PYMNTS.com

Consumers and Smaller Businesses Form an Untapped Embedded Lending Market in Germany

2024-09-26T01:47:41Z

Download the Data Brief The Embedded Lending Opportunity: Germany Edition

[contact-form-7]

Embedded lending is growing in popularity around the world. It promises convenient, streamlined access to financing for specific expenses from within merchant, business and other platforms. This is true for individuals and microbusinesses and small businesses (MSBs) that want to align their cash flow and expenses.

In Germany, 14% of consumers and 10% of MSBs overall have recently used this type of lending. We find much greater adoption among key segments. For example, 20% of millennial consumers have recently taken advantage of embedded lending. Among smaller businesses, 18% of those generating between €1.5 million and €9.3 million in annual revenue have used it.

However, users widely experience friction. The biggest problem area is the application process. The fact may be one factor limiting the adoption of this type of lending in Germany. Lenders that address these issues will reach and retain many more customers.

These are some of the key findings explored in “The Embedded Lending Opportunity: Germany Edition,” a PYMNTS Intelligence report commissioned by Visa. This edition details the state of play for embedded lending in Germany for the consumer and MSB market segments. The report draws on a 360-degree study of lenders and end users, conducted between Jan. 13 and March 15.

Inside “The Embedded Lending Opportunity: Germany Edition”:

What embedded lending is and how it differs from traditional products
How the market in Germany compares to those in other major economies
Which consumers and businesses are more likely to use this type of lending
The critical role of cash flow stability in predicting demand
The pain points consumers and MSBs experience when using this type of lending
The obstacles that lenders in Germany face in rolling out products

This report includes crucial information for lenders looking to become market leaders in embedded lending. Download the report to learn more about what’s next in Germany.

The post Consumers and Smaller Businesses Form an Untapped Embedded Lending Market in Germany appeared first on PYMNTS.com.

Beyond Traditional Banking: Insurance Emerges as Key to Diversifying Revenue

2024-09-26T01:50:42Z

Banks face a digital shift, pressures on deposits and competition for customer loyalty, so they must constantly fine-tune their operations, embracing new revenue streams and avenues of customer engagement.

Insurance may seem like a natural fit for banks large and small. Consumers and commercial enterprises have trust in their primary financial institutions. Plus, insurance becomes a critical component of our financial lives as we get older, start families, and want to protect ourselves, our loved ones and all that we’ve built through the years.

Franklin Madison Vice President of Corporate Risk Management Vanessa Stanfield said several factors may be in play that could cause a financial institution to hesitate about marketing insurance to end customers. Simply put, the banks may be focused on what they perceive to be a set of onerous regulatory burdens — and they may even harbor concerns about the lack of operational expertise needed to craft those marketing campaigns in the first place.

“Banks play an important role in the overall financial health of their customers, and offering insurance is another way for them to connect in a meaningful way,” Stanfield said.

Misconceptions in the Mix

Although the insurance industry is a regulated field, there’s no real barrier to entry for banks.

“There isn’t a huge regulatory burden,” Stanfield said.

The Gramm-Leach-Bliley Act allows commercial banks to diversify into other areas beyond deposits and credit, including insurance, offering these products through subsidiaries. Rules governing insurance-focused efforts have not changed much in 20 years and may not change much in the future, Stanfield said.

“These rules are relatively easy to follow from the banks’ perspective,” she said, where the laws in place mandate that, among other things, consumer-facing disclosures need to be clear and concise.

Licensing need not be a daunting hurdle, either, as the National Insurance Producer Registry has uniform licensing applications for state licenses in every state with one application. In addition, the National Association of Insurance Commissioners Producer Licensing Model Act has been adopted by 45 states, which makes it relatively easy for banks to manage licensing compliance, she said.

Stanfield also noted that, contrary to some additional misconceptions, there’s no balance sheet risk tied to the banks’ sale of insurance. It’s the insurance carriers who underwrite the products and carry all the risk — so there’s the advantage of generating income without exposing the bank itself to any additional hazard.

