Fintech wrap: BNPL warnings and merchants prepare for Visa CE 3.0

New warnings to people using BNPL, as merchants ready to prepare for Visa Compelling Evidence 3.0.

A regular roundup of some of the latest stories in fintech regulation. issues fresh BNPL warning

Comparison website says buy now, pay later (BNPL) is currently the fastest-growing online payment method in the UK, with a growth rate double that of bank transfers and more than triple that of digital wallets.

Half of adults have now used BNPL, up from 36% at the start of 2023, while 38% do not intend to use this payment method. Of those opting for it, 53% paid a late fee.

The generation Z and Millennial cohorts are the main users, with 68% and 69% respectively using BNPL.

“Consumers need the same protections in this sector that they get with other types of credit – they need proper information upfront, such as what the deal is and what happens if they miss a payment, and they need to be able to complain to the Financial Ombudsman if things go wrong, which currently, they can’t,” said Editor in Chief, Liz Edwards.

“When I spoke to the Financial Ombudsman’s office about BNPL complaints, it couldn’t tell me how many it had received as it doesn’t keep records for unregulated products, since it can’t investigate them.”

Merchants prepare for Visa Compelling Evidence 3.0

Visa’s plan for addressing fraud and first-party misuse within payments is due to be implemented on April 15. First-party fraud, in which a person knowingly presents false information about who they are, is on the rise. Some 93% of businesses have experienced it in the past year, the payments giant says.

Examples of first-party fraud are buying clothing items with the intention of using them before returning for a refund, ordering goods and falsely claiming they were lost in transit, and using someone else’s name to obtain a cheaper deal on a contract.

“The typical profile of first-party fraudsters has changed significantly during the pandemic. Previously customers with a respectable credit rating and history of repayment have found themselves struggling financially. This change in circumstances could lead to changing behaviours,” says Experian.

Under CE3.0, merchants will have to share data that helps establish a historical footprint of previous purchase history by sharing two previous transactions that meet certain criteria. These include:

  • transactions at least 120 days old but no older than 365 days (calculated from the dispute date);
  • the transaction must have no active fraud report;
  • the transaction must have no active fraud dispute;
  • at least two of the core data elements (User ID, IP Address, Shipping Address, Device ID / Fingerprint) match between prior transactions and the disputed transaction, and one of the two must be either the IP address or Device ID / Fingerprint;
  • transactions must be from the same merchant.

Moneyhub named as UK government open banking partner

Moneyhub has been named as a supplier on Crown Commercial Service’s (CCS) Open Banking Dynamic Purchasing System (DPS) framework for its Open Banking and Payment services. 

Crown Commercial Service is the biggest public procurement organisation in the UK, and says that in 2021/22, it helped the public sector to achieve commercial benefits equal to £2.8 billion ($3.5 billion)– supporting world-class public services that offer best value for taxpayers.

“At Moneyhub we’re on a mission to enhance the lifetime financial wellness of people, their communities and their businesses, and the public sector has a significant opportunity to benefit from and lead the way in the mass adoption of Open Banking solutions,” said Vaughan Jenkins, Managing Director of Partnerships. Moneyhub. “The continued adoption of Open Banking technology will result in better outcomes for taxpayers and the country.”

EU revises Market Definition Notice

In the first revision to the Notice since 1997, the EU acknowledges “significant societal and technological changes, especially digitalisation, as well as important developments in the Commission’s competition law enforcement practice and in the Union courts’ case law”.

Some of the revisions include clarifications regarding the forward-looking application of market definition, especially in markets expected to undergo structural transitions, such as technological or regulatory changes, and guidance in relation to market definition in digital markets, for example multi-sided platforms and digital ecosystems (for example, products built around a mobile operating system).