Decred aims to deliver decentralized future

https://www.mobilepaymentstoday.com/articles/company-profile-decred-aims-to-deliver-decentralized-future-2/

This is part of a new series profiling blockchain startups.

Blockchain began as a tool for Bitcoin to deliver a decentralized future for the financial industry. Since then, Bitcoin has largely turned into a speculative investment and blockchain is increasingly being adopted by large financial institutions looking to boost efficiency.

However, some companies are till aiming to keep Bitcoin — and by extension blockchain’s original vision — by delivering solutions that create decentralized tools of governance for companies, people groups and governments.

Blockchain Tech News spoke with Jake Yocom-Piatt, project lead at Decred to learn about his company and how it aiming to deliver a decentralized future.

Q. What’s the background of Decred?

A. Decred was created by a group of former Bitcoin developers with two anonymous co-founders, in early 2014, and it was launched publicly in February 2016. I was a fan of Bitcoin and worked with a group of developers to write its first implementation in Go, but we quickly came up against issues with the way Bitcoin was governed. Decisions were made by an inner circle of people who weren’t very welcoming to us as “outsider” contributors.

When we founded Decred, we looked at what was successful with Bitcoin and what we could add by baking in formalized governance from the start. We wanted to create a structure whereby anyone in the community with skin in the game could own and operate the system, make the rules, and determine the direction of the project.

Q. What makes Decred stand out from the competition?

A. Decred is built to last, with a secure, adaptable, and self-sustaining model. Decred’s is a fork-resistant store of value, proven to be twenty times more expensive to attack than Bitcoin thanks to its hybrid PoW and PoS model that layers security and places checks and balances between miners and stakeholders.

By building a proposal-based off-chain governance system and being self-funded by 10% of each block reward, Decred is able to adapt to long-term changes by gaining agreement in the community and enacting changes over a transparent timeline. Both consistent funding through block rewards and the skin in the game model of stakeholder voting make Decred sustainable in the long-term. Where other projects are discussing developer funding, Decred is not only paying developers around the world — it’s also autonomously selecting community leads, its PR firm, and building a decentralized exchange ruled by the collective intelligence of the community.

Decred’s vision is to build a self-directed, decentralized future ruled by collective intelligence. It is built upon the pillars of sovereignty, transparency, inclusivity, privacy and security. Everyone can vote on the rules and project-level decision making proportionately to their stake, yielding decisions and policies in the best interest of all — not just a select few.

Q. How will Decred help deliver blockchain technology to the mainstream?

A. Cryptocurrency was created to remove bankers from their role as gatekeepers, with the idea that value could be transferred and “banked” through math over a decentralized community. Decred is staying true to blockchain’s original tenet. By creating a blockchain ecosystem that’s permissionless, fair, and anti-rent seeking, anyone around the world has access to not only participate in transferring payments, but also to vote and participate in the direction of Decred itself.

Decred is building upon this by continuing to target centralized rent-seekers to create a future built upon the pillars of sovereignty, transparency, inclusivity, privacy, and security. We believe mainstream adoption is incremental and our approach begins with providing a participatory environment where those who are tired of these rent-seeking behaviors have another option.

Decred’s model is similar to the way shareholders are able to vote in a corporation, but with less barriers to entry. Through ticket-splitting to make voting more accessible to all, or direct means of participating to earn a living through Decred’s contractor model, anyone with something meaningful to contribute can do so, regardless of their background — and get rewarded. Decred offers sovereignty and voice. We believe every stakeholder should have an explicit vote in the direction of Decred to ensure its long-term sustainability.

Q. What does Decred see as the future of blockchain and cryptocurrency technology?

A. Governance is the future of blockchain technology. Decred has been in the governance game from the start, and more and more projects are running into crises, realizing they lack a fair and equitable means of reconciling disputes and are talking about adding it to their models.

Decentralized governance is difficult to add after the fact because it involves a party or parties voluntarily reducing their power within an organization. For any entity to be truly decentralized, governance features are key to give a transparent voice to the community. Governance will be a defining step in the industry’s direction long-term. Adaptable projects are the ones most likely to succeed, and Decred has ensured a place at the table by aligning governance incentives from the beginning.

https://www.mobilepaymentstoday.com/articles/company-profile-decred-aims-to-deliver-decentralized-future-2/

Deutsche Bank buys 4.9% stake in open banking fintech Deposit Solutions

https://www.mobilepaymentstoday.com/news/deutsche-bank-buys-49-stake-in-open-banking-fintech-deposit-solutions/

Deutsche Bank buys 4.9% stake in open banking fintech Deposit Solutions

Deutsche Bank said it acquired a 4.9% stake in German-based fintech Deposit Solutions, according to announcements from both companies. 

The Hamburg, Germany-based fintech provides open banking technology that allows more than 100 banks across 18 countries to offer their customers products from third-party banks or source deposits for their balance sheets. 

Deutsche Bank has an existing relationship with Deposit Solutions, providing a savings product called Zinzmarkt to its customers since 2017. The service, based on Deposit Solutions Zinzpilot technology, allows Deutsche Bank customers to access fixed-term deposit products from third-party banks that pay higher interest. 

“We have been in investing in our capabilities to operate as a digital platform for a considerable length of time,” Karl van Rohr, president of Deutsche Bank, said in a company release. “In the digital age the only players that will maintain client contact are those who can offer the best products, even if they are provided by third-party vendors.”

Zinsmarkt currently offers 23 different fixed-term deposit products from three different banks. 

Cover image: iStock


Topics: Mergers & Acquisitions, Mobile Banking, Region: EMEA, Venture Capital


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https://www.mobilepaymentstoday.com/news/deutsche-bank-buys-49-stake-in-open-banking-fintech-deposit-solutions/

OpenSC raises $4M in funding round for blockchain supply chain management

https://www.mobilepaymentstoday.com/news/opensc-raises-4m-in-funding-round-for-blockchain-supply-chain-management/

OpenSC raises $4M in funding round for blockchain supply chain management

OpenSC, an impact venture developed by the World Wide Fund for Nature Australia and BCG Digital Ventures, has raised $4 million in seed funding. The venture will use these funds to develop its blockchain platform, which helps track food and products and helps companies and individuals avoid unethical, illegal or environmentally unfriendly products, according to a press release.

OpenSC is focusing on using its platform to build transparency into products that violate human rights or cause environmental damage.

The venture recently announced a collaboration with Nestle to trace its milk products from farms in New Zealand to consumers in the Middle East. Nestle later plans to use the platform to track palm oil sourced in the Americas.


Topics: Blockchain, Venture Capital


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https://www.mobilepaymentstoday.com/news/opensc-raises-4m-in-funding-round-for-blockchain-supply-chain-management/

Starbucks Japan launching contactless pen with payments technology

https://www.mobilepaymentstoday.com/news/starbucks-japan-launching-contactless-pen-with-payments-technology/

Starbucks Japan launching contactless pen with payments technology

Starbucks Coffee Japan Co. is launching a mobile payment product called Starbucks TouchThe Pen, a ballpoint pen with embedded contactless payment technology, according to a company press release. 

The pen, developed in cooperation with Zebra Corp., uses dark brown water resistant gel ink, inspired by Starbucks Coffee. It’s based on FeliCa contactless payment chips from Sony Corp., which originally launched in 2015, and lead to earlier product releases, including keychains and iPhone cases. 

The pen, which comes in silver, black and white — inspired by ceramic drippers and stainless steel kettles —  costs $37 (4,000 Japanese yen) and is available Sept. 25.

Cover image: Starbucks


Topics: Contactless / NFC, Mobile Payments, Region: APAC, Restaurants

Companies: Sony Electronics, Starbucks


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https://www.mobilepaymentstoday.com/news/starbucks-japan-launching-contactless-pen-with-payments-technology/

Credit card startup Petal closes $300M debt facility from Jeffries

https://www.mobilepaymentstoday.com/news/credit-card-startup-petal-closes-300m-debt-facility-from-jeffries/

Credit card startup Petal closes $300M debt facility from Jeffries

Petal, a start-up aimed at providing credit access to Gen Z consumers and other new applicants, said that investment firm Jeffries will provide a $300 million debt facility that will allow it to expand its credit card business. 