Outsourcing in the Mix

As to the operational “lift” required to ensure banks comply with mandates, Stanfield said that embracing a partnership model — outsourcing those functions to providers such as Franklin Madison — can also smooth go-to-market strategies. There’s a natural progression in using the data and analytics tied to the platform model so that banks can forge marketing campaigns, and even personalized insurance products, that resonate on a customer-by-customer basis.

“We’ve got the marketing experts, we’ve got the compliance experts, and we’re able to put in front of the decision-maker a robust proposal, showing end to end what you can expect, what your customers can expect … and it’s a pretty compelling proposition,” she said.

In addition, Franklin Madison’s sales team will calculate the revenue stream that can be garnered by the bank over the years based on historical response rates and conversion rates.

Looking ahead, Stanfield said the regulatory environment has been stable for banks as they mull bringing insurance to their end customers. That stability is likely to be in place for a while.

“We’re not seeing anything that would impact that environment,” she said, and the time is right to consider how to execute those campaigns sooner rather than later, positively impacting the bank and its customers.

The post Beyond Traditional Banking: Insurance Emerges as Key to Diversifying Revenue appeared first on PYMNTS.com.

Finexio CEO on Why CFOs Can’t Afford to Ignore Automating Payables

2024-09-26T01:54:11Z

Manual accounts payable (AP) operations can cost firms more than they might think.

And the complexity of enterprise AP programs presents a challenge for businesses, particularly as many companies face growing transaction volumes without a corresponding ability to expand staff.

“It’s a serious problem within these AP departments. Completely inefficient manual processes compounded by fragmented systems,” Ernest Rolfson, CEO and founder at Finexio, told PYMNTS.

Rolfson explained that traditional AP operations often involve “swivel chair” activities, with staff manually entering information across disparate platforms, handling paper invoices and issuing physical checks. This fragmented system increases the risk of errors and slows down payment processes while also preventing AP teams from contributing strategically to the business.

At the same time, manually managing sensitive information such as bank accounts or supplier changes exposes companies to fraud — something that Rolfson highlighted as a major concern for CFOs.

“If I’m manually handling payment information … it’s risk, long story short,” he said, noting that as businesses grow and transaction volumes increase, the risk becomes more pronounced, especially when staffing levels remain static or are limited.

That’s why firms are ditching the paper and cashing in on the savings and efficiencies AP automation can bring, transforming how companies operate and driving strategic value beyond cost savings.

Cutting Costs, Boosting Efficiency

According to Rolfson — and he is far from alone in saying so — AP automation is essential for reducing manual effort, minimizing delays and lowering the likelihood of costly errors.

But the current state of AP in most enterprises is disjointed and relentlessly redundant, with companies often juggling multiple systems across different regions or departments. This lack of integration leads to inconsistent data, duplicating efforts and increased risks.

“Many large organizations have unconsolidated, disparately run AP locations or departments,” Rolfson said, adding that firms often rely on three to five disconnected systems to manage their accounts payable, which results in a missed opportunity to centralize and streamline AP operations for greater control and visibility.

As a result, AP teams are asked to do more with fewer resources, balancing manual, operational tasks with more strategic responsibilities — a shift that AP automation platforms are designed to enable by removing time-consuming, repetitive tasks. If you don’t have this in place, “you really can’t scale without adding more bodies,” Rolfson said.

AP automation platforms aim to centralize payments, invoicing and security under a single system. This approach offers a streamlined view of all cash flow activities, making it easier for businesses to track payments in real time while also providing a single source of truth for data-driven decisions. By automating payment execution, exception handling and fraud prevention, companies can reduce the workload for their AP teams, often cutting down the time spent on these tasks by up to 84%, Rolfson said.

When companies assess how well their AP systems might be doing, the entrenched fragmentation of the space can make it difficult to measure the return on investment (ROI) for their AP processes, as it is nearly impossible to gauge performance across such disparate systems. This is ironic, because one of the greatest benefits of AP automation is the ability to demonstrate clear ROI through consolidated operations and real-time reporting.

