shares ran out of gas premarket, dropping 9.6%. The electric-vehicle startup plans to start construction next year on a second U.S. manufacturing facility in Georgia, placing a hefty bet on its ability to steadily increase sales in the coming years.
added 3.7% premarket, but that’s not much after the prior day’s 34% loss for the crypto stock. The shares have been subject to large swings since the company went public in October, including more than tripling Oct. 25 on news of a
RBI’s 2018 rules were adopted despite aggressive lobbying by U.S. firms seeking to dilute them.
India’s decision to ban Mastercard Inc for non-compliance with data storage rules has unsettled the country’s financial sector as it will disrupt banks’ card offerings and hit revenues, payments and banking industry executives told Reuters.
Wednesday’s central bank order followed similar action in April against American Express, but Mastercard is a much bigger player in the Indian market, where many lenders offer cards using the U.S. firm’s payments network.
A Reuters analysis of online card listings of 11 domestic and foreign banks in India showed Mastercard accounted for about a third of roughly 100 debit cards on offer, and more than 75 credit card variants used its network.
From July 22, the Reserve Bank of India (RBI) said, new issuance of such cards will stop as Mastercard did not comply with 2018 rules requiring foreign card networks to store Indian payments data locally for “unfettered supervisory access”.
Though existing customers will not be hit, business impact will be significant as banks need to sign new commercial deals with rival networks such as Visa, a process that can take months and involve weeks of back-end technology integration, five payment and banking executives said.
One banking executive said the switch to Visa could take as long as five months. And with American Express and Mastercard prohibited, Visa gets an unprecedented advantage in negotiations in a credit card market it already dominates.
“It will mean temporary disruption for banks, a lot of hectic negotiations and loss of business in the short term,” said one of the sources, a senior Indian banker.
The RBI’s 2018 rules were adopted despite aggressive lobbying by U.S. firms seeking to dilute them. Mastercard has said it is “disappointed” with the decision and will work to resolve the concerns.
“This is consistent with our considerable and continued investments in our customers and partners in India to advance the government’s Digital India vision,” Mastercard said in a statement on Thursday.
The decision is a major setback for Mastercard, which counts India as a key market. In 2019, Mastercard said it was “bullish on India”, announcing $1 billion in investment over the next five years, after investing $1 billion from 2014 to 2019.
Mastercard also has research and technology centres in India, where its workforce of 4,000 is the second largest after the United States, having grown from 29 in 2013.
High Card Usage, Income Impact
Indians’ use of credit and debit cards has risen as digital payments have spread. By May, RBI data shows, there were more than 62 million credit cards and about 902 million debit cards, which together accounted for transactions worth $40.4 billion.
The delays in transition to Visa are also seen hitting bank fees and other incomes they generate from their cards business, the sources said.
In a research note on RBI’s decision, Macquarie flagged as a “key concern” the risk that banks could suffer as credit cards were a profitable product with a so-called post-tax return on assets of around five per cent to six per cent.
Some banks, such as India’s RBL, lists 42 credit cards on its website, all using the Mastercard network, while Yes Bank lists seven using Mastercard, though none on Visa. The Citibank website offers four Mastercard credit cards.
RBL said in a statement on Thursday that it had reached a pact with Visa for its credit cards after the RBI order, but integration would take up to 10 weeks.
One of the sources said, however, that negotiations for the deal had taken six months.
RBL said it had a share of five per cent in the credit card market but its issuance of 100,000 new cards each month could potentially be affected. Its stock fell more than three per cent in early trade.
Yes Bank in a statement said it is “evaluating migration to other platforms for seamless transition” for issuing new credit cards. A Citibank spokesperson told Reuters it was working with its partner Mastercard “to evaluate any potential impact”.
More than half a dozen websites that securities regulators alleged stole money from novice investors in the U.S., Canada and elsewhere have one thing in common: They all used Wirecard AG, the German technology company that collapsed after an alleged multibillion dollar fraud of its own.
The websites, which specialized in binary options, all-or-nothing bets on financial markets, collected investors’ money via Wirecard’s card payments network, according to internal documents seen by The Wall Street Journal and former company executives.
