Category: Uncategorized

A pattern ties this week’s scatter of headlines together: payment value is sliding back onto home-built, regulator-approved, or single-purpose rails. Japan’s surge in cash-free shopping is pushing the Bank of Japan toward a domestic CBDC; Brussels is sharpening its antitrust knife for Visa and Mastercard’s cross-border fees; Washington is racing to wrap stablecoins in a U.S. flag; Thailand is welding PromptPay to India’s UPI; Shopify is nudging British merchants onto local pay-by-bank. The question behind every story is no longer “Visa or Mastercard?” but “Whose rail, whose rules, whose currency?”

1 | Headlines

Japan races past its own cashless target. Cash-free payments hit 42.8 % of consumer spend in 2024, a full year ahead of Tokyo’s goal, prompting Bank of Japan officials to talk up a digital-yen blueprint and warn that foreign stablecoins could erode the yen’s role if the BOJ fails to modernise.
So what? A CBDC pilot that once felt academic is sliding toward policy-must.

Brussels reloads its antitrust probe into Visa and Mastercard. Fresh questionnaires landed on 3 June asking PSPs whether the schemes’ “inter-regional” fee bundles strangle competition.
So what? A formal Statement of Objections could lop another 40 bps off cross-border swipe fees and dull one of the open-banking lobby’s sharpest selling points.

The GENIUS Act heads for a Senate showdown with 122 amendments. A floor vote set for 11 June could deliver America’s first federal stablecoin law, complete with 1-for-1 reserve rules and a path for state-chartered issuers.
So what? Tokenised dollars may enter the banking mainstream before a U.S. CBDC is even on the table.

FedNow tops 1,500 participating banks and lands its first ADP payroll pilot. A 9 June roster update shows 1,526 live FIs, and ADP confirmed its maiden instant-salary credits on 31 May.
So what? When pay-day hits in seconds, ACH-only employers look positively analog.

Thailand and India sign off on a PromptPay ↔ UPI QR corridor. The Bank of Thailand and NPCI inked an MoU on 2 June; tourist pilots go live in October.
So what? Two of Asia’s biggest wallet ecosystems—together worth 1.7 billion users—just gave card schemes something new to worry about.

Shopify flips the “Pay by Bank” switch in the UK. A 30 May release lets Shopify Plus merchants embed TrueLayer’s open-banking checkout.
So what? Debit-heavy British e-commerce finally gets an account-to-account button native to the cart, not bolted on as an afterthought.

2 | Deep dive — The GENIUS Act: can Washington’s “home-grown dollar” out-run a Fed-issued CBDC?

Two years of congressional skirmish over stablecoins reached endgame last week: the Guiding the Evolution of Numismatics In the United States Act—mercifully shortened to GENIUS—hit the Senate floor. The bill would yank low-risk, dollar-backed stablecoins out of securities limbo and hand supervisory keys to the Fed for megascale issuers and to state regulators for wallets under US $10 billion. Reserve assets must sit in T-bills or Fed balances; redemptions must complete inside 24 hours.

Why does it matter?

• Tokenised deposits at bank scale. JPMorgan’s Onyx and Citi’s Regulated Liability Network suddenly have a federal playbook instead of no-action letters.
• Cross-border leapfrog. A compliant, on-chain dollar that settles in 30 seconds gives U.S. regulators a weapon against China’s e-CNY without touching the quagmire of retail CBDC politics.
• Fraud and KYC heat. Parallel amendments would compel monthly attestations and empower FinCEN to freeze non-compliant tokens—turning the wild west into something closer to a bank branch.

If the bill passes, circle your calendar for Q1 2026: that’s when early-bird issuers must finish audits and hit the “go” button—or redeem every last token. Either way, the private stablecoin world will switch overnight from regulatory twilight to bright-light oversight.

3 | Word of the week — Rail re-shoring

When a country, bloc or ecosystem deliberately shifts payment volume off global networks (cards, SWIFT, dollar wires) onto local, government-blessed rails—be that a CBDC, a domestic QR scheme or a stablecoin ring-fenced by national rules.

Why it matters: lower fees, tighter AML visibility and political leverage at home; fragmentation headaches abroad.