Petal said there are currently 50,000 cardmembers using its product and that the company user-base has doubled every couple of months during 2019. 

“Our expanded facility with Jeffries provides an excellent foundation for serving our current and future customers for many quarters to come,” Andrew Endicott, co-founder and CFO at Petal, said in a company release. “It’s a massive vote of confidence in Petal’s mission to create a fundamentally better credit product experience that better serves the need of modern customers.”

Petal said 66% of its members are either Gen Z or millennials, and the most common age for a Petal cardmember is 20 years old. 

Petal closed a similar $30 million debt facility from Jefferies in 2018. The company has also raised $46 million in equity from investors, including Valar Ventures, Greyhound Capital, Third Prime Capital, Rosecliff Ventures, Story Ventures, RiverPark Ventures and Afore Capital.

Cover image: Petal


Topics: Card Brands, Mobile Payments, Technology Providers, Venture Capital


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https://www.mobilepaymentstoday.com/news/credit-card-startup-petal-closes-300m-debt-facility-from-jeffries/

SellersFunding acquires AmzLenders in a bid to reach more Amazon sellers

https://bankinnovation.net/allposts/biz-lines/lending/sellersfunding-acquires-amzlenders-in-a-bid-to-reach-more-amazon-sellers/

SellersFunding, a Ridgewood, N.J.-based SME lender, has acquired AmzLenders to broaden its reach among e-commerce sellers.

Terms of the deal, which closed on Wednesday, were not disclosed, but SellersFunding CEO Ricardo Pero told Bank Innovation that the objective is to reach a wider group of clients. With AmzLenders, a two-year-old company focused on Amazon sellers, SellersFunding will add 20% more customers to its platform. AmzLenders, based in Jersey City, N.J., was founded by Amazon seller Steve Creasy, who will act as a consultant to SellersFunding over the transition period.

“If you are a well-established bank, there’s no need to spend a lot on driving traffic but, when you’re an online lender, there’s no branch across the street where you can talk to a real person,” Pero said, noting that the acquisition gives SellersFunding a window into a growing client base among Amazon merchants.

AmzLenders offers loans of $1,000 to more than $50,000, while SellersFunding loans typically range from $10,000 to $50,000. Prior to the acquisition, SellersFunding supported an estimated $1 billion in sales globally, according to the company. It operates in the U.S., Canada and the U.K.

To evaluate borrowers, SellersFunding integrates with e-commerce platforms, pulling in data that’s cross-checked with banking and credit information. In turn, the company uses machine learning models to support the underwriting process, which typically takes 24 hours. It has integrations with Amazon, Shopify, Walmart, Chewy, Walmart.com, eBay and Jet.

See also: Why SellersFunding sees an opportunity with Amazon, eBay merchants

Since e-commerce merchants can be “too small for a bank” and often don’t have sufficient business history or predictable transaction flows, banks have challenges extending credit to small-scale sellers. As a result, online lenders have rushed to fill the gap.

“Non-bank lenders are lining up to serve the sellers that are fueling [Amazon’s] marketplace,” wrote Kiri Masters, CEO of Bobsled Marketing and an Amazon seller, in a recent report. “These lenders are not looking at these credit facilities the way traditional banks are. Providing a credit facility was approved [by the bank], it would take several more weeks to fund the loan, even longer if the facility required a guarantee from the U.S. Small Business Administration.” By contrast, online lenders like SellersFunding are able to make funds available 24 hours after the underwriting decision is made.

Despite the opportunity among e-commerce sellers, however, the field of companies competing for market share is becoming increasingly crowded, with such players as Square, PayPal, Amazon Lending, Kabbage and various credit cards offering small-scale loans for online merchants.

https://bankinnovation.net/allposts/biz-lines/lending/sellersfunding-acquires-amzlenders-in-a-bid-to-reach-more-amazon-sellers/

Contactless Gets a Makeover in the UK

https://thefintechtimes.com/contactless-makeover/

By Lina Andolf-Orup, Senior Director at Fingerprints

The deadline hanging over Europe is finally here. No, not Brexit, but PSD2’s September 14 mandate for the implementation of SCA (or, to those unfamiliar, Strong Customer Authentication). The European law and its implementation by banks has stirred a lot of discussion across the continent – especially in the UK.

Already leaders in the open banking game, its unsurprising that the British banking world has raced ahead in implementing – and commenting on – enhancements to their authentication methods.

Wait, what is SCA?

SCA outlines that strong authentication (a secure way to validate it’s you making the payment) needs at least two of the following: something you know (eg. your PIN), something you have (eg. your card), something you are (eg. Biometric ID).

As contactless card payments only have one of these elements, the new rules now mean banks are required to request a PIN is entered after every five contactless payments, or once your payments have totalled £135.

With the UK’s successful mobile-only challenger banks already utilising biometrics to authenticate in-app, adding biometrics to payment cards brings authentication harmony 

Contactless Challengers

Challenger banks in the UK, such as Revolut and Starling, have been especially proactive in their communications on SCA. The message of making contactless more secure is an especially pertinent one in the UK. While a nation of contactless lovers, fear of fraud remains high.

Undoubtedly, SCA mandates will improve security if your card “fell into the wrong hands”. But SCA will also increase friction in some cases. For example, with increased PIN entry requests – contactless may be more secure, but it’s also less convenient…

Revolut has already implemented a method to help combat this, sending mobile push notifications just before you’ll need to authenticate again and enabling consumers to reset their payment limit with fingerprint or face ID in-app. But that’s not the only way biometrics can help.

Bridging the gap

Biometric payment cards offer the perfect answer to SCA requirements. By adding strong authentication to the ‘tap’, consumers can benefit from greater security without harming the user experience of contactless. Or slowing throughput time for merchants!

With the UK’s successful mobile-only challenger banks already utilising biometrics to authenticate in-app, adding biometrics to payment cards brings authentication harmony across form factors. And in recent weeks, the biometric payment card has garnered even more traction in the UK market.

The message of making contactless more secure is an especially pertinent one in the UK.

Use case: BBC explores “the biggest change to payment cards for a decade”

Just a few weeks ago, the BBC (or the British Broadcasting Corporation for those not familiar) got its hands on major UK bank NatWest’s biometric payment card, currently being trialled. Journalist Dan Simmons spoke with our partners NatWest, RBS and Gemalto, to learn more about the details.

The segment went some way to dispel some common myths, explore the benefits and explain in simple terms how it all actually works.

“It’s not CSI!”

Georgina Bulkeley, Director of Strategy and Innovation at RBS and NatWest, went about “shattering television dreams” when probed about the spoof-ability of the new payment cards. An imprint, a stolen thumbprint from a glass, a high-res photograph…able to fool a biometric card?  Not quite.

Smart algorithms capture a mathematical representation of your fingerprint – not an image – so high-resolution photographs can’t trick modern sensors. Advanced security features have also reserved cracking biometric systems with sellotape or gummy bear imprints to the realm of sci-fi fiction.

Gemalto’s MD Howard Berg also added that the smart new sensors ‘learn’ when your fingerprint has a slight variation such as a micro-scratch, to minimize false rejection rates.

An imprint, a stolen thumbprint from a glass, a high-res photograph…able to fool a biometric card?  Not quite.

Take it easy

“Consumers want experiences to be simple and easy,” Georgina added. Saying goodbye to the PIN and fear of contactless card fraud at the same time. Biometric payment cards really make sense.  

Another crucial factor, and something demanded by banks and consumers, is the opportunity to remove the payment cap. NatWest and RBS cited lifting the £30 spending limit as a primary motivation for trialing the technology, which aligns with the opinions of a number of banks we spoke to in our research.  

Journalist Dan happily took the card for a spin, now able to spend up to £100 a tap, with this likely to be “limitless” by the time it gets to market. 

Ready to rock and enroll!