In one instance, a then-senior Wirecard executive helped set up a separate payments company that stood between investment websites and payments systems such as Wirecard, according to an ex-employee of the separate payments company. The setup helped the investment websites operate with less scrutiny from credit-card networks that monitor transactions, according to the person and a civil lawsuit filed by the Commodity Futures Trading Commission.
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Nearly a year after Wirecard acknowledged $2 billion of missing cash on its balance sheet, investigators in Germany are still picking apart what went wrong. While large parts of Wirecard’s business processing credit-card payments for merchants and passing money to banks appear to have been faked, according to German prosecutors, there also were real clients.
Among them were businesses at the underbelly of the economy including unregistered investment companies, as well as offshore gambling operations and pornography operations, according to former company executives. Processing credit-card transactions for these clients generated higher fees, according to the former company executives.
Wirecard’s administrator didn’t respond to requests for comment. A lawyer for Mr. Marsalek declined to comment.
Electronic payments are a major piece of modern financial infrastructure used by companies and consumers as they shop online. Wirecard helped companies collect credit-card details and payment instructions from customers and transmit the information to banks.
Payments experts say the rapid growth of this global network has left it poorly regulated and monitored.
“There’s a huge hole and it’s an easy way to get access to the legitimate financial system for a lot of money,” said
chief executive and founder of EverC. His company makes software for detecting online-transaction laundering, a practice that can be used to disguise illicit payments as legitimate. “A million Wirecards could pop up and do this.”
Much of the payments industry is in effect self regulated.
which run the networks that connect banks and payments companies, fined Wirecard in the past for misrepresenting transactions and for processing too many transactions made with stolen cards, the Journal has previously reported. But the fines did little to dissuade Wirecard, according to the former company executives.
Wirecard processed card payments for several binary options firms. Binary options are financial derivatives that pay out based on whether an event happens or not, such as a stock price or currency reaching a certain level. Like sports bets, binary options either pay out or incur total losses. Binary options are banned for sale to individual investors in some countries, including the U.K. In the U.S., they are legal if traded on a regulated exchange.
In 2013 and 2014, the CFTC and Securities and Exchange Commission sued Banc de Binary, an investment website for illegal selling of binary options. The company, which was licensed in Belize and Cyprus, with call center operations in Israel, reached an $11 million settlement with both agencies in 2016 and then announced it would close in early 2017.
Banc de Binary used Wirecard through Al Alam Card Services, one of Wirecard’s third-party partners, according to internal company documents reviewed by the Journal. It also was listed as a processing client of Wirecard Bank in a 2017 internal customer list. Banc de Binary’s website doesn’t operate and emails and phone numbers associated with the company no longer work.
Another Wirecard client, according to company documents, was Rodeler Ltd., a Cypus-based firm that operated under several names, including 24Option.com. It offered binary options and other high-risk derivatives.
The U.K.’s Financial Conduct Authority banned Rodeler from operating in the U.K. in May 2020, saying it had used fake celebrity endorsements and high-pressure sales tactics. One customer lost the equivalent of $560,000, according to the FCA.
A Rodeler spokesperson didn’t respond to requests for comment.
Rumelia Capital, which operated in the U.S. and Canada, also used Wirecard’s network. It ran an online brokerage that offered investors fabulous-sounding returns from win-or-lose binary options bets on a wide variety of stocks, currencies and other financial markets.
Lisa Spencer, a 54-year-old information-technology professional from Sacramento, Calif., turned to Rumelia when she came into a large sum of money after her father died in 2017.
Ms. Spencer said she lost more than $300,000 when Rumelia suddenly stopped responding to her calls and the website disappeared. “It’s incredible I was that stupid,” she says. “It’s the shame of having to tell your family that you’ve lost everything.”
The owners of Rumelia and several other websites set up an Irish intermediary that took card payments from clients such as Ms. Spencer and passed the money into the mainstream payments system, according to an ongoing civil lawsuit filed last September in Austin, Texas, federal court by the CFTC.
The intermediary, Greymountain Management, used Wirecard as one of its main payments-processing partners.
Wirecard’s director of sales and operations for the U.K. and Ireland at the time,
advised Greymountain’s owner,
on the 2014 set up of the firm, according to a former Greymountain employee. Ms. Molloy’s then-20-year-old son was installed as one of two directors in 2015, according to public documents and former Greymountain employees.
