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The Monday Roundup: what we are watching this week | July 17th

By Puja Sharma

July 17, 2023

  • Bank of America
  • Banking fraud
  • Cash Flow
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MondayThe Monday Roundup sets the scene for the week’s biggest news stories, industry deals, and upcoming events. For Prime subscribers only.

Cash flow constraints

The global FinTech investment landscape has witnessed a few challenges in the past year. However, despite a backdrop of economic slowdown and uncertainties, the FinTech sector continues to attract significant capital, showing its resilience, as per the UK industry body Innovate Finance.

In the first six months of 2023, a total of $27.3 billion was invested across 1,711 deals globally, underscoring the continued demand for FinTech innovation. Nevertheless, these figures represent a 14% decline in global investment from H2 2022 to H1 2023. This reflects cautious investor sentiment as seen across equity markets over the last 12 months.

In the United Kingdom, the FinTech sector has also faced key challenges including high inflation and cash flow constraints. “​​With inflation remaining stubbornly high despite the highest interest rates in a generation, it is clear that there will not be a V shaped recovery”said Kevin Chong, Co-Founder at Outward VC, echoing his own sentiments from Innovate Finance July 2022 report.

Despite these challenges, established FinTech companies have demonstrated their ability to thrive, leveraging their innovative solutions and adaptability to capitalise on market opportunities. The data serves as an indicator of the broader Fintech sector’s scale, with companies striving to differentiate themselves and capture market share.

US FinTech MerQube has raised $22 million in Series B funding for its indexing and rules-based investing technology.

New investor Allianz Life Ventures, as well as Citi, JP Morgan, Laurion Capital Management, and UBS, participated in the round. In addition to the funding, Intel Capital’s investment director David Mueller will also join the MerQube board.

MerQube said the index-linked investments market, currently valued at $17 trillion, is set to grow to $30 trillion by 2027, accelerating the demand for technology that provides customisation, flexibility, scale and speed to market. Launched in 2019 and based in San Francisco, MerQube operates a cloud-native Software-as-a-Service (SaaS) platform to offer design and calculation solutions for rules-based investment strategies and passive solutions, via API.

Card rewards denied

As part of its digitisation initiative, Paytm has announced an agreement with the Goa government. The payment platform has signed an exclusive MoU with Goa Government to deploy QR codes, Soundbox & Card Machines for electricity, water & municipal tax payments.

Under the MoU signed, the company claims to help the various departments of the Goa Government go digital. With the technology-led innovative devices, the digital payments platform has strengthened merchant payments leadership by deploying several devices, both Soundbox and Card Machine. It will deploy payment devices like Paytm QR code, Soundbox, and Card Machines in all departments, including panchayats and municipalities.

With this, users can make payments for various services, including municipal tax, water, and panchayats, through Paytm UPI, UPI Lite, Paytm Wallet, net banking, debit cards, and credit cards.

The US Consumer Financial Protection Bureau (CFPB) has ordered Bank of America to pay $150 million in penalties and more than $100 million to affected consumers for allegedly “illegally charging junk fees, withholding credit card rewards, and opening fake accounts”.

The US regulator alleges that the bank “harmed hundreds of thousands of consumers over a period of several years and across multiple product lines and services”.

Allegations include deploying a double-dipping scheme to harvest junk fees. The CFPB writes: “Bank of America had a policy of charging customers $35 after the bank declined a transaction because the customer did not have enough funds in their account. The CFPB’s investigation found that Bank of America double-dipped by allowing fees to be repeatedly charged for the same transaction.

“Over a period of multiple years, Bank of America generated substantial additional revenue by illegally charging multiple $35 fees.” The regulator claims the bank also withheld cash and points rewards on credit cards and denied sign-up bonuses to customers due to system failures. Additionally, the CFPB alleges that the bank’s employees “illegally applied for and enrolled consumers in credit card accounts without consumers’ knowledge or authorization” and used customers’ credit reports without permission to fill out the applications.

What is the buzz

India’s Unified Payments Interface (UPI) system for payment will soon be accepted in France. Prime Minister of India, Narendra Modi announced. The minister stated that India and France have decided to use UPI in this European nation, opening a huge new market for Indian innovation. Unified Payments Interface (UPI) is India’s mobile-based payment system and allows people to make round-the-clock payments through a virtual payment address established by the customer.

While addressing the Indian community at the La Seine Musicale, a performing arts center on an island in river Seine, Modi said very soon, Indian tourists will be able to make rupee payments using UPI from atop the Eiffel Tower. “In France, an agreement has been made for the use of India’s UPI…It will be started from the Eiffel Tower, and now Indian tourists would be able to make payments in Rupees, through UPI, in the Eiffel Tower,” the prime minister said.

“Be it India’s UPI or other digital platforms, they have brought a huge social transformation in the country and I am happy that India and France are also working together in direction. India and France have agreed to use UPI in France. I will leave after the agreement. However, it is your job to move forward. Friends, in the coming days, its beginning will be made from Eiffel Tower, which means that Indian tourists will now be able to make payments in Rupees, through UPI, at Eiffel Tower,” Modi said while addressing the Indian community at La Seine Musicale in Paris.

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July 17, 2023

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