I have written earlier about problems in banking security and credit card security issues. But what about some other banking issues?
Banking is Broken: A Financial Revolution is Coming article tells that a trio of startups are seeking to change the way we manage our money, by focusing on the customers traditional banks are ignoring. Banks have been slow to embrace new technology.
Finland’s Holvi, Sweden’s iZettle and Estonias TransferWise all took the stage at the Slush startup conference in Helsinki last week, and while they all offer completely different services, they are share a similar goal – to empower the customers that they believe traditional banks are ignoring.
Holvi offers customers an alternative type of current account, integrating bookkeeping and money management in a clean, simple online interface. TransferWise, founded by the first ever Skype employee Taavet Hinrikus, is looking to bring the essence of Skype’s ethos of offering cut rate international phone calls to the money exchange market. Speaking at Slush last week de Geer said that iZettle was “effectively about democratising card payments.”
Keep in mind that Holvi, TransferWise and iZettle are just three of the hundreds of companies looking to cash-in on the revolution that is coming to the banking industry.
What made the article really interesting to me is that I happen to know one of the Kristoffer Lawson, Founder and CEO of Holvi. I have personally heard the story of how the company was put up, that they were applying the needed license and when they got it. But the article includes some a bold new statement: traditional banks are ignoring 80% of their customers.
Lawson believes that Holvi’s new type of account is “the future of banking” and his company is rethinking what it means to be a bank: Holvi offers customers an alternative type of current account, integrating bookkeeping and money management in a clean, simple online interface. It is designed for use by groups and organisations so they can collaborate, making it ideal for events such as Slush, which used the Holvi system for all its budgeting and ticketing operations this year.
And I have also heard of some other events in Finland do the same. The reason why such events have actively started to use the system is that Lawson had been earlier active on organizing different computer events, so he knows the needs of this type of organizations.
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Tomi Engdahl says:
The Cashless Society? It’s Already Coming
http://news.slashdot.org/story/14/12/01/222256/the-cashless-society-its-already-coming
Damon Darlin writes in the NYT that Apple pay is revolutionary but not for the reason you think. It isn’t going to replace the credit card but it’s going to replace the wallet — the actual physical thing crammed with cards, cash, photos and receipts. According to Darlin, when you are out shopping, it’s the wallet, not the credit card, that is the annoyance. It’s bulky. It can be forgotten, or lost.
US mobile payments will grow to $142 billion, from $3.7 billion this year
Cashless Society? It’s Already Coming
http://www.nytimes.com/2014/11/29/upshot/cashless-society-its-already-coming.html?abt=0002&abg=1
When you are out shopping, it’s the wallet, not the credit card, that is the annoyance. It’s bulky. It can be forgotten, or lost. I’ve learned while traipsing about buying stuff with my ApplePay that I can whittle down wallet items that I need to carry to three:
■ A single credit card, for places that have not embraced, but soon will, some form of smartphone payment.
■ A driver’s license. The law says I need to carry it, but I don’t need a whole wallet for it. (To carry it, I tuck it and the single credit card into an iPhone case that has room for three cards and two tightly folded bills.) But give it time. Although no state appears to be actively considering digitizing a driver’s license, I am convinced that within five years some will. (I do, however, foresee a risk in that. You would need to hand over your phone to a police officer who is asking for identification, and then the authorities could have access to anything on that phone.)
■ About $20 in cash. This may seem like a strangely small amount. But younger people will tell you that carrying $40 sounds strange. We are starting to see the first signs of the end of cash.
Citibank did a survey recently asking what method of payment is used for smaller purchases. Nearly half of the people in their 50s said cash. (That just over half said something other than cash is in itself startling.) But among those under 30? Just 30 percent said they’d use cash.
The millennials preferred to use debit cards; about 40 percent said it was the preferred option. Only a quarter of those over age 60 said they’d use a debit card.
If I were to make a bet, I’d say that 10 years from now the most popular answer from young shoppers about how they make small payments would be: thumbprint. And you’ll get a dull shrug when you ask what a wallet is.
Tomi Engdahl says:
Osborne ponders giving fleeing bank customers an API getaway car
Because what we all need is an easier way for world+dog to get at your personal data
http://www.theregister.co.uk/2014/12/08/gov_consultation_standardised_banking_apis/
Banks will have to use standardised application programming interfaces (APIs) to make it easier for customers to move their accounts to rival services, the British government has said.
In his Autumn Statement last week, Chancellor George Osborne announced that the government would launch a “call for evidence” on “how to deliver standardised APIs in the banking industry”.
Banking expert Tony Anderson of Pinsent Masons, the law firm behind Out-Law.com, said that plans “reflect another lesser known role that the established banks perform in society as the holders of substantive amounts of personal data”.
Anderson also said that the use of standardised APIs in banking would create a much more public source of data about customers and said there would be certain parallels with a “know your customer” (KYC) data-sharing initiative that is being developed by the Society for Worldwide Interbank Financial Telecommunication (SWIFT).
Anderson said that the method chosen to deliver standardised APIs in banking must “provide clarity on data privacy and security issues and be consistent with data protection regulation”.
The government threatened to legislate to require banks, energy companies and mobile providers to provide consumers with better access to their data if the companies had not engaged sufficiently with the midata regime, but stepped back from following through on its threat in the summer.
“Encouraging third party integration and becoming a ‘platform’ is potentially a strategy to mitigate the threat of being ‘unbundled’,” the report said. “Applying an open API standard across the whole sector would create the optimal conditions for the re-use of data. However, some organisations predicted that it would take considerable effort and co‐ordination to achieve.”
Tomi Engdahl says:
Are All Payments Becoming Invisible? A Conversation With Square’s Jack Dorsey
http://bits.blogs.nytimes.com/2014/12/10/are-all-payments-becoming-invisible-a-conversation-with-squares-jack-dorsey/?_r=0
Square, the company famous for its tiny mobile credit-card reader, says that during the last week, the firm crossed a major benchmark: Businesses using Square’s various payment technologies processed $100 million in sales during a single shopping day.
Square’s record day caps a stormy year for the company founded by Jack Dorsey, the entrepreneur who also was an inventor of Twitter. Once considered among the most promising start-ups in the tech industry, Square, in 2014, was dogged by reports that it was bleeding cash and looking for a lifeline in the form of an acquirer. Its core business also came under threat, with Apple, Amazon, and PayPal pushing new payment initiatives.
Tomi Engdahl says:
Xbox, Windows Store now accepting Bitcoin payments
You can now use Bitcoin to add funds to your Microsoft account.
http://arstechnica.com/gaming/2014/12/xbox-windows-store-now-accepting-bitcoin-payments/
Microsoft has added Bitcoin support to Microsoft accounts. Bitcoin funds can be added to accounts to enable digital purchases from the Windows, Windows Phone, Xbox Games, Xbox Music, and Xbox Video stores.
Tomi Engdahl says:
Small Bank In Kansas Creates the Bank Account of the Future
http://news.slashdot.org/story/14/12/15/1318249/small-bank-in-kansas-creates-the-bank-account-of-the-future
Nathaniel Popper writes at the NYT that the Citizens Bank of Weir, Kansas, or CBW, has been taken apart and rebuilt, from its fiber optic cables up, so it can offer services not available at even the nation’s largest bank. In the United States the primary option that consumers have to transfer money is still the ACH payment. Requests for ACH transfers are collected by banks and submitted in batches, once a day, and the banks receiving the transfers also process the payments once a day, leading to long waits. ACH technology was created in the 1970s and has not changed significantly since.
Small Bank in Kansas Is a Financial Testing Ground
http://dealbook.nytimes.com//2014/12/13/small-bank-in-kansas-is-a-financial-testing-ground/
The creation of the new bank, and the maintenance of the old one, are the work of a couple who were born in India and ended up in Kansas after living in Silicon Valley and passing through jobs at Google and Lehman Brothers.
But their real goal was to find solutions to logjams that continue to vex consumers all over the country, such as the obstacles that slow money moving from one bank to another and across international borders.
Their work is an unusual experiment: a new kind of mom-and-pop business trying to reshape a highly regulated and innovation-resistant industry. The new services that CBW is providing, like instant payments to any bank in the United States, direct remittance transfers abroad and specialized debit cards, might seem as if they should be painless upgrades in an age of high-frequency trading and interplanetary space missions. But with most banks, it still takes longer to send money to another country or even to another state than it does to travel the same distance.
