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In this Newsletter:

• Regulatory Developments: Payments

• Regulatory Developments: Digital Assets

• Market Developments

• Surveys and Reports

For previous editions of the Payments Newsletters, please visit our Financial Services practice page.

Regulatory Developments: Payments

Germany: Ministry of Finance asks industry groups for feedback on EU PSD3/PSR legislative proposals

On 28 June 2023, the European Commission published several proposals to amend and modernise the current EU Payment Services Directive, PSD2 (PSD3) and to introduce the directly applicable Payment Services Regulation (PSR).

Many of the changes are more evolutionary (and not revolutionary; see our Engage article and the July 2023 edition of the Payments Newsletter) and there are numerous clarifications of existing rules. Market participants have, however, flagged that the proposed new requirement to provide real-time confirmation that the name of the beneficiary of a credit transfer matches the name of the account holder of the IBAN in the payment order may require a substantial overhaul of IT systems (e.g. real-time procession for all credit transfers; new APIs etc). With regard to the new rules for liability of payment service providers for impersonation fraud (spoofing), market participants have pointed out that rules may lead to an overall increase in costs of payment services, in particular if consumers no longer have an incentive to protect their credentials.

The PSD3 proposal includes more harmonised rules for the prudential supervision of payment institutions. Key areas such as risk management are, however, not covered by PSD3, which might lead to divergence between Member States.

The German Ministry of Finance has asked industry groups for feedback on the proposals. We understand that PSR and PSD3 are likely to be finalised in September 2024.

United Kingdom: HM Treasury publishes response to its Payments Regulation and Systemic Perimeter consultation and call for evidence

On 7 August 2023, HM Treasury (HMT) published its response to its July 2022 consultation and call for evidence on payments regulation and the systemic perimeter.

Key next steps will be:

• Extending the scope of the Bank of England’s (BoE) supervisory perimeter via primary legislation to “reflect a more holistic assessment of systemic risk across the payments sector”. Key points here include:​
  • Adoption of the reform principle ‘same risk, same regulatory outcome’;​
  • Use of the essential design of the BoE’s current systemic payments perimeter within Part 5 of the Banking Act 2009;​
  • Introducing an additional category of ‘service provider’ within Part 5 of the Banking Act 2009 to allow for the recognition of payments providers that pose systemic risks in their own right;​
  • Narrowing Part 5’s section 206A to explicitly remove non-payments related critical third parties from regulation through the Banking Act;​
  • Enhancements to the BoE’s ability to gather relevant information from market participants;​
  • Further clarification of the BoE’s existing regulatory toolkit;​
  • Clarifications on how the BoE and the FCA would co-supervise any future systemic payments firms; and​
  • Extending the Future Regulatory Framework (FRF) Review’s enhanced accountability framework to apply to the revised systemic payments perimeter.​

• Reforming the Payment Systems Regulator’s (PSR) systems access framework via secondary legislation using powers conferred on HMT by the Financial Services and Markets Act 2023.
• Considering further the application of the Senior Managers and Certification Regime (SM&CR) to payments after the planned broader review of the SM&CR. â€‹

The response also acknowledges the steps being taken to increase the powers of the FCA and the PSR to deal with retained EU law for payments and towards replacing the Payment Services Regulations 2017 and the Electronic Money Regulations 2011.​

The reforms to the BoE’s systemic payments perimeter will need to be enacted by primary legislation ‘at a future legislative opportunity’, so the government’s immediate next step will be to issue a further policy statement setting out its legislative approach (although timing on this is currently unclear). The government notes that it will be for the BoE itself, as the competent authority, to set out how it intends to supervise the reformed perimeter after the relevant legislation is published.

For more on HMT’s consultation response, take a look at this Engage article by members of the Hogan Lovells London office.

