IFC, a member of the World Bank Group, launched a new initiative to aid financial service providers in delivering funds to small businesses in emerging markets, with a particular focus on those owned by women and those in the agriculture and climate sectors.

The MSME Finance Platform (the Platform) will provide a financing package of up to $4 billion from IFC’s own account to banks, non-bank financial institutions, microfinance institutions, and innovative digital lenders that focus on micro, small, and medium enterprises (MSMEs). This support will be available to both new and existing IFC clients.

The Platform will also use various forms of credit enhancement to mobilise private capital, including an innovative Catalytic First Loss Guarantee, aiming to attract an additional $4 billion in financing from eligible financial service providers to expand lending to these businesses.

“Micro, small, and medium enterprises form the backbone of most developing economies, yet they face significant financial barriers that hinder their potential,” explained Makhtar Diop, Managing Director of IFC. 

“Our new financing platform addresses these challenges head-on, empowering financial service providers to extend critical support to these businesses, particularly those that are women-led or environmentally focused.”

MSMEs constitute over 90% of all firms and account, on average, for 60-70% of total employment and 50% of GDP worldwide. However, according to the SME Finance Forum, there is currently a roughly $5.7 trillion financing gap for MSMEs.

In emerging markets, MSMEs and the informal sector are essential to economic growth, job creation, and poverty alleviation. Recent crises have financially weakened financial service providers, limiting their ability to meet increasingly stringent lending requirements. 

As a result, businesses in emerging markets and developing economies are experiencing a credit contraction due to tighter credit conditions, rising interest rates, and a limited appetite for risk. As the largest development finance institution supporting the private sector in emerging markets, IFC is well-positioned to assist financial service providers.

IFC will leverage its risk capital to extend first loss protection to eligible financial service providers, which often have ample local currency liquidity but limited exposure to MSMEs due to the segment’s perceived high risk. 

Through this mobilisation approach, the MSME Platform aims to create a financing solution through capital optimisation structures and potentially redirect substantial amounts of local currency financing to businesses.

The Platform will be supported by the International Development Association’s Private Sector Window (IDA PSW) to help de-risk the credit and foreign currency exposures in projects in low-income countries. 

Up to $100 million will come from the IDA PSW Blended Finance Facility (BFF). Additionally, resources from the Global SME Finance Facility (GSMEF) and the Women Entrepreneurs Opportunity Facility (WEOF) will be allocated to support and incentivise lending to businesses in the agriculture sector and women-owned MSMEs.

The European Union announced on Thursday that it has given final approval to implement the remaining batch of Basel III rules, a set of tougher bank capital rules starting January 2025. These rules build on safeguards introduced after taxpayers had to bail out lenders during the global financial crisis over a decade ago.

The majority of the Basel III rules, created by the Basel Committee of banking regulators from the world’s major economies, have already been implemented. However, the final batch includes a key addition known as an ‘output floor’.

This safeguard aims to prevent large banks, which can use their own computer models to calculate capital buffers, from exploiting the system to the detriment of smaller rivals, who must use more conservative calculation methods set out by regulators.

Vincent Van Peteghem, Minister for Finance for Belgium, which holds the EU presidency, said, “The rules adopted today will ensure that European banks can continue to operate in the face of economic shocks.”

“They will also make the banking sector more sustainable and better able to deal with the green and digital transitions. This is an important step towards deepening the Banking Union.”

The bloc has included other rules, not part of the Basel norms, to harmonise the minimum requirements across the 27-country bloc for authorising branches of banks that are headquartered outside the EU.

The package also includes transitional capital requirements for banks’ holdings of crypto assets and changes to enhance how lenders manage environmental, social, and governance (ESG) risks.

Surecomp® has announced the completion of successful electronic bills of lading (eBL) transactions, bringing together multiple parties via its collaborative trade finance platform, RIVO. 

Following initial transactions processed in September last year, this second phase focused on streamlining the entire eBL workflow to enhance efficiency and transparency, demonstrating how an error-free process can reduce transaction processing time to just one hour.