Driving ROI Through AP Automation

As AP automation evolves, artificial intelligence (AI) and machine learning are playing a critical role in optimizing processes.

Rolfson pointed out that AI can provide both real-time and predictive analytics, improving speed and efficiency while helping companies make smarter decisions about payments and supplier management.

One area where Finexio has seen success with AI is supplier management. Rolfson highlighted that the Finexio platform uses AI to predict the most efficient payment method for each supplier, eliminating much of the guesswork that bogs down AP teams and transforming payment operations from a manual process to a data-driven one.

By leveraging AI to analyze payment data and trends, automated AP innovations can help businesses transition from costly manual methods like checks to more efficient electronic payments, ultimately turning AP into a revenue-generating department rather than a cost center. This capability is particularly important for companies managing thousands of suppliers, many of whom may change their payment preferences annually — a challenge that AI can effectively address by anticipating and responding to these shifts in real time.

As businesses transition to digital platforms, it becomes essential to track and analyze every aspect of their financial operations. Rolfson said that one of the industry’s biggest shortcomings is the lack of analytics and benchmarking tools to help companies assess their performance — a gap that Finexio is addressing with its customer value dashboard.

“You can’t manage or improve anything that you can’t measure,” he said, underscoring the importance of data-driven decision-making in AP processes and how Finexio’s platform enables real-time visibility into every transaction.

“Some of the biggest problems we run into is that companies don’t even know who they’re paying. They don’t have a great record of their vendors; they don’t have a great vendor master; they don’t have tax IDs; they have almost no knowledge,” Rolfson added.

Finexio stands out, he said, by offering a customer value dashboard that tracks every transaction and supplier interaction, assigning a monetary value to each task. This level of granular insight is invaluable for companies looking to optimize their operations.

“We know, hey, you had 200 vendors change their banking information. We know what that’s worth to you,” Rolfson said, underscoring the platform’s ability to translate efficiencies into tangible savings.

In addition to cost savings, automated systems also help prevent fraud by removing human intervention from sensitive tasks. Advanced fraud detection tools, such as real-time transaction monitoring and counterparty validation, are essential in protecting companies from sophisticated threats. The combination of AI-driven analytics and enhanced security measures enables businesses to scale their operations while maintaining a high level of trust in their payment processes by continuously monitoring for anomalies and validating payment changes in real time.

Moreover, digital platforms allow for real-time visibility into cash flow, enabling CFOs and AP teams to make more informed decisions about supplier relationships and payment methods, turning AP departments into strategic enablers for the business.

Looking ahead, Rolfson said that Finexio is making its business-to-business (B2B) payment platform even more accessible via continued investment in the API infrastructure layer.

“We’re making that the infrastructure, the data, the underlying software, more available via API and via integration to let others bring components of this out into the market,” he said.

The post Finexio CEO on Why CFOs Can’t Afford to Ignore Automating Payables appeared first on PYMNTS.com.

BofA: Tech Turns Global Trade’s Paper Jams Into Payment Streams

2024-09-26T01:30:14Z

Global trade, at its heart, is about receivables. One company owes another for the goods or services it has purchased.

While that may sound simple enough, businesses engaged in international trade contend with a range of factors, from geopolitical risks to environmental hazards, that can disrupt supply chains, delay payments and trap valuable working capital.

“Decades of globalization have led to supply chains becoming increasingly complex,” Duncan Lodge, global head of supply chain finance and EMEA head of trade at Bank of America, told PYMNTS. “If you’re dealing with a new company in a different country for the first time, how much do you really know about them? Visibility and resiliency become” important areas of focus.

International commerce and trade often span multiple geographies, involve numerous counterparties and rely on a variety of transportation modes, he said.

Beyond these external risks, the traditional — and ongoing — reliance on paper-based processes can create additional friction and increase the amount of trapped working capital.

Lodge stressed that different countries have varying levels of digital maturity, meaning that paper still plays a role depending on where firms do business.