4 | Payment fact of the week — How India’s RuPay card turned “rail re-shoring” from slogan into daily swipe

When the National Payments Corporation of India (NPCI) switched on RuPay in March 2012, the country’s debit market was almost entirely fenced by Visa and Mastercard. Domestic purchases—more than 90% of all card transactions—still detoured through foreign switches, and Indian banks paid annual affiliation fees that were little more than the cost of routing bytes across an ocean. RuPay’s pitch was blunt: keep the traffic, the data and the price-setting power at home. (en.wikipedia.org)

The early traction was slow, but two tail-winds changed the math. First came the Jan Dhan financial-inclusion drive, which distributed millions of zero-balance bank accounts—each with a RuPay debit card—across India’s rural districts. By late 2024 RuPay accounted for about 65% of all debit cards issued in the country, flipping the market share Visa and Mastercard once took for granted. (linkedin.com)

Then, on the first day of 2020, New Delhi executed a fee gambit no international network would dare: it slashed the merchant-discount rate on every RuPay debit swipe to 0% for transactions under ₹2,000 and barred banks from passing any MDR on to small shops. The same order zeroed MDR on UPI, but only RuPay could promise card acceptance without a rupee in fees—an unanswerable selling point for micro-merchants tired of the 1–1.5% they sent to foreign schemes. (pwc.in)

Today more than 750 million RuPay cards ride a fully domestic switch, earning NPCI pennies instead of dollars—but pennies that stay within India’s borders and feed back into local innovation such as RuPay-on-UPI “credit lines” and National Common Mobility transit cards. Visa and Mastercard still dominate cross-border spend, yet on home soil the rail has been re-shored: every grocery swipe in Goa or metro tap in Mumbai settles without ever leaving the country, a live-fire proof that national payment sovereignty can move from policy memo to plastic in just over a decade.

Pass the newsletter to three friends and rack up some rail-re-shoring karma. It won’t slash interchange—yet—but neither will another webinar.

Beneath the headlines of reimbursement mandates and shiny card-network APIs sits a quieter, structural shift: payments are retreating to home turf.

China is pressing exporters to settle 40% of invoices in renminbi rather than dollars; Thailand and India are welding their domestic QR systems together; Brussels is sharpening its knife for Visa/Mastercard’s cross-border fees; Shopify is giving British merchants a pay-by-bank button that never leaves the U.K.’s Faster Payments rail. Each story is different, yet they rhyme: value is being routed onto local or purpose-built networks that promise lower cost, tighter compliance and political insulation.

This newsletter follows that thread—how regulators, merchants and even card schemes themselves are repositioning for a world where the dominant question is no longer “Visa or Mastercard?” but “Whose rail, whose rules, and whose currency?”.

1 | Headlines

• Beijing widens the yuan net. The PBOC lifted the minimum share of export invoices that banks must settle in renminbi from 25% to 40%. The carrot? Cheaper CIPS credit lines for lenders that exceed the target. So what? Even a single-digit shift of China’s US $3 trn export machine into RMB cuts dollar demand and gifts Chinese banks fresh correspondent-fee revenue.
• UK rolls out mandatory APP-fraud pay-backs. The Payment Systems Regulator’s new policy statement (PS25/5) confirms that, from 7 Oct 2025, Faster Payments banks must reimburse scam victims, with costs split 50 / 50 between sending and receiving PSPs. So what? Fraud losses will be socialised across the whole network, handing acquirers a huge incentive to police mule accounts—and giving other jurisdictions a ready-made template.
• Mastercard courts Main Street. The card giant launched Small Business Navigator, bundling an AI fraud-cop, tap-on-phone acceptance and free data from the Mastercard Economics Institute. So what? Visa has long owned the SMB love-fest; Navigator is Mastercard’s play to lock merchants into its rails before surging FedNow and pay-by-bank offerings nibble at SME card volume.
• Africa eyes a trillion-dollar corridor. A new Oui Capital report pegs the continent’s cross-border-payment market at US $329 bn today—on course to hit US $1 trn by 2035 thanks to mobile wallets and PAPSS. So what? A tripling of flows would slash dollar clearing fees and hand African central banks real leverage in global FX.
• The remittance tax that won’t die. Washington’s latest all-in-one tax bill carries a 3.5% levy on money transfers by non-citizens. So what? Adding US $6 to a US $200 remittance would flip many migrants to hawala-style cash networks—hurting AML visibility and the US$ 160 bn Latin-American corridors the hardest.

2 | Deep dive: Beijing’s RMB play—can a 40 % rule move the dollar?