Viewers also saw Dan enroll his fingerprint onto the card with a simple self-enrollment device at home. Over 79% of banks think home enrollment essential to success but crucially, the process just needs to be a frictionless user-experience that gets consumers onboard from the get-go.

So, as PSD2 and SCA hit the headlines in the UK and other European markets, its clear banks have worked hard to bring additional security to contactless. But with banks like NatWest and RBS, it’s promising to see some are already taking this a step further: limiting the disruption of increased security with biometric trust.

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https://thefintechtimes.com/contactless-makeover/

Fueling the Fire: How Venture Capital Empowers Fintech Today

https://finovate.com/fueling-the-fire-how-venture-capital-empowers-fintech-today/

A September survey of European venture capital firms published by the European Investment Fund suggests that many of the same themes – such as artificial intelligence and machine learning – that have animated venture capitalists in recent years continue to dominate investment preferences. The queried firms also said that exit environment and fundraising “remain the biggest challenges for (the) VC business” – although “high investee company valuations” and “competition from other investors” were becoming concerns.

How does this square with venture capitalists on the American side of the Atlantic? According to Datatrek, the value of fintech deals in the first half of this year was up year-over-year by 60% in the U.S., even as the number of transactions remained constant. For these analysts, this is a sign of maturation in the U.S. market, writing “as we get further into the economic expansion, VCs may be more comfortable contributing capital towards established fintech companies rather than riskier, newer startups.”

Next week at FinovateFall, we’ll have the opportunity to put all of this analysis to the test. One of the afternoon highlights of our Discussion Day on Wednesday, September 25th, our FinovateFall Venture Capital Panel, will provide attendees with the latest insights from venture capitalists who are investigating new opportunities in fintech every day.

What are investors looking for, and what impact is venture capital having on the fintech industry? What does the future look like, and what does that mean as we embark on an unprecedented period of change in our industry? Join us next week as our panel of experts addresses these questions and helps us understand where and why the smart money in the market is headed.

Chairing our VC Panel is Reza Chowdhury, founder and CEO of AlleyWatch

Recognized as a global thought leader in the startup ecosystem, Chowdhury offers more than 15 years experience in emerging technology, which he brings to AlleyWatch as CEO and Founder. Through the course of his career, Chowdhury has had the privilege of working to drive businesses from conception to eventual exit. His latest professional endeavors have allowed him to work very closely with thriving global technology and startup ecosystems.

Now meet the members of our VC panel

Jennifer Lee, Vice President, Edison Partners –  Lee is a Vice President at Edison Partners focusing on the firm’s fintech investments, most recently including MoneyLion, Bento for Business and Giant Oak. Prior to joining Edison, she was a financial analyst at Commerzbank evaluating select European equities and long/short investments for hedge fund clients. Before Commerzbank, she was an associate at the Associated Press overseeing VC investment prospects and strategic business development opportunities.

Luis Valdich, Managing Director and Venture Investing Lead, Citi Ventures – Valdich joined Citi Ventures in 2015 as a Managing Director and Venture Invest Lead in its NYC office. He is responsible for fintech investing in both the U.S. and Europe. Valdich embraces Citi Ventures’ “best of both worlds” corporate venturing model of combining value-added strategic investing with venture capital best practices by investing in high-potential startups and driving engagement with Citi executives and clients. His investments include Clarity Money (acquired by Goldman Sachs), HighRadius, PPRO, ScaleFactor, Contguard, and SmartAsset.

Mori Oshima, Senior Manager, NTT Finance – Oshima has been a venture capitalist for 16 years. His strategy is to discuss with prominent VCs in the U.S. by leveraging NTT’s market presence in Japan. His successful exits include DocuSign and Quantenna Communications. Currently, Oshima is focusing on fintech startups in the U.S. that are interested in the Japanese market. He has an MBA from the University of California, Berkeley (Haas School of Business) and is a CFA Charter holder.

Maria Gotsch, President and CEO, Partnership Fund for New York City – Gotsch is President and Chief Executive Officer of the Partnership Fund for New York City, which is the investment arm of the Partnership for New York City. The Fund, which has invested over $150 million, has built a network of top experts from the investment and corporate communities who help identify and support New York City’s most promising entrepreneurs in both the for-profit and non-for profit sectors.

Matt Beecher, CEO, Vault and VC Innovator – Beecher is CEO of Vault, a leading student loan benefits platform, equipping employers to make it achievable for employees to more quickly eliminate student loans and attain financial freedom. He is also the co-founder of Redstar Ventures, where he was President and Managing Director from 2010 to 2016. Redstar is a company that creates companies, taking them from the earliest stages of ideation and growing them through their first institutional funding rounds and beyond.

https://finovate.com/fueling-the-fire-how-venture-capital-empowers-fintech-today/

Plaid Adds Credit Card Details to Liabilities Offering

https://finovate.com/plaid-adds-credit-card-details-to-liabilities-offering/

Fintech developer tools expert Plaid announced today it enhanced Liabilities, a product it launched in July to offer developers access to information about how much money a consumer owes.

Upon launch, Liabilities was limited to offering insight into consumers’ student loan balances. Today the tool has added support to show consumers’ credit card details. While Plaid has always offered information about consumer credit card transactions, today’s update broadens the information available by returning details about payment terms, APR type, APR percentage, interest charge amount, minimum payment, last payment date and amount, due dates, and more.

User experience of credit card connection from the end consumer’s perspective

This new launch will allow developers create tools that help borrowers gain a clear picture of their financial obligations, consolidate debt, and pay down their credit card balance faster.

The credit card data tool is now available in Plaid’s sandbox, development, and production environments. The company will add more debt categories in the future to give developers more options to help their users manage and overcome their debt.

At FinDEVr San Fransisco 2014, the company’s founder, Zach Perret gave a presentation about leveraging the Plaid API for financial infrastructure. Plaid has raised $310 million since it was founded in 2013. After the company’s most recent investment last year, TechCrunch estimated Plaid to be valued at $2.65 billion.

https://finovate.com/plaid-adds-credit-card-details-to-liabilities-offering/

Stable Coins: The Next Big Thing?

https://thefintechtimes.com/stable-coins-the-next-big-thing/

Guest Post

Money has always been at the heart of the economy, with the purpose of facilitating commercial trade. Money has taken physical forms such as coins, notes and gold, but also electronic and more recently digital forms.

The common denominator of money is its adoption. In Money and the Mechanism of Exchange (1875), William Stanley Jevons analysed money and gave it four functions: a medium of exchange, a unit of account, a standard of value and a store of value. Ten years after the creation of the first digital currency, bitcoin, we have witnessed the launch of more than 2,000 crypto assets and crypto currencies (bitcoin, ethereum, ripple, litecoin). The marked volatility of crypto currencies since their inception is a hurdle to their development from a consumer perspective but also from a corporate one.

The daily valuation that often changes by more than 20% fuels crypto currencies as a speculative asset. Would you use a crypto currency as your official means of payment if you risked paying twice as much for your pizza in a month’s time?

In this context, stable coins are of major interest to all industries. The increasing investment from venture capitalists in different projects is a clear sign of this.

WHAT IS A STABLE COIN?

A stable coin is easily definable as a stable crypto currency.

It is primarily a response to the problems of volatility and enables money’s function to be fulfilled. To achieve stability, more than 50 stable coins have proliferated using different methodologies:

Fiat currency-collateralised i.e. a crypto currency pegged to a legal tender currency, also called fiat currency in crypto jargon, or a basket of legal tender currencies. Most of the crypto currencies have a stable value of US$1.

The entity that issues the stable coin opens a banking account and mirrors the position. For example, if the entity issues 1 million coins pegged to the USD, they need to credit the banking account with $ 1m. This could be considered as the simplest stable coin model and is very stable (it also mirrors the model long used by the Bank of England for the issuance of Scottish bank notes, whereby each pound issued must be matched by a pound deposited at the Bank of England). This model requires centralisation and therefore a trusted custodian with a need to audit for transparency.

