Mastercard, rivals ‘ran cartel’ on cards for the vulnerable – UK watchdog

LONDON (Reuters) -Mastercard is among five companies which broke the law for cartel behaviour when offering pre-paid cards to vulnerable members of society, Britain’s Payment Systems Regulator said on Wednesday.

Mastercard, allpay, APS, PFS and Sulion agreed not to compete or poach each other’s customers on cards used by local authorities for welfare payments including to the homeless, victims of domestic violence and asylum seekers, the PSR said.

The investigation is ongoing and the companies can make representations on the provisional findings, the PSR said.

Mastercard, allpay and PFS have admitted liability and if the regulator ultimately concludes there is wrongdoing have agreed to pay maximum fines totalling more than 32 million pounds ($44 million), the watchdog said.

The PSR alleges two infringements of Britain’s 1998 competition law.

One breach took place over six years between 2012 and 2018 and involved all five firms, the PSR said.

The other lasted between 2014 and 2016 and involved APS and FPS, the watchdog said.

“Pre-paid card services, like these, can provide significant benefits to local authorities as one way to make welfare payments to some of the most vulnerable people in society,” said Chris Hemsley, managing director of the PSR.

“By colluding in this way, we consider the parties were acting as a cartel… Collusion in payments is absolutely unacceptable. Where we see it happening, we will take action, stop it, and seek to impose significant penalties.”

Mastercard said it took the issue very seriously and had put further controls and training in place, adding the incident was isolated to UK prepaid cards.

“We apologise that the actions of two former employees resulted in the standards expected of us not being met in this instance,” a Mastercard spokesman said.

PFS said it would make an announcement in due course.

Allpay and APS were not immediately available for comment. Sulion could not be reached.

Central bank approves WhatsApp e-cash payments – Brazil

SAO PAULO (Reuters) – Brazil’s central bank on Tuesday cleared the way for Facebook’s WhatsApp messaging service to let its users send each other funds using the Visa Inc and Mastercard card networks, according to a statement.

The central bank had initially suspended WhatsApp’s bid to allow users to send money via chats when it was first proposed last June, saying it could damage Brazil’s existing payments system in terms of competition, efficiency and data privacy.

“(We) are making the final preparations to have payments on WhatsApp available in Brazil as soon as possible,” a WhatsApp spokesperson said in a statement. The messaging platform has over 120 million users in Brazil.

Still, WhatsApp is only allowed to do peer-to-peer payments, not involving merchants. The regulatory approval also comes months after the central bank launched its own instant payments system in November, called Pix, which has since been widely adopted.

Apple launches its contactless payment service in South Africa

JOHANNESBURG (Reuters) – Apple Inc. introduced its contactless payment service in South Africa on Tuesday, as the global tech giant looks to cash in on the mobile payments boom in the country.

The use of digital finance and payments systems has surged in South Africa and elsewhere as the coronavirus crisis has prompted a shift towards e-commerce and contactless payments.

Apple Pay has joined Samsung’s digital wallet offering, Samsung Pay, which was launched in South Africa in 2018.

Apple said it had launched the service without giving details.

The service is available via three South African banks, namely Absa Group, Nedbank Group and Discovery Bank, which is part of the Discovery group.

PayPal launches crypto checkout service

virtual coins cryptocurrency

LONDON (Reuters) – PayPal Holdings Inc will announce later on Tuesday that it has started allowing U.S. consumers to use their cryptocurrency holdings to pay at millions of its online merchants globally, a move that could significantly boost use of digital assets in everyday commerce.

Customers who hold bitcoin, ether, bitcoin cash and litecoin in PayPal digital wallets will now be able to convert their holdings into fiat currencies at checkouts to make purchases, the company said.

The service, which PayPal revealed it was working on late last year, will be available at all of its 29 million merchants in the coming months, the company said.

“This is the first time you can seamlessly use cryptocurrencies in the same way as a credit card or a debit card inside your PayPal wallet,” President and CEO Dan Schulman told Reuters ahead of a formal announcement.

Checkout with Crypto builds on the ability for PayPal users to buy, sell and hold cryptocurrencies, which the San Jose, California-based payments company launched in October.

The offering made PayPal one of the largest mainstream financial companies to open its network to cryptocurrencies and helped fuel a rally in virtual coin prices.

Bitcoin has nearly doubled in value since the start of this year, boosted by increased interest from larger financial firms that are betting on greater adoption and see it as a hedge against inflation.

PayPal’s launch comes less than a week after Tesla Inc said it would start accepting bitcoin payments for its cars. Unlike PayPal transactions where merchants will be receiving fiat currency, Tesla said it will hold the bitcoin used as payment.

Still, while the nascent asset is gaining traction among mainstream investors, it has yet to become a widespread form of payment, due in part to its continued volatility.

PayPal hopes its service can change that, as by settling the transaction in fiat currency, merchants will not take on the volatility risk.

“We think it is a transitional point where cryptocurrencies move from being predominantly an asset class that you buy, hold and or sell to now becoming a legitimate funding source to make transactions in the real world at millions of merchants,” Schulman said.

