitcoin mining is notoriously expensive and energy-intensive, leading technology companies to build alternatives designed to cut electricity usage. The suspect mining operation in Indonesia cost about $100,000 in losses to the government in six months, or the equivalent of the yearly electricity usage of about 7,000 people. In Indonesia, electricity theft carries a potential jail term of up to 5 years. —John Adams

EU deputizes payment service processors to catch VAT fraud

A new European Union rule that went into effect Jan. 1 forces payment service providers to help block Value-Added Tax (VAT) fraud across Europe, according to BNN. European PSPs — which handle 90% of online purchases in the EU zone — must now report any entity that receives more than 25 cross-border payments per quarter to EU member state tax administrators. The rule targets e-commerce sellers operating without a physical presence in the EU who typically evade VAT by failing to register or under-reporting transactions. The European Commission will store information the PSPs gather in a database within the Central Electronic System of Payment Information, which will be accessible to the EU's anti-VAT fraud network, Eurofisc. —Kate Fitzgerald

Ant completes process of removing Jack Ma’s control

Ant Group finished a procedure to remove controlling stakeholders almost a year after billionaire Jack Ma promised to cede his dominance of the Chinese finance giant. As part of the process, the People's Bank of China granted an application to remove any controlling shareholders at Ant's Chinese payment platform Alipay, according to a statement from the central bank. The bank now lists Ant's Alipay as a firm without an actual controller.

Ma, co-founder of Alibaba Group, announced his retreat from Ant earlier this year in one of a number of moves aimed at appeasing Chinese regulators. In January, the finance company said 10 individuals, including management and staff, would be offered voting rights that would effectively remove the billionaire's control. The adjustments will not change the economic interests of any shareholders. The change of status with the PBOC will not affect the company's day-to-day business operations, an Ant spokesperson said in response to the central bank's statement. —Bloomberg News

Nigeria slaps strict rules on banks after lifting crypto ban

Nigeria's central bank has released inaugural guidelines for banks opening cryptocurrency accounts, while retaining its ban on them holding or trading in virtual assets on their own behalf. The rules, published on the central bank's website on Tuesday, flesh out the regulator's decision last month to lift its prohibition on banks operating accounts for crypto service providers.

"Current trends globally have shown that there is need to regulate the activities of virtual assets service providers which include cryptocurrencies and cryptoassets," it said.

Nigeria joins other African regulators in extending oversight of cryptocurrencies, spurred by a string of corporate collapses capped by the bankruptcy of Bahamas-based exchange FTX in April. The continent's most populous nation has seen a surge in virtual currency adoption, in part fueled by the steep decline of the nation's fiat currency.

Only naira-based accounts will be permitted and there will be no cash withdrawals, the central bank said. The restrictions also bar clearing third-party checks through crypto accounts and will limit withdrawals to two per quarter. —Nduka Orjinmo, Bloomberg News