China’s exporters still bill nearly three-quarters of shipments in dollars—legacy inertia that hands US banks fat correspondent fees and gives Washington tariff leverage. Last Wednesday, the PBOC turned the screws: state banks must now clear at least 40% of their trade book in yuan, up from 25%. The sweetener is dirt-cheap liquidity via CIPS; the stick is tougher FX-risk capital rules for laggards.

Why it matters

• Dollar drainage. Shifting just 5% of China’s exports (≈ US $150 bn) into RMB dumps US $150 bn of annual demand—enough to jolt funding spreads in frontier markets that live on greenbacks.
• Fee migration. Every RMB invoice steers payments off SWIFT toward CIPS, whose per-transaction cost is a fraction of New York-cleared wires—revenues that formerly landed with global correspondent banks now ring-fence inside China.
• Commodity shockwaves. Copper and steel traders are already quoting dual currency terms. If iron-ore shipments swing, Australia’s miners could wake to RMB-denominated order books, forcing treasury desks to rethink hedging playbooks.
• FX-hedge tech arms race. Global PSPs eyeing China trade (Adyen, Stripe) must bolt on low-cost CIPS gateways or watch volume evaporate to domestic rivals armed with on-shore RMB liquidity.

What could trip it up

• Liquidity deserts outside Asia. Importers from Africa to South America still struggle to source RMB on demand; a rapid dollar-to-yuan flip risks settlement delays unless offshore pools deepen.
• Political blow-back. Washington can weaponise tariff rounds or secondary sanctions to discourage RMB settlement, pushing multinationals to play it safe with dollars.

Bottom line: the 40% rule won’t dethrone the dollar overnight, but it weaponises invoices—turning every export contract into a micro-battle in the wider currency war.

3 | Word of the week: Alias Directory

What it means
An alias directory lets users send money to “JohnDoe@bank” or a mobile number instead of a 15-digit IBAN. The directory maps that friendly handle to the real account behind the scenes.

Why payments folk care

• Makes instant rails sticky—nobody remembers an IBAN at the checkout.
• Slashes mis-directed payments: the directory can preview the recipient’s name before you hit send (India’s new UPI rule borrows this trick).
• Hot area for fraud—synthetic IDs love an alias, so strong KYC at registration is gold dust.

4 | Payment fact of the week

How a dingy Hangzhou tea-shop birthed QR-code dominance

Walk back to July 2011, when Hangzhou still ran on cash and the nearest point-of-sale terminal cost more than a month’s rent. A young Alipay evangelist ducked into Lao Yu’s two-metre-wide teashop and printed a black-and-white square on ordinary paper. Yu stuck the square to his till, opened an Android app and—when the next student ordered oolong—scanned the customer’s wallet code. The ¥6 payment landed instantly in Yu’s account. No mag-stripe reader, no settlement delay, no 1.5% swipe fee—just a camera, a data connection and a bitmap that anyone could copy for free. In that scruffy moment, QR-code pull-payments were born.

Traditional cards had always brought hidden baggage: plastic blanks, embossers, PCI audits, chargeback paperwork, and hardware that froze in China’s humid alleys. Even when UnionPay pushed terminals into tier-one cities, street stalls balked at the monthly rental and the two-day wait for funds. Alipay’s square of pixels vaporised the whole stack. Phone cameras were already everywhere; merchants paid zero to print a code and the 0.38% fee the People’s Bank later enshrined looked charitable next to global interchange. For shoppers, typing a PIN on someone else’s keypad suddenly felt medieval when a quick scan did the job.

The network effects came fast. Within twelve months, a million micro-merchants from tea stalls to Sichuan buskers were taping up static codes; by 2016 China’s mobile-payment volume hit US $5.5 trillion, dwarfing every card rail on the planet. scmp.com Regulators pivoted from panic to embrace, minting “Technical Standard 10-10-2” in 2016 to formalise dynamic codes and cap fees—cementing the square as national plumbing. Today QR handles around ¥45 trillion (US $6.2 trillion) a year in China, powers metro gates in 285 cities, and has been cloned into BHIM in India, SGQR in Singapore and the ASEAN pay-link projects now stitching the region together.

What began as a hacked sticker in a steamy shop solved the two great frictions of cards—hardware cost and settlement lag—and proved that payments could piggy-back the smartphone, not the other way around. Every time you scan a café placard in Bangkok or a museum code in Paris, you’re replaying that Hangzhou experiment, swapping plastic friction for pixel-speed trust.

Fresh week, fresh buzz. We sifted the last seven days of payment drama—regulators stalking interchange, card networks flexing new APIs, and yet another country trading POS terminals for QR placards, so you can glide into the morning call sounding like you keep ISO 20022 in your bedside drawer.