The idea was to create an intermediary payments company that would stand between the binary-options websites and payments processors, such as Wirecard, according to the former employee. Rumelia and its sister websites were having trouble getting payments companies to accept their business, according to the employee.
The CFTC alleged in its case that Greymountain was created to limit the risk that banks and credit-card companies would refuse to transfer customer funds to Rumelia and other websites due to suspected fraud.
Mr. Cartu and his brothers who the CFTC alleged co-owned Greymountain,
haven’t responded to the CFTC suit. Lawyers representing David Cartu and Greymountain in Canada didn’t respond to requests for comment. Joshua Cartu didn’t respond to requests for comment. Jonathan Cartu couldn’t be reached for comment.
Ms. Molloy didn’t respond to requests for comment. Lawyers for Ms. Molloy’s son and Greymountain in Ireland didn’t respond to requests for comment.
Greymountain, based in the small town of Gorey, south of Dublin, took in $165 million from investors between about 2013 and 2018 including many in the U.S. and Canada, according to the CFTC suit. The suit alleges that the three Cartu brothers behind Greymountain, Rumelia and other websites, operated a “massive fraudulent binary options trading scheme” and received nearly $28 million to offshore accounts.
Ms. Molloy left Wirecard in 2016, according to corporate filings. She then joined a second payments company set up by Mr. Cartu in Ireland, called MegaCharge, according to corporate filings. MegaCharge is referred to in the CFTC lawsuit as “a subsidiary, or successor entity to Greymountain.” An executive at MegaCharge, now known as Simple Internet Solutions Ltd. in Ireland declined to comment.
Greymountain and David Cartu last month reached a settlement in an enforcement action with Canada’s Ontario Securities Commission. Mr. Cartu admitted facilitating card payments to binary options companies, agreed to a ban from acting as a director or officer in Canada for seven years and paid penalties and costs totalling an equivalent of $260,000. The settlement said there wasn’t evidence that he directly solicited investors to buy binary options.
Mastercard and Mumbai-headquartered private sector RBL bank announced a partnership on Thursday, April 15, to launch a mobile-based customer-friendly payment solution – the Pay by Bank App. This will be a first-of-its-kind payment functionality in the country. This is a one-of-its-kind payment system as it ensures that the customer’s credentials are never revealed to the merchant. With the new payment solution, the account holders of RBL Bank will be able to avail of contactless transactions across the globe with the help of the mobile banking application – both online and in-store.
Visa said on Monday it will allow the use of the cryptocurrency USD Coin to settle transactions on its payment network, the latest sign of growing acceptance of digital currencies by the mainstream financial industry.
The company told Reuters it had launched the pilot program with payment and crypto platform Crypto.com and plans to offer the option to more partners later this year.
Bitcoin, the most popular crypto coin, jumped to a one-week high on the news, rising as much as 4.5 percent to $58,300 (roughly Rs. 42.4 lakh) and heading back toward a record-high above $61,000 (roughly Rs. 44.4 lakh) hit earlier this month.
Visa subsequently confirmed the news in a statement.
The USD Coin (USDC) is a stablecoin cryptocurrency whose value is pegged directly to the US dollar.
Visa’s move comes as finance firms including BNY Mellon, BlackRock and Mastercard take steps to make more use of cryptocurrencies for investment and payment purposes.
Tesla boss Elon Musk, a major proponent of cryptocurrencies, said last week that customers can buy its electric vehicles with bitcoin, hoping to encourage more day-to- day use of the digital currency.
“We see increasing demand from consumers across the world to be able to access, hold and use digital currencies and we’re seeing demand from our clients to be able to build products that provide that access for consumers,” Cuy Sheffield, head of crypto at Visa, said.
Traditionally, if a customer chooses to use a Crypto.com Visa card to pay for a coffee, the digital currency held in a cryptocurrency wallet needs to be converted into traditional money.
The cryptocurrency wallet will deposit traditional fiat currency in a bank account, to be wired to Visa at the end of the day to settle any transactions, adding cost and complexity for businesses.
Visa’s latest step, which will use the ethereum blockchain, strips out the need to convert digital coin into traditional money in order for the transaction to be settled.