The company will charge no transaction fee to checkout with crypto and only one type of coin can be used for each purchase, it said

Visa moves to allow payment settlements using cryptocurrency

Exclusive: Visa moves to allow payment settlements using cryptocurrency

(Reuters) – Visa Inc said on Monday it will allow the use of the cryptocurrency USD Coin to settle transactions on its payment network, the latest sign of growing acceptance of digital currencies by the mainstream financial industry.

The company told Reuters it had launched the pilot program with payment and crypto platform Crypto.com and plans to offer the option to more partners later this year.

Bitcoin, the most popular crypto coin, jumped to a one-week high on the news, rising as much as 4.5% to $58,300 and heading back toward a record-high above $61,000 hit earlier this month.

Visa subsequently confirmed the news in a statement.

The USD Coin (USDC) is a stablecoin cryptocurrency whose value is pegged directly to the U.S. dollar.

Visa’s move comes as finance firms including BNY Mellon, BlackRock Inc and Mastercard Inc take steps to make more use of cryptocurrencies for investment and payment purposes.

Tesla Inc boss Elon Musk, a major proponent of cryptocurrencies, said last week that customers can buy its electric vehicles with bitcoin, hoping to encourage more day-to- day use of the digital currency.

“We see increasing demand from consumers across the world to be able to access, hold and use digital currencies and we’re seeing demand from our clients to be able to build products that provide that access for consumers,” Cuy Sheffield, head of crypto at Visa, said.

Traditionally, if a customer chooses to use a Crypto.com Visa card to pay for a coffee, the digital currency held in a cryptocurrency wallet needs to be converted into traditional money.

The cryptocurrency wallet will deposit traditional fiat currency in a bank account, to be wired to Visa at the end of the day to settle any transactions, adding cost and complexity for businesses.

Visa’s latest step, which will use the ethereum blockchain, strips out the need to convert digital coin into traditional money in order for the transaction to be settled.

Visa said it has partnered with digital asset bank Anchorage and completed the first transaction this month — with Crypto.com sending USDC to Visa’s Ethereum address at Anchorage.

Mastercard fights bid to add 14 million dead customers to UK class action

LONDON (Reuters) – Mastercard, a global payment processor, is battling attempts to add about 14 million deceased people to a 14 billion pound ($19.3 billion) British class action in an effort to limit the scope of the historic case.

A Mastercard lawyer told London’s Competition Appeal Tribunal (CAT) on Friday that an application seeking to add those who died between 1992 and 2008 into the country’s first mass consumer claim, that alleges the company overcharged people over a near 16-year period, was a “nullity”.

“A claim cannot be brought in the name of a deceased person,” Mark Hoskins, representing Mastercard, said at the hearing.

Former financial ombudsman Walter Merricks, who is leading the claim, alleges that Mastercard overcharged almost 60 million people in Britain – including about 14 million people who are deceased – over the period. The case could entitle adults and their estates to roughly 300 pounds each if successful.

Hoskins said attempts to add new parties to the “very serious claim” — or their administrators, personal representatives, executors or next of kin — was also now time-barred. The company is also resisting attempts to add compound interest to the claim.

The drawn-out case was brought in 2016, one year after the CAT was nominated to oversee Britain’s U.S.-style “opt-out” class action regime for breaches of UK or EU competition law.

The CAT blocked the case in 2017 but is re-considering authorising it as a collective action and determining its scope — and establishing a standard for a string of other, stalled class actions — after the UK Supreme Court in December allowed the action to proceed.

Merricks, who is being advised by law firm Quinn Emanuel, alleges Mastercard charged excessive “interchange” fees – the fees retailers pay credit card companies when consumers use a card to shop – between May 1992 and June 2008 and that those fees were passed on to consumers as retailers raised prices.

Mastercard says it “fundamentally disagrees” with the claim, that people received valuable benefits from its payments technology and that the lawsuit is driven by U.S. lawyers and backed by organisations focused on making money for themselves.

($1 = 0.7264 pounds)

Mastercard battles return of $19 billion UK class action

LONDON (Reuters) – A specialist London court will this week re-consider allowing a historic 14 billion pound ($19 billion) class action against Mastercard to proceed, which could entitle adults in Britain to about 300 pounds each if successful.

Former financial ombudsman Walter Merricks, who alleges that Mastercard overcharged more than 46 million people in Britain over nearly 16 years, hopes the Competition Appeal Tribunal (CAT) will certify the case after the UK Supreme Court overruled objections to it proceeding in December.

A two-day court hearing will kick off on Thursday and will determine the fate of Britain’s first mass consumer claim — and clarify the rules for a string of other competition class actions that have stalled in its wake.

Merricks, who is being advised by U.S.-headquartered law firm Quinn Emanuel, alleges Mastercard charged excessive “interchange” fees – the fees retailers pay credit card companies when consumers use a card to shop – between May 1992 and June 2008 and that those fees were passed on to consumers as retailers raised prices.

Mastercard says the claim should not be brought, that people received valuable benefits from its payments technology and that the lawsuit is driven by U.S. lawyers and backed by organisations focused on making money for themselves.

“We fundamentally disagree with this claim…,” it said.

