Monoup news digest: main updates from fintech industry
Friday news roundup from Monoup is here again. Well, legalization of crypto in the U.S. is not going unnoticed by payment providers, who are constantly looking for ways to save on domestic transfers. Although stablecoins have long been unappealing to traditional large fintech due to regulatory complexities, everything has changed now: U.S. President's openly positive stance on crypto will allow this technology to be implemented not only by banks but also by e-commerce acquirers. What Nuvei is planning and how it will help merchants — follow on in the article.
Meanwhile, in the UK, tensions are rising around small fintech and their involvement in illegitimate transactions. Are scammers targeting small EMIs and payment companies? Let's take a closer look.
Reviewing what happened this week in fintech and iGaming, keeping our finger on the pulse of events.
Nuvei Implements Crypto-Rails for Merchant Payouts
Nuvei will offer merchant settlement on the same day or the next day after funds are received into its accounts. This is made possible by converting fiat funds from acquiring into stablecoins at the same moment and then transferring them to next financial institution via intermediaries, if necessary.
Importantly, for merchants, only the speed of transaction will change, while the funds will still be received in a bank account, as before. Nuvei does not plan to make payouts to crypto wallets. Although this may not sound groundbreaking, it is actually a very significant change for traditional PSPs. Since payouts via standard method can take weeks, making card acquiring extremely slow for many merchants (as funds remain in transit and cannot be used), this freezes cash flows and can even lead to cash flow gaps for startups. For many startups, speed of fund turnover is key to their profitability and even long-term survival. While working with large, cumbersome providers like Nuvei brings good payment approval ratios and service quality, it negatively impacts cash flow.
By changing the way funds are moved, Nuvei will be able to pay merchants almost instantly. Although such a scheme has long existed for many market participants, its regulatory justification will only come after the U.S. GENIUS Act is passed.
Small Digital Banks in the UK are Growing Regulatory Warnings
Meanwhile, small fintech and EMIs that most definitely positively impact startup cash flow have come to an eye of UK regulators. FCA, together with FATF, focused on such financial institutions because its new findings that most stolen funds end up in accounts at such online banks with small compliance teams and faster onboarding.
This is a significant advantage for businesses, but regulators note the increased risk of such rapid processes, as they attract fraudsters. This allows criminals to avoid lengthy processes and quickly obtain an account with international IBAN for their payments. Analysis for 2023 shows that 53% of stolen funds were immediately transferred to accounts in small fintech firms and passed through a series of similar companies. Due to a lack of personnel and resources, small neobanks fail to achieve the necessary level of compliance at the account opening stage and in monitoring subsequent transactions.
While this may sound harmless for now, such statements could potentially lead to stricter requirements for small online banks and a reduction in their numbers in the market. To avoid fines and increased regulatory attention, some of them may have to refuse suspicious clients, meaning they will lose profits and possibly cease operations. It is no secret that many small fintechs earn money from a stream of clients, receiving fees for opening and closing accounts.
Similar situations have led to the licenses being revoked from Lithuanian EMIs such as Trustcom Financial, Kevin, Finolita, and Transactive Systems over the past few years. Regulation violations and questionable compliance have the potential to lead to actual bankruptcy.
PIN-UP Casino Funds Confiscated to Ukraine’s Budget
Ihor Zotko, the nominee director of payment company TOV "Ukr Game Tekhnolohii," which had a direct connection to PIN-UP casino brand, was found guilty of a series of offenses after being detained months earlier.
On August 10, a court verdict was announced, mandating the forced, uncompensated confiscation of over 2.6 billion UAH and the income generated from managing these funds, which currently amounts to over 200 million UAH, to the state. Recall that Ihor Zotko was detained in Ukraine in January. Our Telegram channel was one of the first to report on this, so we recommend following us to stay updated on similar news. Mr. Zotko is the founder and director of two companies that operated in the country under the PIN-UP brand.
Law enforcement agencies were immediately able to confirm the connection between the actual owners of PIN-UP casino and the detained director, who reportedly often met in Cyprus and spent time together. Based on the collected evidence, suspicions were raised, and the case reached its conclusion only now.
Here are the news highlights for this week from Monoup. More publications can be found in our Telegram channel, and articles are available in the MonoTalks section.
