Visa, Mastercard and Google go big in India; U.K. interchange suit moves forward

ByJohn Adams, Mary de Wet, Joey Pizzolato

September 4, 2024 5:51 PM

Revolut is adding cryptocurrency payments as it competes with crypto-friendly fintechs like Block and PayPal. Block introduces new restaurant technology in Australia, and U.K. banks suffer payment outages as the country plans stricter regulations to ensure payment service. Here's what's happening in the world of payments.

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Google, Mastercard and Visa expand payment reach in India

Google, Visa and Mastercard are rolling out new features and products to dive deeper into one of the world's fastest growing digital payment markets.

Google Pay is adding several new features in partnership with India's real-time payment network, the United Payments Interface, that are expected to roll out later this year and are designed to increase use of the country's real-time payment network, the technology company said on the last day of Global Fintech Fest 2024.

Users will be able to add family members and close friends as "delegates," who will be able to make payments without having to add their own bank account information. Users can approve payments on a transactional basis or set a monthly limit.

Google Pay will also add integrations for UPI vouchers, which allow consumers that aren't on the UPI network to pay with a prepaid voucher connected to their mobile number, bill payments using ClickPay QR code scanning and prepaid utility payments, among others. Google is one of the largest users of India's UPI rail, which is the world's largest real-time settlement network.

Visa also announced a suite of new products on the last day of Global Fintech Fest aimed at driving digital payment adoption in India.

The payment-processing company said it is working with HDFC Bank to create a compact payment device for merchants that integrates point-of-sale, QR code scanning, and soundbox, which provides audio alerts when a digital payment is received and confirms the amount of the payment. Visa is also working with payments India-based Paytm and Asia-based Pine Labs on two separate soundbox devices that integrate QR codes.

Other initiatives include: Neo for Merchants by Axis Bank and Visa, a mobile payments application for payment acceptance, transaction reporting and service requests; PayU Push Provisioning, which allows for the sharing of card tokens; and new credit and debit card offerings with HSBC and IDFC First Bank, respectively.

Meanwhile, Mastercard launched a pilot program for its biometric-enabled payments passkey with Axis Bank, online merchants and payment aggregators such as Juspay, Razorpay and PayU. The passkey initiative is in response to rising one-time password fraud, which rose 300% in the last two years, according to the Reserve Bank of India's 2023-2024 annual report.

Mastercard plans to roll out the program to additional financial institutions in the coming months, according to a company release. —Joey Pizzolato

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Class action suit over payment fees can proceed in the U.K.

Nearly 5,000 miles away from India, Visa and Mastercard face a more than $5 billion class action lawsuit over the fees merchants pay to accept cards in the U.K.

The U.K.'s Competition Appeal Tribunal has ruled that lawsuits by trade groups such as UK Hospitality and the Association of British Travel Agents can proceed as a class action case.

The trade groups and other merchants are arguing the multilateral interchange fees are too high, resulting in damages of about $5.2 billion, according to Harkus Parker, the law firm representing the plaintiffs. The merchant claims are between June 2016 and June 2022, and the law firm is contending that the claim will go higher based on the date of a settlement or judgment. It is also recruiting other U.K. merchants to join the suit.

In the past, British merchants such as Tesco and Sainsbury's have won multi-million-dollar settlements in interchange lawsuits against Visa and Mastercard.

"We disagree with the basis of this claim. Businesses get real value when they choose to accept cards issued on our network, helping them grow their sales, ensure a guaranteed payment, reach new customers and reduce fraud," Mastercard's public relations office said in an email.

Visa did not return a request for comment by deadline.

The card networks also face legal pressure in the U.S., where interchange lawsuits can be traced back at least 20 years. A federal judge in June dismissed a settlement between Visa, Mastercard and merchants.

Under the scuttled U.S. settlement, the card networks agreed to lower interchange fees, though trade groups such as the National Grocers Association and Merchant Payments Coalition said the settlement would only provide temporary relief. —John Adams

Payment outages hit the U.K., bolstering the central bank case for better resilience

Lloyds, Natwest, Virgin Money and Nationwide have all suffered technology glitches in recent days that left consumers unable to make payments or view transactions on online banking apps, unintentionally endorsing the Bank of England's plans to improve payment system resiliency.

Thousands of consumers filed complaints with tracking website Down Detector either on late Friday or early Monday. Lloyds and Virgin Money said their payment services were functional by the end of business Monday. Down Detector did not report outages at any of the four institutions as of Wednesday.

The glitches followed an outage at the Bank of England in July that impacted mostly high-volume transactions such as mortgage payments.

The BofE is mandating improvements in the operational resiliency of payment systems, setting a March 2025 deadline. These improvements include stronger backups to ensure impact tolerance, or the length of time permissible before outages harms consumers or businesses.

"Confidence in financial markets infrastructure services (FMI) is critical to having a vibrant and prosperous economy," said Sasha Mills, executive director of the Bank of England, in an April speech. "For the calibration of impact tolerances, we expect to see greater engagement than we have seen thus far between FMIs, their participants, and the wider market." —John Adams

Revolut pushes crypto for everyday purchases

London fintech Revolut has enabled its virtual cards to support cryptocurrency payments for small transactions such as commuting, convenience stories and quick serve restaurants.

