Snippings

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UK open banking and request to pay fintech Ordo has raised £10 million in a Series A funding round led by Equinox Systems.

Founded in 2018 by the former management team of the Faster Payments scheme, Ordo enables businesses to request payments for single and recurring bills – via call centres, email, text or any other messaging platform a business uses – by orchestrating open banking over the Faster Payments rails.

From Open banking and request to pay fintech Ordo raises £10m:

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Interac AVP Anurag Kar 

Interac continues to identify solutions on a national scale. Recently surpassing 1 billion transactions over 12 months, Interac e-Transfer is one of the most widely-used digital payment products in Canada. It has become synonymous with providing a fast, convenient and secure way to send money to anyone from within their online or mobile banking platform. While created as a person-to-person (P2P) check/cash replacement service, it has become a standard that businesses have adopted.

From Interac Predicts New Wave of Alternative Payments | PYMNTS.com:

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A more recent feature, request-to-pay (R2P), has quickly emerged as a practical option for businesses to streamline their accounts receivable activities. Businesses have the option to integrate R2Ps within their experiences for a 1-to-1 collection capability or use a host-to-host format to collect payments en masse. Initially targeted to displace paper payments, R2Ps have quickly emerged as an alternative to credit cards for small businesses. The capability comes with many other benefits like the ability to reference remittance data, notify end users, payment life cycle management and transaction reconciliation.

From Interac Predicts New Wave of Alternative Payments | PYMNTS.com:

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One financial services professional, who left Moscow soon after the conflict began and requested anonymity, asked a friend to withdraw millions of roubles from his Russian accounts and meet a man in Moscow.

The transaction, based entirely on trust, was completed three hours later when a woman arrived at his hotel room in Dubai with around $50,000 in a paper KFC bag.

From How sanctions complicated day-to-day banking for Russians | Reuters:

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It’s carried out when a fraudster uses fake identification documents to place a second mortgage on a house they don’t own, usually when the first mortgage has been nearly or fully paid off.
Title fraud, on the other hand, involves tenants of a vacant home posing as the owner and selling that home to earnest buyers. This results in a total title transfer of the property.

From In Canada, complex fraud schemes are targeting homeowners – BBC News:

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We propose a limit of between £10,000 and £20,000 per individual as the appropriate balance between managing risks and supporting wide usability of the digital pound. A limit of £10,000 would mean that three quarters of people could receive their pay in digital pounds, while a £20,000 limit would allow almost everyone to receive their pay in digital poundsfootnote [10], keeping outflows from the banking system broadly within the assumptions set out in the Bank’s earlier modelling work.

From The digital pound − speech by Jon Cunliffe | Bank of England:

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Ikea, for instance, has changed tack. Instead of setting out specific goals for the year, it has a set of “scenarios” to give the business wiggle room as the outlook changes. It means acknowledging that widely different outcomes are possible. “It’s teaching us agility in how we operate,” said Brodin.

From CEOs forced to ditch decades of forecasting habits | Financial Times:

The pioneers in this area were Shell. Some years ago I was invited to attend their annual scenario planning exercise.

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Higher-income consumers favor digital wallets, while BNPL is popular among middle-income consumers for all retail purchases.

From Digital ID and KYC Platforms Potent Weapons Against Accounts Receivable Fraud:

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Swiss citizens are likely to vote in a future referendum on whether to enshrine the availability of cash in the constitution after an initiative to pre-emptively guard against digital money.

From Swiss May Face a Future Referendum to Enshrine Status of Cash:

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Most cash there — 51 billion Swiss francs ($55.3 billion) — is held in form of the largest banknote, worth 1,000 francs. That suggests that physical money is used as a store of value rather than for payments. By contrast, the most common bill in the euro area is the 50-euro note, according to 2021 data.

From Swiss May Face a Future Referendum to Enshrine Status of Cash:

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According to the Bank for International Settlements (BIS) data for 2021, Switzerland has the most cash in circulation per capita, with the equivalent of $12,000 out there for every citizen. In comparison, the US has around  $7,000 per citizen “in circulation” and the UK around $2,000.

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This presumption, however, overlooks that while digital transactions are increasingly popular and crowding out cash transactions in retail commerce, overall demand for physical banknotes continues to increase in the UK economy. According to Bank of England data, the value of banknotes in circulation in the UK economy rose to over £80bn in 2022 versus £70bn in 2020.