Surecomp conducted two separate pilot transactions concurrently, with MSC Mediterranean Shipping Company (MSC), the world’s largest shipping company, acting as the carrier generating the eBL in both cases. 

The first transaction also included MAN Truck and Bus, Commerzbank AG, and Bangkok Bank, while the second involved Voith, another German corporate, Bayerische Landesbank, and Indonesian bank PT Bank BTPN Tbk (Bank BTPN).

Using an integration with the WaveBL platform to efficiently generate the digital Bill of Lading—a document typically presented under a Letter of Credit (LC)—the eBL was then attached to the LC transaction in RIVO. Demonstrating a smooth transition from the physical to the digital realm, the document was centrally accessible and transferable to all parties: the beneficiary, advising bank, issuing bank, and applicant. 

The entire process took only one hour to complete. With live status updates verified simultaneously on the WaveBL platform throughout the process, the clean documents were presented under an electronically issued Letter of Credit (eUCP LC).

This secure and seamless eBL ownership transfer via RIVO will facilitate bank adoption. Having also partnered with other leading eBL solution providers in the market, Surecomp is integrating more providers into RIVO.

By eliminating the need for separate onboarding and training for each one, banks can use RIVO as a centralised hub to access all their eBL providers in the same workflow, seamlessly connecting their eBLs to the LCs.

Ofer Ein Bar, VP Financial Institutions at WaveBL, said, “The WaveBL platform issues thousands of electronic Bills of Lading worldwide every day. Some of the largest global shipping companies already trust us to lead the trade revolution. We are confident in our partnership with Surecomp. The success of this transaction will accelerate banks’ adoption of electronic trade documents, marking a significant step toward global trade digitalization.”

“We were able to prove how centralizing the eBL management on RIVO can significantly enhance the process efficiency and operational stability,” said Enno-Burghard Weitzel, Surecomp’s Chief Solutions Officer. “Aggregating digital documents from various platforms represents a significant departure from the traditional, time-consuming paper-based processes that often take days or even weeks. Fostering eBL adoption by banks using RIVO to centralize the workflow, Surecomp remains committed to pioneering trade finance innovation, and the success of this eBL under LC marks a substantial leap forward in digitizing global trade.”

HSBC has introduced its new e-commerce digital payment platform, Omni Collect, in the UAE in collaboration with Saudi-based FinTech company, Geidea.

Through this partnership, Geidea will integrate a merchant acquiring facility within Omni Collect, enabling all HSBC business and corporate clients to access the card receivables solution, thereby gaining a better understanding of their collections data.

Kyle Boag, Regional Head of Global Payment Solutions, Middle East North Africa and Turkey (MENAT), HSBC, said, “HSBC’s Omni Collect will help businesses capitalise on that growth by offering them a simple way to collect payments faster, analyse customer payments behaviour and spot trends to make informed business decisions. Our strategy is to digitise the bank at scale, so that we can innovate faster for customers, and our partnership with Geidea is important in advancing this transformation agenda.”

Available to corporate customers via HSBCnet, Omni Collect is designed to simplify and streamline the way businesses collect digital payments for goods and services sold across multiple payment channels, including credit and debit cards, and e-wallets such as Apple Pay and Samsung Pay.

HSBC’s Omni Collect is integrated into clients’ e-commerce and accounting solutions directly via application programming interface (APIs), enabling real-time data flow. This allows businesses to monitor transactions online, consolidate their reporting across different payment methods, and have a unified view of all their daily business transactions.

Sailesh Malhotra, Geidea’s General Manager – GCC, said, “Our mission is making payments and commerce technology accessible, affordable and intuitive for everyone and this partnership is another testament to our reliability and ability to scale as we deliver on that commitment. We have been granted by the UAE Central Bank the licence to offer a diverse set of merchant services that empowered us to join hands with global partners such as HSBC.”

HSBC clients in the UAE with international operations will be able to expand their integration with Omni Collect across multiple markets in Asia and Europe, and vice versa. Omni Collect is available in the UK, Australia, India, mainland China, Hong Kong, Indonesia, Malaysia, South Korea, Japan, Singapore, Thailand, and Vietnam.

