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The request for a combined processor of pay-by-bank and cards is a growing trend, with some interesting dynamics.

Will open banking PISP aggregators partner with card acquirers, will they build/buy their own card capabilities or will there be mergers between the two? Often acquirers offer pay-by-bank services, but it is a side show compared to their card volumes and it is also a risk that may cannabalise higher margin card volumes - cards and pay-by-bank are uneasy bedfellows, no doubt AIS data insights will be used to differentiate deals.

Tokenized assets present a huge risk of fraudulent fractional ownership. It is very difficult without complex and persistent auditing to enforce a 1:1 relationship between a real world asset and the digital assets that tokenise it.

An example is the London precious metals market where the paper contracts sold are believed to have combined claims vastly exceeding the metal available. It works until too many paper holders request delivery. This is an old world problem that will continue through to new world tokenization.

This is a typical example of government overreach - the Dutch government has no evidence for its concerns as BNPL is not available in physcial stores. Citing "vulnerable groups" is a classic catch-all used to justify anything. If it was genuinely concerned it would wait to review the usage after 12 months and take any action as necessary if issues become apparent.

It suggest the government has other motives - for example, it may want to avoid a new innovative and popular solution competing with the digital euro which the bureaucrats are pushing.

This is a sensible move. Both payment initiation services and account information services in open banking need their own set of operating and participation rules.

A separate scheme/operator for each may be the best solution. 

I believe that "drawing on US experience" means allowing individual retailers to set their own contactless limits, which is fair. 

I hope so - then retailers can set limits to their own risk appetite based on their own experience, rather than being forced to accept high value unauthorised, potentially fraudulent card payments.

Otherwise, raising the contactless card limit further will increase contactless fraud. It jumped 80% (according to UK Finance's 2024 fraud report) in 2022 after the limit was rasied from £45 to £100 in late 2021 and rose a further 19% in 2023.

UK Finance plays down the significance of contactless fraud - although one third of all lost & stolen card spend (i.e. fraud ) was contactless in 2023, it was relatively low in total at £41.5 million, with the contactless fraud-to-turnover ratio below that for unauthorised card fraud overall.

Any changes the FCA makes to contactless limits must keep a lid on fraud.

This works best with the participation of commercial banks.

Technically, cross-border payments using TIPS should be straightforward, but the complication comes with providing liquidity (funds) and managing FX.

Central banks are used to managing liqudity and reserves to meet their monetary and financial stability objectives, but I expect that most will be uncomfortable doing so to meet the operational requirements of cross-border payment flows and taking on FX risk. This is bread-and-butter for commercial banks and best done by them, but TIPS is owned and run by the ECB which probably complicate matters.

It certainly looks as if stablecoins could start eating into debit cards and credit cards, but only in the USA for now, where cards are very expensive and USD stablecoins are proliferating. The main everyday use for stablecoins outside of crypto is in cross-border remittances, ecommerce and B2B payments, especially in USD - making it unlikely stablecoins will scale in other currencies any time soon. 

I am unsure it is correct to say stablecoins developed out of a need for crypto traders to avoid volatile price swings. Certainly, they can be used to dip in and out of crypto very quickly, but they really developed to avoid dependency on bank payments to settle crypto trades, in an environment where banks had no appetite to have any association with crypto.

More on the topic here: https://jeremylight.substack.com/p/stablecoin-to-heaven?r=axqgy

Curious to see how PhonePe with 48% share of UPI transactions and Google Pay with 37% are expected to reduce their share below 30%. 

What do they do - limit the number of payments per customer? end the service to a proportion of customers? degrade their services so customers start migrating to others? transfer arbitrarily a proportion of their customers to another provider? start charging customers to drive them away? 

Its difficult to see how any such measures benefit customers or competition or have anything to do with running with a business properly.

the European Court of Auditors? wow - only in the EU....

FDIC deposit insurance distorts the free market and introduces moral hazard - the $250k limit is way in excess of average deposits, giving unearned risk free returns to wealthy individuals and businesses. Small banks subsidize big banks by paying disproportionatly more. Also, big banks are far more likely to get favorable treatment, including bailouts - depositors over the $250k limit in the tiny First National Bank of Lindsay received nothing this year, wheareas all SVB depositors were made good in full, go figure - it's all political.

The FDIC has funds worth only 1.21% of its exposure and is in no position to bailout depositors in the event of a major bank collapse. It is more a political scheme than an insurance scheme, to insulate large banks from market downsides.

Instead of compulosry FDIC contributions, banks should be allowed to make their own, non-compulsory, private insurance arrangements - the market and consumers will be much better off.