The slowness of current methods of moving money is a widely acknowledged problem in the financial industry.
But hastening the movement of money creates risk for banks, because it generally means less time to catch fraudulent transactions.
CBW, on the other hand, is starting from the ground up, with one tiny bank, so it has less to lose. The experiment is a long way from changing the world, and it could easily flop, but it is already winning praise.
At the largest annual conference for global banks, in September, Ms. McQuerry said “the biggest idea” she saw at the entire event was new CBW software that can judge the risk involved in any transaction in real time.
CBW is already providing its new services to businesses far from Weir — including several start-ups in Silicon Valley — and is positioning itself to provide accounts to ordinary consumers who live outside Kansas.
buying an established institution allowed them to examine how money transfers and payment technology worked in a traditional bank — something that was hard to see in detail from the outside — and to consider how to make changes.
The most obvious problem to attack was the difficulty of making instant money transfers from one bank account to another. This is already possible in many countries, including Mexico and Britain, but in the United States the primary option that consumers have to transfer money is still the A.C.H. payment. Requests for A.C.H. transfers are collected by banks and submitted in batches, once a day, and the banks receiving the transfers also process the payments once a day, leading to long waits. Wire transfers move faster, with some being settled in hours, but they cost significantly more, and are still not instant.
CBW went to work on the problem by using the debit card networks that power A.T.M. cash dispensers. People use debit cards to make payments or withdraw cash from their accounts, but Mr. Ramamurthi’s team engineered a system so that a business could collect a customer’s debit card number and use it to make an instant payment directly into the customer’s account — or into the account of a customer of almost any other bank in the country. This costs the customer a few dollars, but is still significantly cheaper than a wire transfer, which generally costs $10 to $40.
A few other companies offer a similar service, but they are not banks, and most have less reach than CBW’s program. Some health insurance companies already use CBW’s instant payments to disburse claims payments.
Executives at big banks grumble that the sorts of innovations that CBW is trying are possible only because regulators don’t watch smaller banks closely, and that regulators would never let larger banks try such untested methods.
Tomi Engdahl says:
Mike Isaac / New York Times:
Apple Pay now supports 90% of US credit cards in terms of purchase volume
Dozens More Companies Sign Up for Apple Pay
http://bits.blogs.nytimes.com/2014/12/16/dozens-more-companies-sign-up-for-apple-pay/?_r=0
The list of companies working with Apple Pay continues to grow.
On Tuesday, Apple announced that in recent weeks the company had signed up dozens more banks, retail stores and start-ups to adopt Apple Pay, the company’s new e-commerce product, which allows customers to buy things with little more than a wave of their iPhone.
Tomi Engdahl says:
Messaging App Line’s Payment Service Begins Rolling Out To Users Worldwide
http://techcrunch.com/2014/12/16/line-pay-finally-rolling-out/
Line prematurely announced the introduction of its chat app payment feature earlier this month, but now it has begun rolling out to its 500 million-plus registered users.
The Japanese company announced a new update that brings Line Pay to all users (bar those in China and South Korea)
The principal goal of Line Pay is to enable users to make payments via the chat app, in the same way that users of Kakao Talk in Korea and WeChat in China already can
Payments are not just about Asia — Snapchat has jumped on the wagon, while Facebook appears to have tested its own solution and Kik is also keen.
Line said it works with cards from American Express, Diner’s Club, JCB, Master Card, and Visa. It will initially support payments in the Line Store — which sells stickers and themes — only, but the company plans to allow global users to make online/in-app purchases, send money to Line friends, and pay for goods offline in the future.
Security is understandably a major concern. Line said it will require a unique 7-digital password for transactions, while users will be required to authenticate via their mobile (using a password or Touch ID on iOS) if they make payment via the desktop version of the service.
Tomi Engdahl says:
Microsoft BEATS Apple, Google … to accepting limited Bitcoin payments
Oh yeah, and you can’t actually pay for anything. Oh well.
http://www.theregister.co.uk/2014/12/11/microsoft_beats_apple_and_google_to_accepting_limited_regional_bitcoin_payments/
Microsoft has quietly added Bitcoin as a payment method for digital content – games and music – thanks to a deal with Bitpay that allows customers to use the cryptocurrency to add money to their MS account.
Trouble is, the synthetic dosh still can’t be used to pay for physical goods directly, and initially at least, it’s Bitcoin holders who seem to be benefiting, with a single Bitcoin soaring $20 overight to $360 on the back of the Microsoft agreement.
Whether Microsoft (one of the first big tech companies to embrace the currency, ahead of Apple and Google) will also see a financial benefit is too early to tell, it certainly can’t hurt.
Tomi Engdahl says:
Bitcoin is GREAT and SAFE, says, er, the Bitcoin Foundation
Gros fromage: As long as operators aren’t in jail, digital cash is the future
http://www.theregister.co.uk/2014/11/06/bitcoin_remittance_unstable_currency_regulation/
Web Summit Bitcoin will have its biggest impact in unstable regimes and foreign currency transfers, according to the Bitcoin Foundation’s chief scientist Gavin Andresen.
Speaking at Web Summit 2014, the head boffin said the online virtual current offered a great way to sidestep unstable government-issued currencies when they were suffering from issues such as hyperinflation.
“Those are the places where having an alternative, where you can kind of go around the government currency, where Bitcoin will have the biggest societal impact,” Andresen told press at the event, while brandishing a hundred trillion Zimbabwean dollar he carries around.
“The Foundation works on keeping transaction fees inexpensive. We don’t want a world where Bitcoin remittance costs the same amount as wire transfers,” he said.
Tomi Engdahl says:
The Virtual Currency Taking Over the World isn’t the One You Think
http://www.securityweek.com/virtual-currency-taking-over-world-isn%E2%80%99t-one-you-think
Currency is a technology that evolves according to the needs of the people who use it. Throughout history, the forcing function for an evolutionary step in currency has usually been to meet an efficiency gap such as arbitrage, auditing, or fraud control. In the 20th century, the most significant evolution occurred when all governments detached the value of their currencies from underlying precious metal reserves.
With the rise of the Internet, the world may be on the verge of evolving a new currency—one that more closely lives in the digital world, and one that can be transmitted directly from one individual and received and processed by another as easily as an email or a text message. The world is looking for a virtual currency. Virtual means that the currency is not backed by a physical commodity, is not controlled by a government agency either, and is used and accepted among members of a specific virtual community (that is, the Internet).
Today, enthusiasts of virtual currencies fall into two camps. The first camp contains the crypto-currency enthusiasts.
Crypto-currency enthusiasts are also a very expressive group, blogging frequently about the currency and singing the praises of its benefits and the security of its protocol. However, as one would expect from contrarians, they disagree with each other quite often; as a result, there are now 80 virtual currencies—all based off of Bitcoin—with names like Dogecoin, Altcoin, and Primecoin. Of these, Bitcoin has the vast majority of mindshare and user base.
But for all the noise, the actual number of Bitcoin users is very likely quite small. Brandon Hurst, a Bitcoin enthusiast himself, estimates the number of Bitcoin users at less than 1 million.
The second camp of virtual currency enthusiasts is largely unknown, which is surprising considering that there are over 30 million of them. They wouldn’t even consider themselves as virtual currency enthusiasts, but just ordinary people in Africa using an SMS text-based currency called M-Pesa.
M-Pesa was invented as a virtual currency by mobile network provider Vodafone after it was discovered that its airtime minutes were being used and traded in by people in Africa in lieu of actual money. Partnering with the governments of Kenya and Tanzania, Vodafone launched the M-Pesa service, which would allow registered users to send and receive money using text messages. Tens of thousands of Point of Sale merchants, such as news agencies, grocers, landlords and government agencies were recruited to accept M-Pesa.
M-Pesa transactions are limited to $500, which reduces the incentive for mischief. Fraud still occurs in the M-pesa system, but at very low levels compared with that of Bitcoin or any traditional currency. In fact, Safaricom, the operator of M-pesa in Kenya, reports a fraud rate less than 1%.
The forward drivers for Bitcoin and M-Pesa are completely different. Speculation will continue to be a primary force for Bitcoin in 2015.
