FedNow doubles real-time transaction limit to $1 million | PaymentsSource

As corporations increase their interest in real-time payments, FedNow has boosted its transaction limit from $500,000 to $1 million.

The central bank’s faster payments scheme also added new risk mitigation features that allow participants to define value and velocity thresholds by customer segment. For example, corporate clients may have a higher cumulative threshold than new account holders or other consumer accounts. 

“We’re opening up opportunities for our customers to meet market needs, while also maintaining strong risk mitigation controls,” said Mark Gould, chief payments executive for Federal Reserve Financial Services, in a statement. “The combination of account activity threshold functionality with the increased transaction limit gives participants powerful tools to customize risk parameters across customer segments, from established businesses to retail clients.”

Adoption of the Federal Reserve’s instant payment scheme has been slow, with most financial institutions opting to only receive instant payments. Many are holding off on turning on send functionality due to fraud concerns. 

The Clearing House, which operates its own real-time payment network, raised its limit to $10 million from $1 million in February.

Higher limits have increased adoption of real-time payments because high-dollar transactions are a key use case for instant payments in real estate, supply-chain transactions and business-to-business transactions. 

Bank of America has seen the volume of high-dollar corporate transactions increase since TCH raised its limit. Six weeks after that increase, payments above $1 million accounted for more than half – 52% – of all of Bank of America’s corporate transactions on the RTP network. —Joey Pizzolato

Krisztian Bocsi/Bloomberg

Deutsche Bank plots ‘smart payment routing’ in Europe

Deutsche Bank is collaborating with Amsterdam-based payment processor Silverflow to construct a cloud-based platform designed to improve the bank’s merchant services and enable dynamic routing.

The bank will act as a merchant acquirer and will also offer cash management, settlement and risk management, using Silverflow’s application programming interface and hosted technology to support connections with merchants.

 Silverflow and Deutsche are working on other initiatives, including an analytics dashboard that provides more transaction details, faster reconciliation fraud control and dynamic payment routing.

Intelligent payment routing, which automatically chooses a payment option based on cost, speed or other factors, has become an important part of new payment service bundles. Banks have deployed technology that fields customer instructions and provides a recommendation, often in a few seconds.

 Routing is similar to payment orchestration, a product that has drawn fintech venture capitalists as corporations look to improve treasury management. —John Adams 

Klarna integrates with Google Pay

Google Pay has added Klarna’s pay-over-time financing products to its wallet. Users will be able to choose Klarna as a payment option on select websites and apps that offer Google Pay at checkout. 

The Swedish BNPL company’s Pay in 4 option will be available on purchases over $35. Longer-term financing options for high-ticket items will also be available, Klarna said. 

Klarna first said it was planning to integrate with Google Pay in November 2024. 

“People shop on Google more than a billion times per day, and consumers are increasingly looking for more choice and flexibility when it comes to their payment options,” said Ben Volk, VP and general manager of Google Pay and Google Wallet, in a statement. “By teaming up with pay over time providers like Klarna, we are able to give Google Pay users more payment options when checking out, while providing merchants with another tool to drive growth.” 

Popular digital wallets offered by tech companies such as Apple and Google are important distribution channels for BNPL lenders because they enable integration with merchants without having a direct relationship with them. Klarna and Affirm are already integrated with Apple Pay, and rivals Affirm and Zip Co. have been available on Google Pay since 2023. —Joey Pizzolato

Mastercard adds a link to African fintechs

Mastercard and payment technology company enza are collaborating to connect fintechs that develop technology on enza’s platform to Mastercard’s global payment network.

Cairo-based enza will host consumer and merchant accounts and will support security and manage payment processing uptime. Companies can issue physical and virtual cards and can accept payments in stores, online and in apps.

“Through our work with enza, fintech innovators in Africa will be able to deploy embedded payment capabilities more efficiently, helping accelerate financial inclusion and the region’s digital transformation,” Mete Guney, executive vice president, market development for EEMEA at Mastercard, said in a release.

Mastercard and enza are pursuing a rapidly growing fintech industry in Africa, where the number of companies in the category increased from 450 to about 1300 between 2020 and 2024, according to the European Investment Bank.

  Visa has also invested in African payments technology. Other firms such as AZA Finance support financial inclusion by connecting startups in Africa and other emerging markets to the international payments market.—John Adams 

David Paul Morris/Bloomberg

Visa partners to expand its global services strategy

Malta-based payment technology firm RS2 is collaborating with Visa to support a range of transaction-processing functions.