United Kingdom: HM Treasury policy statement and FCA request for information on payment account contract termination

On 21 July 2023, HM Treasury (HMT) published a policy statement setting out its proposed reforms on payment account contract termination,  following feedback received from its January 2023 call for evidence on the Payment Services Regulations 2017 (PSRs 2017). ​ The policy statement sets out HMT’s intention to:​

• Require payment service providers (PSPs) to give customers a clear reason as to why their account has been terminated to increase transparency and consumer understanding, unless providing such information would be unlawful;

• Require PSPs to give customers 90 days’ notice when terminating a payment account (except for a serious and uncorrected breach); and​

• Restrict PSPs from terminating payment accounts for other reasons, such as brand protection.

HMT has also indicated that shorter notice periods would be allowed where a PSP is obliged to terminate an account to comply with applicable law (such as financial crime law). The government is considering the amendments’ scope of application, but it is anticipated that they will apply to contracts concluded from the date the changes are brought into effect.​

The statement also mentions that the regulations relating to Politically Exposed Persons (PEPs) may be being applied disproportionately by some financial institutions, and emphasises that the regulations do not provide grounds for account closure on the basis of political views and that a consumer being a domestic PEP should not be the basis for firms refusing to provide banking services in the absence of other risk factors. The FCA is currently reviewing its guidance on PEPs (as required under the Financial Services and Markets Act 2023 (FSMA 2023)) and on 15 August 2023 it announced that it had issued a request for information to parliamentarians, chairs of the political parties and other UK PEPs.​

The Government intends to enact the necessary changes to the PSRs 2017 via secondary legislation through the powers granted in FSMA 2023, as part of its programme in building a Smarter Regulatory Framework for UK financial services. The Government will formally respond to its call for evidence on the PSRs 2017 ‘later in 2023’. ​

In a related development, on 9 August 2023 the FCA sent an information request and accompanying letter on account closures to the largest banks and building societies, with a deadline of 25 August 2023. Firms that identified barriers to completing the request  should have notified the FCA by 14 August 2023. The FCA asked about both personal and business customers, including pawn brokers, charities and political parties.​ The FCA will analyse the results of its information request and provide an initial assessment by mid-September 2023. It will share its analysis with the Chancellor of the Exchequer. The FCA is also actively engaging the largest payments firms on this topic.​

United Kingdom: Bank of England RTGS speech

On 20 July 2023, the Bank of England (BoE) published a speech by its Executive Director of Payments, Victoria Cleland. In the speech, Ms. Cleland thanks the industry for their work on migrating to the ISO 20022 global financial messaging standard. Ms. Cleland emphasises that this marks the first stage in the major transformation programme to renew the Real-Time Gross Settlement (RTGS) system.

The speech highlights that the renewal of RTGS is structured around four key benefits: increased resilience, greater access, wider interoperability, and improved user functionality. Ms. Cleland highlights the ongoing efforts to work closely with the payments industry to fully realise these benefits across three main phases:

• ISO 20022 Phase: transitioning to this standard is expected to enhance domestic and cross-border payments, offering more structured payment messages that should help to streamline processing and enhance fraud detection.
• New Core Settlement Engine Phase: launching in summer 2024, this will lead to increased resilience, more extensive accessibility, enhanced user functionality, and a modular architecture in the RTGS system.
• Foundations for the Future Phase: the new RTGS is envisaged as an open platform that encourages change and innovation. Features under consideration include new ways to connect to RTGS, and a synchronisation interface to link RTGS with other ledgers, and extended RTGS operating hours.

United Kingdom: PSR publishes stakeholder feedback to cross-border interchange fees market review

On 21 July 2023, the PSR published a summary paper and stakeholder feedback to its December 2022 working paper ‘A discussion of the impact of the UK-EEA cross-border interchange fees increases’ which forms part of its market review of UK-EEA consumer cross-border interchange fees.

Significant points from the feedback include:

• Mastercard and Visa's increased interchange fees (IFs) for card-not-present UK-EEA transactions are discussed. Despite a decline in UK-EEA transaction volumes and values, outbound and inbound IFs paid by acquirers increased significantly in the first half of 2022. The paper invited stakeholder feedback on this. Some respondents argued that there is no real rationale for these fee increases, suggesting they could be anti-competitive. Recommended interventions included capping cross-border IFs at previous EU levels or prioritising interventions that encourage alternative payment methods.