Tomi Engdahl says:
PayPal Here Adds Windows Support, Will Launch An EMV Card Reader Later This Year
http://techcrunch.com/2015/01/13/paypal-here-adds-windows-support-will-launch-a-free-emv-card-reader-later-this-year/
The PayPal Here card reader, PayPal’s hardware device that lets merchants accept credit and debit card payments through a dongle attached to their iOS or Android device, is being updated with support for EMV and contactless transactions, the payments company announced today at the National Retail Federation conference taking place this week in New York. An alternative to competitors like Square, the new reader will allow PayPal merchants to accept transactions via any chip card, magnetic strip, or contactless payment form, including mobile wallets.
Additionally, PayPal announced its Here SDK and soon, its mobile app, will be compatible with Microsoft Surface Pro 3, and other devices running Windows 8.1.
Tomi Engdahl says:
Oracle data centre offers its back end to banking upstart
Larry’s cloud to host Hampden & Co’s bulging accounts
http://www.theregister.co.uk/2015/01/15/oracle_datacenter_offers_its_back_end_to_banking_upstart_hampden_cloud/
Oracle is becoming a British banking back end, with its data centres about to start holding the money and details of some of the UK’s wealthiest citizens.
Hampden & Co, due to launch in the first quarter of 2015, has picked Oracle’s Flexcube as its core banking platform, the database giant said Tuesday.
Unlike other Flexcube customers, Hampden’s will be run as a service hosted at an Oracle data centre – a 160,000 square foot facility in Linlithgow, Scotland.
Flexcube will run on Oracle SPARC T5 servers at the centre.
The system will let Hampden’s staff provision and manage customers accounts, and it’ll provide online banking initially, with mobile banking planned.
Banking is Oracle’s second largest vertical, and the plan is to let more customers run inside Oracle’s own data centres as it tries to grow its cloud footprint.
At the same time, Hampden – a private bank – didn’t want to work with lots of different service suppliers.
“Hampden preferred to have soup to nuts from one single vendor,” Senthil Kumar, veep, business development of Oracle Financial Services, told The Reg.
“We eliminate the risk of multiple parties coming together and trying to connect it up, and in the cloud we give them fairly good level of comfort to run core businesses.”
Tomi Engdahl says:
Michael Carney / PandoDaily:
Braintree opens private beta allowing US merchants to accept bitcoin via its v.zero SDK and Coinbase integration
Paying for Uber with Bitcoin? Braintree opens up bitcoin payments to its thousands of merchants
http://pando.com/2015/01/22/braintree-goes-full-bitcoin-allowing-all-merchants-to-accept-the-virtual-currency-for-any-transaction/
Two of the biggest forces in modern payments collided today as Braintree announced broad availability of its bitcoin payments product via a previously announced partnership with Coinbase.
The integration was initially announced in September, with subsequent news from PayPal that limited use by its merchants to digital goods transactions like media, software, and in-app purchases. Today’s update means that, effective immediately, “any merchant that uses Braintree for credit card payments [can now accept bitcoin payments]” according to a Braintree spokesperson.
“Today, our initial integration with Coinbase is complete and we are opening up private beta access to allow merchants in the US to accept bitcoin via v.Zero,” the company writes in a blog post today.
With Braintree powering the online and mobile payments of several of the most popular consumer companies, this could be big news for bitcoin adoption. Popular merchants like Uber, AirBnB, HotelTonight, and thousands of others all have the option to enable bitcoin payments by flipping a single switch within the Braintree administrative interface. Coinbase already works with some 38,000 merchants including household names like Dell, Expedia, and Overstock.com, in addition to its 2.2 million consumer wallets. The company also has a similar payments processing partnership with Stripe
For bitcoin bulls, this news couldn’t come at a better time. The market has been fighting a negative news cycle – namely the BitStamp hack and Silk Road trial – and several fundamental factors contributing to declining prices. This includes the inflationary effects of new bitcoins entering circulation daily, merchants instantly converting all incoming bitcoin to fiat currency, and the declining profitability of mining. Anything that increases transaction volume and buy-side demand has the potential to stabilize, if not buoy prices.
Braintree, its parent PayPal, and their parent eBay have often presented conflicting perspectives on bitcoin.
Tomi Engdahl says:
New York Times:
Winklevoss Twins Aim to Take Bitcoin Mainstream With a Regulated Exchange
Winklevoss Twins Aim to Take Bitcoin Mainstream
http://dealbook.nytimes.com/2015/01/22/winklevoss-twins-aim-to-take-bitcoin-mainstream-with-a-regulated-exchange/
Bitcoin, the virtual currency that was once the talk of the financial world, has been taking a beating over the last year with the price tumbling downward.
Now two of the biggest boosters of the virtual currency, Cameron and Tyler Winklevoss, are trying to firm up support by creating the first regulated Bitcoin exchange for American customers — what they are calling the Nasdaq of Bitcoin.
The exchange, which the twins have financed themselves, is a risky bet, given that the virtual currency industry has been a target of hackers and has faced existential questions about its legitimacy. But the brothers are betting that the currency will be able to rise again if it follows the same playbook as the more established financial industry.
“Right now we have to build the infrastructure,” Tyler Winklevoss said. “You have to walk before you run.”
Since being brought into existence in 2009, by a creator going by the name of Satoshi Nakamoto, Bitcoin has become a technology and financial industry phenomenon. Many major Bitcoin companies, however, were founded by people with little previous financial experience. Bitcoins themselves are stored on a decentralized database run by the currency’s users, and can be bought and sold by anybody.
This week, an American Bitcoin company, Coinbase, a kind of retail brokerage firm, announced a $75 million financing round — the biggest ever for a Bitcoin start-up — with backing from the New York Stock Exchange and the Spanish bank BBVA.
But exchanges, where traders can meet to buy and sell Bitcoins for dollars and euros, have proved to be the biggest vulnerability for Bitcoin.
The first major Bitcoin exchange, Mt. Gox in Japan, lost hundreds of millions of dollars and went bankrupt last year. Earlier this month, a security breach at another prominent exchange in Europe, Bitstamp, was the latest reminder of the risks, and helped push the price of a Bitcoin below $200 from a peak above $1,200 in late 2013.
Tomi Engdahl says:
Jon Southurst / CoinDesk:
Coinbase to launch first regulated US bitcoin exchange on Monday, approved by half of all state regulators
Coinbase Secures Approval to Launch Regulated US Bitcoin Exchange
http://www.coindesk.com/coinbase-secures-approval-launch-regulated-us-bitcoin-exchange/
Bitcoin services provider Coinbase is set to launch a US exchange on Monday – one reportedly already approved by regulators in 24 jurisdictions, including California and New York.
Coinbase has until now acted largely as a brokerage for bitcoin users. By expanding into this new vertical the company will be able to “offer greater security for individuals and institutions to trade bitcoin and monitor real-time pricing of the cryptocurrency”, the company told the Wall Street Journal.
“Our goal is to become the world’s largest exchange,”
Tomi Engdahl says:
Pete Rizzo / CoinDesk:
Coinbase’s US Bitcoin Exchange Opens Doors to Traders — Bitcoin services provider Coinbase officially launched its exchange product today to consumers in 24 states. — The news follows what proved a dramatic runup to the launch, one sparked by a single teaser tweet that caused speculation to run rampant Sunday.
http://www.coindesk.com/coinbases-us-bitcoin-exchange-opens-doors-traders/
Tomi Engdahl says:
Your gran and her cronies are ‘embracing online banking’ – study
Really? Even 100-year-olds, claim clipboard wielders
http://www.theregister.co.uk/2015/01/29/your_gran_and_her_cronies_are_embracing_online_banking_study/
Online banking has seen a boom among the older generation, with nearly 2.3 million aged between 70 and over 100 years old now using internet banking, according to figures compiled by the British Bankers’ Association (BBA).
The BBA said more than 450,000 customers over the age of 60 are using banking apps on smart phones, iPads and other tablets.
“The oldest HSBC customer to have downloaded its banking app is aged 108,” the BBA said.
Figures published on 26 January, part of the BBA’s “Way We Bank Now” research, show that 2,267,597 bank customers aged over 70 are now registered to use internet banking. “More than 600,000 of these people are 80-plus,” the BBA said.
In addition, “more than 306,000 customers aged 60-plus have signed up to receive text alerts from their bank, which can help customers avoid fees when breeching borrowing limits”.