Tether, which is one of the most popular in this category with a market capitalisation of US$2bn, is listed on more than 65 crypto exchanges.

Commodity-collateralised i.e. crypto currency guaranteed by a commodity. The operating model is quite similar to the fiat one. Several initiatives have been launched in this space, especially in gold. It is inspired by the Bretton Woods system.

“A number of crypto exchanges do not accept fiat currency yet, and stable coins can help better manage the risks”.

Crypto currency-collateralised i.e. crypto currency guaranteed by another crypto currency. The whole process is done within the blockchain, contrary to fiat currency and commodities, where a custodian is needed to safeguard the collateral off chain. This model has the benefit of decentralisation, as the collateral is held in a smart contract.

However, crypto currencies, being unstable, require over collateralisation to absorb crypto currency fluctuations.

Non-collateralised. It is supported only by its value thanks to a smart contract that runs automatically.

If the total offer or demand of the stable coin is increasing or decreasing, the smart contract will automatically adapt the number of coins in circulation to keep the price unchanged.

The asset-collateralised stable coin is the dominant model, and represents, in value, 83% of initiatives, which mostly run on an Ethereum protocol.

WHY ARE STABLE COINS SO ATTRACTIVE?

The stability of stable coins reassures the whole industry, retail investors as much as institutional investors.

They are built in such a way that global participation and near real-time transfer are possible, in seconds or minutes instead of days. To secure an exchange, most financial transactions are made delivery versus payment (DVP).

For the time being, the absence of fiat currency in the crypto world prevents efficient DVP exchange in the blockchain.

Until a fiat currency is available, a stable coin pegged to a fiat currency is one of the best answers, bringing efficiency to the value chain. Many blockchain initiatives in the post-trade industry would benefit from this introduction. Moreover, it has the potential to be adopted as a real crypto currency from a macro economy perspective. 

There is great potential for several countries in a situation of hyperinflation or monetary instability (Venezuela, Argentina, etc.) where the stable coin might become an alternative. From a trading perspective, the stable coin will be a good alternative, allowing them to add a new pair. A number of crypto exchanges do not accept fiat currency yet, and stable coins can help better manage the risks.

During her speech, Christine Lagarde, the outgoing Managing Director of the IMF (International Monetary Fund) even mentioned the possibility of the IMF taking greater control in this domain, including issuing its own crypto currencies whose exchange rate would be governed by macroeconomic mechanisms. Governments around the world are prototyping and testing their own digital currencies. They have definitely acknowledged the potential of DLT technology with the trust of their national bank currency. This is what we call the Central Bank Digital Currency (CDBC). Different projects are already public, in the UK, Sweden, Singapore and Switzerland.

WHAT ARE THE KEY CHALLENGES FOR STABLE COINS? AND LASTLY WHAT ARE THEIR FUTURES?

KYC (know your client) is still the cornerstone of all stable coin projects, especially due to their volume to capitalisation ratio which is substantially higher than traditional crypto assets. Tether’s 30-day volume is similar to that of bitcoin whereas its market capitalisation is on average 30 times less valued.

“A good management of all aspects of KYC elements is crucial to its efficiency”.

A good management of all aspects of KYC elements is crucial to its efficiency. JP Morgan, through JPM Coin, and Facebook, have also launched initiatives in this context. That demonstrates the appeal and potential of stable coins. Despite substantial interest from regulators and the industry as a whole, we are still at the beginning of the journey. There are still clear structural and regulatory concerns to be addressed.

We need to keep in mind the role of money; TRUST will be the answer.

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Flood risk AI is now a reliable tool- is there a desire to put it to work?

https://dailyfintech.com/2019/09/19/flood-risk-ai-is-now-a-reliable-tool-is-there-a-desire-to-put-it-to-work/

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Flood insurance has been a wallflower at the coverage dance- an eager participant but not able to find a suitable partner.  Innovation efforts have found suitable risk prediction partners for carriers- FloodMapp, Hazard Hub, and Previsco among others- but is the flood insurance market ready?

Politics, inertia, customer preferences and regulation might keep the music from playing.

Patrick Kelahan is a CX, engineering & insurance professional, working with Insurers, Attorneys & Owners. He also serves the insurance and Fintech world as the ‘Insurance Elephant’.

Flooding causes damage globally in tens of billions of dollars/euros per year, and the bulk of that amount is uninsured.  Choose your source for insured/uninsured percentages- the conclusion is the same- flooding is a risk with global effects, and flooding is a risk that is globally accepted as difficult to underwrite.  Flooding is hard to predict, has regional effects involving huge numbers of properties, and subject to moral hazard perspective by property owners.  Consider these indicative data from McKinsey :

ins gap

Hard to predict is a real problem-if the probability of risk cannot be reasonably calculated, and the extent of possible risk is elusive, that sure makes an actuary’s job difficult. In the U.S. those problems were finally acknowledged as nonviable issues for the private insurance industry and a government program was established in the early 1970’s to address the risk, the National Flood Insurance Program (NFIP).  The underpinning of the NFIP was flood cover that was limited, was driven by a property’s location within flood maps drawn by risk exposure over time, and by the relative elevation of a property to risk (creeks, streams, rivers, wave and surge, etc.)

Fast forwarding to today that program morphed into a moral hazard, subsidized, under-funded monster that even in high risk areas had a low take up rate among property owners.  Mapping data became political footballs (no one wants a property that is in a designated Special Flood Hazard Area, SFHA), premiums became unbearable due to the effects of moral hazard/adverse selection, and outside of mortgagee requirements there is little societal or economic coercive pressure for a property owner to obtain the cover.  SFHA- a one in a hundred probability of a damaging flood?  I’ll take those odds and my chances, most property owners said.  And over time?  Persons who obtained the cover and suffered losses often simply repaired and waited for the next event, being indemnified multiple times without any underwriting consequence other than premium creep.  Those who had no cover either self-repaired or waited for government support in the form of grants or low-interest loans.

Human nature prevailed after 2005’s Hurricane Katrina, when flood/surge losses exceeded $100 Bn, and the number of US flood policies peaked the following few years to 5.7 million, only to decline more than 10% since then (see below):

policies

And here’s a well-kept secret of the NFIP- claims can be adjusted only by flood-certified adjusters due to policy differences from private plans, and of course the bureaucracy’s zeal to restrict how flood funds are spent.  Subsidize the heck out of the program, but restrict efficiency in handling when indemnity is needed to jump-start recovery.

What of  countries other than the US?

There are few government subsidized flood programs elsewhere; most flood programs that are available are tied to property policies as extensions of cover (hello again, adverse selection issues) or bundled cover with more traditional policies.

An exception to lack of subsidized cover is the UK’s Flood Re initiative that cedes risk in excess of premium calculations to a not-for-profit organized as a backstop for carriers that is in the end supported by all insurers by market share.

Parametric options are becoming more accepted as alternatives to the complex nature of flood indemnity predictions.

So, it’s agreed that flood damage is a growing problem, and options for carriers and customers have been few.  However- if the probability of flood risk can be assessed and ‘tightened’, does that not move flood risk into a more traditional risk role?  The ongoing issues with US flood maps are that not only are the maps supported primarily by property elevation data that may have been influenced by politics, but that the mapping results are static until the next official surveys, and the mapping data are narrow in their basis- elevation, proximity to the water risk, and calculation of risk probability that is always backwards looking.