The fintech's digitally issued cards are integrated with Apple Pay and Google Pay and convert the cryptocurrency to traditional money at the point of sale. Cryptocurrency has not been widely used for general retail transactions, with less than 3% of payments coming via crypto, according to research from Deutsche Bank. Crypto's volatility and the lack of regulatory clarity for stablecoins have held back more robust usage of cryptocurrency for payments.

But by adding technology to support payments, Revolut can compete with other payment-focused technology companies like PayPal and Block, which are investing in their cryptocurrency strategies. Block has a crypto- and blockchain-focused unit and receives a substantial portion of its revenue from cryptocurrency trading.

PayPal recently debuted a stablecoin and has added partners to use PayPal's large base of merchants and consumers to develop a payments market. Revolut also recently launched cash deposits in the U.K. and other markets as it expands its financial services menu to compete with other challenger banks and traditional financial institutions. —John Adams

Block adds payments tech in Australia

Square, Block's business-focused unit, has rolled out Square Kiosk, a software, hardware and payment processing product that supports self-service ordering for hospitality businesses in Australia.

Square Kiosk integrates with other Square checkout products and merchant services. Square Kiosk tracks sales and syncs menu updates. The consumer user interface enables ordering, customization and upgrades, with the order going directly to the kitchen.

Payment can be made via Square as part of the ordering experience. Block, which retains its original Square brand for merchant products, linked the new product to staffing shortages in Australia, particularly in the service sector.

"It's a challenging time to be in Australian hospitality right now, but speaking to people in the industry, we see how resourceful they are and how they're looking for ways to operate more efficiently, without impacting service quality," said Jean Magalhães, Hospo Product Lead for Square in Australia, in a release.

Block is in the midst of a corporate restructuring that is organizing the company around engineering, product development, sales and service, in an effort to speed product delivery and expansion to new markets. —John Adams

Stripe rolls out AI for cross-border payments in Asia

Payments processor Stripe is leaning on artificial intelligence for a slew of new features to support cross-border transactions in Asia.

The San Francisco-based company is using AI to determine which payment method to show customers as well as localizing prices and allowing payments with local currency across 150 markets – including Australia, Hong Kong, India, Japan, Malaysia, New Zealand, Singapore and Thailand. Stripe is also using natural language processing to set new fraud rules, according to a company release.

U.S.-based merchants can also now accept payments from South Korea via Stripe.

The new features come after a 30% increase in cross-border payment volume in the region last year, according to Stripe. The company said that 90% of customers choose to checkout in their local currency and that businesses can expect a 18% increase in cross-border revenue and an 8% uptick in conversions. —Joey Pizzolato

PayPal leads investment round in Brazilian payments fintech

PayPal Ventures last week led a $15 million investment into a Brazilian payments fintech company as companies flock to the burgeoning payments market.

The San Jose, Calif.-based payments giant injected fresh capital into Ume, a buy now/pay later fintech, Brazil Journal reported.

São Paulo, Brazil-based Ume, founded in 2011, works with small and medium-sized merchants to allow customers to break up payments for goods into four installments. It will use the funds to expand into the southeast region of the country, according to Brazil Journal.

The company has raised $35 million across three funding rounds, according to Crunchbase.

The investment comes as more payments companies flock to Brazil. Payments and financial platform Airwallex is preparing for expansion in Brazil as part of a wider move to boost its footprint in Latin America and hopes to be operating in the country by 2025. —Joey Pizzolato

NCR Atleos to let consumers trade Bitcoin for cash

Software and technology provider NCR Atleos has launched a service in the U.S. that lets consumers sell Bitcoin for cash.

The offering leverages LibertyX, a cryptocurrency software company designed for ATMs that NCR acquired in 2022, according to the company. LibertyX users will be able to cash out Bitcoin at thousands of merchants across the country by selling their cryptocurrency in the LibertyX app before withdrawing their funds from the ATM.

The value-added service hits the market at a time when ATMs struggle to find relevance as more payments go digital. —Joey Pizzolato

Euronet unit expands U.S. remittance network

Ria Money Transfer, a cross-border payment app that's a Euronet business segment, has signed a remittance distribution deal with PLS Financial Services to add Ria's services to more than 200 PLS Check Cashing locations in the U.S.

PLS has more than 3 million consumers in the U.S., mostly immigrants who have relatives in other countries, and an international network of more than 600,000 cash pickup locations.

The U.S. is the largest origination market for remittances, making it a key market for global payment companies that want to expand international transfers. People in the U.S. in 2023 sent more than $52 billion to Mexico, $15 billion to India and about $14 billion to the Philippines, according to the World Bank. —John Adams

TerraPay hires another Visa executive

London-based global money-transfer firm TerraPay has hired Ralph Koker as its global head of products, according to a press release.

Koker's role will be to refine the company's product strategy and spearhead comprehensive go-to-market initiatives. Before joining TerraPay, he was a member of Visa's global money movement team.

Earlier this year, TerraPay hired Ruben Salazar Genovez, the longtime global head of Visa Direct, as its president. Both hires are focused on growing TerraPay on a global scale. —Mary de Wet