According to the BBA, the study also found that older customers who use mobile and internet banking “typically use it as frequently or only slightly less often than younger generations”. It shows that some banks “are currently experiencing faster growth rates for digital services by customers in their 70s and 80s than for younger generations”.
Tomi Engdahl says:
Ben Popper / The Verge:
Bill Gates says mobile banking solutions like M-PESA will revolutionize the lives of the poor within 15 years
Guest editor Bill Gates
Can mobile banking revolutionize the lives of the poor?
http://www.theverge.com/2015/2/4/7966043/bill-gates-future-of-banking-and-mobile-money
As detailed in a 2012 study from the SIT Graduate Institute, residents of Sori traditionally kept their money at home. Theft was a constant concern, and many of the women interviewed reported their husbands misappropriating their savings. For many, traditional banks were either too far away, or demanded minimum deposits the villagers could not afford.
All that changed in 2007 with the introduction of M-PESA, a mobile service that allows Kenyans to store and transfer their money using only a cell phone. Funds can be exchanged over the network using SMS messages, meaning it works on almost any mobile phone. M-PESA agents spread throughout the country allow users to convert their credit to cash and deposit or withdraw from their accounts. The majority of Sori women interviewed for the study now keep their savings in M-PESA accounts, safe from criminals and wasteful purchases.
M-PESA also revolutionized how the women sold their goods. Prior to M-PESA, the women worked only in cash.
Of the 2.5 billion people in the world who have no access to a traditional bank, approximately 1 billion have a mobile phone. The widespread adoption of mobile phones has enabled some of the poorest economies on earth to leapfrog ahead of developed nations when it comes to tech-driven financial solutions.
A report in The Atlantic noted that adults in Sub-Saharan Africa are three times more likely to use mobile money as their counterparts in Europe and the Americas. In fact, another recent report found nine African nations now have more mobile pay accounts than traditional bank accounts.
Kenya is frequently cited as a successful example of how mobile money can dramatically transform a country’s economy. In 2006, less than 30 percent of adults in the country had access to formal financial services. Thanks to M-PESA, today that figure stands above 65 percent. Developed by telecom giants Vodafone and Safaricom with the blessing of the Central Bank of Kenya, by 2010 M-PESA was considered the most successful mobile money service in the developing world. In 2014, the service processed over $20 billion in transactions, a figure equal to more than 40 percent of the nation’s GDP.
Widespread adoption has bolstered Kenya’s economy
But as banks, governments, and telecommunication companies have learned, replicating the success of M-PESA in other developing nations is not so simple.
Between 2010 and 2013, mobile money services began a push to expand in countries like India, Nigeria, and Brazil, but onlookers were dismayed by the pace of adoption. “There have been about 200 of these experiments around the world, and maybe only four or five have been successful,” Michael Joseph, director of mobile commerce at Vodafone, told Financial Times.
“People thought it was this magic service that would pull us all out of poverty, but it wasn’t working like it did in Kenya anywhere else in the world. Do you know the hype cycle? Well the last few years have been our trough of disillusionment.”
“The government and the financial institutions [in Kenya] were comfortable with a lot more risk.”
That risk included the use of M-PESA by criminals to move illicit proceeds. Laundering dirty money was now as simple as sending a text message. “Most countries would hesitate to help a massive channel for illegal transfers like that to develop,” says Abhishek Chauhan, a mobile banking analyst with Frost & Sullivan. “People were aware that this was being used by drug lords and smugglers.”
in countries like India, where a robust banking sector already exists, mobile payments have been less successful.
There are now well-established markets with multiple competitors across Africa, Asia, and Latin America.
But whether or not mobile payments can significantly address global poverty is up for debate. “I think there is some evidence that the basic deposit, withdraw, and send functions help poor people to have more choices, more convenience, more privacy, and more security in their financial lives,” says CGAP’s McKay. “But people thought it was a magic service that would pull us all out of poverty. I would not say that mobile money in and of itself is going to pull people out of poverty. That would be going too far.”
Tomi Engdahl says:
Everett Rosenfeld / CNBC:
Ecuador is the first country to roll out a state-run electronic payment system; digital currency will be tied to the US dollar
Ecuador becomes the first country to roll out its own digital cash
http://www.cnbc.com/id/102397137
In 2000, Ecuador moved to ditch its stumbling currency for the U.S. dollar. Now more than 15 years later, the South American country is revamping its monetary system again—using digital currencies.
Ecuador’s Sistema de Dinero Electrónico (electronic money system) kicked off in December by allowing qualifying users to set up accounts, and it will begin acting as a real means of transaction this month.
Once the government flips the switch, the South American nation of 16 million will host the first-ever state-run electronic payment system. (Other countries, such as Sweden, use digital currencies widely, but they’re not state-sponsored.) But the Ecuadorean government says the scheme is designed to support its dollar-based monetary system, not replace it.
Electronic money will not only help the poor, he added, but will act as a cost-saving mechanism for the government: Ecuador spends more than $3 million every year to exchange deteriorating old notes for new dollars, Martinez said. There would presumably be less wear and tear on the currency if much of it was stored at the central bank while citizens relied on mobile payments.
White told CNBC that the government’s bitcoin ban in July and its barring of competing e-money systems demonstrate Quito’s intentions.
At the very least, White said, the government is looking to turn a profit from holding a monopoly on all electronic payments
Despite several headlines to the contrary, Ecuador’s electronic money system is dissimilar from bitcoin. While the world’s most popular cryptocurrency is a digital token running on a decentralized (yet cryptographically secured) electronic network, Ecuador’s new project would be controlled by the government and tied directly to the local currency—the dollar.
The project initially created buzz in in the bitcoin blogosphere, but that interest faltered once it was clear that Ecuador’s project would not present a competing alternative. Not only is the technology importantly different, but Ecuador’s electronic money system currently can be accessed only by qualifying citizens and residents.
Tomi Engdahl says:
HSBC Banking Leak Shows Tax Avoidance, Dealings With Criminals
http://news.slashdot.org/story/15/02/10/0431219/hsbc-banking-leak-shows-tax-avoidance-dealings-with-criminals
Data in a massive cache of leaked secret bank account files lift the lid on questionable practices at a subsidiary of one of the world’s biggest financial institutions. HSBC’s Swiss banking arm
HSBC files show how Swiss bank helped clients dodge taxes and hide millions
http://www.theguardian.com/business/2015/feb/08/hsbc-files-expose-swiss-bank-clients-dodge-taxes-hide-millions
Data in massive cache of leaked secret bank account files lift lid on questionable practices at subsidiary of one of world’s biggest financial institutions
The files – obtained through an international collaboration of news outlets, including the Guardian, the French daily Le Monde, BBC Panorama and the Washington-based International Consortium of Investigative Journalists – reveal that HSBC’s Swiss private bank:
• Routinely allowed clients to withdraw bricks of cash, often in foreign currencies of little use in Switzerland.
• Aggressively marketed schemes likely to enable wealthy clients to avoid European taxes.
• Colluded with some clients to conceal undeclared “black” accounts from their domestic tax authorities.
• Provided accounts to international criminals, corrupt businessmen and other high-risk individuals.
US prosecutors weigh criminal charges against HSBC as Warren turns up the heat
http://www.theguardian.com/news/2015/feb/10/hsbc-us-prosecutors-criminal-charges-elizabeth-warren
Tomi Engdahl says:
Mic Wright / The Next Web:
Visa announces credit card tech that could speed up Apple Pay’s arrival in Europe
http://thenextweb.com/apple/2015/02/24/visa-announces-credit-card-tech-that-could-speed-up-apple-pays-arrival-in-europe/
Visa Europe has announced that it’s introducing a secure way to pay with your smartphone while keeping your credit card details concealed. Bringing the method to Europe could speed up the arrival of Apple Pay and other new contactless payment services.
Visa says it will introduce “tokenization” by mid-April. The technique substitutes your credit card information with a series of numbers that can be used to authorize payment without revealing your actual account details. When you use your smartphone to make a contactless payment, the token is submitted, instead of your account information.
The introduction of token-based security by Visa and rivals including MasterCard and American Express was a key component in the launch of Apple Pay in the US last year.