1 | Headlines

Brussels sharpens its knives for Visa & Mastercard.
The European Commission widened its antitrust probe on 23 May, firing fresh questionnaires at terminal providers to see if the duopoly’s fee bundles choke competition. So what? A formal Statement of Objections could land this summer, reviving talk of a hard cap on “interregional” card fees.

Visa woos fintech back-end builders.
On 22 May the network rolled out Visa Commercial Integrated Partners, pre-integrating ERP, fleet- and expense-software with Visa APIs to cut months from B2B card launches. So what? Visa is racing Mastercard’s Track and American Express / Coupa to become the default “payments micro-service” inside corporate software.

UPI tightens its bolts after four outages.
NPCI’s 26 May circular forces apps to throttle status-check calls, show the beneficiary’s legal name, and add a four-second review screen before every push payment. So what? Fewer fat-finger misfires and less API spam should keep India’s 14 bn-a-month rail from buckling under peak loads.

Kazakhstan joins the QR club.
The National Bank announced on 22 May that a national QR payment system will launch by end-2025, with all banks mandated to connect in 2026. So what? Central Asia’s cash heavyweight is leap-frogging POS terminals, clearing the path for cross-border QR with China and Russia.

Visa Payments Forum teases “future-proof” rails.
Speaking in San Francisco on 21 May, execs demoed AI-driven dispute prevention, network-level tokenised BNPL, and a card-on-file updater that works across schemes. So what? Visa wants to prove it can do account-to-account-style magic without surrendering the four-party model.

Megabanks toy with a consortium stablecoin.
JPMorgan, Citi, BofA and Wells confirmed exploratory talks about a joint U.S-dollar stablecoin alongside Zelle-operator EWS and The Clearing House. So what? If they green-light the project, banks could reclaim P2P volume leaking to PayPal, Circle and Visa’s upcoming agentic rails.

Visa turbo-charges the back end with Commercial Integrated Partners.
Announced 21 May, ERP and fleet-software vendors can now one-click Visa APIs to spin up B2B cards. So what? Visa is racing Mastercard Track to become the default payments micro-service inside corporate SaaS before FedNow A2A takes that slot.

Mastercard’s 2025 Travel Trends put APAC at the top of the tourist spend table.
Released 23 May, the Economics Institute says Asia-Pac destinations will outgrow Europe for the second summer running. So what? Cross-border acquirers should beef up UnionPay, Alipay+ and VietQR acceptance before the July surge.

Britain’s fintech dream loses altitude.
FT analysis on 27 May shows open-banking “pay by bank” hit just 27 m payments in March versus 1.9 bn card swipes. So what? The UK once set the pace on open banking; its stall gives EU PayNow clones (and card schemes) breathing room.

2 | Deep dive — Europe’s renewed war on card fees

When the European Commission hit “send” on a new batch of questionnaires last Friday, every PSP in the Eurozone felt déjà vu. Brussels has scuffled with Visa and Mastercard for two decades; caps in 2015 tamed domestic fees, but “interregional” charges (e.g., a U.S. card at a Paris café) still sit near 1.5%.

Merchants and acquirers claim those surcharges now make up 20–25% of their card acceptance costs. The Commission wants to know whether:

• terminal vendors must enable the card-scheme rate bundle to get certification;
• fees change too often for merchants to re-price;
• alternative rails (e.g., A2A, pay-by-bank, wallet QR) are being steered away at checkout.

Why the timing matters

• SEPA-for-Cards 2.0. EU lawmakers eye a broader retail-payments law that could force “open routing” between any licensed rail. Fresh evidence of fee pain strengthens their hand.
• Retail CBDC diplomacy. The ECB’s digital-euro road map needs merchants on-side; squeezing card costs burnishes the Bank’s “public option” argument.
• Visa–Mastercard MIF déjà vu. In 2007 Brussels killed MasterCard’s cross-border interchange; a reprise could see caps plunge from ~150 bp to the domestic 30 / 20 bp level.

What could happen next?
If responses confirm fee stasis and compulsory bundles, expect a Statement of Objections in Q4 and an offer from the schemes to slash interregional interchange by at least 40%. For wallets, A2A and private-stablecoin players, lower swipe fees dim one of their sharpest selling points; for Visa and Mastercard, it’s another reminder that Brussels never forgets.