• Regarding merchant relocation as a means of mitigating IF increases, most respondents said this was not a feasible option, particularly for smaller businesses.

• On price differentiation, respondents had mixed views, with some saying it already occurs and is legal under current rules, while others consider it impractical as a mitigation tool.

The market review is ongoing, and the PSR intends to publish a report setting out its interim conclusions later in 2023, and a final report before the end of the year.

India and United Arab Emirates: RBI and Central Bank of UAE sign two MoUs for trade in local currencies

On 15 July 2023, the Reserve Bank of India (RBI) and the Central Bank of UAE (CBUAE) signed two memoranda of understanding (MoUs) to promote seamless cross-border transactions and payments and foster greater economic cooperation between the two countries.

The first MoU, on establishing a framework for the use of local currencies for transactions between India and the UAE, aims to implement a Local Currency Settlement System to promote the use of the Indian rupee (INR) and the United Arab Emirates dirham (AED) bilaterally. The MoU covers all current account transactions and permits capital account transactions.

Under the second MOU on ‘Payments and Messaging Systems’, the two central banks agreed to cooperate on:

• linking their Fast Payment Systems – Unified Payments Interface of India (UPI) with Instant Payment Platform of UAE (IPP);

• linking the respective Card Switches (RuPay switch and UAESWITCH); and

• exploring the linking of payments messaging systems.

The RBI announced that the UPI-IPP linkage will allow users in both countries to engage in efficient cross-border funds transfers. Additionally, linking the Card Switches will enable mutual acceptance of domestic cards and streamline card transactions between the nations. The connection of messaging systems is designed to enhance bilateral financial communication between the two countries, making transfers more convenient, secure, and cost-effective.

United Kingdom: PSR consults on gross negligence and reimbursement limit for APP fraud reimbursement requirement

On 15 August 2023, the Payment Systems Regulator (PSR) published two consultations as part of its work to prepare for the new APP fraud reimbursement requirement set out in its June 2023 policy statement PS23/3.​

The first consultation, CP23/7, sets out a draft policy document and guidance for payment service providers on the consumer standard of caution (gross negligence). The PSR describes gross negligence as a ‘very high bar which will critically depend on the individual circumstances of each case’. It only expects it to apply in a ‘small minority’ of cases, and never where a victim's vulnerability is a factor.

The second consultation, CP23/6, contains proposals relating to the claim excess, and the maximum reimbursement level for both Faster Payments and CHAPS. The proposal for both Faster Payments and CHAPS is that the maximum level will mirror the FOS limit of £415,000 per claim. While the claim excess would not apply to vulnerable customers, the PSR is consulting on whether the maximum reimbursement level for Faster Payments should.

Both consultations close on 12 September 2023.

In October, the PSR intends to consult on the draft General Direction which will be given to all payments firms, requiring reimbursement for APP scams victims. By the end of 2023, the PSR will publish the claim excess and maximum level of reimbursement, its final policy and guidance on the consumer standard of caution, and all legal instruments.

For more on the consultations, take a look at this Engage article by members of the Hogan Lovells London office.

As reported in the July 2023 edition of the Payments Newsletter, the PSR has also recently consulted on the proposed legal instruments to put its reimbursement requirements in place.

To ensure the new reimbursement requirements are in place for consumers as soon as possible, in its above consultation on the draft legal instruments the PSR has proposed an implementation, or ‘go live’, date of 2 April 2024. It plans to confirm the implementation date in the autumn, alongside the consultation on the draft General Direction (see above).

United Kingdom: HM Treasury policy statement and FCA statement on access to cash

On 18 August 2023, HM Treasury (HMT) published a policy statement on access to cash and the FCA published a statement further explaining its new powers to protect access to cash and outlining its next steps.​ Both developments relate to the access to cash provisions in the Financial Services and Markets Act 2023.

