Daily Dash: Hong Kong And Israel Sign Off On CBDC Project

• Hong Kong, Israel Regulators Unveil CBDC Findings
• White House Secures Commitments From Second Round Of AI Firms
• PayPoint Launches PISP Solution
• We’ve Been Robbed, Say US Authors In ChatGPT Lawsuit
• Tempo France Launches Cloud Partnership With DECTA
• US 'Long Away' From Digital Dollar, Says Fed Vice Chair
• 50 Percent Rise In Money Mule Transfers, Warns Irish Banking Lobby
• Australians Happy To Accept Slower Payments To Protect Against Fraud, Says Study
• India Hits Financial Inclusion Target In Six Years
• Adyen Grabs UK Banking Licence As Passport Rules Set To Expire
• Costa Rica Applauds $430m Savings Thanks To Acquiring Fee Cap

Hong Kong, Israel Regulators Unveil CBDC Findings

The Hong Kong Monetary Authority (HKMA), the Bank of Israel (BOI) and the Bank for International Settlements Innovation Hub (BISIH) in Hong Kong have released a joint report on Project Sela, their central bank digital currency (CBDC) initiative.

Project Sela demonstrated the technical feasibility of a retail CBDC architecture that can promote competition and innovation in digital payments, they say, by allowing non-bank payment intermediaries to connect directly to the CBDC ledger of the central bank. 

Leveraging distributed ledger technology (DLT), a proof-of-concept prototype was developed to showcase how the technical implementation of the proposed architecture can incorporate “strict” cybersecurity, legal and policy requirements.

Andrew Abir, deputy governor of the BOI, said that competition and innovation require a “flourishing and open ecosystem” with many different types of service providers, as was demonstrated during the study.

"This was our initial goal in Project Sela as a proof-of-concept, and the project proved the feasibility of the model we had in mind," he said.

"If central bank money is to go digital, cybersecurity is key, and the project provided an opportunity to discuss and study cybersecurity elements of CBDC with our partners."

White House Secures Commitments From Second Round Of AI Firms

Adobe, Cohere, IBM, Nvidia, Palantir, Salesforce, Scale AI and Stability have committed to help drive responsible development of AI technology, the White House has announced.

The companies undertook to develop their AI tools with three core principles in mind, namely “safety”, “security” and “trust”.

Previously in July, Amazon, Anthropic, Google, Inflection, Meta, Microsoft and OpenAI agreed to undertake the same commitments.

The release emphasised that the principles were developed in collaboration with a wide group of countries, including the UK, Australia, Brazil, Japan and others.

The Biden administration said it will “continue to pursue bipartisan legislation to help America lead the way in responsible AI development”.

PayPoint Launches PISP Solution

Utility bill service PayPoint has launched Pay By Bank, a new solution offering account-to-account (A2A) transfers as a payment initiation service provider (PISP) to Pay-As-You-Go energy customers.

"Our most recent Pay By Bank solution offers customers a payment method that requires fewer steps and less data input than others, thereby reducing friction in a customer’s payment journey,” said Jo Toolan, client services director at PayPoint. 

“Uniquely, we have paired this payment option with a Pay-As-You-Go vend, enabling the service for customers using a smart meter.” 

The PISP Pay By Bank solution strengthens PayPoint’s existing open banking portfolio, which includes Confirmation of Payee (CoP), Payer Name Verification (PNV) and Account Information Services (AIS) solutions.

“The launch of Pay By Bank is a major milestone in the evolution of our Open Banking offering and our long-term success in providing omnichannel payment solutions,” said Toolan.

We’ve Been Robbed, Say US Authors In ChatGPT Lawsuit

A group of authors has filed a class action lawsuit against OpenAI over claims the company illegally used their work to train its AI ChatGPT chatbot.

In a complaint filed on September 8 in California, the writers accuse OpenAI of a “clear infringement of their intellectual property” by copying massive amounts of text data from the internet to train the chatbot.

The plaintiffs claim through its operation, OpenAI profits “handsomely” from the illegal use of their copyrighted works and are seeking unquantified damages.

The lawsuit is one of the many copyright-infringement class actions filed by authors against OpenAI and other companies involved in AI training including Microsoft, Meta and Stability AI, according to Reuters.

Tempo France Launches Cloud Partnership With DECTA

Tempo France, operator of Tempo Money Transfer, has signed an agreement with DECTA, a fintech solutions designer, on the use of cloud technology in Tempo’s digital systems.

In a statement, Tempo said that DECTA will provide a range of automated IT services to its money transfer operations.

These will cover digital on-boarding and customer management, transaction processing, accounting feeds and financial reporting. 

“Implementation of the DECTA solution will provide a customised and fully automated workflow for Tempo and enable the EU-based payment company to handle more clients and a greater transaction volume with faster execution rates,” the company said.

US 'Long Away' From Digital Dollar, Says Fed Vice Chair

The United States is “a long way from” issuing a central bank digital currency (CBDC), said Michael Barr, vice chair for supervision at the Federal Reserve.