3 | Word of the week — MIF (Multilateral Interchange Fee)

At first glance the MIF is just a wholesale clearing toll: every time you tap a card, your acquirer wires a slice of the sale to the issuer, typically 0.10–1.50% depending on jurisdiction, card type and where the buyer and seller sit. But that tiny toll does three heavyweight jobs at once:

1. Risk insurance. It bankrolls fraud write-offs and chargebacks. Cap it too hard and issuers either gut fraud guarantees (hello, liability shift) or jack up annual fees and lending spreads.
2. Rewards flywheel. Cash-back, airline miles and Metal-card “ooh shiny” perks are funded almost entirely from MIF revenue. Every basis-point Bruxelles lops off shows up as thinner points or higher APRs.
3. Network diplomacy. Because the MIF is set by the schemes—not regulators—Visa and Mastercard can tweak it corridor-by-corridor to shepherd volume toward markets they want to seed (e.g., QR-light Africa) or trenches they want to defend (e.g., luxury travel).

Numbers to drop in a meeting

Region	Domestic cap	Cross-border (“inter-regional”)	Last big cut
EU	0.20% debit / 0.30% credit	~1.15% (Visa), ~1.50% (MC)	2015 (Reg 2015/751)
India	0.00% on RuPay debit < ₹2 000	0.50% (MC/Visa debit)	2020 (MDR zeroed for small RuPay tx)
Australia	0.10 – 0.20% weighted average	0.80% default	2003 (RBA reforms)

What happens if Brussels’ fresh probe slashes the EU’s inter-regional MIF? History hints at two pivots: issuers double-down on lending to replace lost fee income, and schemes invent new products (tokenisation fees, value-added APIs) that sit outside the cap. The chess match never ends—only the board changes.

4 | Payment fact of the week — The 1.95% spark that lit a trillion-dollar industry

June 1971, San Mateo, California. Dee Hock, freshly appointed CEO of the nascent BankAmericard Association, gathers 15 bankers in a Holiday Inn ballroom. Their problem: merchants hate unpredictable “discount” rates, and banks are swallowing fraud losses from each other with every mailed-in sales slip. Hock’s answer is equal parts genius and guesswork:

“We’ll standardise a 1.95% interchange. Acquirers pay it to issuers. It’ll fund fraud, processing, even a little cardholder credit grace. Everyone lives with the same toll, and merchants get a uniform rate.”

Why it stuck

• Simple maths beats haggling. Merchants finally knew the fee before swiping; acquirers could price around a constant.
• Cash advances without chaos. Issuers had a revenue stream to float 30-day interest-free periods—turning cards from charge plates into mini-credit lines.
• Copy-and-paste scalability. When Master Charge (later Mastercard) saw issuers defecting to the predictable BankAmericard model, it cloned the 1.95% fee almost verbatim.

How the spark travelled

1976 → Visa launches in Europe with the same fee logic.
1984 → Australia adopts interchange; Reserve Bank of Australia starts tracking merchant costs.
1991 → Brazil’s Redecard and Visanet (now Cielo) bring the model to Latin America.
2003 → Australia becomes the first regulator to slash interchange (0.95% → 0.55% weighted), triggering global copy-cats.

Legacy today

Even after a half-century of regulation, interchange still funnels roughly US $75 billion a year from merchants to issuers worldwide—fuel for fraud insurance, loyalty schemes and, increasingly, BNPL rails that piggy-back the four-party model. Whenever regulators shave another basis point, they’re negotiating with the ghost of that 1971 Holiday Inn meeting.

Take-home sound-bite: “Every tap you make still pays tribute to a two-percent fee dreamed up over stale coffee in ’71—no wonder Brussels keeps sharpening its scalpel.”

Pass this on to three payments nerds and stack some mythical “MIF karma.” It won’t lower your interchange (yet)—but neither will another webinar.

Welcome to your Tuesday brain-espresso. We sifted the last five days of global payments news (15 – 20 May) so you can stride into your morning call sounding like you main-line ISO 20022 for breakfast.

1 | Headlines

ECB circles a launchpad for the digital euro. Board member Piero Cipollone told reporters the Bank wants a political deal in place “by early 2026,” clearing the runway for a retail CBDC two-to-three years later. A legislative green-light would give the Eurosystem a head-start over the Fed and pressure private wallets to plug into central-bank rails.

PayPal turns Singapore into its APAC sandbox. Complete Payments—a one-stop checkout stack bundling cards, wallets, BNPL and fraud tools – went live for all SG-registered merchants on 15 May. Stripe, Adyen and GrabPay suddenly face a full-stack rival that already owns the consumer PayPal button.