Visa will combine its authorization services with RS2’s back-end processing in a platform that the two firms aim to sell to banks, financial institutions and merchants. The first deployments will be in Europe and Latin America, with other regions to follow.

 The platform will use RS2’s cloud-hosted technology and application programming interface to enable firms to access Visa’s expanding range of value-added services, such as security, risk management, blockchain and technology that supports digital payments.

Visa in recent years has focused on products it can offer to its issuer and merchant networks that do not rely directly on payment fees, which have come under pressure due to regulation and the expansion of other payment options. —John Adams 

Chainlink adds card payment option for digital assets

Blockchain technology company Chainlink is collaborating with Mastercard to enable cardholders to buy digital assets through a conversion between traditional currency and crypto.

Chainlink, which connects different distributed ledgers to each other and to other enterprise systems, will integrate with Mastercard’s payment network, which includes banks, cardholders, merchants and stablecoin issuers.

Chainlink hopes the connection will expand the addressable market for products developed on blockchains, or the “on-chain economy.“

Mainstream banks and financial institutions are considering on-chain strategies as the market grows beyond early adopters.

“People want to be able to easily connect to the digital assets ecosystem, and vice versa. That’s why we continue to leverage our proven expertise and global payments network to bridge the gap between on-chain commerce and offchain transactions,” said Raj Dhamodharan, executive vice president of blockchain and digital assets at Mastercard, in a release. —John Adams

American Banker/Joey Pizzolato

Shift4 to acquire Australian payment processor for $180M

Shift4 Payments has reached a definitive agreement to acquire Australian payment processor Smartpay for NZ$296.4 million ($180 million), subject to regulatory approval. The deal is expected to close in the fourth quarter. 

Smartpay is a provider of payment-processing services and point-of-sale solutions in Australia and New Zealand. It counts more than 40,000 merchants as its clients. 

The acquisition will provide Shift4 with a key inroad into the Oceanic region and a distribution channel to expand its business. 

“By combining our payment infrastructure with Smartpay’s distribution capabilities, we’re well positioned to go-to-market at scale in the region with our leading products and services such as SkyTab POS for restaurants, SkyTab Venue for stadiums and arenas, and our end-to-end payment solution for hotels and unified commerce merchants,” Shift4 CEO Taylor Lauber said in a statement. 

Shift4 has used a similar acquisition strategy to enter other international markets, including Germany, the United Kingdom and Ireland, the company said. —Joey Pizzolato

Cesar Rodriguez/Bloomberg

Ebanx partners with Mexican fintech to offer BNPL onlin

Brazilian payment-processing fintech Ebanx has partnered with Mexican buy now/pay later provider Aplazo to allow digital merchants offer pay-over-time financing to shoppers residing in Mexico. 

“Mexico is one of the most dynamic markets in Latin America, where e-commerce is expected to grow 25% annually until 2027, with digital payment adoption aligned with this growth,” said Eduardo de Abreu, VP of Product at Ebanx, in a statement, citing PCMI data. “Partnering with Aplazo will allow us to expand our local reach and offer our global clients an alternative that directly responds to the preferences of Mexican consumers.”

The BNPL market is budding in Mexico, where it’s expected to grow 20% in online sales this year and at a 16% annual rate through 2027, according to PCMI. Aplazo estimates that 38% of Millennials and 31% of Gen Z consumers in Mexico already use BNPL. —Joey Pizzolato

Xero

New Zealand’s Xero to buy Melio Payments in $2.5 billion deal

Xero Ltd., a cloud-based accounting software firm, agreed to buy Melio Payments Inc. for $2.5 billion as the New Zealand company pushes deeper into the U.S. market with its biggest-ever acquisition.

The cash-and-stock deal for Melio includes as much as $500 million in additional performance and other payments over three years, according to a statement on Wednesday.

The combined business is expected to accelerate U.S. revenue growth, possibly more than doubling Xero’s group revenue by its 2028 fiscal year, it said.

“Probably the most critical to a build-versus-buy decision, you look at the competitive nature of the market and you work backwards for your ambitions and say ‘Look, am I going to get there fast enough?'” Xero Chief Executive Officer Sukhinder Singh Cassidy said in a phone interview. Once the platforms are integrated “we can go after acquiring customers faster.” 

Melio co-founder and CEO Matan Bar will be responsible for the combined U.S. business. Before creating Melio, he led PayPal’s consumer peer-to-peer payments group. —Ryan Gould and Adam Haigh, Bloomberg News