Finastra, a global provider of financial software applications and marketplaces, announced it has been selected by LGT to implement instant payment services in Austria and Liechtenstein, with plans to expand to other markets. 

LGT will deploy Finastra’s payment hub using a model bank implementation approach to expedite its compliance with the EU instant payments regulatory timeline. By separating payment processing from its core banking platform and utilising Finastra’s future-proof solution, the bank will be positioned to handle the expected increase in instant payment volumes while ensuring 24/7 service availability.

“Payments are becoming increasingly sophisticated, and it is crucial that we continue to evolve to meet our customers’ business needs and regulatory requirements,” said Bernhard Strauch, Head Securities & Payments Services at LGT Financial Services Ltd. “We selected Finastra’s payment hub as it supports multiple payment types within one standalone system, while enabling seamless integrations of new services as and when we need them. With Finastra’s solution and industry expertise, we will gain the necessary agility required to keep pace with regulatory and industry demands.”

Finastra’s payment hub offers banks a future-proof, scalable, and resilient payment processing system. Financial institutions can meet current regulatory requirements, respond faster to future changes, and provide personalised services to their customers. 

Combined with a model bank and best practice implementation, the solution will enable LGT to meet the fast-approaching EU regulatory deadline for instant payments swiftly. Once in place, the bank can easily adopt other schemes, such as SIC5 IP in Switzerland, and pursue ongoing modernisation, innovation, and growth. 

LGT also utilises Finastra Kondor, a bank treasury management system, and Finastra’s Total Messaging platform.

“Many institutions need to urgently assess whether their current payment processing environment can support the expected increase in volumes and the need to operate 24/7,” said Neil Macro, Vice President, Managing Director – EMEA mid-markets, Payments at Finastra. “This has been a huge priority for us at Finastra; ensuring that banks are fit for the future with our sophisticated payment hubs, including with the option to pay as you grow. Underpinned by open architecture, APIs, and our partner ecosystem, our solutions enable banks like LGT to innovate at speed, boost risk management and deliver enhanced services to end-users. For example, the bank can seamlessly implement new functionality to strengthen its instant payments offering, such as Verification of Payee and real-time sanctions screening. We look forward to supporting LGT on further developing its payments services.”

BNPL providers like Affirm, Klarna, and Afterpay collaborate with retailers to finance purchases, which customers repay in instalments. While this sector has grown substantially as a credit source, it currently lacks a federal regulatory framework.

According to an interpretive rule issued by the CFPB on Wednesday, BNPL lenders must now investigate customer disputes, refund returned products, and provide periodic billing statements. These are requirements that credit card companies must meet under the Truth in Lending Act.

“Regardless of whether a shopper swipes a credit card or uses Buy Now, Pay Later, they are entitled to important consumer protections under longstanding laws and regulations already on the books,” stated CFPB Director Rohit Chopra.

While most major BNPL providers already voluntarily adhere to similar protections, the new rule aims to ensure uniformity across the sector, a CFPB official informed reporters.

The rule will apply only to the popular “pay in four” instalment product, and BNPL providers will not need to comply with certain other credit card regulations, such as assessing a consumer’s ability to repay, the agency clarified.

BNPL loans accounted for $75 billion in online spending in 2023, a 14.3% increase from 2022, according to Adobe Analytics.

A 2022 CFPB report indicated that consumers often use BNPL as an alternative to traditional credit cards. However, consumer protection disclosures vary among major providers, and these loans can lead to increased consumer debt.

Under Chopra’s leadership, the CFPB has increased scrutiny on tech companies entering the financial sector, proposing supervision of payment services from Google and Apple and examining how tech giants utilise consumer payment data.

This agreement allocates an overall risk limit to local African banks, bolstering their ability to support economic activities on the continent.

The collaboration between AfDB and BCP is set to enhance financial inclusion for economic operators, with a special focus on small and medium-sized enterprises (SMEs). By consolidating the foreign trade capacities of these enterprises, the initiative is projected to catalyse approximately €200 million in trade.

 “This partnership with BCP includes objectives to diversify Morocco’s production capacity, strengthen its competitiveness, generate additional tax revenues, while creating new job opportunities,” commented Achraf Tarsim, AfDB’s Country Manager for Morocco.