Consider some of the risk assessment/prediction innovators:

  • FloodMapp, a real-time flood prediction software platform that “uses proprietary technology for large-scale, rapid predictive flood and hazard modeling.” Large scale and rapid, words that have not been typically found in the flood risk lexicon.  And here’s a real innovation- the real-time aspect of the tech can be leveraged by insurers to advise policyholders of flooding potential before it actually affects properties, allowing insureds time to mitigate potential losses, and while the company’s information does not touch on this aspect, it’s important- potential reduction in immediate danger to residents. FloodMapp has proven its concept with insurers in the US and globally, and will roll out its primary products, Predictive Mapping (flood modelling to predict an extent of flooding), and Hazard Mapping, (tool for underwriters to apply in determining the risk of a particular property).  As co-founder Juliette Murphy suggested, “if we can have an app that tracks when our pizza will arrive, with proper, detailed flood risk data we should be able to have an app that tells when a flood may arrive.”
  • Hazard Hub, a company that promises, “the most comprehensive risk data ever created.” Whether that promise can be proven, the company can prove that for multiple risks (air, fire, earth, water, and man made risks) its proprietary ‘scoring of properties for exposure to any or all of these risks is comprehensive and accessible.  Yes, the firm does want to be a carrier’s go-to tool to aid in underwriting, but it also wants to be a risk understanding tool for individual property owners through its com website, where the firm will provide a free risk analysis for dozens of risk category, assigning the respective property a score of ‘A’ (low or no risk) to ‘F”, substantial risk.  In terms of comparison with traditional flood maps, Hazard Hub’s analysis will narrow the risk measure to the subject property as opposed to a broad assessment, potentially advising that a property in an ‘X’ flood hazard area (low risk) may have elevated risk due to its immediate geographic placement.  It educates customers and agents to allow better insurance decisions.
  • Previsico, a newer entrant whose purpose is, “produc(ing) round the clock street-level flood risk predictions and analytics. Uniquely, these are continuously modelled and updated using a combination of different weather forecasts. This allows us to map the likelihood of short and long-term surface water events in real-time to the street level. Real-time data production, working to allow property owners to protect structures and residents. The company has a robust staff of data scientists and modeling experts; the firm plans rollout of the product offerings- mapping, individual risk assessments, training and ‘nowcasts’ in greater breadth during 2019 and beyond.

With the advent of availability of these and other risk prediction tools, will the insurance industry leverage the detailed analyses into more widely available, less costly and more desirable flood products?

Some considerations:

  • A generally available flood cover within the US could produce a $40 Bn premium ‘bump’ for carriers, if the risk is aggregated back into standard HO policies. ( Flood Insurance Gap Represents a $40 Billion New Market, Guy Carpenter)
  • Detailed flood risk information can be leveraged into parametric programs, including municipalities establishing immediate financial response programs if a flood trigger/index is met
  • New parametric programs such as that offered by FloodFlash will become more widely available due to the availability of risk data, and changes in market tendencies related to flood risk
  • Reliance on government subsidies may be reduced as less costly alternatives become available within the private flood market.
  • There will be a more affirmative approach to risk education as information becomes more robust.  As John Siegman of Hazard Hub noted, the biggest change in flood risk will be when there’s a recognition that agencies are best suited as trusted advisors re: flood risk for customers, and carriers are able to regularly communicate risk proactively to their customers based on empirical, topical risk data.
  • Will opt-out choices become integrated into policy applications, e.g., risk scoring supports flood cover and prices it, prospective customer chooses to not have it included? Or the carrier opts to not extend HO cover?
  • Flood programs will evolve from subsidized, backward looking programs to forward looking, risk-rated private plans.
  • Private flood insurance plans integrated into HO policies opens the door to a wider spectrum of adjusting/methods of settlement.

There’s plenty to discuss about flood insurance, its magnitude of insurance gap, subsidization of cover, and potential if the private market becomes the primary flood insurance vehicle.

The presence of innovative AI risk analysis, predictive programs, and reasonably inexpensive access to same by carriers and insureds just might prompt a new tune for flood insurance, which surely would be a welcome addition to the insurance dance card.

image source

https://dailyfintech.com/2019/09/19/flood-risk-ai-is-now-a-reliable-tool-is-there-a-desire-to-put-it-to-work/

With Wirecard, UnionPay takes aim at Visa, Mastercard

https://bankinnovation.net/allposts/biz-lines/payments/with-wirecard-unionpay-takes-aim-at-visa-mastercard/

China’s UnionPay, the world’s largest card issuer with 57.6% of the world’s payment cards in circulation, has global ambitions. Its latest move is a memorandum of understanding with digital payments giant Wirecard, a partnership which will help it expand to new markets and craft new payment solutions for foreign visitors to China.

Wirecard, which has an acquiring license, will help UnionPay expand its global footprint, said Georg von Wilfendels, executive vice president of group business development at Wirecard. “We also will start to issue physical, as well as digital, cards outside of China,” he added. UnionPay could not be reached for comment by press time.

Geographic expansion plans will focus on Europe as a first step, along with the Asia-Pacific region, after which Wirecard will work with UnionPay on a plan to expand to other markets, von Wilfendels noted. UnionPay also plans to take advantage of the 2022 Winter Olympics in Beijing as an opportunity to launch a new consumer payments solution for foreigners visiting China.

UnionPay has been aggressively expanding to international markets through partnerships with tech companies. In June, UnionPay partnered with Tribe Payments, a U.K-based startup, to allow banks and startups to begin offering UnionPay cards in Europe. As a result, European companies that do business in China would be able to use UnionPay in China, and Chinese businesses operating in Europe could take advantage of consistent payment methods in Europe and China, said Tribe founder Suresh Vaghjiani in a recent interview.

See also: Wirecard’s cashier-free checkout to help retailers stand up to Amazon

UnionPay’s enhanced efforts to expand internationally may be in anticipation of further competition from Visa and Mastercard, which seek access to the Chinese market. The inability of foreign card companies to reach the Chinese market has been a sticking point in global trade talks. In 2010. the U.S. filed a WTO case against China over access to its card market. While the WTO ruled in the U.S.’ favor, implementation has been slow, with American Express acquiring a preliminary license to operate in China in November 2018.

“Visa and MasterCard are lining up to seek market access to China, [and] UnionPay realizes it needs to compete globally with the leading credit card companies in the world, both inside and outside of China,” said Xiaomeng Lu, China practice lead at public policy consultancy Access Partnership.

Within China, a key use case for which UnionPay and Wirecard are looking to find a solution is a means for foreign visitors to make payments in China, where Visa and Mastercard aren’t widely accepted. Wirecard didn’t offer details on the types of solutions it’s pursuing with UnionPay, but von Wilfendels hinted that it would incorporate both physical and digital methods.

While payment solutions for visitors to China through UnionPay solves a pain point, working around traditional systems that rely on Chinese bank accounts won’t be easy, according to Meng Liu, a Beijing-based payments analyst at Forrester Research. “For UnionPay, you need a [Chinese] bank account,” he said. “With Wirecard, they’re likely to find a more innovative, non-traditional solution.” Anti-money laundering mechanisms for the new solution also will require careful consideration, he noted.

https://bankinnovation.net/allposts/biz-lines/payments/with-wirecard-unionpay-takes-aim-at-visa-mastercard/

Wells Fargo using blockchain for corporate international money transfers

https://bankinnovation.net/allposts/biz-lines/payments/wells-fargo-using-blockchain-for-corporate-international-money-transfers/

Wells Fargo is turning to blockchain to speed up cross-border money transfers for its corporate clients. The bank is using the technology to create a money transfer service it’s branding as Wells Fargo Digital Cash. The technology is still in its nascent stages, but Wells Fargo wants corporate clients to use the system to transfer money around the world instantaneously.

The bank is aiming to create a seamless experience, according to Lisa Frazier, head of Wells Fargo’s innovation group. “From a customer point of view, you don’t do anything different than you do today,” said Frazier. “Today, the network is a combination of intermediaries, banks, correspondent banks and SWIFT.”

For now, Wells Fargo Digital Cash is a tool strictly for the bank’s corporate clients to send money internally to different departments in different countries. Using the tool, corporate customers will be able to carry out real-time money settlement and will be able to send money within longer operating windows. According to Frazier, corporate customers currently can only send money within a nine-hour window, five days a week. With Wells Fargo Digital Cash, that increases to 20 hours, five days a week.

Wells Fargo emphasized that the feature is still in an early development stage. The bank completed a proof of concept, and the pilot is expected to launch in 2020. Frazier didn’t disclose how many companies participated in the proof of concept or how many are expected to participate in the pilot. Although Wells Fargo’s goal is for corporate clients to instantly send money internationally and settle in different currencies, companies in the pilot will start by transferring in U.S. dollars between the U.S. and Canada. 

