A Few Things About The Internet Of Things

https://www.pymnts.com/today-in-data/2019/internet-of-things-devices-innovation/

Devices are everywhere – and are now intelligent and interacting with us through all manner of daily routines. There are billions of devices in the world helping to monitor and regulate everything from room temperatures to restocking the fridge. The Intelligence of Things Tracker has shown that smart cities, security and even healthcare are all getting a boost from tech-powered devices that promise ease and convenience in keeping our lives, well, humming.

Data:

$1 trillion: Projected value of global IoT spending in 2022.

33 percent: Projected CAGR of the global IoT insurance market, as measured between 2019 and 2025.

16.2 percent: Projected CAGR of the IoT analytics market from 2017 to 2025.

8.6 billion: Number of IoT devices in use across the globe.

$400 million: Expected amount to be spent on IoT development.

https://www.pymnts.com/today-in-data/2019/internet-of-things-devices-innovation/

Retailers Get Ready For More Mobile Commerce Innovation

https://www.pymnts.com/news/retail/2019/retailers-get-ready-for-more-mobile-commerce-innovation/

Retailers need to work harder to get more consumers to download mobile commerce apps, one of the main areas of focus for retail going into the 2020s.

As new PYMNTS research shows, most consumers do not like having too many mobile apps on their mobile devices. More specifically, 77.6 percent of consumers have installed five or fewer merchant apps on their phones.

That said, the research also found that consumers “who make half or most of their purchases online tend to have more apps installed than respondents who make most or all of their purchases in physical stores.” Even more on point, “42.6 percent of respondents who shop mostly online and 44.5 percent of those who make half of their purchases online were ‘very’ or ‘extremely’ interested in downloading merchants’ apps, compared to 30.3 percent of respondents who make most of their purchases in physical stores.”

No Lack of Choice

It’s not about the lack of choice. In all, some five million apps – retail and other types – are available for download. Part of the reason for that apparent paucity of useful retail apps is that consumers don’t seem to find much to do with them besides shopping. And as most PYMNTS readers probably know, it’s not only the shopping that matters – the payments and overall consumer experience serve to build loyalty among shoppers.

But things are changing, thanks in large part to one very popular U.S.-based coffee chain. “Starbucks changed the game when they decided to do all of it themselves,” Chris Ostoich, co-founder at LISNR, said in a recent PYMNTS interview.

Not only that, but the success of the Starbucks mobile program – which stands as an example for all types of retailers – demonstrates on a daily basis how app value and experience can bring more consumers into a particular retailer’s mobile ecosystem, he said. In fact, the PYMNTS/LISNR research found that nearly 46 percent of mobile app users would be interested in downloading frequently-visited merchants’ offerings and using them to make payments if that would allow them to bypass checkout lines at brick-and-mortar locations. In comparison, just 36 percent say they would be interested in downloading these merchant apps as they are.

The main idea behind all that data and consumer desire? Consumers just don’t like friction-filled checkout experiences, and anything that can make transactions more seamless will win over mobile consumers.

Back to mobile apps, the lesson boils down to this, according to Ostoich: “In many ways, payments are the gateway to other things, and can tie those experiences together.”

So what does the future hold for mobile retail apps, some two to five years out?

“You’ll see more apps rather than less,” he said. “You’ll store them on folders with all your favorite retailers you shop with, until someone figures out how to run one protocol on top of all those retail apps.”

Rise of Super Apps

So-called “super apps” might also play a role. Indeed, that was one of the main messages from a new PYMNTS discussion between Karen Webster and Anabel Perez, co-founder and CEO of NovoPayment. “From a financial services perspective, we haven’t seen a super app originate from a pure financial services provider and move to eCommerce,” Perez told Webster.

What is a “super app,” you might ask?

Simply put, it’s a mobile app designed to improve and ease payment and retail flows for consumers. Super apps create differentiated financial ecosystems in the back end (and front end), incorporating capabilities like an aggregation of multiple service providers, digital account origination, embedded KYC abilities and real-time payments (to name a few).

As Webster recently noted in a column about PYMNTS research into the subject, it can take consumers four different apps and four different interactions across their existing apps – and many minutes – to close the loop on that single flow.

Get ready for more mobile innovation in the retail world in the coming decade.

