PayPal earnings soar on e-commerce boom

SAN FRANCISCO, United States - PayPal on Wednesday reported record quarterly profit as the online financial transactions service benefited from an e-commerce trend boosted by the pandemic.

PayPal said it made a profit of $1.1 billion in the recently ended quarter, compared with $84 million in the same period last year.

"Our strong first quarter results demonstrate sustained momentum in our business as the world shifts into the digital economy," PayPal chief executive Dan Schulman said in an earnings release.

PayPal handled some billion payment transactions in the quarter, with a total value of $285 billion, the Silicon Valley-based company said.

Revenue in what the company said was its best first-quarter financial performance ever was $6.03 billion, up 31 percent from the same period last year.

PayPal shares were up slightly more than 4 percent in after-market trades that followed release of the earnings report.

PayPal-owned mobile payments service Venmo last month began letting users in the United States buy, hold or sell cryptocurrency using its app.

The expansion into the hot digital money trend came on the heels of PayPal allowing people in the United States to use cryptocurrency to make purchases from millions of merchants that use the financial platform for online transactions.

The payments giant had already let users buy, sell or store digital money.

Agence France-Presse

'Digital' Filipinos to stick with cashless payments, online shopping in new normal: Visa study

MANILA - Majority of Filipinos plan to keep on using digital payments and e-commerce even after the coronavirus pandemic is contained, a Visa study released Thursday showed.

At least 70 percent of Filipino respondents said they intend to stick with digital payments instead of cash when the crisis is over, a Visa study conducted in 40 countries worldwide showed.

Asia Pacific preference to digital payments is at 78 percent, compared to the global average of 68 percent, it said.

"In this new normal, we’re seeing a shift – Filipinos are becoming more digital, and the COVID-19 situation has forced consumers to adopt this change in behavior," Visa Country Manager for the Philippines & Guam Dan Wolbert said.

A total of 73 percent of consumers said they were likely to "increase" or "sustain" their current online shopping behavior compared to 72 percent global average, Visa said. 

Thirty-seven percent of Filipino respondents said online shopping is a positive experience, compared to 35 percent global response, the study showed.

One in 6 active Visa cardholders also made an e-commerce purchase for the first time this year, shopping for essential goods, medicines and paying bills, the financial firm said.

Online shopping and cashless payments surged in the Philippines after the COVID-19 lockdown was imposed in March. Delivery of essential goods were allowed, while cashless payments were encouraged to reduce human to human contact. 

Metro Manila remains under general community quarantine until July 31, where services, businesses and restaurants are operating at a limited capacity. 

news.abs-cbn.com

Germany vows to beef up finance watchdog after Wirecard drama

FRANKFURT AM MAIN, Germany -- German Finance Minister Olaf Scholz said Sunday he wanted to overhaul the country's finance watchdog Bafin and give it more powers after a massive fraud scandal involving digital payments firm Wirecard.

Wirecard filed for bankruptcy late last month after admitting that 1.9 billion euros ($2.1 billion) was missing from its accounts, a case that has triggered criticism of the auditors and regulators meant to be overseeing the firm.

Scholz told the Frankfurter Allgemeine Sonntagszeitung newspaper he wanted to ditch the current two-stage procedure whereby Bafin is only called in when red flags are raised in a first vetting of accounts by a private monitoring body.

"We need far-reaching reforms," Scholz said, adding that Bafin needed to step in earlier and have the right to launch "special audits on a large scale".

"I want to give Bafin more control rights over financial reports, regardless of whether the company has a banking division," he went on.

"If we decide that Bafin needs more money, more employees and more competencies, I will work to ensure that happens." 

Bafin chief Felix Hufeld has admitted that his watchdog "had not been effective enough" at preventing the Wirecard disaster.

But auditing firm EY has also come under scrutiny for signing off on Wirecard's accounts for years before finally warning last month of an "elaborate and sophisticated fraud" at the payments provider.