NPCI tweaks UPI to kill fat-finger fails. New rules force apps (GPay, PhonePe, Paytm) to show the beneficiary’s legal name and a four-second “review” timer on every push payment. The guard-rail aims to slash wrong-credit disputes that clogged NPCI’s grievance portal by 23 % last quarter.

Vietnam unveils its first NAPAS × Mastercard co-badged card. Six banks launched dual-logo plastic that rides NAPAS domestically and Mastercard abroad. Issuers keep <0.2 % local interchange while cardholders skip FX fees overseas – expect Visa to court VietinBank fast. As the payments landscape evolves, the concept of a dual logo system is becoming increasingly significant in enhancing brand visibility and consumer trust.

XTransfer joins FXC’s “Top 100 Cross-Border Firms.” The Hong-Kong B2B pay-tech snagged the accolade on 20 May. So what? Cross-border SMEs finally have a China-grown alternative to Stripe Treasury and Revolut Business—watch mainland exporters switch.

Klarna’s U-turn on AI-only support. After a 15% Q1 revenue pop, the BNPL giant admitted its chatbot-first service hurt quality and is rehiring humans. So what? Even AI poster-kids concede that people close chargebacks faster—bad optics for pure-bot checkout dreams.

Revolut pledges €1 bn for a French growth-spurt. The challenger will triple Paris headcount and launch local credit this year. A banking-licence push in the euro-zone complicates incumbents’ interchange defence just as the digital euro looms.

PBoC slices loan-prime rates another 10 bps. One-year LPR at 3 % and five-year at 3.5 % mark fresh lows since 2019. So what? Cheaper yuan funding amps outbound tourist spend—handy tail-wind for China-ASEAN QR corridors lighting up this summer.

2 | Deep dive — Vietnam’s first co-badged card: why six logos beat one

Vietnam already runs a thriving two-rail world: NAPAS for cheap domestic debits (0.1 % caps) and the US giants for cross-border swipes. Until last Thursday, consumers needed two bits of plastic.

What changed?
On 15 May, NAPAS and Mastercard launched a dual-logo card whose PAN lives in both schemes’ bins. A coffee in Hanoi routes via NAPAS; a hotel in Seoul clears over Mastercard. Six banks: Agribank, BIDV, TPBank, Nam A, PVComBank and Vikki, are first movers.

Why now?

• Interchange economics. Local regulators cap NAPAS fees at ~0.2 %; merchants cheer. Issuers keep foreign revenue via Mastercard’s cross-border tables, best of both.
• Tourism bounce-back. Vietnam welcomed 4.6 m Chinese and Korean tourists pre-Covid. Dual cards promise seamless refunds and chargebacks to lure them back.
• Domestic-scheme moat. By riding the card giants abroad instead of ceding traffic to UnionPay QR, NAPAS stays inside the traveller’s wallet.

The friction to watch

1. Routing roulette. POS terminals must choose the right rail; get it wrong and merchants pay Mastercard on a $3 bowl of phở.
2. BIN inventory. Dual embossing devours six-digit ranges fast; smaller issuers may wait for ISO/IEC 7812 extensions.
3. Network parity. Visa will lobby hard to join the party – three logos on one card tests both chip memory and consumer sanity.

Bottom line: Co-badging is Vietnam’s middle path: protect local fee caps and hand cardholders a single piece of plastic for every border they cross – an elegant answer to the “one-scheme-too-many” problem haunting Asia’s fragmenting payment scene.

3 | Word of the week — Co-badged or Co-branded card

A single physical or virtual card that carries two payment networks: one typically domestic (cheap, regulatory-favoured), the other international (global acceptance). The chip decides which logo wakes up when you tap. Think France’s CB + Visa or Brazil’s Elo + Mastercard – Vietnam just joined the club.

Why payments folk care

• Interchange arbitrage: issuers maximise fee yield abroad, merchants minimise it at home.
• Regulatory détente: local schemes win volume; global brands stay in the wallet.
• Routing chess: terminal prefs and scheme incentives will decide who really earns the swipe.

4 | Payment fact of the week — How France’s carte bleue + Visa mash-up invented the playbook for co-badging

The pre-history
By the mid-1970s France already had Carte Bleue – a domestic card created in 1967 by six big banks – but the plastic was useless once you crossed the border. Travellers carried a second piece of foreign-scheme plastic, merchants juggled two terminals, and the fledgling BankAmericard network (soon to be re-branded “Visa”) wanted French volume. The compromise landed in 1976: emboss a tiny Visa flag next to the blue dove and let the chip decide which rail to wake up. Carte Bleue Internationale was born.