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Latest Insights: 

The Which Apps Do They Want Study analyzes survey data collected from 1,045 American consumers to learn how they use merchant apps to enhance in-store shopping experiences, and their interest in downloading more in the future. Our research covered consumers’ usage of in-app features like loyalty and rewards offerings and in-store navigation, helping to assess how merchants can design apps to distinguish themselves from competitors.

https://www.pymnts.com/news/retail/2019/retailers-get-ready-for-more-mobile-commerce-innovation/

Amazon Raises Seller Fees Due To Digital Tax In France

https://www.pymnts.com/news/retail/2019/amazon-raises-seller-fees-france-digital-tax/

With a 3 percent digital tax passed by the French government, Amazon is hiking seller fees for small and medium-sized businesses in France beginning in the fall. The eCommerce company cited the tax as the reason for the increase, CNBC reported.

Amazon said in a statement, according to the report, “This tax is aimed squarely at the marketplace services we provide to businesses, so we had no choice but to pass it down to selling partners. We recognize that this may place small firms in France at a competitive disadvantage to their counterparts in other countries.”

One seller, for instance, began a jewelry company in 2011 creating custom pieces such as bracelets, rings and necklaces. She began to sell her items on Amazon two years ago and brings in one-fifth of her sales from the eCommerce marketplace. The seller will now pay Amazon 12.36 percent of her sales compared to 12 percent before. According to the outlet, she noted that any fee hike hits profits, as margins are already tight from materials costs and other taxes. She must either absorb the higher costs or increase prices.

The news comes after reports surfaced in April that France’s lower parliament has passed a proposed tax that targets the revenue of tech giants like Google, Amazon and Facebook. The finance minister of France had the prior month announced the 3 percent tax, which targets digital businesses with $845 million or €750 million in global revenue and €25 million in domestic revenue.

The tax was reportedly to apply to approximately 30 major companies, mainly from the U.S., and is expected to help France generate $565 million each year. At the time, it was noted that the proposed tax could spark the legislation of internet companies in other European countries.

There was speculation that a European Union-wide digital tax could be instituted, although an effort to pass a 3 percent digital tax failed last year because of objections by Germany and Ireland.

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Latest Insights: 

The Which Apps Do They Want Study analyzes survey data collected from 1,045 American consumers to learn how they use merchant apps to enhance in-store shopping experiences, and their interest in downloading more in the future. Our research covered consumers’ usage of in-app features like loyalty and rewards offerings and in-store navigation, helping to assess how merchants can design apps to distinguish themselves from competitors.

https://www.pymnts.com/news/retail/2019/amazon-raises-seller-fees-france-digital-tax/

Data Dive, Moving In And Moving On Edition: Apple, Venmo, Google And Visa

https://www.pymnts.com/data-dive/2019/apple-venmo-google-visa/

The official end of summer is now less than two weeks away, but payments and commerce got an early jump on getting back to the fall work schedule. There is lots of motion in the markets, with Apple officially moving into the world of being a card issuer (with mixed reviews), Venmo making moves on the bank account and Google Pay breaking up with Visa Checkout as a payments button.

Apple’s Expensive Card

The Apple Card rollout began last week through Goldman, and the analysts are already worried that the card and its features will be a bit of a dud with consumers, at least at first, which will lead to some rather underwhelming results for Apple’s tech and bank backers. Don’t say we didn’t warn you.

Analysts at  Nomura believe the card may bring more in the way of losses at first – and though there could be potential for disruption down the line, it will likely be far, far down the line.

“The card may take years to reach our threshold for materiality, or above $1 billion in operating profit,” noted the report. “Goldman, for its part, may see impact from loan losses should the economy falter. As a new entrant, Goldman Sachs does not have the historical data or experience that lenders obtain when underwriting through a credit cycle.”

The card, with its lower interest rates and no-fee structure, is estimated to be an expensive card to issue, with acquisition costs in the range of $350 per customer.

The report goes on to note that while many new industry players enter the market announcing they have a way to build “a better mousetrap for underwriting consumer credit,” most discover that it is incredibly difficult to actually live up to that promise, particularly during a down credit cycle. The effects could be particularly tough for Goldman, the report added, since it is underwriting at least some sub-prime customers for the new Apple Card offering, which will mean higher loss and delinquency rates.

The report was not wholly negative, though: Analysts also noted the Apple Card’s “elegance should entice some consumers to make it their payment vehicle of choice.”