The scandal has raised questions about whether auditing firms should be rotated more frequently, Scholz said, and whether it makes sense for them to advise and monitor a company at the same time.

German shareholders' association SdK, which has launched legal action against two EY auditors and one former employee over Wirecard, welcomed Scholz's proposals.

Bafin needs to be "completely rebuilt," SdK chief Daniel Bauer told the Handelsblatt financial daily.

"It's not enough to increase the number of employees," he warned. "They have to be the right employees who actually understand the subject matter."

Agence France-Presse

Five things to know about the Wirecard scandal

FRANKFURT AM MAIN, Germany - German payments provider Wirecard is in crisis after it admitted Monday that 1.9 billion euros ($2.1 billion) recorded in its accounts "do not exist".

Here are the most important facts about a scandal that is drawing comparisons with the collapse of US energy company Enron in the early 2000s over accounting fraud.

What does Wirecard do?

At its heart, Wirecard is a payments processor, offering companies services allowing them to accept credit cards and digital payments like Apple Pay or Paypal in stores, online or on mobile.

The company collects a commission for assuring that merchants will receive the money they are owed.

Around that, it sells its customers extra services like analytics based on the data generated from those transactions that it says can help boost sales and track trends.

Wirecard claims around 300,000 firms worldwide as customers, and deals with giants in the sector like China's AliPay and WeChat, Apple and Google have offered hot prospects for growth.

How did Wirecard make it big?

Wirecard was founded in 1999, starting out offering its services to porn and gambling sites.

Such stable revenue streams helped it survive the early-2000s dotcom crisis, and as more savory forms of online commerce ramped up through the 2000s and 2010s, the group's star mounted with it.

In the early days, founder Markus Braun increased his stake to seven percent, becoming the largest shareholder.

Wirecard now highlights clients like KLM, Deutsche Telekom and FedEx on its website.

First listed on the Frankfurt stock exchange in 2005, by 2018 it elbowed traditional lender Commerzbank out of the blue-chip DAX share index.

In early 2019, Wirecard's market value hit around 17 billion euros, matching crisis-ridden Deutsche Bank with 15 times fewer workers and revenues.

The past week's revelations have now collapsed that value to two billion.

Why weren't weak spots uncovered?

Beginning in January 2019, a string of Financial Times reports highlighted accounting irregularities, notably in Wirecard's Asian division.

Bosses denied any wrongdoing and the German financial world appeared to close ranks around its favourite.

Markets watchdog BaFin announced a probe into potential links between the FT and short sellers betting against Wirecard stock.

The fact his agency did not catch the scandal sooner was "a shame", BaFin chief Felix Hufeld said Monday.

"We weren't effective enough to prevent something like this happening," Hufeld added.

Wirecard's status as a Payment Service Provider (PSP) subjected it to multiple EU directives since 2008 obliging it to better fight payment fraud, but companies are not subject to as much scrutiny over their accounting practices.

Who controls Wirecard?

Wirecard was founded by Austrian Markus Braun, who until Friday served as chief executive.

Braun resigned after the company was forced to acknowledge the 1.9 billion euros might be missing.

Chief operating officer Jan Marsalek had been dismissed the day before.

American James Freis, installed as compliance chief on Thursday, was promoted to acting CEO on Braun's departure.

Freis had previously been compliance chief at German stock market operator Deutsche Boerse.

Aside from Freis, Braun and the remainder of Wirecard's former four-person board are under investigation by Munich prosecutors over "market manipulation" relating to how they presented KPMG's findings in its audit of their old accounts.

Wirecard's five-person supervisory board is headed by Thomas Eichelmann, a former business consultant who later switched to the financial sector including a stint at Deutsche Boerse.

Who is behind the missing cash?

German news weekly Der Spiegel named Mark Tolentino, a lawyer working in the Philippines, as the trustee responsible for the missing cash.

Based in Philippine financial centre Makati City, his website had vanished by Monday, although a Facebook page with public legal Q+A video sessions remained online.