• HMT policy statement: The aim is to inform the FCA's approach to ensuring access to cash, including in relation to what constitutes "reasonable provision" of cash access services in the UK. HMT wants to maintain reasonable access to deposit and withdrawal services for certain personal and business current accounts. ​

• • With respect to personal current accounts, the government's view is that "reasonable provision of cash access services" (as to be determined by the FCA) means free cash access services. This does not preclude the provision of pay-to-use services. However, the government does not consider it appropriate for pay-to-use services to contribute towards "reasonable provision" in relation to such accounts. ​

  • In determining what constitutes "reasonable provision", the legislation requires the FCA to have regard, in particular, to local deficiencies that have significant impacts. The government's view is that consideration should be taken of the degree to which services meet local needs in relation to both business and personal use. This may include the following factors as appropriate in the circumstances: types of cash services and nearest alternatives available; hours of availability; travel and geographic factors; demographic factors in a local area, such as age, and characteristics of vulnerability that may reflect a greater need for cash access; and potential for reliance on assistance with accessing cash that is provided in-person.​

• FCA statement: The FCA explains that its approach will be balanced, considering the cash needs of consumers and small businesses, and the costs for firms to meet those needs and the general consumer preference for digital ways to pay. The FCA intends to consult on rules that will require each of the banks and building societies, which are designated by the government as subject to the new access to cash regime, to conduct assessments of the reasonableness of cash provision when certain significant changes in local access occur or are proposed. ​Before the FCA makes any rules or general guidance, it will consult on its proposed policy. Depending on the outcome of its consultation, it expects any new rules will take effect by summer 2024.​

United Kingdom: Bank of England statement of policy on supervisory approach to wholesale cash distribution​

On 18 August 2023, the Bank of England (BoE) published a statement of policy on its supervisory approach to market oversight for wholesale cash distribution, as required under section 206D of the Banking Act 2009 (as introduced by the Financial Services and Markets Act 2023).​ It also published a summary, together with its feedback, of the responses to its December 2022 consultation on its supervisory approach to wholesale cash distribution.

The BoE's approach is based on the principles for wholesale cash distribution set out in section 2 of the statement of policy, which describe the regime's purpose at a high level. The principles are the foundation for the BoE's analysis of the main risks presented to the effectiveness, resilience and sustainability of the market. The BoE will then assess firms' compliance with the regime to ensure that these risks are mitigated, taking a risk-based and proportionate approach.​ Certain firms recognised by HM Treasury must share information with the BoE at regular intervals, as well as on an event-driven basis, in order to assist with the BoE’s monitoring and analysis.

​In autumn 2023, the  BoE intends to consult on its proposals for codes of practice (and accompanying guidance) relating to information gathering, third-party arrangements and cash centre closure and market exit. At the same time, the BoE will also consult on its proposals relating to its approach under the statement of policy to imposing financial penalties and their amount.​ The BoE may, in the future, identify other areas where codes of practice are necessary and appropriate.​ HM Treasury and the BoE will further engage with the industry on the fee scale later in 2023, before any regulations are made and laid before Parliament.​

United Kingdom: UK Finance publishes updated interpretative guide on UK revised Wire Transfer Regulation

On 9 August 2023, UK Finance (UKF) published "how to" interpretative guidance on the onshored version of the revised Wire Transfer Regulation ((EU) 2015/847) (UK revised WTR).

This is an updated version of UKF's guidance on the EU revised WTR, which was published in 2018 and subsequently updated in 2022 to reflect issues raised by members during the Brexit onshoring process. The guidance is intended to provide operational clarity and encourage market harmonisation.

According to UKF on a related webpage, the latest amendments focus on new practice issues and regulatory developments raised by members following changes in industry best practice. It states that the document is for general guidance only

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Regulatory Developments: Digital Assets

United States: U.S. Bill establishing regulatory framework for cryptoassets passes congressional committee

On 26 July 2023, a key congressional committee, the House Financial Services Committee, passed a Bill that is intended to bring digital assets into the regulatory perimeter of the Commodity Futures Trading Commission (CFTC). The Bill also seeks to clarify the jurisdiction of the SEC regarding cryptoassets. The Bill contains three exclusive categories into which digital assets may fall, each of which has a different regulator:

1. ‘Digital Commodities’ which will be regulated by the CFTC.
2. ‘Restricted Digital Assets’ that the SEC will regulate.
3. ‘Payment Stablecoins’ that can be issued by depository institutions regulated by the federal and state banking authorities. The SEC and CFTC will retain antifraud and antimanipulation authority over the permitted stablecoins trading on venues that fall within their regulatory perimeter.