But mostly, the report focused on the fact that Apple has created a costly card, with no obvious road to make a big splash in a crowded credit card market. It did note the possibility that the card is best understood as part of Apple’s broader ecosystem play around financial services, and that more products and services may be en route.

“Ultimately, however, we do not believe the Apple Card’s full roster of features and perks compare favorably with rival credit cards, at least for now. We believe the Apple Card is best understood as yet another tool in Apple’s digital wallet toolkit, alongside the current services Apple Wallet, Apple Pay and Apple Cash. We suspect that Apple is not finished with its slate of financial services; adding debit could be one such avenue,” the analysts wrote.

Venmo Steps up Its Game Against Zelle

Venmo added its newest instant money feature this week: instant transfer to a bank account, according to a blog post.

“Having money in your Venmo account is an awesome feeling – it makes paying friends and family that much easier,” the company said. “We also know that sometimes you need other ways to access that money. This week, we’re excited to announce another way for you to instantly access your funds!”

Since last year, Venmo customers have been able to make an instant transfer to a checking account via a debit card for a 1 percent fee (minimum 25 cents, maximum $100). The new service drops the debit card requirement but keeps the 1 percent fee. Venmo is using the JPMorgan connection to the TCH RTP rails to enable the instant account-to-account transfer option.

“The new transfer option begins rolling out today and will be widely available in the coming weeks, so make sure to update your Venmo app!” the company said.

PayPal-owned Venmo hit 40 million active users in Q1 of 2019.

“Venmo continues its significant momentum,” CEO Daniel Schulman said on a call with analysts. “As user growth continues to accelerate, merchants are increasingly turning to Venmo as a way to attract a valuable and engaged consumer base.”

But Venmo faces active and aggressive competition in the form of bank-backed P2P payments service Zelle.

The growth of Zelle P2P payments increased at a slightly faster rate than Venmo in the latest financial reporting period: While year-over-year payment values increased by 56 percent, transaction volume increased by 71 percent, just barely beating the PayPal figure. Early Warning, the network operator of Zelle, also said that in the second quarter of 2019, “$44 billion was sent through the Zelle network on 171 million transactions.”

“More than 64 percent of U.S. demand deposit accounts will have access to Zelle through the 480 financial institutions contracted to join the Zelle Network,” said Al Ko, CEO at Early Warning. “We continue to see double-digit increases in new customer wins each month, demonstrating continued demand for Zelle from national and regional banks and credit unions.”

Visa Checkout Gets Ready to Check Out

According to reports out this week, Visa is moving ever closer to pulling the plug on its Visa Checkout service sometime next year. First introduced in 2013 alongside the rise of EMV, the service will reportedly be shuttered in favor of a new EMV SRC-based service.

As a sign that the process is moving forward, Google Pay this week pulled the plug on its support for Visa Checkout, removing the services from the “Supported accounts & services” section of its support page, leaving only PayPal. Google Pay has supported Visa Checkout since 2017.

When asked about the change, Google said Visa was in the process of terminating the service to migrate to the new one.

Visa has said the replacement service will start appearing to Checkout customers within the next few months in a handful of markets. The full transition to what’s next, however, will likely not be completed until 2020.

Google did note that bank-issued Visa cards will continue to work within the Google Pay service. Only the direct integration between Google Pay and Visa Checkout is shutting down.

Whether Visa Checkout’s replacement will eventually be supported by Google Pay remains to be seen.

In fact, “it remains to be seen” is the coda to many of this week’s stories. Will the Apple Card sizzle as Apple hopes, or fizzle as analysts fear? Who will come out ahead in the rapidly intensifying digital P2P foot race between Zelle and Venmo? And what will Visa’s next move on digital payments look like?

It remains to be seen – but we’ll be here to tell you all about it when we get our first glances.

Have a good week.

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Latest Insights: 

The Which Apps Do They Want Study analyzes survey data collected from 1,045 American consumers to learn how they use merchant apps to enhance in-store shopping experiences, and their interest in downloading more in the future. Our research covered consumers’ usage of in-app features like loyalty and rewards offerings and in-store navigation, helping to assess how merchants can design apps to distinguish themselves from competitors.

https://www.pymnts.com/data-dive/2019/apple-venmo-google-visa/

Banana Republic Unveils Women’s Apparel Subscription Service

https://www.pymnts.com/news/retail/2019/banana-republic-unveils-womens-apparel-subscription-service/

To provide unlimited access to its collection of women’s apparel, Banana Republic unveiled its online subscription service called Style Passport. The company plans to roll out the offering to U.S. customers at the end of September and has the aim of adding apparel for men at a later time, according to an announcement.

