Digital wallets go beyond payments and now offer a suite of services; Kraken’s business model; Key technology components of a superapp platform;
In this week’s edition of Fintech Wrap Up, we’re diving into the evolution of digital wallets into multifunctional platforms, the rise of instant payments and the associated fraud risks, and the ongoing innovation in the cryptocurrency space despite a challenging market.
Insights & Reports:
1️⃣ Digital wallets go beyond payments and now offer a suite of services
2️⃣ Faster payments, faster fraud: when milliseconds matter
3️⃣ Impact of Instant Payments on ACH Systems
5️⃣ Key technology components of a superapp platform
6️⃣ SEPA participants, BICs, and IBANs
8️⃣ Form3, a quiet giant in UK fintech, raises $60M at a $570M valuation
9️⃣ Payhawk launches budget tracking & cards for every purpose
Technology has a growing place in shaping our markets, investments, workplaces, media, medicine and even our elections. So when we talk about technology — especially decision-making AI — we need to talk about trust. Join visionaries, investors, founders and policymakers to close the trust gap.
TL;DR:
Welcome back to this edition of Fintech Wrap Up, where I break down the latest trends and insights in the ever-evolving world of fintech, payments, and banking. This time, we explore how digital wallets have transformed into all-in-one platforms, with super apps leading the way, particularly in regions like China and Southeast Asia. Financial services now dominate this space, offering everything from mobile banking to insurance, reshaping how consumers interact with money.
However, with faster payments come faster fraud risks. The rise of real-time payments (RTP) is both a boon and a bane, as fraudsters exploit the immediacy of these transactions. Cross-border payments are also a hotbed for fraud, leaving SMEs and consumers wary of transacting internationally. It’s clear that innovation in security measures is needed to keep pace with these advancements.
Speaking of innovation, Kraken’s business model continues to evolve, despite a slight dip in revenue. The company remains a key player in the crypto exchange market, and its growth in trading volumes for 2024 shows that crypto trading is far from slowing down.
We also touch on how ACH systems are seeing declines in use as instant payments gain traction globally, with countries like Brazil and the UK leading the charge. And finally, the latest partnerships, including TrueLayer’s expansion with Stripe and Payhawk’s new budget-tracking features, are sure to make waves in the payments ecosystem.
Stay tuned for more insights and updates as the fintech landscape continues to shift!
Insights & Reports
Digital wallets go beyond payments and now offer a suite of services
Digital wallets are evolving into integrated platforms of applications to meet the shifting shopping preferences of consumers post-pandemic. With super apps assembling many third-party services through mini apps on their integrated platforms, consumers are not required to download separate apps from third parties on their mobile phones, as the ‘instant use and instant drop’ capabilities within super apps enable mini apps to appear for purchase and vanish post-purchase, providing a seamless user experience. Super apps and mini apps allow for simple user authentication, such as single sign-on and tracking of user preferences or app usage.
Super apps are among the world’s most successful brands in digital wallets. Alipay and Wechat Pay, for instance, dominate the world’s largest digital wallet market in China. Digital wallet players in Southeast Asia followed suit and embraced the concept of the ‘super app’. For example, Malaysia’s Touch’N Go, initially known for its physical card used for toll payments, launched its e-wallet in 2018, enabling users to make digital payments for tolls, parking, and public transportation. Over the years, the wallet app surpassed its roots in transportation payments to become the most utilized e-wallet brand in Malaysia since 2020
Financial services is the leading application market for super apps in 2023. Financial services and payments account for more than half of the super app landscape, signifying the substantial influence they wield within this ecosystem. By incorporating a swathe of services, including mobile banking, peer-to-peer payments, insurance and investment platforms, the financial super apps have emerged as disruptors to conventional financial institutions. With built-in two-factor authentication and tokenization, digital wallets offer more secure transactions and peace of mind for consumers
Faster payments, faster fraud: when milliseconds matter
With 88% of consumers eager to continue using RTP for online purchases, according to FICO, websites must offer diverse payment options to meet expectations and avoid losing sales. However, the immediacy of RTP, while convenient, opens doors for fraudsters, posing challenges in maintaining secure transactions. In the US, networks like RTP, Zelle and FedNow process transactions instantly, no time for fraud checks.
Common fraud types include authorized push payment (APP) fraud, with imposter and romance scams leading to significant losses, including a notable $10 billion in 2023 due to various scams. Account takeover (ATO) fraud, where unauthorized access to accounts leads to fraudulent transactions, affected 22% of US adults.
Mobile wallets, deepfakes and fighting advanced fraud
The widespread use of mobile wallets has also escalated mobile money fraud, with a sharp increase in fraud executed from mobile devices, rising from 47% in 2022 to 61% in 2023.
Invoice payment fraud and the emergence of deepfake technology present additional risks, with deepfake scams resulting in losses like the $25.5 million transferred by a Hong Kong finance employee duped by a fake video call.
Combatting such fraud requires a multilayered approach, combining systembuilt security measures and increased vigilance. Understanding customer behavior, establishing anomaly protocols and promoting customer education are essential. Collaboration within the industry and with technology partners for real-time fraud detection can provide comprehensive insights, highlighting the shared responsibility between financial institutions and consumers in fraud prevention.
Curated News
TrueLayer Expands Partnership with Stripe to Power New Pay by Bank Feature in the UK
TrueLayer, Europe’s leading open banking payments network, today announces an expansion to its partnership with Stripe. TrueLayer now underpins Stripe’s Pay by Bank offering across its payments products in the UK. In May, Stripe unveiled Pay by Bank — a new payment method enabling merchants to accept payments directly from customers’ bank accounts, streamlining the payment process and reducing transaction fees. Stripe has chosen TrueLayer to be its open banking payment partner in the UK, adding Pay by Bank to Stripe Elements as a new payment method for UK users.