“At any time, when you have paper, you introduce manual processes,” he said. “That means someone has to extract information, process it and ensure its accuracy — introducing delays, inefficiencies and the potential for error.”

Digital innovations are addressing these pain points and unlocking opportunities for businesses around the globe.

Overcoming the Legacy Challenges of Global Trade

One of the key drawbacks of relying on paper documentation is the reduced end-to-end visibility.

As soon as an exporter sends off their documentation, they lose sight of what’s happening to their transaction, Lodge explained.

“Is the buyer encountering problems with the documents?” he said. “When will they get paid? This uncertainty represents trapped working capital for both the buyer and the seller.”

Given these longstanding challenges, Lodge emphasized the importance of digital transformation in global trade.

“Eradicating paper brings significant benefits in terms of speed, reduced processing risks and improved visibility between counterparties,” he said.

This visibility is crucial for managing counterparty and performance risks — both key concerns in international trade.

Digitalization also unlocks the potential for new forms of financing. For instance, purchase order financing relies heavily on the availability of real-time data. Paper-based processes slow down access to that data, limiting the opportunities for businesses to secure financing earlier in the procurement cycle. Digital trade documentation, on the other hand, provides better data that can be fed into financing models, opening new avenues for liquidity, Lodge explained.

“If investors have better data, they can better understand credit and performance risk dynamics, making trade finance and receivables more investable as an asset class,” he said. “This, in turn, helps plug the trade finance gap — a gap that is only increasing as more companies seek to engage in global trade.”

Using Technology to Mitigate Global Payment Risks

As digitalization gains traction, advanced technologies like APIs are being integrated into trade finance operations to help mitigate payment risks via data visibility. Much of the data that businesses need to make informed decisions is trapped in silos, often within a company’s enterprise resource planning (ERP) system or with third-party logistics providers.

APIs play a role in breaking down these silos and allow companies to access the information they need in real time, Lodge said.

“APIs have been used extensively in consumer applications, but we’re now seeing how they can be applied to trade finance to stitch together ecosystems and expose the necessary data,” he said.

By integrating APIs, logistics providers can share valuable information about the movement of goods, helping buyers and suppliers optimize their processes and reduce uncertainty.

Another key technology that Lodge highlighted as playing an important role in trade finance is optical character recognition (OCR). While digitalization advances, paper documentation is still hard to eradicate entirely, especially in certain jurisdictions where paper-based documents like bills of lading are still legally required.

While OCR has been around for years, the current iteration of the technology has improved its capabilities. Next-gen OCR, unlike previous solutions, can operate with a high degree of accuracy, helping bridge the gap between physical and digital processes and allowing businesses to extract data from paper documents until full digital adoption is possible, Lodge said.

In addition to APIs and OCR, Lodge highlighted the importance of an ecosystem approach to trade finance technology.

“It’s very hard to get all companies to coalesce around a single platform,” he said. “Instead, we need to focus on maximizing the interoperability of platforms so transactions can move seamlessly across different systems. The ability to join the dots across different platforms will be key to driving further digitalization and unlocking the full potential of global trade.”

The post BofA: Tech Turns Global Trade’s Paper Jams Into Payment Streams appeared first on PYMNTS.com.

84% of Healthcare Organizations Report Financial Losses Due to Outdated AR Processes

2024-09-26T00:29:35Z

In an era where convenience is king, the healthcare sector remains shackled by outdated payment processes that jeopardize its financial stability. Despite the promise of digital solutions to enhance efficiency and patient experiences, the industry has been slow to adopt these innovations.

A PYMNTS Intelligence Report, “Pains and Gains: Conquering Healthcare’s Payment Woes,” in collaboration with American Express, highlights critical inefficiencies in healthcare payments and reveals how digital transformation could provide much-needed relief.

Payment Crisis in Healthcare

Inefficient payment systems threaten the financial health of healthcare organizations. More than half of payment leaders are concerned about delays in processing payments and claims, which they see as significant operational risks.