“We’re constantly evolving with our customer, meeting her where she is shopping. Style Passport will drive incremental revenue, and help us connect with younger shoppers who appreciate great style and want an affordable, sustainable way to try new fashion.” Banana Republic CEO and President Mark Breitbard said in the company’s announcement. “With this new service, we’ll gather valuable insights from a highly interactive customer base that can be used to design future product and experiences.”

Through the new offering, shoppers will be able to rent Banana Republic fashions for a single monthly fee and have the ability to purchase and keep any product. Style Passport offers an $85 charge for a plan of three garments that comes with unlimited exchanges and returns; complimentary laundering services; and free priority shipping. The retailer worked with rental technology platform CaaStle to develop Style Passport.

Banana Republic said it would work with the platform to “utilize its white glove service to handle logistics while delivering a seamless experience.” At the same time, the announcement noted that the retailer will also offer Buy Online, Pick Up in Store starting this fall.

The retailer also said that it is “committed to integrating sustainability throughout the business from sustainable fibers to environment-friendly practices. Style Passport provides an easy way for customers to own fewer items while improving their wardrobe with fashion for every occasion.”

Beyond Banana Republic, news recently surfaced that Bloomingdale’s is launching My List, which Macy’s CEO Jeff Gennette described in a recent earnings conference call as a “subscription rental service,” with CaaStle as a partner. He noted that the learnings will inform the development of a similar rental service at Macy’s in the near future.

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Latest Insights: 

The Which Apps Do They Want Study analyzes survey data collected from 1,045 American consumers to learn how they use merchant apps to enhance in-store shopping experiences, and their interest in downloading more in the future. Our research covered consumers’ usage of in-app features like loyalty and rewards offerings and in-store navigation, helping to assess how merchants can design apps to distinguish themselves from competitors.

https://www.pymnts.com/news/retail/2019/banana-republic-unveils-womens-apparel-subscription-service/

Target To Introduce New Private-Label Food Brand

https://www.pymnts.com/news/retail/2019/target-to-introduce-new-private-label-food-brand/

Target has announced that it’s launching a new private-label food brand called Good & Gather in a move to boost its grocery business, according to a report by CNBC

The new brand will arrive at Target stores on Sept 15, and Target said by the end of 2020 there will be upwards of 2,000 items being sold by the brand. The items will include things like milk, eggs, pasta, veggies, salads and organic pizza crusts. 

“We’ve been hard at work [on this] for the last couple years,” said Stephanie Lundquist, head of food and beverage at Target. “Food and beverage play such an important role for Target’s business … for the Target experience.”

Lundquist said that about 75 percent of customers, in addition to shopping Target’s regular products, put at least one food item in their baskets when shopping. This also translates into bigger baskets. 

“One of our biggest strengths is the fact that we are a one-stop shop for our guests,” she said.

Brian Yarbrough, an analyst at Edward Jones, said Target has a lot of potential for growth in the sector, and some analysts say Target has never really been strong in the food department, even while it touts its other private-label offerings in departments like clothing and furniture. 

“Grocery is the one spot in their stores they haven’t fixed yet,” Yarbrough said. “But they are in a much better spot than they were four or five years ago.”

Yarbrough said that while Walmart gets upwards of half of its business from customer grocery shopping, Target only gets about 20 percent, which shows that it is ripe for growth.

Target has recently pulled itself out of a sales slump, especially since 2016, when sales dropped 5 percent to $69.45 billion from $73.79 billion a year before. It went up slightly in 2017 to $71.88 billion and then to $75.36 billion in 2018. 

Analysts predict sales of $77.44 billion in fiscal 2019, while Target shares are up 27 percent so far this year. 

The company’s private-label brands are part of what helped, as Target wants to increasingly become the store for items that people can’t find unless they go on Amazon.

“I think the reason they haven’t done as much in food to date … is food is much more competitive,” said Neil Saunders, managing director at GlobalData Retail. “Food is also much higher risk because the margins are lower. … I think the staples are what they are, and for the everyday things you need, Target does a reasonable job.”

