The payments industry is a compelling space, but it’s a time consuming one as well. You might not have time to keep track of every major story and trend or every funny and fascinating tidbit that we cover on everyone’s favorite payments site.
With that in mind, we bring you What’s In And What’s Out: a weekly look at the best stories from the PYMNTS.com EMEA newsletter, and a bit of light reading before you take off for the weekend.
Make sure to understand What’s In so you avoid being part of What’s Out!
Traditional Banking Sets Back Middle East Credit System
What’s In: Allowing the government-installed credit bureau to take care of unpaid debt in the U.A.E.
What’s Out: Expecting the U.A.E. police to bust and imprison customers who can’t pay off loans. Somehow this seems a bit out of their jurisdiction.
What Happened: The U.A.E.’s progression in the financial industry is noticeably behind the rest of the world. Several other Gulf countries have similar issues, and many lack mature credit bureaus, collateral registries and the ability to enforce legal action to collect debt. The cause for the Middle East’s underdeveloped financial infrastructure is partially due to its outdated banking infrastructure.
Traditional Islamic banks wanted to match their religious morals with financial systems. Islamic banks often relied on personal experience and subjective judgment to determine creditworthiness. Additionally, banks believed adding interest to credit loans were a form of stealing and deemed it unacceptable.
Years later, various countries in the Middle East are suffering greatly from huge losses because of consumers who can’t afford to pay back loans.
The U.A.E. announced the country’s first formal credit bureau would be opening later this month to help improve the lending system and mitigate on-going debt issues.
Congratulations, and welcome to the 21st century.
The French Give America The Finger
What’s In: Paying for groceries in the north of France with a simple finger-scanning device.
What’s Out: Holding up the checkout line in French grocery stores because you’re paying by card. Amateur.
What Happened: The U.S.-based company, Pay By Touch, introduced the revolutionary biometric finger scanning payment device back in 2006, but went out of business only two years after launch. Almost a decade later, the French showed them how it was done.
Last October, French supermarket chain Auchan and DIY store Leroy Merlin, commenced a six-month trial that allowed shoppers to pay for groceries with just a fingerprint scan. During the six-month period the fingerprint technology attracted over 900 customers who conducted over 5,000 payment transactions. The figures prove a high adoption rate and successful trial.
A recent survey published by WorldPay reported that 49 percent of European consumers were eager to see biometric payments emerge as a payment option in retail stores. The success of the French pilot indicated these results were on-point.
Natural Security, the company behind the device, has hinted towards a commercial launch in the near future.
Where will Brits cash their tax checks now?
What’s In: Shutting down Payday lenders across the UK that try and take advantage of vulnerable consumers.
What’s Out: Payday lenders in the UK dodging regulatory pressure and continuing to scam consumers.
What Happened: This week the regulatory pressure became too much and two UK payday lenders finally threw in the towel and surrendered their licenses. Eight others said they would be leaving the payday loan business in response to letters sent by the country’s Office of Fair Trading (OFT) in March of this year.
While this may be seen as a victory for U.K. residents who have called the business practices of these companies unfair, a closer look at the data behind payday loan use in the nation paints a more complex picture. By limiting the supply of payday loans, U.K. regulators may actually be leaving up to 6 percent of the population vulnerable to bankruptcy and the financial disadvantages that can come with this status.
Regulators will keep cracking down as they wait to see how the remaining companies will respond.
Barclays Banks Tells Somalis: You Don’t Get To Phone-A-Friend
What’s In: Barclays Bank mandating a directive to withdraw its money transfer operations in Somalia to prohibit terrorism financing and money laundering.
What’s Out: Barclays Bank’s decision to end money transfer services and disrupt the Somali businesses and families who rely on money transfers from overseas.
What Happened: Somalis and their businesses are getting cut short of their “lifeline” pass since Barclays Banks decided to remove its services from over 250 money transfer companies in Somalia.
Barclays Bank’s decision to stop its services in Somali transfer firms may be diverting terrorist, but it could also be strangling the Somali economy.
The Somalia government is begging the British government to reconsider its actions in fear that cutting off services will disrupt the country’s remittances. Additionally, officials are concerned that the removal will inadvertently encourage the emergence of illegal transfer replacements.
Forty-percent of the Somali population rely on these remittance services to survive, as well as the local businesses that need financial support from relatives abroad.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
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