See also: CULedger Partners with R3 on Blockchain-Powered Cross-Border Payments

Wells Fargo, which has $1.9 trillion in assets, isn’t the only bank turning to blockchain to enable faster money movement. Medici Bank, MUFG, Banco Bradesco and credit unions are testing the technology. 

https://bankinnovation.net/allposts/biz-lines/payments/wells-fargo-using-blockchain-for-corporate-international-money-transfers/

Open-banking fintech Bud slashes 20% of workforce

https://www.mobilepaymentstoday.com/news/open-banking-fintech-bud-slashes-20-of-workforce/

Bud, the U.K.-based open banking fintech, confirmed that it laid off 20% of its workforce amid a number of competitive pressures weighing on the banking industry in that country. 

Bud provides open banking technology that connects banks to various financial apps and allows consumers to keep track of their spending. A spokesperson said the cuts mostly involved employees in support functions and the company would focus more on its core business needs. 

“Part of being an agile tech business is that you can respond quickly to changes in the market,” Ed Maslaveckas, CEO of Bud, said in an emailed statement. “We’re adapting our strategy to focus 100% on delivering value to business customers and that means we need some people with a different skill set to deliver it.”

He added that the strategy also meant they would need to hire more people for their sales and development teams. 


Topics: Mobile Banking, Region: EMEA


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Travelex Unveils New API-Led B2B Fintech Platform ‘Travelex Business’

https://thefintechtimes.com/travelex-business/

Travelex, a Finablr company and a market leading independent foreign exchange specialist, has unveiled its new B2B fintech platform, Travelex Business.

Travelex Business allows the company’s partners including banks, credit unions, retailers and digital technology companies, to access a broad range of payments and foreign exchange services in one place. The launch of the Travelex Business platform follows a four-year digital transformation project.

The platform is the culmination of a digital transformation project for Travelex under Finablr

Travelex Business leverages the strengths of Finablr’s network and capabilities and combines it with a state-of-the-art cloud-based, API-led platform. The platform provides a seamless way for customers across mature and emerging markets to move money around the world. From cash management to cross border payments and retail currency conversion via APIs, Travelex Business addresses a wide range of enterprise and consumer needs with its omni-channel, multi-currency capabilities. For digital technology companies wanting to offer cross border payments services to their customers, services can be delivered as a white-label offering.

Travelex Business builds on Finablr’s global capabilities and includes three core product suites underpinned by a developer centre which allows customers to explore Travelex services:

  • Travelex Business Cash is a technology driven solution that allows end users to quickly and securely receive cash, by working with large banks, financial institutions and retailers. This solution features Cash Network and Cash Services, comprising a range of related white-label cash products, from travel money to wholesale banknotes.
  • Travelex Business Pay is a cross-border payment platform serving enterprise customers including financial institutions and digital technology companies. It offers two modules, Pay Banking for banks and other financial services providers, and Pay Direct which serves consumers and organisations that need to transfer large amounts of money across borders quickly. Both offer a suite of APIs that enable seamless international money transfer for end customers.
  • Travelex Business Cloud is the ideal solution for any business that offers foreign currency services to international customers. It provides a new way for business to financially benefit from international transactions made through mobile apps, ecommerce websites, Point of Sale terminals or ATMs. It includes advanced and flexible Multi-Currency-Processing, and Dynamic Currency Conversion, underpinned by a market leading Dynamic Exchange Rate Engine.
  • Travelex Business Digital is a developer platform, that provides access to Travelex Business APIs so partners can embed capabilities and processes into their products and services.

Gareth Williams, Chief Product and Innovation Officer at Travelex comments:

“The platform is the culmination of years of hard work by Travelex and collaboration across the Finablr network. By revolutionising how we work, the technology we use, and the partners we work with, we have combined four decades of experience with a new microservices architecture to build a market-leading global fintech platform. Critically, working with Finablr, we have adopted a modern engineering culture with self-organising teams in order to create and iterate on a new and innovative suite of services.

Not only does this allow Travelex to continually innovate and improve its products and services, but it gives our customers the services they need within one solution—and the developer centre means that our customers and prospects can experiment with our capabilities at their own convenience. Travelex Business ensures companies get to market quicker, increase revenues and boost customer value with agile services available at the click of a button.”

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https://thefintechtimes.com/travelex-business/

Amazon launches PayCode in U.S. via Western Union for cash paying customers

https://www.mobilepaymentstoday.com/news/amazon-launches-paycode-in-us-via-western-union-for-cash-paying-customers/

Amazon launches PayCode in U.S. via Western Union for cash paying customers

Amazon announced the launch of Amazon PayCode, which allows cash paying customers to shop on the Amazon website and pay in person at one of 15,000  Western Union money transfer locations to complete their purchases. 

“Customers have told us they love the convenience of paying in cash,” Ben Volk, director, payments at Amazon, told Mobile Payments Today via email. “The focus with Amazon PayCode is providing customers another option to pay in a way that is most convenient for them.”

Amazon has many customers who choose to pay in cash or do not otherwise have access to credit cards or other payment cards. The option for those type of customers has been Amazon Cash, which allows cash customers to add between $5 and $500 to their Amazon balances and pay for purchases. 

Amazon PayCode is already available in 19 countries. Customers using Amazon PayCode need to select the Amazon PayCode option to get their QR code and number. 

Amazon officials said that Amazon cash, which allows cash customers to reload prepaid cards, is available at more than 100,000 locations. 

Amazon did not disclose how many of its customers pay using cash, but noted Federal Reserve of San Francisco data showing 77% of purchases in the U.S. last year were made in person during 2018 and 39% of that volume was in cash. 

Cover image courtesy of iStock.


Topics: Mobile Payments, Online Purchasing, POS, Retail

Companies: Western Union, Amazon


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Walmart, Capital One to launch co-branded, private label cards

https://www.mobilepaymentstoday.com/news/walmart-capital-one-to-launch-co-branded-private-label-cards/

Walmart, Capital One to launch co-branded, private label cards

Capital One and Walmart Inc. announced plans to launch of the Capital One Walmart Rewards Card Program with the rollout of two new rewards cards that provide loyalty points and discounts to shoppers that make purchases at the big box retailer, according to a press release. 

The companies will launch the co-branded Capital One Walmart Rewards Mastercard and the private label Walmart Rewards Card, exclusively for Walmart purchases on Sept. 24. 

Walmart and Capital One have maximized the program to allow mobile interaction, for example, Walmart Pay customers can load the card directly onto their smartphones. Customers can also apply for the card at Walmart.com, the Walmart app, CapitalOne.com and can send a text to apply for the card and complete the application using a smartphone. 

“We are using our technology expertise to transform the customer experience through a digital first approach,” Daniel Mouadeb, senior vice president, head of Walmart partnership at Capital One, said in the press release. “We worked with Walmart to deliver a credit card program that offers meaningful rewards, combined with simple, intuitive digital tools that help people get more for their money by rewarding them for the things that they buy at Walmart and everywhere else they shop.”

The Capital One Walmart Rewards card will have no annual or foreign transaction fees and offer a variety rewards for purchases at the retailer. 

  • 5% for Walmart.com, including grocery pickup and delivery as well as in-store purchases using Walmart Pay during first 12 months.
  • 2% back on in-store Walmart purchases as well as restaurants and travel.
  • 1% back on all other purchases.

Current Walmart cardholders will be converted to one of the new cards starting Oct. 11. 

Cover image courtesy of Walmart.
 


Topics: Card Brands, Loyalty Programs, Mobile Apps, Mobile/Digital Wallet, Mobile Payments, Retail, Transaction Processing

Companies: Capital One, Walmart


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Isle of Man: The Jurisdiction that Refuses to Call a Rat a Rat

https://thefintechtimes.com/isle-of-man/

By Matthew Dove

There’s two things Manxes can’t stand; taxes and rats. Corporation rates are set at 0% and those pesky rodents are only ever referred to as longtails or “big fellas.” As TFT’s Matthew Dove set off for Douglas, he wondered if this fledgling tech hub was really just another glorified tax haven. What’s more, could he get anyone on the Isle of Man to call a rat a rat?