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Latest Insights: 

The Which Apps Do They Want Study analyzes survey data collected from 1,045 American consumers to learn how they use merchant apps to enhance in-store shopping experiences, and their interest in downloading more in the future. Our research covered consumers’ usage of in-app features like loyalty and rewards offerings and in-store navigation, helping to assess how merchants can design apps to distinguish themselves from competitors.

https://www.pymnts.com/news/retail/2019/target-to-introduce-new-private-label-food-brand/

Why Mobile Rewards Programs Attract Fraud

https://www.pymnts.com/news/security-and-risk/2019/why-mobile-rewards-programs-attract-fraud/

In the latest Mobile Order-Ahead Tracker, PYMNTS explores the latest developments in the world of QSR rewards programs and how credential stuffing and account takeovers are plaguing the industry.

According to the Restaurant Readiness Index, 80 percent of QSR managers and customers reported positive experiences with loyalty programs. So, what are the downsides?

Rewards and loyalty programs also make attractive targets for fraud. These programs might not seem to be worth hackers’ time on the surface, but they store a great deal of personal data. They are also attractive because in many cases, customers sign up to take advantage of a one-time offer, then forget about it. It could be some time before a hacker’s presence is even detected.

Here are some examples of restaurants and retailers that have bounced back from mobile data breaches and what they are doing to ensure security.

Chipotle 

Chipotle is on the route to recovery after suffering setbacks due to food safety concerns, falling sales – oh, and an April data breach.

One of its moves in an attempt to win back customers was the launching of Chipotle Rewards in May.

PYMNTS spoke with Curt Garner, Chipotle’s chief technology officer, about the restaurant’s new rewards program and how it safeguards against fraudsters.

The fast-casual restaurant was an early mobile adopter, launching an iPhone ordering app in 2009. But it took a decade for the chain to roll out a rewards program. “We took the position in the early days that we wouldn’t rush to put things in place that wouldn’t support a great experience for our customers,” Garner said.

Chipotle attributed the April attack to credential stuffing, in which a hacker uses a bot to automatically enter usernames and passwords stolen from other websites to try to find matches.

Dunkin’

Coffee and donut giant Dunkin’ also fell victim to a rewards points hack last year—and then again in February. These were also credential stuffing attacks where hackers were able to use passwords they gleaned from other sites to get into the DD Perks rewards accounts.

The intent wasn’t to access users’ names, emails or other personal information – it was to get into the DD Perks accounts and profit. Cybercriminals attempted to sell accounts and loyalty credits.

7-Eleven

Hacks aren’t exclusive to the U.S. or relegated to restaurant rewards programs. In Japan, convenience store chain 7-Eleven fell victim to a data breach last month that compromised approximately 900 customers’ accounts.

The attack occurred at 20,000 Japanese locations shortly after the launch of 7-Eleven’s 7pay mobile app. In a recent interview with PYMNTS, Rich Stuppy, chief customer experience officer at Kount, blamed the attack on prioritizing customer convenience over security, a flaw shared by many other mobile apps and digital services.

Security Solutions

Chipotle has been using artificial intelligence (AI) and machine learning (ML) for risk assessment with human assistance when necessary.

“When you’re looking at account takeovers, for example, it’s predominantly automated bot attacks that have an identifiable signature. As a retailer, you can say there’s no practical purpose for a customer to be trying to log onto your network using a bot. The security platforms that utilize AI and machine learning can also spot attack patterns, and very quickly block those transactions as well,” said Garner.

Chipotle has also partnered with payments providers and security firms, and even resubmits its app to the hackers every time it is updated to ensure that the software remains secure.

Third-party ordering provider ChowNow also leverages AI and ML to analyze each transaction conducted on its app and cross-references it with other transactions to determine its legitimacy.

Other restaurants are turning to biometrics to increase security.

Providing fast and frictionless ordering experiences that don’t compromise the safety of customer information requires tapping into modern authentication technologies and partnering with security experts for tailored solutions, according to Dan Simpson, CEO of Taziki’s Mediterranean Café.

Last year, the company launched a version of its app that included a new feature allowing customers to log in via face or fingerprint recognition. Despite some persistent wariness, the iPhone X has made biometrics more acceptable to the public.