THE DECEASED, COMPOUND INTEREST IN FOCUS

Legal arguments this week are expected to revolve in part around whether estates of the deceased should have a claim and whether compound interest should accrue, which are “significant” for the ultimate size of the claim, Mastercard says.

The case was filed in 2016, one year after the CAT was nominated to oversee Britain’s U.S.-style “opt-out” class action regime for breaches of UK or EU competition law — and 12 years after the European Commission ruled that Mastercard had charged unlawful cross-border interchange fees over the period.

In such cases, UK-based members of a defined group are automatically bound into legal action unless they opt out.

But the CAT blocked the lawsuit in 2017 because it thought it unsuitable for collective proceedings, triggering drawn-out appeals and causing a bottleneck for other class actions.

If the case proceeds, Merricks is expected to need to prove that Mastercard’s domestic fees were illegal — and to quantify the costs passed on to consumers.

Litigation funder Innsworth Capital has stumped up 60.1 million pounds to cover the legal costs of the case, including 15 million pounds for Mastercard’s legal costs if the claim fails. It will be paid from any unclaimed damages awarded, after agreement from the CAT.

Typically, take-up by claimants is low in such claims. The U.S. Federal Trade Commission found in 2019 that only about 9% made a claim after successful consumer class actions.

($1 = 0.7189 pounds)

Google payments chief quits after 15 years at company

(Reuters) – Senior Google executive Caesar Sengupta, head of the tech giant’s payment initiatives, said on Monday he was leaving the company next month, after 15 years.

“I remain very positive about Google’s future but it’s time for me to see if I can ride without training wheels,” Sengupta, vice president and general manager of payments and the ‘Next Billion Users’ initiative, said in a LinkedIn post here.

He was also one of the key people behind the launch and success of Google Pay in India and helped the payment app’s relaunch in the U.S. and Singapore. The payment facility is now used by over 150 million users in 30 countries.

“My last day at Google will be April 30th. I haven’t decided what I will start next,” said Sengupta, who is based in Singapore.

“…Through his time at Google, Caesar has played a key role in starting, building and leading initiatives such as ChromeOS, Next Billion Users and Google Pay. We are excited to see what he builds next and wish him the best in his new journey,” a Google Spokesperson said in an emailed statement.

Flutterwave teams up with PayPal on African payments

LAGOS (Reuters) – Fintech company Flutterwave has teamed up with U.S. payments giant PayPal to enable PayPal customers pay African merchants through its platform, the Africa-focused payments firm said on Tuesday.

The collaboration will connect small and medium enterprises with the more than 377 million PayPal account holders globally, Flutterwave said, eliminating the barrier to cross-border commerce.

Flutterwave’s integration with PayPal will be operational across 50 African countries and worldwide, it said in a statement.

Online payments got a boost with the COVID-19 pandemic as people rely on mobile apps for shopping and paying bills.

Like other companies in the digital payments sector, San Jose, California-based PayPal has profited from the boom in online transactions that pushed more business into the virtual realm.

Flutterwave has said it is positioning to be an African payment platform for multinationals entering new markets. Founded in 2016 by Nigerians and headquartered in San Francisco, the firm has processed over 140 million transactions.

CEO and co-founder Olugbenga Agboola told Reuters last week that Flutterwave could consider a New York listing after it raised $170 million from investors to expand its customer base, pushing its valuation up to more than $1 billion.

UAE’s first independent digital banking platform launches

DUBAI – The first independent digital banking platform in the United Arab Emirates launched on Sunday, a neobank hoping to become a leader in the Middle East, Africa and South Asia.

Dubai-based YAP does not have a banking licence itself but has partnered with RAK Bank which provides international bank account numbers for YAP users and secures their funds under its own banking licence.

YAP, like other neobanks which do not have physical branches, does not offer traditional banking services like loans and mortgages, but offers spending and budgeting analytics, peer-to-peer payments and remittances services and bill payments.

YAP is in the process of partnering with banks in other countries, head of product Katral-Nada Hassan said, including a bank in Saudi, in Pakistan and in Ghana.

Global leaders in digital banking, such as Revolut, one of the world’s fastest-growing apps, do not have a UAE presence.

Some UAE banks have in recent years launched their own digital banking offerings targeted at digitally-savvy and younger users, such as LIV by Emirates NBD and Mashreq Neo by Mashreq Bank.

Abu Dhabi state-owned holding company ADQ last year said it plans to set up an as-yet unnamed neobank using a banking licence of the country’s biggest lender, First Abu Dhabi Bank (FAB).

“The fintech revolution has become very popular in other parts of the world and we saw a gap and unique need for this service in the Middle East,” said YAP CEO and founder Marwan Hachem

Hassan said there are challenges for fintechs looking to expand to the UAE.

“There are a lot of fintechs right now looking at partnering with banks, but that requires a lot of discussion, relationship building … It is not an easy thing to do,” she said, adding YAP’s founders had an existing relationship with RAK Bank.

YAP is at seed funding stage, funded by founders, a private equity firm and private investors, Hassan said, adding that more than 20,000 customers have pre-registered and accounts will gradually go live in coming weeks.