Speaking at a fintech conference in Philadelphia, Barr defended the Fed's efforts to explore new technologies and innovations in the financial sector, while he assured that this does not mean the Fed would go ahead with issuing a digital dollar any time soon.

He noted that there is ongoing experimentation in the private and public sectors regarding cryptocurrencies, stablecoins and CBDCs.

“In my view, as both the issuer of US currency and an operator in the payments system, the Federal Reserve must understand these developments and the tradeoffs they introduce.”

Barr said the engagement by Fed researchers is “crucial” so that they can support a safe and efficient payments system in the future.

“Of course, investigation and research are very different from decision making about next steps in terms of payments system development, and we are a long way from that,” Barr added.

He affirmed that the Fed “has made no decision” on issuing a CBDC and would only proceed with issuance once it had obtained clear support from the executive branch and authorising legislation from Congress.

50 Percent Rise In Money Mule Transfers, Warns Irish Banking Lobby 

New figures released by the Banking & Payments Federation of Ireland’s (BPFI) FraudSMART have revealed that €17.5m was illegally transferred through money mule accounts in the first half of 2023, a rise of almost 50 percent on figures from the same period in 2022.

FraudSMART members identified more than 2,600 money mule accounts in the first half of this year, with the average amount moved through the accounts in the region of €10,000, more than double the average amount observed in H1 2022. 

The majority of money mule bank accounts continue to belong to those aged between 18 and 24 years of age, with some as young as 15, the BPFI said. 

“Today’s figures from FraudSMART members show a significant rise in money mule activity,” commented Niamh Davenport, BPFI’s financial crime chief. “This may reflect increased levels of activity in text message scams and investment fraud observed by FraudSMART in recent months, as criminals seek ways to launder their profits.”

Australians Happy To Accept Slower Payments To Protect Against Fraud, Says Study

A new study by National Australian Bank (NAB) has found that four in ten consumers would be “extremely prepared” to accept slower payment processing times to protect against fraud.

“Among consumers, older Australians are more willing to trade off speed for safety,” said Ross McEwan, CEO of NAB. “They are also more likely to invest time in educating themselves on scams than young Australians.”

Similarly, half of Australian SMEs said they would be “completely prepared” to reduce payment processing times if it can also reduce fraud.

The findings, which are based on a survey of 2,000 consumers and 760 SMEs, are part of an NAB Consumer & Business Insights study looking at approaches to scams and cybersecurity.

The study also found that only 15 percent of Australian SMEs conduct “extensive training” around scams and other cybersecurity risks.

India Hits Financial Inclusion Target In Six Years

Ahead of the G20 conference in Indian capital New Delhi, it was announced that India has met its financial inclusion target of 80 percent in six years. 

According to a G20 report, India’s advancements were accelerated by digital payment options such as government-backed Jan Dhan Bank accounts, Aadhaar, which is the world's largest biometric ID system, and mobile phones.

Other countries such as Estonia, Singapore and Brazil were also praised for their financial inclusion work in the report. 

For example, the report noted that, in Brazil, the introduction of Pix has accelerated the usage of digital payments beyond any trends observed earlier. 

Fifty million individuals made transfers through Pix when they had not made any account-to-account transfers in the 12 months prior to its launch, the report says. 

Adyen Grabs UK Banking Licence As Passport Rules Set To Expire

Payments giant Adyen has announced that it has been granted authorisation to provide banking services in the UK.

In a statement, Adyen said the authorisation will allow it to continue its current UK operations beyond the end of 2023, following the expiration of the Temporary Permissions Regime (TPR).

The TPR, which came into effect on December 31, 2020, allowed European firms to passport their services to the UK after Brexit, while preparing for full compliance with UK laws.

Adyen said the licence means that it can keep offering its recently launched suite of embedded finance products in the UK.

The suite enables platform businesses to provide bank accounts, virtual or physical cards to small and medium-sized business (SMB) clients. 

Capital, an Adyen cash advance service for SMBs, can also continue.

Costa Rica Applauds $430m Savings Thanks To Acquiring Fee Cap

Costa Rica’s regulations limiting the acquiring fees merchants pay for accepting card payments have saved businesses ₡231bn ($431.5m) between November 2020 and December 2022, the country’s central bank (BCCR) has said.

Costa Rica passed a law in 2020 establishing a 2.5 percent cap on acquiring fees and a 2 percent cap on interchange fees.

After monitoring the market, in December 2022, the central bank decided to lower these caps further to 2 percent for the acquiring fee and 1.5 percent for interchange.

The BCCR now says the fee regulations have levelled the playing field, benefiting more than 22,000 businesses.

It notes that at the time the legislation was passed, the amount of acquisition fees ranged from 0.25 percent to 12 percent, with some smaller businesses paying 48 times higher fees than large ones.

“Today, thanks to the BCCR regulation, pursuant to the national legislation, the highest commission charged for card payments is 2 percent,” the central bank said.

The BCCR confirmed it is also working to reevaluate the acquiring and interchange fee caps for 2024, as required by law.