The Bill also sets out requirements in relation to cryptoasset custody and requires intermediaries to either register with the SEC or CFTC, depending on their classification under the Bill.

Ancillary activities, such as the operation of a blockchain system or self-custody of private keys, fall outside of the Bill’s scope.

Namibia: Virtual Assets Act 2023 passes into law

On 21 July 2023, the Virtual Assets Act 2023 (the Act) was published in the Namibian Government Gazette having been passed by the Parliament and signed by the President. The Act sets out the regulatory framework for digital assets in Namibia and reverses the ban on cryptocurrency exchanges that was put in place in 2017.

The Act subjects digital asset firms to the anti-financial crime provisions of the Financial Intelligence Act 2012 and the Companies Act 2004, as well as the regulatory oversight of the authorities designated under these Acts. The Act also sets out the powers of the regulators in relation to the inspection and investigation of virtual asset providers (including those that do not hold a licence). These rights include a right to inspect and audit the books, as well as broad powers to instruct an inspector to ensure compliance with the requirements and obligations under the Act.

It also sets out a regulatory framework for licensing and regulation of virtual asset providers. Firms must be incorporated in Namibia and have a registered office in the country to get a licence. If a crypto firm operates in the country without a licence, sanctions include up to 10 years of imprisonment or a penalty of 10,000,000 Namibian dollars.

The Act aims to provide a regulatory framework that enhances consumer protection and prevents market abuse and money laundering.  The Act will come into effect at a date determined by the Ministry of Finance.

United Kingdom: HM Treasury responds to Treasury Committee report calling for cryptoassets to be regulated as gambling

On 20 July 2023, the response from HM Treasury (HMT) to a report by the House of Commons Treasury Committee regarding the regulation of cryptoassets was published. In the response, HMT disagrees with the Committee's suggestion that the regulation of retail trading and investment involving unbacked cryptoassets should fall under gambling regulations rather than being considered a financial service. We covered the Treasury Committee’s report in the May/June edition of the Payments Newsletter.

United Kingdom: FCA statement on expectations for cryptoasset businesses complying with FATF Travel Rule and JMLSG consultation on new cryptoasset transfer guidance

On 17 August 2023, the FCA published a statement setting out its expectations for UK cryptoasset businesses complying with the so-called FATF Travel Rule (FATF Recommendation 16).

Under the Money Laundering and Terrorist Financing (Amendment) (No. 2) Regulations 2022, the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs 2017) are being amended with effect from 1 September 2023 (following a 12-month grace period) to extend the Travel Rule to cryptoasset businesses in the UK. This means that they will be required to collect, verify and share information about cryptoasset transfers.  

The FCA's statement also mentions that in June 2023 FATF highlighted the challenges arising from delays in adoption and different timelines for enforcement of the Travel Rule across jurisdictions. As a result, the FCA has worked closely with industry to provide guidance on how to comply and what it reasonably expects of firms ahead of other countries following the UK’s position.  This includes:

• Taking all reasonable steps and exercising all due diligence to comply with the Travel Rule. If the recipient jurisdiction does not have the Travel Rule, firms should take all reasonable steps to establish whether the firm can receive the required information. Even if they can't receive the necessary information, firms must still collect, verify and store information required by the MLRs before making the cryptoasset transfer.

• Remaining responsible for achieving compliance with the Travel Rule, even when using third-party suppliers.

• Regularly reviewing the implementation status of the Travel Rule in other jurisdictions and adapting business processes as appropriate.

• If the sending jurisdiction doesn't have the Travel Rule and the transfer has missing or incomplete information, firms must take these factors into account when making a risk-based assessment of whether to make the cryptoassets available to the beneficiary.

The FCA has been working with industry, the Joint Money Laundering Steering Group (JMLSG) and HM Treasury on draft guidance for firms which the JMLSG published for consultation on 28 July 2023. Firms had until 25 August 2023 to provide feedback.