How it actually worked

• Dual BINs in one chip. The card stored two BIN ranges: CB for domestic francs, Visa for anything abroad, long before ISO 7816 smart-cards existed.
• Dynamic routing. When a Paris café POS asked for authorisation the card responded “CB”; a Milan boutique got “Visa.”
• Fee diplomacy. CB interchange stayed dirt-cheap (<0.3%), keeping French merchants happy, while issuers still earned Visa’s richer cross-border fees.

Scale & staying power
The French liked the two-for-one deal: by 1980 more than 90% of cards carried both logos; today ~76 million CB cards are in circulation and “more than 95% are co-branded with Visa or Mastercard.”

Technological ripple effects

1. Chip-and-PIN standardisation. CB demanded offline smart-card security in 1992 and pushed EMV to adopt similar cryptograms; the world’s “insert + PIN” habit owes a debt to Paris.
2. Interchange diplomacy. EU regulators later pointed to CB-Visa as proof domestic-scheme fee caps can coexist with global acceptance – a model Brazil (Elo + Mastercard) and now Vietnam (NAPAS + Mastercard) follow.
3. Consumer UX blueprint. One card, two rails became the norm from France’s boulangeries to Rio’s botecos, pre-conditioning shoppers for today’s Apple-Pay-selects-network prompt.

Modern echo
Vietnam’s six-bank NAPAS-Mastercard launch last Thursday almost carbon-copies the 1976 French hack: cheap local fees at home, global clout abroad, single piece of plastic in pocket. Not bad for a half-century-old logo soup.

Takeaway: every time you tap a co-badged card, you’re replaying a French experiment that turned fee politics into smart silicon—and taught the rest of the world how to route swipes without riling merchants.

---

Liked the sip? Forward it to three payments nerds and earn mythical “dual-logo karma.” Still not legal tender—give the ECB a few years.

Concrete caffeine for your first meeting.

1 | Headlines

PhonePe drops the UPI ball for an hour. A 12th of May disaster-recovery drill flooded a new data-centre and froze India’s biggest UPI app for almost 60 minutes. At 450 TPS peak, even a micro-hiccup torches consumer trust and hands RBI fresh ammo for tougher uptime SLAs.

Ant waves goodbye to another 4 % of Paytm. The Chinese giant off-loaded a US $242 m tranche at a 6.5 % discount on May 13th. New domestic buyers get voting heft just as Paytm angles for a small-finance-bank licence.

Sea rebrands its fintech arm to “Monee” and cuts the ribbon on a 200,000 sq ft Singapore HQ. The name may be cute, but the move signals Sea’s intent to be regulated as a regional finance platform,not just Shopee’s checkout plugin.

Seoul exports QR payments to Jakarta. Korea’s KFTC will pilot a low-cost QR network in Indonesia before year-end. The winner of the ASEAN QR land-grab pockets merchant FX float and data on 280 m consumers.

HDFC Bank publishes a two-night blackout schedule (9–10 May). Cards, UPI and net-banking went dark for up to three hours. Going airline-style transparent ups the pressure on peers to diarise their own downtimes.

Tide now serves more Indian SMEs than UK ones. The neobank’s customer count in India nudged past 700,000 on the 7th of May, three years after launch. Proof that a UPI-native onboarding funnel can out-scale legacy FX rails in record time.

Asia-Pac P2P payments forecast to sprint at 20 % CAGR to 2029. Report Ocean’s 12th of May study pegs the market at US $640 bn by mid-term. Analysts are finally pricing super-app flywheels (Grab, Gojek, Kakao) as a payments story.

India notifies sweeping payment-law amendments effective 9 May. Sections 152–153 of the Finance Act beef up RBI oversight and create a Payments Regulatory Board. Expect stiffer audits for wallets, BNPL and PPI issuers as the new board flexes.

Jakarta’s QRIS user base hits 5.99 million; Q1 volume +166 % YoY. Bank Indonesia’s 9-May data show 907 m scans in the quarter. The capital’s transit system will roll out QRIS-Tap at all MRT/LRT gates—watch cash vanish from turnstiles by Christmas.