While 80% believe streamlining these processes is crucial, only 53% have adequately automated their workflows, indicating a reliance on manual methods that result in costly errors and lost revenue. Consider 84% of organizations report financial losses due to outdated accounts receivable processes, and 85% recognize the urgent need to improve payment experiences, emphasizing the demand for a comprehensive overhaul.

A dependency on traditional paper statements escalates collection delays. Nearly 70% of providers still use paper for patient communications, while 50% cite that as a primary concern in managing revenue cycles. This antiquated practice not only hampers timely collections, but also prevents healthcare providers from tapping into the efficiency gains offered by digital payment solutions.

Harnessing Digital Solutions

As healthcare begins to recognize the potential of digital payment solutions, innovative companies are stepping in to fill the gaps. For instance, Weave recently introduced payment installment plans that allow healthcare businesses to automate recurring payments, enhancing both patient convenience and administrative efficiency. These types of solutions can alleviate some of the $760 billion to $935 billion wasted annually due to payment inefficiencies.

Partnerships are also emerging to leverage technology for improved financial operations. Companies like Waystar and Meditech are using artificial intelligence (AI) to streamline billing processes and reduce operational costs. By automating payment workflows and enhancing claims accuracy, they aim to create a leaner healthcare ecosystem.

Planet DDS further illustrates this trend with Cloud 9 Pay, which simplifies payment processing in specialized healthcare settings through features like contactless payments and compliance automation.

Navigating Obstacles

Despite the advantages of digital payments, barriers to adoption persist. Cybersecurity risks present a formidable challenge, as the report found 78% of healthcare organizations experienced at least one cybersecurity incident in the past year, impacting care delivery for more than 60% of respondents. These threats underscore the necessity for robust security measures as the sector transitions to digital systems.

Additionally, patient acceptance remains a hurdle. About 26% of healthcare professionals report that patient resistance is a key obstacle to implementing digital payment solutions. Educating patients about these technologies is crucial to alleviate their concerns, particularly among older demographics who may feel intimidated by modern payment methods.

The healthcare industry faces significant challenges that require a multifaceted approach to payment modernization. Key strategies include democratizing access to digital payment resources through education, enhancing patient communication with integrated platforms, and adopting AI-driven billing models for precise cost estimates. Additionally, a comprehensive digital health wallet could streamline transactions while ensuring robust cybersecurity.

To navigate these complexities and reap the rewards of modernization, the sector must embrace digital transformation, which promises to enhance efficiency, improve patient experiences, and secure financial stability.

The post 84% of Healthcare Organizations Report Financial Losses Due to Outdated AR Processes appeared first on PYMNTS.com.

Shifting Digital Payment Trends Prompt New Visa Credential System

2024-09-26T01:23:11Z

For decades, different payment cards existed to serve different purposes: Credit cards have offered the option to pay in full or revolve and pay the minimum balance, and rewards and loyalty programs have varied wildly. Debit cards provide access to funds on hand.

We’ve seen innovation now evolve to reinvent the credit experience with installments and buy now, pay later (BNPL), and debit evolve to an account-to-account (A2A) relationship via open banking. Rewards cards become platforms for creating new ecosystems. But now, as commerce spans the digital and physical realms, Visa Issuing Solutions SVP Kathleen Pierce-Gilmore told Karen Webster in a PYMNTS TV segment, payments are being embedded into a variety of online and offline use cases.

As she noted to Webster, “the pace of change across the last 50 years has been nothing in comparison to what has happened over the last five years.”

Along the way, the payments network is forging smart credentials that go beyond data encryption. Tokenized experiences — still in early days — bring issuers the opportunity to add relevance to consumer use of their digital credentials. The consumer is at the center of it all, building upon the trust and confidence that comes with global acceptance of transacting anywhere in the world with most any merchant.

Consumers, Pierce-Gilmore said, gravitate toward the latest technologies, and now they are looking for issuers to provide a broad range of different payment options — and the choice of how they want to settle the transaction after it’s actually been completed.

Flexible Credentials

Visa earlier this year announced its Flexible Credentials offering, which lets users access several accounts and toggle between payment methods, including credit, debit and BNPL.