Disembarking a Loganair twin-engine propeller plane at Ronaldsway Airport, I was reminded, rather worryingly, of the 1973 British horror classic, The Wicker Man. I found myself fearful of suffering the same fiery fate as Edward Woodward’s stoic policeman at the hands of a murderous island cult. So great was my trepidation that I began to exhibit the same manic affectations as Nicolas Cage in the ill-fated 2006 remake of the aforementioned frightfest (The bees! The bees! – Ed. okay that’s enough). 

It was a great relief then to be greeted, not by an native islander (of whom I’d convinced myself to be terrified) but a Polish taxi driver named Christoph who proved a most convivial tour guide. Christoph spoke of his adopted home warmly and introduced me to the taxonomy of “big fellas” as well as the island’s mythic fairy bridge. As one passes over this innocuous road bridge, it’s considered good luck to greet its fantastical guardians with a wave and a kind word. It’s a rite Christoph felt important enough to insist I observe, which I duly did.

the Isle of Man is brimming with happy campers, particularly those who happen to enjoy camping.

Christoph’s Manx zeal isn’t the exception but rather the rule on an island with a considerable surfeit of cheerleaders. Peppered throughout accounts of fintech innovation and a business-friendly administration were rhapsodies on the myriad delights the place has to offer its inhabitants. Whether it be the world famous TT course, nonexistent crime rate, short commutes or line-to-plate seafood, the Isle of Man is brimming with happy campers, particularly those who happen to enjoy camping.

THE HUBB

Advertised as having superfast wifi and complimentary cookies, “The Hubb” in the centre of Douglas is a near perfect embodiment of the Isle of Man’s digital aspirations. The government-sponsored blockchain and emerging technologies incubator aims to promote the social benefits of relocating to the island as much as the commercial. 

The Hubb’s CEO, Jason Isaacs, is an enthusiastic convert having “fallen in love with the place” after making the leap from Manchester. The 24-year old is also emblematic of the Manx can-do attitude. Boasting a strong background in tech and business (this guy was selling web hosting services when he was twelve!), Isaacs speaks fondly of a jurisdiction which “facilitates an ability to do business.” However, this business-first approach can prove worrisome.

The Hubb in the centre of Douglas is a near perfect embodiment of the Isle of Man’s digital aspirations.

When discussion turned to the island’s unemployment rate, which sits at an astonishing 0.7%, Isaacs offered a slightly jarring analysis. The Hubb’s commander-in-chief would rather up to 4% of the Isle of Man’s 84,200 denizens were jobless. The reason? Because it would be better for business. 

John Hunter, the head of banking and fiduciaries for IoM’s Department for Enterprise, agrees that near total employment “has the potential to limit growth.” In order to remedy this predicament, the government tasks Locate Isle of Man with attracting talent, as Hunter puts it, “to meet the needs of business.” 

To assess the representation of big business on the island I needed look no further than the office I was sitting in. The Manx government set up its very own Blockchain Office and Sandbox in February of this year and it resides in the Hubb under the stewardship of Lyle Wraxall. Key to the operation is regulatory lead, Steve Billinghurst, who has acted (and continues to act) as PwC’s advisory director on the island since 2013. 

Neither is the affable Mr Billinghurst alone, the big four alum has a total contingent somewhere north of 100, including 13 partners/directors. At a low estimate, that’s 1 PricewaterhouseCooper for every 752 islanders!

THE GHOSTS OF ATHOL STREET

My visit to the Hubb led me to ruminate on the potential pitfalls of such a strident state-backed pro-business stance. This by turns, led me, quite literally, to a street synonymous with the darker side of the island’s economic model. Locals joke that Athol Street is shady on both sides and, on inspecting some of its occupants, one can easily see why.

Despite the exotic name, the fallout from 2017’s Paradise Papers leak wasn’t localised in tropical climes but spread the world over. Details of a massive offshore economy, complete with Byzantine tax vehicles, shadowy practices and their elusive benefactors, were made public. 

Those named and shamed included the usual suspects like Vladmir Putin, Facebook and Bono, as well as those you’d hope would know better, like Her Majesty the Queen (say it ain’t so!).

And where did these files originate? The leak sprung from legal services company, Appleby, which has offices in the Cayman Islands, Bermuda and – you guessed it – the Isle of Man, 33/37 Athol St, Douglas to be precise. Not that their neighbours at No. 41 got off lightly as they were roundly criticised for advising a Canadian ticket tout (and Appleby client) in his efforts to avoid paying UK taxes. They’re a little consultancy called KPMG, you may have heard of them. Like PwC, they too have more than 100 employees on the island.

The spectre of the Paradise Papers still looms large over Athol Street and does little to enlighten that notorious shade. 

Locals joke that Athol Street is shady on both sides and, on inspecting some of its occupants, one can easily see why.

BLOCKCHAIN ISLE 

Leaving Athol Street behind, as I’m sure my hosts wished the media as a whole would, I set off in search of a fresh vein of Manx innovation. 

My first stop was Solutions Hub, a crypto and blockchain advisory at the pointy end of the sector and clearly relishing the challenge. Along with “supporting the island’s first tokenised blockchain fund” CEO Lee Hills was keen to tell me about Solutions Hub’s other vanguard achievements. The advisor was instrumental in the issuance of a world-first blockchain gambling licence as well as utilising the Isle of Man’s Designated Business Act regulations to launch AML/CFT-compliant ICOs.

Joining Solutions Hub at the forefront of Manx DLT innovation are established locals CoinCorner and Quanta. The former is a Bitcoin brokerage and something of an institution, having operated on the island since 2014 with a workforce that’s 85% Manx. Quanta, on the other hand, is a decidedly global prospect with staff from Nigeria, Japan and Greece to name but a few. Led by Ray Davies (not that one), Quanta is the world’s first fully licensed blockchain lottery and straddles effortlessly the faultline between emerging tech and good ol’ fashioned gambling. 

All three enterprises are uniquely Manx, honing their craft in the island’s commercial microcosm before turning their focus to conquering global markets.

how is the Isle of Man such a nice place to live if no one’s paying any taxes?

DATA AND EXCHANGE

One business already seizing the global initiative is Manx Telecom, which is busily exploiting the island’s geopolitical assets to cement itself as a centre for secure data storage. With the world’s longest continuous parliament, little threat of terrorism or domestic discord, the IoM is a pretty safe bet for organisations with information to protect. It’s these same conditions which make the island a fine place to raise children (at least that’s what another patriotic cab driver told me anyway).

The data centre I visited is one of three and sits 150m above sea level with a power supply which runs at a 2-megawatt capacity. Everything is doubled up; two back-up generators, two air conditioning units, plus 500 tonnes of battery power just in case. Even the temperature and humidity are monitored and optimised to ensure client servers are snug as bugs in rugs. Not that there’s any bugs to be found, no longtails either…

Meanwhile, down at the waterfront, Carolyn Gelling and the International Stock Exchange (TISE) are helping to secure funding for “incubator investments.” 

Despite having welcomed what is thought to be the first regulated listing of notes digitised on a blockchain, TISE sees the island’s future not solely in blockchain and e-gaming. When I asked Gelling about the narrowness of IoM fintech offerings, she answered “I can see more diversification happening naturally.” 

If all this undiluted positivity hadn’t given me cause enough to question what kind of Faustian pact these guys had got themselves into, Gelling offered another reminder that “the Isle of Man is a really nice place to live.”

By this point I was I considering emigrating myself but I still had a few questions that I needed addressed. Top of my list was; how is the Isle of Man such a nice place to live if no one’s paying any taxes?

WHEN IS A RAT NOT A RAT? 

When I caught up with John Hunter for a one-on-one, he first lamented the weather. Next, he lamented the pervasiveness of what he sees as misconceptions about the Isle of Man.   