The agreement underscores BCP group’s ongoing commitment to financing trade transactions in Africa. It presents an opportunity for BCP to further support its clients and fortify relationships with local African banks, which are increasingly challenged by declining financing and confirmation lines from foreign correspondents.

“Hand in hand, we are offering solutions to unleash the potential of companies that believe in their continent, invest in it, and create added value and jobs,” said Mohamed El Azizi, AfDB’s Director General for North Africa, at the signing ceremony.

The new RSA is expected to significantly bolster BCP’s capacity to finance trade across Africa, providing crucial support for commercial transactions of African companies. It is also aimed to promote better integration of local banks into the international financial system.

“This new agreement with the African Development Bank represents an ideal model of South-South collaboration, offering a comprehensive solution adapted to the development needs of pan-African trade and Africa’s trade with the rest of the world,” stated Kamal Mokdad, CEO of BCP and the group’s international operations. 

The AfDB-BCP partnership reflects a shared vision of promoting sustainable economic growth and development in Africa by empowering SMEs and enhancing trade capabilities, thereby contributing to the broader goal of economic resilience and prosperity across the continent.

NetXD has announced the expansion of its payments collaboration with Visa B2B Connect to onboard banks in Asia, following the successful onboarding of several banks across eight countries in Europe and the Americas. 

NetXD’s payments-as-a-service offering provides banks with various options to integrate with Visa B2B Connect. Using the experience of NetXD and Visa B2B Connect, banks can increase the speed to go live, benefiting from a pre-certified integration and a proven track record of onboarding numerous banks across Europe and Latin America since 2020.

Visa B2B Connect is a multilateral network that builds on Visa’s reputation and expertise, providing a predictable, secure, and cost-effective solution for financial institutions and their corporate clients. The solution offers banks an alternative to the traditional correspondent banking network to facilitate business-to-business cross-border payments.

Visa B2B Connect improves the customer experience by providing predictability, finality, and transparency in transactions. It can reduce costs by eliminating intermediary fees, minimizing upfront investment, and lowering operational overhead. 

The platform ensures security and efficiency through screened participants, tokenisation of sensitive information, and direct messaging for case resolution. Additionally, banks have the flexibility to utilise Visa or their own treasury for FX rates.

“Visa is committed to modernizing cross-border payments around the world and the collaboration with NetXD will help our clients start transacting on our network even faster. We are excited to kick off the collaboration in Asia Pacific with more markets to follow this year,” said Ben Ellis, Global Head of Visa B2B Connect at Visa. “Visa B2B Connect simplifies and speeds up transactions for banks and their clients, reducing costs for a more efficient and secure way to move money globally.”

NetXD has been a certified onboarding partner for Visa B2B Connect since 2020, with its hosted payments-as-a-service offering. 

NetXD’s payments-as-a-service enables banks to get to market and transact in a matter of weeks without additional upfront investment to build or integrate existing messages to transfer to and from customer accounts. NetXD also offers the capability to screen transactions for all participants before submitting to Visa for processing.

“We are delighted to announce the expansion of our collaboration with Visa B2B Connect in APAC,” said Seshadri Rengarajan, Head of Platform and Strategy, NetXD Inc. “Visa B2B Connect is available in 118 countries and territories, and growing and provides a cost-effective solution for banks to facilitate business-to-business cross border payments. NetXD’s solution enables banks to get onboarded in a short time with no technology change or integration.”

In 2023, the World Factoring industry exhibited robust resilience and growth, with a 3.6% increase in volume compared to 2022. This follows two consecutive years of double-digit growth, bringing the total volume to €3,791 billion, up from €3,659 billion the previous year. Although the growth rate has stabilised compared to recent years’ volatility, it reflects a return to pre-pandemic stability.

Over the past two decades, factoring has shown remarkable strength, with a compounded annual growth rate of 8.3%. Both domestic and international factoring have grown substantially, supporting SMEs and corporates by providing liquidity, protecting against customer bankruptcies, and offering global collection support.