“We’re putting maneuverability in the hands of the consumer,” said Pierce-Gilmore, “built off of all of the tremendous infrastructure, scale and security that’s been built up over decades … we’re shifting from the physical credit card or debit card to a set of digital credentials.”

The PAN, she said, has morphed into the token that goes with consumers everywhere they go. Elsewhere, with Visa’s Click to Pay options, Pierce-Gilmore said, consumers can opt to have their preregistered Visa card be the default payment mechanism at checkout. Pierce-Gilmore added that flexible credentials also enable consumers to manage their transactions after the fact — to better understand how and where they are spending.

That level of choice is necessary, said Pierce-Gilmore, who added that “to retain the relationship, they need to give this flexibility to the consumer … and the issuer needs to go where the consumer is.”

At a high level, “the ability to get your card into your digital wallet has to be simple,” she said, “and digital issuance and provisioning has to be easy for a consumer — wherever they are — when they want to get their credentials into those wallets.”

Issuers and Regulators

That’s no easy task for the issuers, as they are busy grappling with new regulations, she told Webster, and a daunting technological challenge to become more “digital” across all levels of their business. There’s still work to be done as they strive to embrace digital issuance or offer individuals in-app provisioning to their favorite digital wallet. Visa’s software developer kits (SDKs), she said, can shave months off that workload.

“The SDK … is a way to make it a lighter lift for our issuers,” she said, “for digital provisioning, digital issuance, in app provisioning and subscription manager — which helps understand how consumers are engaging with brands.”

Once the cards are provisioned, she said, artificial intelligence (AI) can be and is being harnessed to create personalized experience throughout the customer lifecycle. Pierce-Gilmore said AI-assisted shopping can offer better and more prescient recommendations as consumers interact with various brands.

On the back end, she said, the merchants and issuers are able to resolve disputes more quickly or glean customer-level data that can lead to a better experience online, and in brick-and-mortar locations too.

A better shopping experience, she said, is created through AI-underpinned loyalty and rewards offerings that are contextualized in real time (and on a merchant-by-merchant basis), which in turn are informed by the use of the Visa flexible credentials.

Real-Time Protection

The end result is a seamless experience across channels, she said, in the aisles (“I can’t stand watching an inefficient payment experience,” she said) and online, where no one has to click through a dozen steps in order to transact.

No matter the setting or the payments type, battling fraud is essential, she said, and the company continues to innovate in the fraud-defense space. The flexible offerings, she said, can make sure that digital credentials are provisioned to wallets almost immediately, so that consumers and issuers can protect themselves in real time.

“You can continue shopping,” she said, “and there is never the need to get a physical card — so one potential point of vulnerability is taken out of the mix.”

As she told Webster, for issuers and for Visa, as it serves those issuers, “you cannot take your eye off the ball. You have to participate in whatever the consumer is using — and with the notion of tokenization and the payment token itself … there’s a whole world of innovation that’s going to follow.”

The post Shifting Digital Payment Trends Prompt New Visa Credential System appeared first on PYMNTS.com.

Report: OpenAI Plans to Restructure and Become For-Profit Benefit Corporation

2024-09-26T02:07:41Z

OpenAI reportedly plans to restructure its core business into a for-profit benefit corporation that won’t be controlled by its nonprofit board.

Under this plan, the OpenAI nonprofit will own a minority stake in the for-profit company, Reuters reported Wednesday (Sept. 25), citing unnamed sources.

The plan has not been finalized and the timeline for its implementation is uncertain, according to the report.

Asked about the report by Reuters, an OpenAI spokesperson said: “We remain focused on building AI that benefits everyone, and we’re working with our board to ensure that we’re best positioned to succeed in our mission. The nonprofit is core to our mission and will continue to exist.”

The planned restructuring will make the company more attractive to investors, as it would operate more like a typical startup, the report said. OpenAI is also working to remove a cap on returns for investors that it currently has, according to the report.

In addition, the plan would give CEO Sam Altman equity in the for-profit company, per the report.