It was “blowing a hoolie” (or stormy in local parlance) so we’d be unable to take a tour of the island’s more mountainous scenery. Nonetheless, a lowland drive was sufficient to map the terrain. 

As we saloomed through winding lanes on our way to historic Peele, Hunter was eager is dispel one especially bothersome sobriquet; tax haven. Hunter is adamant that the notion of the Isle of Man as a safe harbour for dodgy characters and their opaque interests was “killed off a long time ago.” He insists that IoM is simply “tax neutral” and boasts a “leading AML regime.”

This line of logic does little to convince the likes of Richard Murphy who lectures in international political economy at City University as well as holding a directorship at Tax Research LLP. He argues that whilst “you may claim to be “offshore”; you prefer to be called “an international finance centre”. Best of all is the claim that you are “tax neutral” (which means: “We don’t charge tax, but don’t want to admit it”). But nothing gets round the truth that what tax havens really do is help to abuse the world’s tax systems and in the process mount a challenge to market-based capitalism and even democracy itself.”

Another uncomfortable topic is the common purse agreement which entitles the Isle of Man to a share in the United Kingdom’s customs and excise revenues. To its critics, the arrangement is deeply one-sided and allows the island access to revenue disproportionate to what it collects, effectively making it a subsidy. 

Visiting the island is like being shown around a beautiful house which happens to have a rodent problem.

Alistair Darling reduced the purse post-financial crisis but under Tory governance the island’s take has slowly risen and now sits somewhere in excess of £300 million a year (as estimated in 2017). Using the Manx government’s own records for 2017/18, it follows that the common purse accounts for around one third of total governmental income.

When I asked Hunter if he knew the exact figure for last year’s purse revenue, he said he didn’t but was confident that it’s in “a good place.” A good place indeed, as Manx Radio reported last month;

“Government income for the last financial year has revealed a more than £30 million revenue surplus.”

SLANE LHIAT (FAREWELL)

The charms of the Isle of Man are abundant. The people are warm, the scenery is spectacular and its culture is rich and diverse. The foundations of Royal National Lifeboat Institution were established on the island in the 1800’s. The Manx government gave women the vote as early as 1881. Hell, even pilates was invented there! Unfortunately, that’s not the full picture.

Visiting the island is like being shown around a beautiful house which happens to have a rodent problem. You can raise questions about the rat situation as much as you like, the owner’s response will always be the same; “Those aren’t rats, they’re longtails.” 

A fast follower when it comes to business and regulation, “the Isle of man is really good at learning from the mistakes of others.” However, the question remains whether it’s any good at learning from its own.

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Touchbistro raises $119.24M to expand payments portfolio

https://www.mobilepaymentstoday.com/news/touchbistro-raises-11924m-to-expand-payments-portfolio/

Touchbistro raises $119.24M to expand payments portfolio

Touchbistro, a provider of foodservice iPad and POS payment solutions, has raised CDN$158 million ($119.24 USD) in Series E funding in a round led by Omers Growth Equity with participation from Barclays Bank, RBC Ventures, BMO Capital Partners, and existing investors including Omers Ventures, JPMorgan Chase, Napier Park Financial Partners, BDC IT Venture Fund and Kensington Capital Partners.

Touchbistro will use the funds to acquire complementary products that broaden the company’s capabilities, support the development of technology advancements, expand its presence in international markets and increase the size of its team over the next year, according to a press release. 

More than 16,000 restaurants in over 100 countries use the Touchbistro iPad POS and payments solution. Touchbistro processes more than $11 billion annually and is used to streamline and simplify all aspects of running a restaurant — from order taking, payment processing, menu management and accounting, to reporting, inventory management, staff scheduling and customer loyalty. 

This quarter, Touchbistro announced partnerships with Barclaycard in the U.K. and EVO Payments in Mexico to provide integrated payment solutions that streamline processes for restaurants, drive operational efficiency and reduce human errors associated with the bill-paying process. Last year, Touchbistro announced TouchBistro Payments powered by WePay, a JPMorgan Chase company, to streamline payment processing for restaurants in the US. 

“Last year we led Touchbistro’s Series D round. Since then, the company has exceeded our performance expectations and we are increasing our commitment by investing in this funding round,” says Damien Steel, managing partner and head of Omers Ventures. 

Photo courtesy of Touchbistro.


Topics: Financial News, Mobile Payments, POS, Restaurants, Venture Capital

Companies: TouchBistro


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https://www.mobilepaymentstoday.com/news/touchbistro-raises-11924m-to-expand-payments-portfolio/

Increased Focus on Payments Performance Set to Boost Sales and Revenue Over Next Two Years

https://thefintechtimes.com/payments-performance/

Performance is set to become the next big battleground within the payments industry, as businesses in all sectors look to enhance customer experience and increase margins in response to market disruption and increased competition.

Research from emerchantpay reveals that as many as 85% of payments leaders predict that a greater focus on payments performance (including tools, analytics, skills and investment) over the next two years will increase their organisation’s revenues by between 1% and 10%. 

Within some sectors, the potential impact of improved payments performance is even greater. 89% of payments leaders in the travel sector and 88% within retail expect to see revenue increases of up to 10% as a result of increased performance.

More than three quarters (78%) of payments leaders believe that deploying AI within payments systems will drive improved performance.

The Performance Pulse white paper identifies the number and variety of steps that payments leaders are looking to take to improve performance across all areas of their payments infrastructures. At the top of the list is minimising the number of steps in the payment user journey across multiple touchpoints, cited by 93% of payments leaders as having a significant impact on performance. This is followed by action to reassure customers around security and encryption on payment pages (92%), consolidating international payment providers (88%), incentivising payments teams around improved efficiency (88%) and optimising Merchant Category Codes (MCCs) to increase authorisation rates (87%).

New technology is also seen as an important catalyst for improved payments performance and, therefore, increased revenue. More than three quarters (78%) of payments leaders believe that deploying AI within payments systems will drive improved performance.

When it comes to measuring and evaluating payments performance, the most widely used metric is growth rates (deployed by 64% of organisations), followed by operational costs (46%), acceptance rates (43%), impact in revenue and profitability (39%) and conversion rates (37%). Other metrics include instances of fraud or impact of fraud and customer satisfaction.

only one in seven payments leaders (14%) has personal and team KPIs that are fully aligned to the KPIs of the wider business and to broader commercial objectives.

However, the research reveals a disconnect between the organisational drive for greater payments performance and the objectives and focus of those individuals responsible for delivering it. Remarkably, only one in seven payments leaders (14%) has personal and team KPIs that are fully aligned to the KPIs of the wider business and to broader commercial objectives.

Owen Tustin, VP Realtionship Management, emerchantpay, said:

“These findings really bring home the size of the opportunity for payments leaders to deliver significant commercial and financial results, through a strategic approach to payments performance. It’s evident that more and more businesses are recognising the importance of instilling a culture of payments performance and ensuring that they have the dedicated resources to ensure that performance is monitored, analysed and optimised on a consistent basis across all aspects of the payments eco-system.

This means having high quality skills within the payments team, or support from external providers, to analyse, interpret and present data back to the business in a coherent and accessible way.”

“These findings really bring home the size of the opportunity for payments leaders to deliver significant commercial and financial results”

The research revealed different priorities in driving payments performance across industries. Within the retail sector, there was a relatively strong emphasis on upskilling payments teams and aligning team objectives and incentives to overall payments performance. Within travel and gaming, the focus was weighted towards minimising steps in the customer journey across multiple touchpoints and, within gambling, there was an inclination towards A/B testing to fine-tune payment page design.

Payments leaders within Forex (foreign exchange) reported the highest expectation levels around the impact of AI on payments performance.

Tustin concluded: “We need to change the narrative around payments, from a tactical focus around ‘keeping the lights on’, to a strategic, business imperative, where performance is clearly aligned to overall strategic goals and KPIs, and payments teams are measured and incentivised around hard commercial metrics. As an industry, if we can get this right, payments performance will create a platform for payments teams to position themselves as more strategic and high-value functions within their organisations.”

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