Visa said it has partnered with digital asset bank Anchorage and completed the first transaction this month — with Crypto.com sending USDC to Visa’s Ethereum address at Anchorage.
Orbital, the Gadgets 360 podcast, has a double bill this week: the OnePlus 9 series, and Justice League Snyder Cut (starting at 25:32). Orbital is available on Apple Podcasts, Google Podcasts, Spotify, and wherever you get your podcasts.
The initiative aims to empower more than 20,000 women-led small businesses
In a big boost to expedite the growth of rural women entrepreneurs, Mastercard in collaboration with women’s cooperative bank – Mann Deshi Foundation, announced the expansion of the Chamber of Commerce for Rural Women. The expansion aims to empower more than 20,000 women-led small businesses to tap into digital networks for sourcing and selling. The initiative is focused on addressing the finance-related issues faced by rural women and keeping up with the evolving market dynamics, such as consumer preference to pay digitally. According to a recent statement, the Chamber of Commerce for Rural Women will add a new chapter in Kolhapur, Maharashtra.
The program will introduce a leadership academy for women entrepreneurs to conduct training on advocacy and provide mentorship. The expansion of the Chamber of Commerce for Rural Women will increase the members’ access to emerging digital technology, legal advisory services, and marketing clinics. The expansion will also strengthen sales networks among women entrepreneurs and help in launching a pathway for them to become agents of change.
“Our collaboration with the Mann Deshi Foundation to expand the Chamber of Commerce for Rural Women is part of our ongoing commitment to build a more inclusive and sustainable economy. Through innovative and trusted partnerships, we are empowering women entrepreneurs with the digital skills and resources necessary to operate more efficient and productive businesses,” said Shamina Singh, founder and President of the Mastercard Center for Inclusive Growth.
The Chamber of Commerce for Rural Women already has chapters in Pune, Chiplun, and Satara in Maharashtra through which as many as 10,000 women have benefitted since 2018. The expansion will primarily focus on the following:
Leverage technology to facilitate business operations and to scale skills training. This will introduce women business owners to low-cost technology for digital bookkeeping, virtual networking, and online classes
Provide hands-on demo workshops to enable small business owners to test and learn about time-saving machines, such as dal mills, solar dryers, packaging machines that can help scale up their businesses.
Retain the existing members through the continued provision of monthly services ranging from legal aid clinics, financial education workshops, and exposure visits to market opportunities
Add new services to the monthly roster, such as digital marketing clinics.
“Women entrepreneurs are keen to expand and grow their businesses, realize their ambitions and dreams, and build a secure future for themselves and their families. They need access to affordable finance, supportive networks, and the latest market information,” said Chetna Sinha, Founder, Mann Deshi Foundation
”The Chamber of Commerce for Rural Women recognizes that connecting women to knowledge, markets, skills, financial services, technology, and networks is essential to helping women-owned businesses grow and thrive,” she added.
and other shares, pointing to a volatile end to 2021’s first month of trading. For our live blog on the short-squeezed shares, follow this link.
Futures tied to the S&P 500 declined 0.5%, suggesting a reversal in direction after a nearly 1% rise Thursday. Those linked to the Nasdaq-100 retreated 0.7%. Read our full market wrap.
What’s Coming Up
—Consumer spending for December, due at 8:30 a.m. ET, is expected to drop 0.4% from the month before. The University of Michigan’s consumer sentiment index for January, due at 10 a.m., is expected to hold steady at 79.2, unchanged from a preliminary reading.
—U.S. pending-home sales for December, due at 10 a.m., are expected to fall 0.2% from a month earlier.
Market Movers to Watch
—Reddit rally ructions: The now-familiar troupe of stocks whose high-flying shares took a hit on Thursday are back on the rise.
both logged smaller declines in quarterly revenue than in recent periods, but the pandemic continued to spur weakness in cross-border spending. Visa’s shares added 0.7% premarket, Mastercard’s ticked lower by 0.4%.
Most-actively traded silver futures rose 4.4% to $27.14 a troy ounce Friday. Up 6% for the week, they are on track for their biggest one-week advance since mid-December.
Chart of the Day
American Airlines’ latest numbers were bad enough to justify bearish Wall Street bets against it. In today’s topsy-turvy market, this all but guarantees stock gains, writes Heard on the Street columnist Jon Sindreu.