Italy: Italian central bank initiates DeFi tokenisation project

On 26 July 2023, the Cetif Research Centre of the Universita Cattolica del Sacro Cuore of Milan, announced that the ecosystem project of its Cetif Advisory consultancy has been selected as part of the Milano Hub’s second Call for Proposals. The Milano Hub is the Innovation Centre of the Bank of Italy. The ecosystem project involves research into and experimentation with security tokens. The goal of the project is to develop a security token for institutional decentralised finance (DeFi) that complies with regulatory guidance and requirements.

The Milano Hub will support Cetif Advisory with regulatory advice and sector expertise over a six-month period.

Oman: Capital Market Authority publishes consultation paper on virtual assets regulatory framework

On 27 July 2023, the Capital Market Authority, Sultanate of Oman (CMA) published a consultation paper on the virtual assets regulatory framework in Oman. The proposed new regulatory framework is intended to cover the regulatory and licensing requirements for virtual asset service providers (including those carrying out initial coin offerings), corporate governance, risk management and virtual assets issuance. The consultation also asked for stakeholders’ opinions on prudential and audit requirements, and on a potential ban on privacy coins. The consultation closed on 17 August 2023.

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Market Developments

Global: Aptos Labs partnering with Microsoft on new blockchain AI tools

On 9 August 2023, Aptos Labs, the developer of a layer 1 blockchain, published a press release announcing its partnership with Microsoft. Aptos Labs intends to expand its tools and services using Microsoft's artificial intelligence technology (Microsoft’s Azure OpenAI Service).

Among other things, the partnership intends to develop an AI chatbot that will aim to demystify blockchain for the everyday internet user and organisation, and a Financial Services solution that in the future could allow users to bring use cases like tokenisation, payments, and central bank digital currencies (CBDCs) to market.

Bangladesh: Central Bank of Bangladesh selects Fime to launch card scheme

On 10 August 2023, Fime announced that it has won a six-year contract with the central bank of Bangladesh to help launch the nation's domestic card scheme. Fime will provide consulting and testing services, and set up a certification body framework. The project will begin with Fime supporting the central bank in defining its payment strategy to improve financial inclusion, sovereignty and security.

United States: Amazon rolls out palm payments in WholeFoods stores

On 20 July 2023, it was reported that Amazon is rolling out its palm payment technology to all of its Whole Foods Market stores in the U.S. The report outlines that Amazon is increasingly marketing its palm technology to third parties such as cafes, sports stadiums, and airport stores. The technology was first introduced by Amazon in its cashier-less Go stores in 2020.

Global: PayPal launches stablecoin

On 7 August 2023, PayPal launched a stablecoin, PayPal USD, which is redeemable 1:1 for U.S. dollars and is issued by the Paxos Trust Company. The stablecoin is issued on the Ethereum blockchain. PayPal USD is designed to reduce friction and facilitate fast transfers of value, send remittances, or conduct international payments, as well as enable direct flows to developers and creators within the PayPal environment. The corresponding press release also noted that PayPal already offers its customers the ability to buy, hold, sell and transfer select cryptocurrencies, and provides educational content on the same.

United States: Revolut suspends its cryptocurrency services in the U.S.

On 4 August 2023, it was reported that Revolut has decided to stop allowing U.S. customers to access cryptocurrencies. According to the reports, U.S. customers will no longer be able to buy cryptocurrencies from Revolut from 2 September 2023. From 3 October 2023, Revolut intends to disable buying, selling and holding for U.S. customers. The company cited the regulatory environment and market uncertainty as the driving forces behind the decision.

China: Alipay and WeChat pay accept Mastercard and Visa

On 21 July 2023, it was reported that Alipay and WeChat pay now accept Mastercard and Visa as payment methods. This will enable foreign visitors to access the two most popular mobile payment platforms in China. According to the report, Alipay and WeChat pay said  that they were acting under the guidance of Chinese regulators.