OpenAI was founded in 2015 as a nonprofit AI research organization and added a for-profit entity called OpenAI LP in 2019 as a subsidiary of the nonprofit, according to the report.

Two of its rivals, Anthropic and Elon Musk’s xAI, are registered as benefit corporations, per the report.

It has been reported in recent weeks that OpenAI is seeking $6.5 billion in funding and a valuation of $150 billion in the funding round. Earlier reports said that the funding round is being led by venture capital firm Thrive Capital; that Microsoft, which has already invested $13 billion in OpenAI since 2019, is expected to participate; and that Apple and Nvidia are in talks to invest in the company as well.

On Sept. 15, it was reported that OpenAI’s $150 billion valuation will depend on whether it can change its corporate structure and remove the profit cap for investors.

The report said that the conditions on the $6.5 billion in funding show the extent of OpenAI’s evolution from a research-based nonprofit and signify the changes it’s willing to make to woo investors to fund its costly efforts in the field of artificial general intelligence (AGI).

The post Report: OpenAI Plans to Restructure and Become For-Profit Benefit Corporation appeared first on PYMNTS.com.

First Abu Dhabi Bank Completes Programmable Payments Pilot With JPM Coin

2024-09-26T01:40:02Z

First Abu Dhabi Bank (FAB) successfully completed a pilot using programmable payments with JPM Coin through Onyx by J.P. Morgan.

This programmability enables payments to be triggered at specific times or events, FAB said in a Tuesday (Sept. 24) press release.

“This successful pilot opens up the possibility of a dynamic and automated funding and settlement solution to FAB and J.P. Morgan’s mutual clients,” the release said. “This solution will enable clients to benefit from Onyx’s real-time and/or event-based programmable capabilities.”

The pilot included FAB’s successful completion of time-based and threshold balance-based account funding into deposit accounts to execute a payment obligation, according to the release.

This innovation can provide flexibility to clients, enable banks to build a wide range of programmable scenarios, and allow treasurers to transition from cash forecasting to dynamic or just-in-time funding, the release said.

The pilot will also lay the groundwork for use cases like automated and conditional invoice payments, margin funding and settlement solutions, per the release.

Naveen Mallela, co-head of Onyx by J.P. Morgan, said in the release: “We are delighted to work with the FAB to extend our programmable payment offerings to multibank use cases. We believe that digital programmable ledgers will form the foundations for the finternet in the coming years.”

Onyx by J.P. Morgan said in November 2023 that it had recently launched programmable payments through JPM Coin and that multinational conglomerate Siemens AG became one of the first companies to utilize the feature.

Peter Rathgeb, group treasurer of Siemens AG, said at the time that programmable payments provide the ability to leverage 24/7 blockchain-based bank accounts combined with programmability, which will enhance automation, optimize working capital utilization, and support data-driven digital business models.

It was reported Sept. 11 that JPMorgan Chase aims to use its blockchain services to boost its corporate banking market share in Switzerland.

The report noted that those services are already being used in Germany by companies like Siemens and that with the help of those and other offerings, the bank is working to grow its corporate banking business in Switzerland over the next three to five years.

The post First Abu Dhabi Bank Completes Programmable Payments Pilot With JPM Coin appeared first on PYMNTS.com.

Lightspeed Commerce Engages in Discussions of ‘Potential Strategic Alternatives’

2024-09-26T00:49:01Z

Lightspeed Commerce responded to media reports of a potential sale of the company, saying that it periodically undertakes a strategic review of its business and that it does not intend to disclose more information except as required by its regulatory obligations.

“While it is the long-standing policy of Lightspeed not to comment on market rumors, the company notes the recent media reports concerning a potential transaction involving the company,” Lightspeed said in a Wednesday (Sept. 25) press release.

“Lightspeed periodically undertakes, and is currently conducting, a strategic review of its business and operations with a view to realizing its full potential,” the company added. “In this context, the company has engaged, and may continue to engage, in discussions relating to a range of potential strategic alternatives.”