Europe

Europe remains the largest contributor, accounting for approximately 68% of the global volume with €2,555 billion, showing an overall increase of 2.3%. Key markets include:

• France (+1.2%)
• United Kingdom (+2.7%)
• Germany (+3.1%)
• Italy (+0.9%)
• Spain (+5%)

Exceptional growth was noted in:

• Hungary (+14.7%)
• North Macedonia (+52%)
• Romania (+10.4%)
• Serbia (+24.3%)
• Slovenia (+14.2%)
• Turkey (+10.6%)

Some markets experienced declines, including:

• Armenia (-42.1%)
• Denmark (-23.6%)
• Georgia (-26.3%)
• Latvia (-12.8%)
• Moldova (-60%)
• Norway (-15.3%)

Asia Pacific

The region represents 25% of global volume with €942 billion, marking a 6.9% increase. The Greater China region showed mixed results:

• Mainland China (+10%)
• Hong Kong (-20.2%)
• Taiwan (-14%)

Japan rebounded with a 5.8% increase to €60 billion, while India grew by 10.2% to €17.3 billion. Singapore posted the highest regional increase at 36.4%, reaching €60 billion.

Americas

The Americas saw a 4.1% increase, representing 6% of the global volume at €237 billion. South and Central America, with a 3% share at €144 billion, grew by 16.4%. Leading markets include:

• Chile (+2.4%)
• Brazil (+16%)
• Mexico (+3.9%)

North America, representing nearly 3% of the market at €92.8 billion, experienced a decline of 10.7%.

Africa

Africa accounts for 1.2% of the global volume at €47 billion, with a growth rate of 13.5%. South Africa, the dominant market, saw a 14% increase, reflecting the continent’s strong growth trajectory.

Middle East

The Middle East, with 0.3% of the global volume, remained flat, largely due to data collection challenges.

Despite a challenging global environment, the 2023 FCI market survey highlights the strength and resilience of the factoring and receivables finance industry. The return to a more stable growth rate demonstrates the industry’s crucial role in financing the real trade economy. FCI extends its gratitude to all members and partners for their contributions in accurately reporting these impactful figures.

“This year’s data reaffirms the vital role of factoring and open account finance in supporting global trade, providing stability, and fostering economic growth across diverse regions.”, stated Neal Harm, “As we look forward to the future, the industry’s proven adaptability and robust performance continue to pave the way for sustained success.”

Marsh has announced the launch of Tax Investment Default Insurance, a new solution designed to increase the capital available for investing in federal tax credits tied to US renewable energy projects.

Under the Inflation Reduction Act of 2022, which introduced new tax incentives to promote renewable energy project development, developers can now transfer future tax credits to investors without needing to take an equity stake in the project. 

By transferring their tax credits, developers can generate cash to support early-stage project development, while buyers, typically financial institutions, obtain future credits to offset their federal taxes.

However, project lenders have typically required prospective tax credit or tax equity investors to meet strict financial strength criteria of investment grade. While this has given developers access to high-quality capital, it has excluded a larger pool of investors lacking the requisite credit ratings demanded by lenders.

Marsh’s Tax Investment Default Insurance was created to protect developers against the risk of default if a tax credit investor becomes unable or unwilling to fulfil their financial obligations once the tax credits are generated. 

This coverage can reassure lenders, enabling them to accept tax investors who previously would have been excluded, with greater confidence. Marsh’s new policy is supported by several A-rated underwriters, including Everest Insurance® underwriting companies, which bound the first Tax Investment Default policy for a leading solar developer in March.

The launch of Marsh’s Tax Investment Default Insurance comes amid a significant rise in the number of Marsh clients purchasing tax insurance policies to protect their renewable energy tax credit investments against the risk of the credits being disallowed or reduced by tax authorities.

David Kinzel, a Senior Vice President, Structured Credit & Political Risk, Marsh said, “The transferability of tax credits plays an essential role in the growth of the renewable energy market by offsetting the high upfront costs of constructing solar, wind, and other projects.” 

“Marsh’s Tax Investment Default Insurance further supports this growth by enabling a wider pool of investors to capitalize more clean energy projects.”