Venezuela: MoneyGram partners with Banesco for international remittances

On 7 August 2023, MoneyGram announced that it has partnered with Venezuela-based bank Banesco. The partnership enables Venezuelan consumers to receive funds from abroad directly into their Banesco bank accounts. In a statement regarding the launch, a representative from Banesco emphasised the importance of remittances as a source of income for households in Venezuela.  

International: Skipify and AmEx partner to enable faster checkouts

On 2 August 2023, it was reported that the fintech Skipify and Amex have partnered with the aim of enabling faster online checkouts. Skipify aims to establish a smooth checkout process by authenticating shoppers allowing them to access rewards, and pay by card without requiring them to enter their payment and billing details.

Singapore: Tazapay confirms MPI licence from MAS

On 3 August 2023, the fintech Tazapay confirmed that it has secured a Major Payment Institution Licence from the Monetary Authority of Singapore (MAS). Tazapay can now provide its clients with its complete range of account issuance, merchant acquisition, cross-border and domestic money transfers, and e-money issuance. Tazapay’s platform enables businesses to make transactions in over 173 countries, enabling various card and local payment options.

Kenya: Uber, Safaricom partner for M-PESA payments and disbursements

On 3 August 2023, it was reported that the communication solutions company Safaricom has partnered with Uber to enable Kenya-based customers to pay for trips through the mobile money service M-PESA. The companies believe that the collaboration is set to benefit drivers that are unbanked. Uber data shows that approximately 20% of drivers on the platform do not have bank accounts.

India: Mastercard enables payments for tokenised cards without CVC

On 3 August 2023, Mastercard published a press release announcing that it has enabled CVC-less online transactions for its Indian debit and credit cardholders that have tokenised their cards on merchant platforms. The move aims to reduce the checkout time and make virtual transactions hassle-free and more secure. This is in line with the Reserve Bank of India’s tokenization guidelines, which propose that merchants who adopt tokenized payments will only have to collect CVC once, while tokenizing the card.

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Surveys and Reports

Global: CFA Institute CBDC survey results

On 26 July 2023, the Chartered Financial Analyst (CFA) Institute published a report setting out the findings from its global membership survey on Central Bank Digital Currencies, which had 4,157 respondents.

The key findings include:

• There was limited support for CBDCs. Only 42% of the respondents believed that CBDCs should be launched, while 32% disagreed and nearly one in four (24%) expressed no opinion. The support for CBDCs differed by region, with 37% of respondents from developed markets saying that they support a CBDC versus 61% from emerging markets.
• Of those that were in support of launching a CBDC, the top reason for their support was to accelerate payments and transfers (58%).
• The leading reason for opposing the launch of a CBDC was the data privacy risk (50%), followed by the concern that there is no valid use case (40%).
• The survey also found limited understanding of CBDCs. A majority of respondents said they have either a low (40%) or moderate (47%) understanding of CBDCs, with only 13% reporting a strong understanding.

United States: PYMNTS survey on instant payments in the FinTech space

On 19 July 2023, PYMNTS published its report "FinTechs’ Instant Payment Mismatch". This resulted from a survey of 2,292 U.S. consumers to investigate their adoption and overall usage of instant payments, alongside 150 FinTech issuers to examine the services issuers offer their customers and their customers’ satisfaction with the money mobility capabilities they provide.

Significant findings were:

• P2P transfers for money-in and money-out transactions are the most popular services among consumers, with 51% and 44% of consumers, respectively, using them. 47% of FinTech respondents reported they allow consumers to send P2P transfers, while 41% allow consumers to receive these transfers. This represents increases of 10 percentage points for sending and 9 percentage points for receiving since Q3 2022, according to PYMNTS.
• 21% of FinTechs believe customer experience to be a priority, while only 4.8% of consumers cited customer experience as the top reason that they use FinTech providers. Instead transfer speed is the leading reason why consumers use FinTech providers, with 27% citing this reason. This is followed by the availability of a wide variety of payment and fund transfer options, which 26% of consumers cite as a reason.

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Authored by Virginia Montgomery and Grace Wyatt.

Hogan Lovells (Luxembourg) LLP is registered with the Luxembourg bar.