Tracking Payments - Issue #5

Will Banks become informants to the IRS?

“President Joe Biden's $1.8 trillion American Families Plan would require banks and P2P payment services to report annual account inflows and outflows to the IRS...Under the plan, individuals or businesses wouldn't be forced to report more information to the government. Rather, that task would fall to banks.”

+ BankingDive: Biden plan would boost bank data sharing with IRS

Good News: Given banks are already modernizing to meet SWIFT’s ISO 20022 mandate, and it’s pretty easy to include a US Tax ID in every payment message, Biden’s plan would be the ultimate forcing function to accelerate the adoption of data rich payments.

Bad News: The mandate will put banks in the very uncomfortable position of disclosing corporate and wealthy clients’ unreported income. Banks will probably argue that implementing the plan will create an administrative burden for them.

Since the plan promises to raise $460B in revenue without (technically) raising taxes and reduce unwarranted audits of ordinary voters, it might stand a chance to pass Congress. And there’s certainly international precedents for governments mandating similar reporting, such as with e-invoicing. 

Fintech Hits Largest Funding Quarter Ever

With $22.8B invested into 614 companies, Q1 2021 was the largest fintech funding quarter ever. With 114 payments companies alone pulled in $6B.

+ CBInsightsState Of Fintech Q1’21 Report: Investment & Sector Trends To Watch

Some interesting themes for this week:

Small Business Neo-Banking

+ Ramp: Ramp Raises $115M, Reaches $1.6B Valuation as Fastest Growing Corporate Card.
+ Brex: Brex Announces a $425M Series D Investment Round  hitting a $74B valuation. The provider of ‘all-in-one finance’ for growing businesses.
+ Techcrunch: Greece’s Viva Wallet raises $80M for its neobank targeting small business merchants, apparently it’s in advance of another raise that values the company at $1.8B. 

Bank-Sponsored Alternative Payment Networks

+ PYMTS: European Payments Initiative Looking To Topple US FinTechs “Some 30-plus banks and credit card processors in Europe are teaming up to topple what they see as an “oligopoly” dominated by the U.S.”
+ JPMorgan: DBS, J.P. Morgan and Temasek to establish platform to transform interbank value movements in a new digital era “an open industry platform to reimagine and accelerate value movements for payments, trade and foreign exchange settlement.” 
+ Finextra: Thailand and Singapore launch first linkage of domestic instant payment systems, apparently the first of more to come.
+ Finextra: Nedbank and Mastercard team on WhatsApp payments for small businesses