Meanwhile one of the country's largest banks -- BPI -- where some of the missing money was supposedly deposited -- confirmed to AFP that an employee was on "preventive suspension".

Media had reported that an assistant manager at BPI signed a forged document relating to the supposed deposits at the bank.

Agence France-Presse

GCash transactions up 700 percent due to pandemic demand

MANILA - Mobile wallet GCash said Monday transactions spiked 700 percent in May as Filipinos turn to e-commerce during the coronavirus lockdown.

Customers loaded their GCash wallets using Instapay and paid for purchases on Google, Apple and Lazada more than they did during the same month in 2019, GCash said in a statement.

“GCash is empowering Filipinos to do more with less through our best-in-class platform. Through GCash, we are helping stir up economic activity by bringing merchants and consumers closer, at least digitally,” GCash president and CEO Martha Sazon said. 

Food delivery and online grocery shopping became more popular while fund transfers using GCash and Instapay are now the preferred mode of domestic remittance, it said. 

Bangko Sentral ng Pilipinas Governor Benjamin Diokno earlier urged Filipinos to use electronic channels to reduce human-to-human contact and reduce the risk of spreading the coronavirus.

news.abs-cbn.com

Google, Gates Foundation join digital payments initiative

WASHINGTON - A new nonprofit charity unveiled plans Wednesday to promote digital payments for people outside the financial system, with support from Google and the Bill & Melinda Gates Foundation.

The Mojaloop Foundation said it would work on free and open-source software that can be used by disadvantaged communities and the unbanked around the world.

The initiative aims to serve an estimated 1.7 billion people who lack access to digital financial services, according to a statement by the organization, which is also backed by Omidyar Network and the Rockefeller Foundation.

Mojaloop executive director Paula Hunter said the aim was to provide "more affordable, accessible digital financial services" to people outside the banking system.

The move comes amid an effort by the Facebook-backed Libra Association to create a new digital payments system to help make financial transfers easier and less costly for people outside the financial system.

The announcement Wednesday aims to create an inter-operable system based on the Mojaloop software project.

Named after the Swahili word for "one," Mojaloop is a reference model for payment inter-operability to barriers to money transfers large or small, the organization said.

The open source software was first established by the Gates Foundation in 2017.

"Our vision of universal financial inclusion is a world where everyone, everywhere, can access and use the digital financial services they need to build economic security and resilience," said Kosta Peric, the chairman of the Mojaloop Foundation and deputy director of financial services for the poor at the Gates Foundation.

Agence France-Presse

Australia probes PayPal over child abuse payments

SYDNEY - Australia's financial regulator on Tuesday ordered an investigation into global money transfer platform PayPal over concerns it is being misused by sex offenders to buy child abuse material from Asia.

The Australian Transaction Reports and Analysis Center (AUSTRAC) will appoint an external auditor to examine what it calls "ongoing concerns" over PayPal's alleged breaches of the country's anti-money laundering and counter-terrorism financing laws.

Announcing the appointment in a statement Tuesday, AUSTRAC said it was working with its partners to "combat serious crimes such as child sex exploitation" using funds transfer information reported by the financial services sector.

"Online child abuse material can be ordered from Australia to areas such as the Philippines in quite often small amounts that are repeated often, and PayPal unfortunately is one of the areas that they can use to do that," AUSTRAC CEO Nicole Rose told the ABC.

"That's why we want to get the auditor in to really what sort of risks there have been and continue to be with PayPal systems or their reporting regime."

A PayPal Australia spokesperson said that following an internal review the company had "self-disclosed an issue" in its reporting system to AUSTRAC.

"We are working in full cooperation with AUSTRAC to remediate this reporting system issue and to undertake the audit as outlined by AUSTRAC in the time specified," they said in a statement. 

An audit report must be compiled within 120 days and will be used to determine whether the regulator takes any further action against the digital payments platform.

source: news.abs-cbn.com