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Yesterday, Facebook announced Libra, a stablecoin to be used for payment in WhatsApp and Facebook Messenger. Libra is a stablecoin pegged to a basket of fiat currencies to minimize fluctuation of its value.

TechCrunch writes: “Facebook has finally revealed the details of its cryptocurrency, Libra, which will let you buy things or send money to people with nearly zero fees.”

Further, “Facebook wants to make Libra the evolution of PayPal. It’s hoping Libra will become simpler to set up, more ubiquitous as a payment method, more efficient with fewer fees, more accessible to the unbanked, more flexible thanks to developers and more long-lasting through decentralization.”

The big five, Facebook, Amazon, Apple, Microsoft and Google (FAAMG) are continuing to chip away at the banks.

 Over the last couple of years I’ve been telling banks they must stop worrying about the competition from peer banks. The real threat is from the large tech companies.

Customers want an instant, low-cost international payments service. Who do you go to (or, perhaps, who did you go to) when you need to make a payment? That’s right - your bank. Does your bank provide such a service? No. As a result, there is a gap between supply and demand. When incumbents don’t fill the gap, someone else does. Always. This is what leads to disruption. In most cases it’s not the technology itself that disrupts, but new business models.

This time is no different. Several stablecoin initiatives have recently been launched (or are in the works) that fill the gap for an instant, low-cost international payment without the involvement of banks.

Banks must realize who their real competitors are and form new alliances to address these new threats.

Instant, low-cost international payments is a perfect catalyst for this. Banks should adopt a federated stablecoin that enables instant, low-cost international payments to compete with Libra and other initiatives. This stablecoin must be bank-grade, meaning it is secure, safe, fungible between multiple issuers and with clear sight of source of funds to support robust AML and sanctions screening.

 

Santosh Tripathy, Practice Lead, SmartStream Technologies & Pritesh Kotecha, SVP EMEA, SmartStream Technologies, speak at Money 20/20 Europe about the best approach to innovation in a competitive marketplace, what ecosystem players need to take into consideration going forward and how this space is likely to evolve in the future.

Nordic bank-backed P27 has struck a deal with Mastercard to provide the underlying infrastructure for its real-time, cross-border payment project.

Owned by Danske Bank, Handelsbanken, Nordea, OP Financial Group, SEB and Swedbank, P27 is bidding to replace ageing domestic infrastructures with a real-time and batch multi-currency platform that will enable consumers and businesses to send and receive funds across the Nordic markets.

Lars Sjögren, CEO P27 Nordic Payments Platform comments: “This is change for real. By joining forces across the Nordics we will be able to develop instant payment solutions in a way that each country never would accomplish by themselves. By sharing the costs between the Nordic countries, we will get a state of the art payment infrastructure in the Nordics with the highest standard when it comes to security and efficiency; further boosting innovation and growth in the Nordics."

He says the underlying infrastructure is the first step that this partnership is establishing. Thereafter, there will be efforts in developing further common products and services based on the platform.

For banks, the new platform will provide a real-time view of the multiple schemes that are running, participant information, balances across schemes and the addition of a data-rich message set, opening the way for the creation of new revenue opportunities.

Says Sjögren: "The demand from consumers and businesses around the world for instant and account to account payments is growing and this new payment infrastructure will put the Nordic markets at the forefront with an ecosystem that connects all bank accounts. Not too far in the future, family and friends might be able to pay each other using mobile devices, regardless of what service they use or which country they live in. Businesses can take advantage of access to a wider network of customers and suppliers, and the seamless movement of money when paying or getting paid. This one single interface will make it easier for banks to handle all payments - domestic, European and beyond.”

The ambition is to go live 2021, subject to a merger filing approval, clearing license application and final investment commitments.

Visa is beefing up its security credentials by buying the token services and ticketing business of chip maker Rambus. Financial terms of the deal were not disclosed.

Tokenisation - replacing sensitive payments information with a unique identifier (token) - has had a significant effect on securing card payments and reducing fraud at the point of sale and online since being introduced by Visa and others.

Visa says that by buying the Rambus assets - formerly called Bell ID and Ecebs - it can expand the benefits of tokenisation beyond its own cards to any type of transaction, including domestic card networks, account based, and real-time payment systems.

TS Anil, SVP, global head of payment products and platforms, Visa, says: "As the way people and businesses pay and get paid continues to evolve, the addition of Rambus’ technology will allow us to deliver greater security beyond the card to support more transactions, payments systems and participants."

Beyond tokenisation, Rambus’ digital ticketing portfolio will help Visa in its work with public transport operators. The payments giant has nearly 250 transit projects underway around the world as cities look to upgrade their systems for the digital age.

Open, an Indian neo-banking startup targeting SMEs, is set to launch a "programmable" bank account after raising $30 million in a Series B funding round led by Tiger Global Management.

Tanglin Venture Partners Advisors and existing investors 3one4 Capital, Speedinvest and BetterCapital AngelList Syndicate all joined the round for Bangalore-based Open.

Founded in 2017, Open partners regulated banks to offers SMEs and startups a business account designed to automate the way they run their finances by helping with things like payments and bookkeeping.

The firm already has over 100,000 users and says it is adding 20,000 a month., making it the fastest growing SME-focused neo-banking service in the world.

With the new funding in place, Open is set to immediately launch a business credit card, Open+, with a 30-day interest-free credit line.

In addition, the firm is rolling out Layer, a "programmable" bank account that will let developers use APIs to build their own features on top of it and integrate with other services.

Anish Achuthan, CEO, Open, says: "This funding will help us accelerate our target of simplifying business banking for more than 1 million businesses at a greater pace and also launching new products like the Open+ card and Layer that will enhance our value proposition for small businesses."

Marc Corbalan, Product Management, Vocalink, a Mastercard company, speaks at NextGen Banking London about the role AI plays in tackling financial crime, what helps to detect fraud or prevent it, the role of digital identity in tackling crime and how the industry is dealing with the problem collectively.

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