Tomi Engdahl says:
Bank of England could mint own brand of Bitcoin
Research paper sees role for distributed ledgers as interbank settlement instrument
http://www.theregister.co.uk/2015/02/26/bank_of_england_considers_its_own_brand_of_bitcoin/
The Bank of England (BoE) has issued a piece of research suggesting, among other things, that it may not be a bad idea for it and other central banks to issue digital currencies.
That section says one example of fundamental change Bitcoin and its ilk, for the following reasons:
“Digital currencies, potentially combined with mobile technology, may reshape the mechanisms for making secure payments, allowing transactions to be made directly between participants. This has potentially profound implications for a financial system whose payments mechanism depends on bank deposits that need to be created through credit.”
Also called out as game-changers are “… new business models, such as peer-to-peer lending and crowdfunding, which create alternative sources of finance for both individuals and businesses.”
Digital currencies, the paper says, are significant because they show “that it is possible to transfer value securely without a trusted third party.”
“While existing private digital currencies have economic flaws which make them volatile,” the paper says, “the distributed ledger technology that their payment systems rely on may have considerable promise.”
So much promise that the paper says digital currency “could be used as a new way of undertaking interbank settlement, or it could be made available to a wider range of banks and NBFIs [non-bank financial institutions. In principle, it might also be made available to non-financial firms and individuals generally, as banknotes are today.”
The BoE thinks we can’t rush into such a scheme before first getting security right and “without compromising a central bank’s ability to control its currency”.
Tomi Engdahl says:
Digital Wallets: End of the Beginning or Beginning of the End?
http://www.wired.com/2015/02/digital-wallets-end-of-the-beginning-or-beginning-of-the-end/
Apple Pay is up and running and digital wallets are back in the limelight. Are merchants, consumers, and the market ready for mass adoption of digital wallets? Google Wallet’s poor early uptake comes to mind four years after its launch in 2011. We believe a combination of factors – part structural, part user experience – will drive the next and larger cycle in digital wallet adoption. Apple Pay will be a key enabler, it will neither be alone nor, the necessary winner.
The mobile wallet space has been fragmented without a clear leader. By this time next year we will have our leaders in place. Payment systems and currencies are either universal or limited, this has been true as long as records have been written down, carved into rock or told of around the campfire. The more limited the usability, the less likely a digital wallet is to keep users engaged as infrastructure catches up with entrenched payment methods. Past brushes with digital wallet greatness have withered on the cloud as insecure, less than seamless alternatives to boring analogue cash and plastic cards. Lack of a universal technology standard, disparate interests of stakeholders, and poor user experience, have severely limited adoption and growth. Apple Pay has begun to change this, quickly, given the short and still limited rollout of the service. Google’s recent moves with SoftCard from AT&T, T-Mobile and Verizon and Samsung’s purchase of Loop Pay suggest the future is arriving fast.
Fortunately for the industry, a perfect confluence of contextual realities has formed to allow rapid evolution of wide spread digital wallets adoption. The secular facts on the ground are: near-ubiquitous presence of NFC (Near Field Communications) POS terminals; October 2015 deadline for retailers to upgrade to Europay Mastercard and Visa (EMV) enabled POS terminals; and several massive hacks costing merchants and banks millions while driving up interest in newer, safer, payment.
Tomi Engdahl says:
Stratos’ Bluetooth connected payment card works everywhere, available this April
http://thenextweb.com/gadgets/2015/03/03/stratos-bluetooth-connected-payment-card-works-everywhere-available-this-april/
Everyone wants a piece of the payments space and if the excitement for Coin proved anything, people want a single card that replaces all the separate ones they’ve already carrying around.
Stratos, launching today, is a new payments card that exists to replace every single plastic card in your wallet. The card features Bluetooth connectivity and can be used everywhere you’d expect, like at ATMs, restaurants and gas stations.
Using the companion mobile app, you can switch between cards and track your spending. The company is working to add further features like location based recommendations based on your spending history, virtual card downloads (think gift cards or pre-paid cards) and more.
The amazing thing about Stratos is that the company says you can load basically anything that features a magnetic strip onto it like credit, debit, loyalty, membership or even gift cards.
What’s cool about Stratos’ approach versus a solution like Apple Pay or even Samsung Pay is that it says it’ll work on day one with 100 percent of merchants in the US, since it uses technology that already exists.
Instead of requiring a one-time purchase, Stratos is a recurring yearly membership of $95 per year or $145 for two years. The idea behind this is simple; the company wants you to get the most “complete” experience, with a new card every year that features the latest technology or a replacement if you lose it, similar to how your bank works.
Tomi Engdahl says:
Michael J. Casey / Wall Street Journal:
Bitcoin startup 21 Inc. reveals $116M in funding led by Andreessen Horowitz, RRE Ventures, Yuan Capital, aims to drive mainstream adoption of Bitcoin
Secretive Bitcoin Startup 21 Reveals Record Funds, Hints at Mass Consumer Play
http://blogs.wsj.com/venturecapital/2015/03/10/secretive-bitcoin-startup-21-reveals-record-funds-hints-at-mass-consumer-play/
For the past year and a half, a Silicon Valley startup has quietly convinced some of the biggest names in venture capital to back its effort to turn the technology behind bitcoin into a mass-marketed phenomenon.
Now, that company, which bears the name 21 Inc., is emerging from stealth to announce it has raised $116 million in venture funding, the most ever by a startup in the digital-currency sector, based on data from bitcoin news service Coindesk.
What it’s not yet publicizing is the precise nature of its operations, Chief Executive and co-founder Matthew Pauker will only say there will be “several interesting developments over the next weeks and months” about software and hardware products designed “to drive mainstream adoption of bitcoin.”
According to Silicon Valley investors such as those taking stakes in 21, say that failure to gain mass adoption is partly because the public’s attention has been misguidedly focused on bitcoin’s limited potential as a digital alternative to traditional currencies. In reality, they say, its underlying technology has far wider applications than that. Unlike the currency transactions that are generally associated with bitcoin, these new uses could range from lawyer-free smart contracts to tamper-proof online voting systems.
Qualcomm’s involvement could spur speculation that 21 has its sights on the so-called “Internet of Things.”
The money flow is paving the way for products and services aimed at transitioning bitcoin from its volatile, Wild West beginnings into an era of more secure infrastructure and mass appeal.
A week after its funding announcement, Coinbase unveiled the first licensed U.S bitcoin currency exchange. Later, high-tech security company BitGo Inc. launched a unique insurance program, while the New York-based Digital Currency Group’s Bitcoin Investment Trust earned regulatory approval to become the first publicly offered fund dedicated to owning bitcoin.
Well-funded custodial and financial services companies Xapo Ltd. and Circle Internet Financial Ltd. have also developed high-tech security and insurance projects. Meanwhile, San Francisco startup BitFury Holding BV has launched new, high-powered chips to take bitcoin mining to a new level of intensity.
None of this will matter if bitcoin doesn’t achieve mass adoption, says Mr. Pauker.
“Bitcoin is going to change the way that people and businesses and even machines interact with each other,” he says. “But for bitcoin to realize that vision we need mass adoption. It can’t just be for Silicon Valley.”
Tomi Engdahl says:
Now anybody can use Robinhood, the no-fee trading app backed by Snoop Dogg and Marc Andreessen
http://uk.businessinsider.com/robinhood-no-fee-brokerage-app-is-now-open-2015-3?op=1?r=US
It’s sleek. It’s easy to use. It’s designed to give first time, small-scale investors a leg up on Wall Street hotshots.
And after months of waiting, it’s now open to anyone who wants to join.
Robinhood, a zero-commission brokerage app for iPhone that launched in December to a 700,000-person waitlist, is now available to the general public.
For starters, it’s mobile first. That has allowed the company to rethink traditional brokerage cost structures. With no human traders to pay – or ancient infrastructure running the trades – they’re able to cut out those overhead costs.
As a result, Robinhood doesn’t charge a commission for standard trades, nor does it require any minimum deposits.
“Imagine you’re a first-time investor in your early 20s. You have a few hundred dollars – maybe a thousand dollars – to put in the market. You want to learn how it works. Seven to 10 dollars eats into that quite a bit,” said cofounder Vladimir Tenev.
The co-founders were inspired to “democratize access to the financial markets” by the 2011 Occupy Wall Street movement, in which protesters, upset about large bank bailouts, occupied Zuccotti Park and other financial districts for months, denouncing Wall Street and the government’s leniency toward bankers.
