Monoup news digest: main updates from fintech industry

As always, we keep a close eye on all events in payment industry and have compiled a digest of the most influential ones. A major and single American neobank suffered due to poor AML procedures of its partner bank, and Visa and Mastercard are once again at the center of huge scandal.

Payment systems are accused of processing illegal casinos. The Guardian, which has repeatedly confirmed its tough stance against gambling, generally does not support gambling advertising and does not publish articles about gambling products, even for money, investigated this matter recently. The journalists conducted an entire investigation under a loud headline and are trying to shake the industry of payment systems as Visa/Master logos were found on gambling sites. Details in the article below.

Also in our set are the main news of this week that you might have missed in rush of work tasks. We have gathered the key information and will publish it in a short and understandable format. Even if you are not an expert, you will understand everything. Enjoy reading!

Mercury disconnects from Evolve Bank

American fintech Mercury is forced to change partnering bank. Mercury's long-time partner, Evolve Bank, faced federal prosecution, revealing gaps in its AML and compliance procedures.

This situation is quite standard. Similar exposures happen worldwide, and banks either pay huge fines or cease operations. This once again shows that no one is protected and imperfect procedures will cost more and more. Therefore, paying attention to AML issues is important and necessary, even if you are not a bank but a business dealing with clients.

While this issue is being resolved, Mercury has decided not to waste time and has connected with two new banks: Column Bank and Choice Bank. The fintech company assures that everything will remain the same for clients, or even improve, but they will need to undergo KYC procedures again and sign new contracts.

UK Payment Systems Regulator to be closed

For a long time, the regulatory body overseeing payment systems in Britain, primarily monitoring Mastercard and Faster Payments, has been actively operating. However, a decision was made to dissolve Payment Systems Regulator (PSR) and transfer all its responsibilities to the FCA. Financial Conduct Authority is well-known to us, as it is the organization that issues licenses to fintech companies in the UK.

British government is actively moving forward with its Plan for Change, and more innovations based on it are expected to come. The country aims to simplify life for everyone, and centralization of payment and financial issues will help fintech businesses operate more effectively. Now they will report to a single regulator, which can closely monitor and control their activities.

However, some industry representatives have commented on this change with a touch of irony, as the dissolved PSR has always been closely cooperating and was part of FCA. Some employees even shared roles in both agencies. Therefore, it is unclear what will critically change. At the very least, guys will have less paperwork.

Visa and Mastercard investigation in The Guardian

Here we are with the main news of this week: investigative article in The Guardian revealed the presence of Visa and Mastercard payment methods on several illegal online casinos in the UK.

The article caused a stir with its loud headline and undoubtedly made it into the most impressive headlines. It should be noted that for many, it does not contain any new facts. Although the article's message sounds as if it is intended to tarnish the reputation of Visa and Mastercard and expose their illegal activities, we believe its goal may be different — to draw attention once again to illegal casino operators. This problem is acute in the UK, and regulator cannot cope with the illegal operators. Threats to payment systems and major processing partners can seriously shake this part of the industry if they refuse to provide services.

However, we want to note the basics of financial system's functioning and declare the main point: neither Visa nor Mastercard act as direct acquirers and they both do not have direct communication with merchants whose sites may feature their card acceptance logos. This is trusted to partner banks, and responsibility of verifying all merchants lies with them. Despite this, both companies voluntarily agreed to help track and combat violations, although this is not their primary function.

Worldline and its service PaymentIQ, which insist they play a technical role and do not process payments, also came under scrutiny. Whether PaymentIQ will change its approach and stop providing technical services to illegal operators is not yet known.

At the same time, a dispute is ongoing in the UK between Visa, Mastercard, and regulator over their processing fees that increase yearly. This article will likely add to the resonance around both payment systems. We will also monitor further actions of the UK Gambling Commission related to these illegal websites covered in the article. But one point is clear that Visa and Mastercard are not directly to blame in this situation, even they have committed to investigating and addressing the issue.

North Macedonia and Moldova join SEPA zone

New participants in the unified European payment system: North Macedonia and Moldova. European Payments Council has finally approved the applications of both countries to join SEPA, and active developments are underway to start operating payments as soon as possible.

Moldova and North Macedonia will gain access to the full functionality of SEPA, including Credit Transfer, SEPA Instant Credit Transfer, and SEPA Direct Debit. This will open new horizons for cooperation with other European countries and help process payments faster without using the SWIFT system. Local banks and payment systems will also become full-fledged participants in the European market and will be able to offer higher-quality services, opening the way for businesses to European clients.

SEPA zone now covers 40 European countries, including non-EU members. This once again confirms that EU payment ecosystem is open, despite some political and governmental factors, and may help in European integration to those who are not yet accepted into the EU.

That's the news! Stay tuned for more updates on fintech and payments with us. Subscribe to our Telegram channel and follow new expert articles. Stay connected!