The company added in the release that its board of directors is committed to acting in the best interests of Lightspeed and its stakeholders, and that the company does not plan to share more information about these matters except as required under its regulatory obligations.

Reuters reported Wednesday that Lightspeed was working with a financial adviser to explore options, including a potential sale, and that potential buyers could include private equity firms.

The report added that the talks are at an early stage and there is no guarantee there will be a deal.

Since Lightspeed went public about five years ago, its stock has lost more than a third of its value, according to the report. The report attributed the drop to weak consumer spending and a decline in the investor enthusiasm for FinTech stocks that was seen during the pandemic.

It was reported in March that Dax Dasilva, the founder of Lightspeed who was interim CEO at the time and is now CEO, was wondering if going private would be a better option for the company.

The report said that Dasilva believed the stock market was a good place for Lightspeed, but he wondered if the company could do more as a private company. He added that the firm is always open to discussions on that topic.

In May, Dasilva told PYMNTS CEO Karen Webster in an interview: “We’ve got profitability as an absolute priority. We’ve cut costs across the company and capture operational efficiencies.”

The post Lightspeed Commerce Engages in Discussions of ‘Potential Strategic Alternatives’ appeared first on PYMNTS.com.

LatAm Draws FinTechs Seeking to Transform Digital Banking

2024-09-26T00:19:38Z

Digitally savvy, younger consumers with mobile devices in hand.

Underbanked and even unbanked populations ripe for financial inclusion.

A regulatory environment conducive to digital innovation.

It comes as no surprise, given the above statements, that Latin America would prove to be a key target for FinTechs seeking to transform financial services.

Among just two recent examples:

Earlier this month, Mercado Pago, which operates as the FinTech unit of Mercado Libre, the eCommerce platform, applied for a banking license in Mexico.

The move comes after the company said in a statement dating back to May that it would seek to become the largest digital bank in Mexico once that license was in place, coming after a period, where, as the company said, with “two years of successful operation as an Electronic Payment Funds Institution (IFPE), which saw its user base quintuple and become one of the leading digital accounts in Mexico … our millions of users see us as their digital bank.”

Currently Mercado Pago offers Mastercard debit cards and Visa credit cards, provides daily yield rates on the available balance in the digital account, and offers personal loans and financing for SMEs. The company also has made progress in digitizing cash, “with over 10,000 partner establishments for deposits and withdrawals, which is crucial in a country with high cash usage,” the company said in its statement.

Elsewhere, as PYMNTS reported last week, Nasdaq is providing its AxiomSL regulatory reporting tool to Nubank, the region’s digital banking giant.

“The agreement extends Nasdaq’s existing partnership with Nubank, which includes providing the technology that underpins the bank’s treasury function — managing its fixed income and money market operations — and now the bank’s regulatory reporting obligations in Colombia,” according to the announcement. The arrangement also reflects rising demand in Latin America for third-party FinTech solutions as digital banking grows more popular, according to the release.

Smartphones at the Ready

Brazil stands out here as an example of LatAm’s appeal, given the fact that, as PYMNTS has reported, two-thirds of consumers own smartphones, the average sample age is 42, lower than the roughly 48 we estimated across 11 countries, and 39% are millennials, as compared to the overall average of 29%. Brazil had the highest number of activity days, at 361 (12 activities per day) as a measure of digital engagement, and 63% of consumers engage in mobile banking at least weekly.

In a separate report published in June, the IDB said that overall, the FinTech ecosystem in Latin America experienced 340% growth as measured in the 2017 to 2023 time frame, with more than 3,000 FinTechs across roughly two dozen countries.

Brazil and Mexico and Colombia account for 57% of those companies. “Brazil continues to be the country in the region with the highest number of FinTech startups, with 24% of the total. Mexico follows with 20%,” wrote the IDB, adding, “The leading segments in terms of the number of platforms in the region continue to be payments and remittances, with 21% of the total companies, loans with 19%, and corporate finance management with 13%.”

The post LatAm Draws FinTechs Seeking to Transform Digital Banking appeared first on PYMNTS.com.