In the 12 months since Robinhood was first announced, nearly 500,000 people have joined a wait list to download the app.
“It’s really, really, important that this country as a whole trusts its financial system,” said Bhatt. “I think it’s really important that there actually is a company that thinks like that.”
Though the app rolls out on iPhone first, the founders plan to expand to Android and web as soon as possible
Tomi Engdahl says:
Gertrude Chavez-Dreyfuss / Reuters:
IBM talked informally with US Federal Reserve and other central banks about creating a digital cash and payment system for currencies using blockchain tech
Exclusive: IBM looking at adopting bitcoin technology for major currencies
http://www.reuters.com/article/2015/03/12/us-bitcoin-ibm-idUSKBN0M82KB20150312
(Reuters) – International Business Machines Corp is considering adopting the underlying technology behind bitcoin, known as the “blockchain,” to create a digital cash and payment system for major currencies, according to a person familiar with the matter.
The objective is to allow people to transfer cash or make payments instantaneously using this technology without a bank or clearing party involved, saving on transaction costs, the person said. The transactions would be in an open ledger of a specific country’s currency such as the dollar or euro, said the source, who declined to be identified because of a lack of authorization to discuss the project in public.
The blockchain – a ledger, or list, of all of a digital currency’s transactions – is viewed as bitcoin’s main technological innovation, allowing users to make payments anonymously, instantly, and without government regulation.
Unlike bitcoin, where the network is decentralized and there is no overseer, the proposed digital currency system would be controlled by central banks, the source said.
Tomi Engdahl says:
Jon Russell / TechCrunch:
Rakuten To Put Its Bitnet Investment To Work And Accept Bitcoin Worldwide
http://techcrunch.com/2015/03/17/rakuten-bitcoin-bitnet/
Rakuten, Japan’s largest online retail firm, has announced that it will soon accept bitcoin across its global marketplaces.
The company is putting its investment in Bitnet — a startup that raised $14.5 million last October — to work with this development. Bitnet, which was founded by ex-Visa execs and is rivaled by Coinbase and Bitpay, will initially be integrated into Rakuten’s U.S. marketplace to allow customers to pay in BTC.
Next up, the new payment option will roll out in Germany and Austria, with other international markets to follow. Interestingly, there’s no specific mention of when Bitnet will be integrated into Rakuten Japan, which is the most prominent of its 12 country-specific services.
Last year was a breakthrough year for bitcoin as a sea of established retailers, including Dell, Overstock and even Microsoft, hopped onto the cryptocurrency to give customers an alternative avenue for payments.
Tomi Engdahl says:
The tech helping investors ignore their emotions
http://www.bbc.com/news/business-31913220
For decades “passive” tracker funds that mirror stock market indexes have been shown to outperform ones actively managed by humans.
And now so-called ‘robo investors’ – algorithm-based systems that manage investments on our behalf – are soaring in popularity with the public.
A key advantage to automated funds is that they bypass human emotions like fear and greed, which often lead to poor investment decisions.
However, a new wave of tech start-ups say they can redress the balance – by helping fund managers overcome their deepest cognitive biases.
Using big data and behavioural finance techniques, they say they can help you invest more wisely and ethically – as well as outflank the automatons eating your lunch.
Put simply, you tell the system about your investment plans, price targets, risks you’re looking out for – even how many hours’ sleep you had last night or whether you woke up in a bad mood.
Algorithms start to recognise your behavioural ticks and alert you.
“It might send you a message to say, ‘FYI, here are two stocks you hold that are starting to show the same characteristics that have got you into trouble before, so you might want to have a look,’” says Mrs Levy.
“You make the ultimate decision. It just helps you to stay the course and do what you’d said you would do and not get side-tracked by your own emotions.”
Sybenetix, another start-up in the field, says that users of its software can see the cost of a biased decision immediately after they make a trade – and in some cases it’s as high as 3% of profits.
Prof Raghavendra Rau, director of the Behavioural Finance programme at Cambridge Judge Business School, is not convinced by the new wave of behavioural tech, however.
He says that systems still can’t predict the vagaries of the stock market and he’s yet to see a “strategy that consistently makes money”.
“A big issue is that they have no way of predicting turning points in markets. Human beings can’t do it, and if we can’t do it we can’t programme it effectively either.”
“An enormous amount depends on the specific objectives, environment and context of the investor. For example, the role played by ‘in-the-moment intuition’ is completely different for an investor with a five-year time horizon, versus one trading stocks with an average holding period of a week.”
“Automated models still don’t really know what to do when markets go haywire,” Essentia’s Mrs Levy says, “but what humans bring to the situation is their natural skill, intuition and emotional intelligence which technology can’t replicate.”
“An interesting parallel is in the world of chess,” he says.
“It took a long while for machines to beat humans, and yet there is now a form of chess which combines the power of humans and machines, which is actually far more powerful than either humans or computers can achieve alone.”
Tomi Engdahl says:
Facebook Messenger brings money transfers to US users
Facebook Messenger application receives a message feature, which allows users to transfer money to each other conversation.
The property comes Messenger US Android, iOS and desktop users within a few months. Money transfer for the application will be by tapping dollar sign or clicking the money can be transferred to a friend. Sending money and receive calls with your Facebook account connecting the bank card.
Facebook competitor Snapchat presented similar characteristic late last year.
Source: http://www.tivi.fi/Uutiset/2015-03-18/Facebook-tuo-Messenger-rahansiirrot-yhdysvaltalaisk%C3%A4ytt%C3%A4jille-3217644.html
Tomi Engdahl says:
Withdraw Cash Without a Card? There’s an App for That
BMO Harris Bank initiative gives new meaning to ‘smartphone withdrawal’ in bid to cut fraud
http://www.wsj.com/articles/withdraw-cash-without-a-card-theres-an-app-for-that-1426459107
Chicago-based BMO Harris Bank, a unit of Canada’s Bank of Montreal, on Monday will launch the U.S.’s biggest cardless ATM network, allowing customers to withdraw cash by using their smartphones.
Tomi Engdahl says:
Geoffrey Smith / Fortune:
Alibaba’s Jack Ma shows off new ‘pay with a selfie’ technology
http://fortune.com/2015/03/17/alibabas-jack-ma-shows-off-new-pay-with-a-selfie-technology/
New facial recognition software is intended to buttress the fast-growing mobile-payments business.
One thing is for sure – it’s better than having to remember another password.
Alibaba Group Holdings BABA 1.24% founder and chief executive Jack Ma Monday showed off the company’s new facial recognition tool, intended for use with Alipay mobile payments service.
Appearing at the annual CeBit tech exhibition in Hanover, Germany pulled a trick straight out of the Steve Jobs “one more thing” playbook by ending his presentation with a demonstration of “Smile to Pay”.
The app validates mobile payments by matching a photo taken by the user at the point of purchase to a stored profile photo.
The technology is being developed by Ant Financial unit, which also operates Alipay. Alipay was spun out of Alibaba before the latter’s IPO in New York last year, and Ma has hinted that he will seek a separate listing for it.
Tomi Engdahl says:
Google Working on Project to Let You Receive and Pay Bills Directly Inside Gmail
http://recode.net/2015/03/24/google-working-on-project-to-let-you-receive-and-pay-bills-directly-inside-gmail/
Google’s mission to organize the world’s information is now targeting your physical mailbox.
The company is currently working on a project that will allow Gmail users to more easily receive bills in their email inbox instead of their mailbox. Called Pony Express, the service also is designed to let people pay their bills within Gmail, rather than having to go to a telecom or utility company’s website to complete a payment.
Those details are outlined in a lengthy document viewed by Re/code. The new service is scheduled to start in the fourth quarter, according to the document. It’s not clear whether Pony Express is a code name or one that’ll be used if it comes to market. A Google spokeswoman declined to comment.
Such a service fits Google’s ongoing desire to bring all of the world’s information online
With Pony Express, Google could suck in the type of financial data that would allow it to expand into new businesses. Credit card bills and payment history would be a gateway into industries such as personal finance or lending. And the data could be used to refine how advertisements are targeted to individuals on Google, YouTube and partnering sites, though such a move would likely stoke privacy concerns. It’s not clear whether Google would generate any revenue directly from the Pony Express service.