Fast-casual pizzeria &pizza revamped its mobile order-ahead app and rewards program. Security was paramount in the eatery’s app redesign, and it utilized the same cloud-based point-of-sale system present at all of its physical locations to handle in-app transactions. Importantly, the restaurant doesn’t store any card data.

“None of the card data ever resides with &pizza,” said Kevin Blesy, head of strategy, in an interview with PYMNTS. “We do the right vetting upfront before we put something as important as payment processing in the hands of a third party.”

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Latest Insights: 

The Which Apps Do They Want Study analyzes survey data collected from 1,045 American consumers to learn how they use merchant apps to enhance in-store shopping experiences, and their interest in downloading more in the future. Our research covered consumers’ usage of in-app features like loyalty and rewards offerings and in-store navigation, helping to assess how merchants can design apps to distinguish themselves from competitors.

https://www.pymnts.com/news/security-and-risk/2019/why-mobile-rewards-programs-attract-fraud/

Barclays Launches £100K SME Loans

https://www.pymnts.com/loans/2019/barclays-launches-100k-sme-loans/

Barclays is now offering £100,000 unsecured lending for SMEs on its app and online banking platform.

A recent survey by Barclays found that 44 percent of SMEs said they would have more confidence in applying for a loan if they could see a pre-assessed limit. With that in mind, the lender is now offering over 360,000 customers pre-assessed limits on their digital channels, with the limits for unsecured digital lending increasing to £100,000 from £25,000 for thousands of clients. Funds are typically received within 24 hours.

Last year Barclays funded a new startup every four minutes, with a total of £2.8 billion of loans provided to small businesses. The bank recently unveiled a package that included a £14 billion dedicated lending fund, as well as a series of over 100 clinics to provide business advice and guidance from the bank’s 1,500 relationship managers.

“Every day we talk to thousands of SMEs about how we can support them to grow their business, and our team of relationship managers are out and about visiting offices and homes up and down the country,” Ian Rand, CEO of Barclays Business Banking, said in a press release.  “Now, with the launch of £100k unsecured lending on our app and online banking, we’ll be able to go even further to support businesses with exciting scale-up plans to borrow what they want, when they want. With pre-assessed limits of up to £100k, clients can follow just six simple steps and receive the money in their account normally within 24 hours.”

Last year the bank invested in small business lending platform MarketInvoice, making it the first High Street FI to partner with the FinTech. In addition to acquiring a minority stake in the alternative lender, MarketInvoice will integrate its invoice financing solution into Barclays’ offering. The tie-up is part of Barclays’ larger initiative to enhance its small business financial services.

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Latest Insights: 

The Which Apps Do They Want Study analyzes survey data collected from 1,045 American consumers to learn how they use merchant apps to enhance in-store shopping experiences, and their interest in downloading more in the future. Our research covered consumers’ usage of in-app features like loyalty and rewards offerings and in-store navigation, helping to assess how merchants can design apps to distinguish themselves from competitors.

https://www.pymnts.com/loans/2019/barclays-launches-100k-sme-loans/

 Ransomware Gains Traction, UK BEC Fraud Spikes

https://www.pymnts.com/news/b2b-payments/2019/ransomware-gains-traction-uk-bec-fraud-spikes/

Aided by technology – and emboldened by the rise of cryptocurrencies – fraudsters are stepping up ransomware campaigns.

As reported earlier this week, a new strain of ransomware has been hitting US firms and firms based overseas. The latest news centers on  Sodinokibi, a ransomware strain that has helped fraudsters make higher ransom demands. Through that ransomware they have been hijacking companies’ systems and demanding bitcoin payment in exchange for a decryption key.

In comments reported earlier this week, cyber insurance security responder Tom Bennett of CFC Underwriting told The Financial Times that that claims surged in June and July.

“Ransomware groups tend to target people in the Anglosphere, who are seen as able to pay and deserving of what they get. They tend not to target poorer countries,” he said.  Payment terms have been higher, too. Payoffs have topped $150,000, where the average has been $50,000.

“The threat actors realized they can amplify their impact by targeting specific companies such as managed service providers,” said Bennett. “They are getting into an administration system, finding lists of client credentials and then installing [Sodinokibi] on all the clients’ systems.”