2 | Deep dive – Visa Intelligent Commerce

From click-to-buy to delegate-and-buy in one product drop

On 30 April Visa staged its annual “Global Product Drop” and, almost as an aside, redrew the future of checkout. The company unveiled Visa Intelligent Commerce, a set of rails that lets autonomous AI agents not only recommend a flight or a pair of headphones but actually pay for them on your behalf. Think of it as Amazon’s “1-Click” –  only the clicker is a large-language model, not your thumb.

What’s under the hood?

Visa isn’t handing LLMs a raw 16-digit PAN. Instead, the agent receives a tokenised credential generated by Visa’s existing Token Service, wrapped in new APIs that expose three essential controls:

• Guardrails. Issuers (or the user) set dynamic spend caps, merchant whitelists and velocity limits.
• Real-time auth. Passkeys, FIDO biometrics and EMV 3-DS flows confirm the bot is acting for a live human, not a SIM-farm.
• Contextual receipts. Each agent-initiated purchase carries metadata (“Booked GPT-flight YVR→NRT”) so banks’ risk engines can spot anomalies before the cardholder does.

Who’s in the first cohort?

Visa name-checked OpenAI, Microsoft, Anthropic, IBM, Mistral AI and Stripe as early design partners. The pitch to developers is blunt: why build your own payments layer when you can delegate the messy bits  like KYC, PSD2, PCI, AML  to a network that already clears 260 billion transactions a year?

Why this is a strategic land-grab

• Network effect in reverse. If ChatGPT, Copilot and Claude default to Visa tokens, rival schemes and A2A wallets become the alternate rails, not the primary ones.
• Interchange → API subscription. Visa can start pricing per call, per authorised spend, or even per agent seat — a hedge against regulators squeezing swipe fees.
• Data moat extension. Sitting in the agent’s decision loop gives Visa visibility into intent (what the bot almost bought) as well as the final transaction.

The risks ledger

Although this all sounds amazing…what could possiblly ever go wrong? Well, as it turns out, a lot.

“Rogue-bot” blow-ups – A poorly tuned agent orders 500 pizzas. Who eats the loss—issuer, Visa or consumer? Regulators will ask early.

Merchant push-back – Token fees plus higher fraud-model costs could nudge some merchants toward cheaper A2A links.

Privacy optics – Handing spending history to an LLM scares consumer advocates; Visa promises “zero data beyond purchase context,” but watchdogs will probe.

Timeline to checkout-without-clicking

Pilot programmes with selected AI partners are running now; Visa insiders talk about a developer-wide SDK in Q4 2025 and mainstream rollout during 2026. That dovetails with hardware makers baking agentic UX into earbuds and AR glasses. If the plan sticks, by the next World Cup your travel-bot will price-watch flights, pick the seat, pay, and send you the boarding pass while you sleep.

Bottom line: in the same way that Apple Pay vaulted the phone into the payment flow, Visa Intelligent Commerce vaults the AI into the flow. Whoever controls that agent credential controls the next decade of interchange.

3 | Word of the week – Agentic Commerce

Definition – A model where AI agents (“shopper-bots”) autonomously search, decide, and execute payment on a user’s behalf, within pre-set limits.

Why payments folk care

• Fraud shifts from card-present to bot-present risk.
• Interchange gets atomised into per-API calls.
• Data bargaining power flips—issuers must decide how much spending history to share with LLMs.

Expect agentic rails to surface first in travel (complex itineraries) and SMB procurement (recurring re-orders).

4 | Payment fact of the week – How Hong Kong’s Octopus card taught the world to tap

On 1 September 1997, six weeks after the handover. Hong Kong’s MTR flipped on the bright-orange Octopus readers. Three million cards moved in 90 days; by 2000 the system captured most bus journeys and held HK $416 m in float at any moment. Today Octopus processes 15 m taps a day and is accepted by 98 % of residents aged 15-64 for everything from school attendance to vending machines.

Why it mattered

1. Contactless proof-of-concept – Octopus beat London’s Oyster by six years, showing FeliCa chips could clear sub-300 ms transactions even in tunnels.
2. E-money licence precedent – The 2000 HKMA deposit-taking licence let Octopus diversify into retail, setting the template for stored-value regulation worldwide.
3. Flywheel economics – Each top-up meant consumers pre-paid transit + retail, giving Octopus a cheap float and cementing the “tap & go” habit long before NFC phones.

Every QR code or NFC tap in Asia traces lineage to that 1997 swipe-less beep.

(That’s your shot of payments espresso—see you next Tuesday.)