Tomi Engdahl says:
UK Setting Itself Up To Be More Friendly To Bitcoin Startups
http://news.slashdot.org/story/15/03/26/0015210/uk-setting-itself-up-to-be-more-friendly-to-bitcoin-startups
While various states in the U.S. (most notably: New York) are trying to regulate every last aspect of Bitcoin, making it very difficult to innovate there, the UK appears to be going in the opposite direction. It’s been setting up much more open regulations that would allow for greater freedom for Bitcoin startups to innovate without first having to ask for permission.
UK Positioning Itself As Bitcoin’s Best Friend
https://www.techdirt.com/articles/20150323/06185230403/uk-positioning-itself-as-bitcoins-best-friend.shtml
Imagine if a government put out a series of questions that the public could respond to, garnered responses from across a community, listened to them, and then actually enacted sensible tech policy. Sounds like a dream, right? Well that’s exactly what the UK just did.
Last week the UK announced the results of its extensive inquiry on bitcoin and digital currencies, and so far, the results seem both fair and reasonable.
One major conclusion is that the UK will apply AML (anti money-laundering) regulation to digital currency exchanges, with the details to be determined by the Parliament in the forthcoming session. The US, by contrast, already imposes such requirements on exchanges plus other digital currency companies via FinCEN and the Bank Secrecy Act. The UK government will also work to ensure that law enforcement has the tools it needs to stamp out criminal uses of digital currencies.
But the even bigger part is what’s missing: no licensing regime for digital currencies.[1] No arduous process for startups and small businesses. No policies that give an advantage to big institutions over up-and-coming innovators.
In fact, the British government decided that what is most appropriate is to work with the digital currency community to develop a set of best practices for consumer protection and create a voluntary, opt-in regime.
Tomi Engdahl says:
Fintech: how legal departments at banks are driving financial innovation
http://www.theguardian.com/media-network/2015/jan/15/fintech-legal-banking-innovation-technology
With tech startups playing an integral role in the future of banking, innovation on the legal front can help unlock vast opportunities
Tomi Engdahl says:
Here, Have Some Money…
http://www.linuxjournal.com/content/here-have-some-money
I love Bitcoin. It’s not a secret
I’m the first to admit, however, that we’re at the very beginning of the cryptocurrency age.
Although it’s becoming easier and easier to use Bitcoin
, the limited use cases combined with the wild volatility of price make Bitcoin the wild wild west of the financial world.
There are a few awesome ideas, however, that are brilliant in their simplicity.
Sending someone a tip or donation on the Internet generally has been done with something like PayPal. That’s all well and good, but it’s fairly cumbersome. The folks at changetip.com have made sending money over the Internet extremely simple, and fun!
With its integration into Twitter, Facebook, GitHub, Google+, YouTube, Reddit and more, ChangeTip makes sending money as simple as sending a Tweet. Thanks to the world of OAUTH, you don’t even need to create an account on ChangeTip.com to claim or send funds. If you send money to people who don’t have accounts, they simply sign in to ChangeTip via the social-media account from which you sent it to them, and the money will be there waiting for them. Oh, and the money? It’s Bitcoin!
With its seamless integration to Coinbase, ChangeTip makes actual financial transactions secure, simple, and did I mention simple?
Tomi Engdahl says:
Megan Geuss / Ars Technica:
Microsoft applies to be a Money Services Business and for money transmitter licenses in all 50 states, paves the way for payment platform
“Microsoft Payments” may join Apple, Android, Samsung in pay platforms
Windows 10 for phones supports Host Card Emulation, licensing makes it official.
http://arstechnica.com/business/2015/04/microsoft-payments-may-join-apple-android-samsung-in-pay-platforms/
Tomi Engdahl says:
Gertrude Chavez-Dreyfuss / Reuters:
Bitcoin exchange Coinsetter acquires Cavirtex, the Canadian trading platform that recently shut down due to security breach
Bitcoin exchange Coinsetter acquires Canadian platform
http://www.reuters.com/article/2015/04/08/us-bitcoin-exchange-coinsetter-idUSKBN0MZ1WD20150408
(Reuters) – Coinsetter, a New York-based bitcoin exchange that targets institutional and professional traders, said on Wednesday it has acquired Canadian Virtual Exchange, a bitcoin trading platform which recently shut down due to security breaches.
According to sources, the deal was valued at $2 million, marking the first merger deal in the growing bitcoin exchange market.
Cavirtex shut down in March following a breach that compromised security information including password hashes. Lukasiewicz said the exchange would resume operation later on Wednesday.
banking relationships had become difficult to obtain for bitcoin companies and “bitcoin exchanges have become the connecting point between the traditional banking institutions and the bitcoin ecosystem.”
Coinsetter has an average daily volume of 1,200 bitcoins, or just over $290,000.
Tomi Engdahl says:
Harnessing AI to Make Your Boring Bank Statements Useful
http://www.wired.com/2015/04/kasisto-and-moneystream/
Old-school financial institutions are typically slow-moving giants. And that’s a shame, because banks also tend to accumulate deep troves of data on their customers that goes mostly untapped. If you’re a consumer looking for an answer to a specific question about your finances, tough luck. Your usual recourse would probably involve a lot of digging through bank statements and bank website pages, or endless hours on the phone with a customer service rep.
But as of late, a swell of banking startups are seeking to change this. They take all that undifferentiated data tucked into your bank statements, and then, harnessing artificial intelligence, transform and organize it into helpful information that people can actually understand—and act on.
Among these is Kasisto, a spin-off venture of SRI International—the creator of Siri. The startup is testing a voice-recognition add-on for mobile banking apps that lets customers ask questions about their accounts. Users can ask Kasisto, “How much have I spent on fees?” or tell it, “I’m looking for a three-dollar transaction on my checking account,” and the system will return an answer. It’s a voice-activated assistant that, unlike Siri, isn’t a generalist.
Meanwhile, MoneyStream, a new service from a Silicon Valley startup of the same name, links your bank account to a range of services that together deliver personal finance predictions in the form of a simple calendar.
Level, already aim to help you plan your daily budge
In developing these tools, Kasisto and MoneyStream join a multitude of other companies that are riding the cresting wave of artificial intelligence to surface information that’s useful for humans.
Tomi Engdahl says:
The Behavioral Psychology of Why Taxes Suck
http://www.wired.com/2015/04/behavioral-psychology-taxes-suck/
Happy Tax Day 2015! You’re finished, right? Totally painless?
It could have been so much easier. The US tax code is oversized, under-efficient and an all-around pain in the neck. And it’s your fault. Mine, too, to be honest.
Here’s the thing: The people who build careers out of thinking about how to improve tax policy generally agree on what would make the system better—behavioral economists, that is, not partisan politicians. The government should close loopholes in the tax code and use the boost in revenue to lower overall tax rates.
Tomi Engdahl says:
Seattle homeless newspaper vendors pioneer scan-to-pay Google app
http://www.reuters.com/article/2015/04/16/us-google-usa-seattle-idUSKBN0N71BG20150416
(Reuters) – Street vendors selling Seattle’s Real Change newspaper will accept digital payments from Thursday through a new smartphone application developed by workers at Google Inc in a volunteer project to help hawkers serve increasingly cashless patrons.
Seattle residents looking for a weekly dose of reform-minded news will be able to scan a barcode with their phones to receive a $2.99 digital edition of the paper sold by homeless and poor men and women, Real Change and Google said. The print cost is $2.
“This app will help our paper survive in the digital age, when fewer people have ready access to cash and more people prefer to read news content on their mobile devices,”
Seattle street hawkers turn to Google-driven smartphone payment from cashless consumers
http://thestack.com/real-change-google-seattle-cashless-google-160415
Seattle’s Real Change weekly newspaper has teamed up with Google to create an Android and iOs app which lets pedestrians scan a barcode and purchase a digital version of the paper, priced at $2.99 (as opposed to the print price of $2).
The app has taken two years to develop, and was instituted by a Google employee who volunteered with the Real Change organisation after hearing of its problems maintaining sales in the face of street consumers who increasingly often carry no cash or change. Google has stated that it will not be profiting from the app.
Tomi Engdahl says:
On 6 May 2010 the New York Stock Exchange’s main index of the Dow Jones Industrial Average plunged a few minutes about a thousand points, or nearly nine per cent during afternoon trading. Then it was restored as quickly and mysteriously as they are.