In The UK

In the United Kingdom, the UK Finance Department announced that the UK’s Dedicated Card and Payment Crime Unit, which operates as a specialized police unit that is in turn backed by financial institutions, as reported by govtinfosecurity.com, has dismantled 13 organized crime groups through the first half of the year, a rate that more than doubles that which was seen in the previous year.

Gary Robinson, who serves as head of DCPCU, said that online conduits are gaining favor from fraudsters to further their schemes.

“We are seeing gangs involved in drug trafficking and firearms offenses turning to fraud, targeting victims across the U.K. These criminals are exploiting new technologies to commit fraud, posting adverts on social media to try and recruit money mules,” he said.

As reported by the site, 39 fraudsters were convicted after investigations by the DCPCU, and they were sentenced to a combined total of more than 44 years of prison time. The unit seized the equivalent of more than $401,000 in assets from the criminals.  Fraud that was in turn prevented by the unit amounted to as much as $8.2 million in the first half of the year. Through the past 17 years, the unit has “disrupted” $732 million of fraud.

Corporate Wire Fraud

Separately, a federal grand jury has indicted a Maryland woman for allegedly bilking a Newark, Delaware medical practice of more than $320,000 through the use of a corporate credit card.

Kimberly Sponaugle, was charged by the U.S. Attorney’s Office, District of Delaware with one count of wire fraud. She allegedly used the card during her time as office manager for the unnamed practice to buy jewelry and limousine services, among other unauthorized purchases from January of 2012, through March of 2018.

According to the announcement detailing the indictment, Sponaugle allegedly used funds from the business’s bank account to pay corporate credit card bills associated with those personal purchases and hid her fraud by making false entries in the business’s financial accounting system.

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Latest Insights: 

The Which Apps Do They Want Study analyzes survey data collected from 1,045 American consumers to learn how they use merchant apps to enhance in-store shopping experiences, and their interest in downloading more in the future. Our research covered consumers’ usage of in-app features like loyalty and rewards offerings and in-store navigation, helping to assess how merchants can design apps to distinguish themselves from competitors.

https://www.pymnts.com/news/b2b-payments/2019/ransomware-gains-traction-uk-bec-fraud-spikes/

Lendingkart Secures $2.95M From Sistema Asia Fund

https://www.pymnts.com/news/investment-tracker/2019/lendingkart-secures-2-95m-from-sistema-asia-fund/

Indian startup Lendingkart announced that it has raised $2.95 million in new funding from Sistema Asia Fund.

The investment comes days after the company raised $30 million in a Series D financing round led by existing investors including Fullerton Financial Holdings, Bertelsmann India Investments and India Quotient. The total funds raised by LendkingKart is now at $146 million.

The funds will be used to expand the company’s lending base, build technology and boost analytics capabilities.

Launched in 2014 by Harshvardhan Lunia and Mukul Sachan, Lendingkart offers loans to micro, small and medium-sized businesses, issuing more than 60,000 loans to more than 55,000 SMBs in 1,300 cities across India so far.

“Harsh and team continue to impress us with their energy, passion and tenacity in scaling Lendingkart to greater heights. Even during these challenging times, Lendingkart continues to grow and perform impressively across all metrics and we are privileged to partner with the company in their journey,” Dhruv Kapoor, partner, Sistema Asia Capital said, according to Inc 42.

“Micro and small businesses represent a vibrant yet underserved segment of the Indian economy. The support of all of our customers, investors and employees is empowering us to build the leading financial services platform for this segment,” Harshvardhan Lunia, co-founder and managing director of Lendingkart, said last week.

Lendingkart reported a three-fold increase in its consolidated revenue to $13.1 million for the fiscal year 2018, but its total expenses almost doubled, which led to widening losses for the company.

One of Lendingkart’s main rivals is Gurgaon-based Indifi, which raised a $21.32 million (Rs 145 crore) Series C round led by CDC Group earlier this week.  As part of the transaction, CDC Group received 71,08,870 Series C CCPS and 100 equity shares each at a price of Rs 140.67, adding up to an investment worth $14.71 million (Rs 100 crore) in Indifi.