From A comprehensive critique of “Britcoin”. You’re welcome – The Blind Spot:

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Anyway, back to Switzerland. In his article, Larry noted that the Swiss National Bank (SNB) is “the most important central bank still bucking the trend”. It has said that it has no plans to withdraw its 1,000 Swiss Franc (CHF)  note. The highest-denomination banknote in the world, this is an inordinately profitable commodity. It costs about 40 centimes to make, generating a 250-fold seigniorage return.

I also read with interest the comments earlier in the year by SNB Vice Chairman Fritz Zurbruegg on the news that they are to continue production. Herr Zurbruegg said that there were “no indications” that criminals use the CHF 1,000 note more than any other note. So what are these notes used for? When I read the Swiss National Bank’s payment survey for 2017, the most recent at the time, I noted that is said that the 200-franc and 1000-franc notes accounted for a combined 23% of the total number
of Swiss banknotes in circulation, with 61 million and
50 million units respectively. These banknotes had a combined value of CHF 62 billion, or 76% of the value
of all banknotes in circulation.

Where are these banknotes? Apparently, three-quarters of Swiss households keep less than 1,000 Swiss Francs as a store of value, so obviously they aren’t using the CHF 1,000 that much. In fact, of the cash that is held as store of value, less than 5% is CHF 1,000 notes.

(The report goes on to say that “it should be borne in mind that respondents’ answers on this sensitive topic are likely to be not wholly reliable due to both security and discretion considerations”, which may point us in the direction of the actual use of the notes. It also notes the particular importance of the SFR 1,000 note in livestock trading. Presumably Swiss farmers find the payment facilities provided by the nation’s financial institutions to be inconvenient in some way.)

Still the main point is that less than a quarter of Swiss household have even one CHF 1,000, which given that they account for a substantial portion of the cash in circulation suggests a long tail: there are a few households with a lot of them.

Interestingly, in his comments on the continued production of the SFR 1,000, Herr Zurbruegg went on to say that should these notes be used for tax evasion, then “this is an issue for the legislators and authorities to prevent”. But as Cash & Payment News Volume 2, Number 3 (March 2019) goes on to observe about this perspective, in other industries the manufacturers are not allowed to wash their hands of the negative side-effects of their products (cars have to meet safety standards, for example). On the contrary, it is the manufacturers who are required to pay in some way for the potentail harrm that their product may cause.

The idea of making the producers of high-value notes (central banks) pay some sort of tax to compensate society for the damage done by those notes does, I’ll  admit, seem a little far-fetched. But the alternative, which is to considerably reduce the value of the highest-denomination notes, does not. Why not get rid of the US$100 (of which there are more “in circulation” than $1 bills) and the £50, for example. After all Denmark ignored a request by the European Central Bank and moved to ban 500-euro notes, as the country toughens it defenses against money launderers. Yay! Go Denmark! There really is no excuse for printing such high value notes in the modern world. Perhaps it was once a reasonable aspiration to displace the $100 bills stuffed into drug dealers’ mattresses with €500 bills and thus redirect the proceeds of crime (the seigniorage earned on those bills) from the Fed to the ECB, but no more.

(The head of Switzerland’s financial regulator, FINMA, is on record as saying that the Swiss financial system is susceptible to money laundering with the number of cases rising over the past five years, warns the head of Switzerland’s financial regulatory body, FINMA.)

So if the Swiss did decide to replace cash with a digital currency, then what digital currency should it be? Andréa Maechler, a member of the Swiss central bank’s board of governors, has already said that “private-sector digital currencies are better and less risky than nationally-issued versions”. So, Libra?

From Smart banknotes, dumb banknotes or no banknotes? | 15Mb:

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This potentially threatens the next fragmentation in the EU, namely between sovereign (state) and private-sector applications. In business, the majority of use cases, such as opening a bank account or the qualified electronic signature (QES), are defined at the “substantial” level. Application examples such as rental car rental with age verification only require the “low” LoA. Only visits to authorities and use cases from the state health system would be classified at the “high” level of trust.

From eIDAS regulation: The European digital market is threatened with further fragmentation – cio.de:

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In the economist Diane Coyle’s review of Mariana Mazzucato and Rosie Collington’s new polemic against consultancies, The Big Con, she notes their view that while “It would be foolish to blame consultancies for all the problems that advanced capitalism has created,” they do blame them for “copy-and-pasted formulas for strategy and often ineffective tools” they such organisations use. But copy-and-paste, it seems to me, is precisely the value of management consultants. When they do it properly, instead of the lame repackaging of conventional wisdom that I often see in my in box, it has real value.