Size of Wall Street was wondering what had happened. In the following days were held emergency meetings and system experts attempted to trace the source of the malfunction.
First, there was talk of small systematic error in the interaction. Then reason began to search for automated trading systems. Their on-lightning-speed automatic sales orders suspected to have caused the toxic cycle, even if the principle of machinery should stop selling when prices fall enough.
Over the years, after examination, the cause of the whole mess is suspected of a young British man who managed to mess up a moment of world stock markets using his own automated trading systems.
Britain now sit in a trial in which the US Department of Justice requires Saraon surrender to the United States for trial. Business magazine Financial Times reported the trial.
US officials accuse Saraota including raw material markets AWARD fraud, market manipulation and cheating. He allegedly sent large amounts of sale and purchase of provisions that were actually designed for the cancellation automatically. Price malfunction caused a chain reaction that caused a collapse in prices in the stock exchange.
According to US Department of Justice, the operations, can Sarao earned $ 40 million, or about $ 37 million in 2010-2014.
Source: http://www.hs.fi/talous/a1429768631850?jako=2cd4a4fd7415b7a045480327bb45d44c&ref=tf_iHSisboksi-artikkeli&utm_campaign=tf-hs&utm_source=iltasanomat.fi&utm_medium=tf-desktop&utm_content=articlepage
Tomi Engdahl says:
Felix Salmon / Fusion:
Lack of women in the estimated 96% male Bitcoin community is a major hurdle to widespread adoption
Why Bitcoin’s male domination will be its downfall
http://fusion.net/story/124655/why-bitcoins-male-domination-will-be-its-downfall/
Tomi Engdahl says:
Daniel Roberts / Fortune:
The dearth of women in Bitcoin mirrors tech as a whole, with some women actively involved, influential, and welcomed in the community
Think there aren’t women in bitcoin? Think again.
http://fortune.com/2015/04/24/women-in-bitcoin/
Rumors of the lack of women in the bitcoin industry have been greatly exaggerated.
The bitcoin community—the developers, executives, venture capitalists, policy wonks, academics, and even bloggers who work in, engage with, and support the decentralized technology and the digital currency—has a diversity problem.
It’s no worse than in the technology industry writ large, though some people disagree. Whatever the case, women are very much a minority in the business of bitcoin. But there are more of them than a Fusion piece this week would have you believe.
The bitcoin industry has what Brian Forde, director of digital currency for MIT Media Lab, calls a “pale male” problem.
“Is the Bitcoin community just young, white and male?” A separate survey from 2013 concluded that 96% of bitcoin “users” are male.
But there are quite a few women in the business of bitcoin—and while they may be heavily outnumbered by their male counterparts, they are hardly standing on the sidelines. “I might be a special case, but in my experience, I’ve only been welcomed and encouraged in this space,” says Andrea Castillo, an economic researcher at the Mercatus Center at George Mason University. “I’ve never felt there were barriers presented to me because of my gender. If anything, I think people have been nicer to me because of it.”
Tomi Engdahl says:
PayPal Brings Its Instant Checkout Service “One Touch” Across The Web
http://techcrunch.com/2015/04/28/paypal-brings-its-instant-checkout-service-one-touch-to-the-web/#.utwu3c:I3DZ
PayPal is rolling out seamless, one-touch payments across the web, allowing customers to checkout from a merchant’s website without having to enter in their user ID and password again. The system, called One Touch for Web, is an expansion of PayPal’s earlier efforts on mobile.
Last fall, the company announced the general availability of One Touch mobile payments at TechCrunch Disrupt, which then introduced an easier way for consumers to shop and pay on mobile devices. On mobile, the platform was built using technology from PayPal acquisition Braintree, and was initially found in a number of applications including those from Jane.com, ParkWhiz, StubHub and Threadless, for example. Today, others such as Airbnb, Lyft and Munchery, are also using the system with some reporting a 50 percent increase in conversion.
“With One Touch, the biggest issue merchants face is this huge fall-off in conversion, especially on mobile,” said Bill Ready, the senior vice president of Merchant & Next Generation Commerce at PayPal. “And the majority of purchases still happens on the mobile web, so this is pretty important.”
Tomi Engdahl says:
The United States’ first official BitCoin exchange goes live
Charter granted to itBit by Department of Financial Services
http://www.theregister.co.uk/2015/05/07/new_yorks_first_bitcoin_exchange_goes_live/
The first government-approved BitCoin exchange in the US has gone live.
As we predicted last week, the New York State Department of Financial Services (NYFDS) has given itBit Trust Company the first charter to be a virtual currency in the world’s financial center.
NYFDS superintendent Benjamin Lawsky said of the decision: “We have sought to move quickly but carefully to put in place rules of the road to protect consumers and provide greater regulatory certainty for virtual currency entrepreneurs.”
“The technology behind Bitcoin and other virtual currencies could ultimately hold real promise and it is critical that we set up appropriate rules of the road to help safeguard customer funds. Indeed, we believe that regulation will ultimately be important to the long-term health and development of the virtual currency industry.”
Following the collapse of the bitcoin exchange Mt. Gox, the NYDFS created a process to accept licences for virtual currencies. So far, itBit is the only company to have applied. The NYFDS will also be publishing what should be its final set of regulatory frameworks for virtual currencies.
Tomi Engdahl says:
Wall Street Journal:
NASDAQ to test system based on blockchain technology for NASDAQ Private Market, its marketplace for pre-IPO trading, may extend it to stock market if successful
A Bitcoin Technology Gets Nasdaq Test
Pilot to take place in fledgling Nasdaq Private Market
http://www.wsj.com/article_email/a-bitcoin-technology-gets-nasdaq-test-1431296886-lMyQjAxMTE1MzEyMDQxNzAwWj
Nasdaq OMX Group Inc. is testing a new use of the technology that underpins the digital currency bitcoin, in a bid to transform the trading of shares in private companies.
The experiment joins a slew of financial-industry forays into bitcoin-related technology. If the effort is deemed successful, Nasdaq wants to use so-called blockchain technology in its stock market, one of the world’s largest, and potentially shake up systems that have facilitated the trading of financial assets for decades.
“Utilizing the blockchain is a natural digital evolution for managing physical securities,” said Nasdaq Chief Executive Robert Greifeld. He said the technology holds the potential to “benefit not only our clients, but the broader global capital markets.”
Nasdaq Private Market is also a relatively small project for Nasdaq so any changes there aren’t far-reaching. At the same time, the experiment is the latest example of large financial firms exploring the use of the technology.
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Tomi Engdahl says:
Sarah Perez / TechCrunch:
Vouch, a social network for loans where users can “vouch” for borrowers, raises $6M series A
Vouch Raises $6 Million Series A For Its Social Network For Credit
http://techcrunch.com/2015/05/14/vouch-raises-6-million-series-a-for-its-social-network-for-credit/
Vouch, a so-called “social network for credit” founded by ex-PayPal and ex-Prosper alumni, now has an additional $6 million in Series A funding to continue to grow its business. While there are a number of alternative lending startups on the market today, Vouch’s differentiating factor is that it leverages a person’s social connections in order to determine their credit-worthiness. In addition, these connections can choose to “vouch” for a loan recipient – even agreeing to pay back a portion of the debt if the borrower defaults.
Tomi Engdahl says:
Pete Rizzo / CoinDesk:
US-based Bitcoin storage company Xapo is moving its headquarters to Switzerland citing customer privacy concerns, will keep small presence in Palo Alto
Xapo Moves to Switzerland Citing Customer Privacy Concerns
http://www.coindesk.com/xapo-switzerland-privacy-concerns/
Xapo has officially relocated its corporate headquarters to Zurich, Switzerland, citing the country’s long history of neutrality and stability.
The bitcoin services and security firm said the transition was put in motion three months ago at the request of customers
Xapo indicated that its company representatives would now face potential fines and prison time for revealing customer information without consent in all but select circumstances.
“We decided to do what they had been asking us to do for a while, move our main company to Switzerland and benefit from the safeguards,” Casares explained.
While Casares suggested that Xapo was primarily interested in promoting user privacy, he noted that the company must still follow Swiss law. This includes monitoring transactions for potential money laundering, illegal transactions and terrorist financing.
“Ninety-six percent of the coins that we hold in custody are in the hands of people who are keeping those coins as an investment,” Casares continued.