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Latest Insights: 

The Which Apps Do They Want Study analyzes survey data collected from 1,045 American consumers to learn how they use merchant apps to enhance in-store shopping experiences, and their interest in downloading more in the future. Our research covered consumers’ usage of in-app features like loyalty and rewards offerings and in-store navigation, helping to assess how merchants can design apps to distinguish themselves from competitors.

https://www.pymnts.com/news/investment-tracker/2019/lendingkart-secures-2-95m-from-sistema-asia-fund/

 AppZen On The State Of Spend Auditing

https://www.pymnts.com/news/b2b-payments/2019/appzen-on-the-state-of-spend-auditing/

Firms auditing expenses through manual processes and outdated technologies risk missing the chance to flag erroneous or fraudulent submissions from vendors and employees.

Deploying technology — especially artificial intelligence (AI) — can streamline the auditing process and boost cost savings significantly.

As AppZen noted in a recent report titled “The State of AI in Business Spend,” companies that do not use AI audit only 10 percent of their spending.

The data was based on expense report, contract and invoice audit data from billions of transactions across hundreds of enterprise customers from April 1, 2019, through June 30, 2019, AppZen said.

Firms that do leverage AI to dig deeper (through deep learning and natural language processing) into their spending trends are, in fact, able to audit nearly all invoices and expenses, the report found.

Moreover, in terms of the larger picture, more than 96 percent of enterprise spend beyond that of payroll is related to accounts payable; 3.7 percent of the remainder is T&E related.

AI, according to the findings, can flag 8.7 percent of expenses as high risk, tied to duplicative spending or as being unauthorized.  Similarly, about 4 percent of invoices are flagged as high risk

In an interview, AppZen Chief Marketing Officer Jamie Barnett noted that “although AI technology is relatively new,  it’s triggering more interest because it’s able to complete the manual review that no one could (or wanted to do) previously.”

That comes against a backdrop where manual auditing has been the status quo, and where they may not have been aware of tech-driven solutions.

On average, the firms queried processed 200,000 expenses across the past quarter, and with more than 60,300 invoices processed per month, as many as 7 percent of those invoices were considered high risk due to inflated pricing (compared by AI to external market pricing data) or information mismatches.

AppZen also found that across every 10,000 expenses submitted, two contain regulatory violations and for every 10,000 invoices, one reveals a regulatory violation. Shedding some light on those violations, said Barnett, “we’ve seen it all, from gifts to sanctioned organizations, payments to foreign officials or politically-exposed people, to meals with healthcare professionals. Many would be difficult, if not impossible, to find without the help of AI.”

Asked about surprising findings amid the research, Barnett said that the data shows that in some cases AI has identified employees making purchases on their credit card, creating an expense report for reimbursement and submitting invoices to be paid by their accounts payable department.

In one example, Barnett told PYMNTS: “One example we found was an expense that was $45,000 for an event at a hotel. The employee was paid out, and so was the invoice. Conventional wisdom might tell you that this would have been caught, but in this case, it was approved, which goes to show how little oversight there is between expense and AP systems.”

Oversight becomes especially important as businesses are becoming ever more global in scope.  Employees are traveling more than ever and are submitting expenses from all over the world, she said. AI, she added, can enforce regulatory compliance and verify receipts across dozens of languages.

Embracing alternative solutions can pay off, she added, pointing to the fact that 85 percent of companies can automatically approve low risk spend, saving hours that can be redeployed toward other business functions and strategy.

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Latest Insights: 

The Which Apps Do They Want Study analyzes survey data collected from 1,045 American consumers to learn how they use merchant apps to enhance in-store shopping experiences, and their interest in downloading more in the future. Our research covered consumers’ usage of in-app features like loyalty and rewards offerings and in-store navigation, helping to assess how merchants can design apps to distinguish themselves from competitors.

https://www.pymnts.com/news/b2b-payments/2019/appzen-on-the-state-of-spend-auditing/

Japan’s LINE Pay Starts WeChat Pay Partnership 

https://www.pymnts.com/digital-payments/2019/japans-line-pay-starts-wechat-pay-partnership/

Japan’s LINE Pay has announced that it’s been integrating WeChat Pay to be used by participating merchants in the country, according to a press release. 

The LINE Pay Corporation, which operates LINE Pay mobile money transfer and a payment service on the LINE messaging app, plans to become the number-one payment service for tourism into the country. 

“Once system integration is complete, WeChat Pay users simply scan a Japanese LINE Pay merchant’s QR code to pay with their WeChat Pay balance. Since WeChat Pay is heavily used in China, the service will be particularly convenient for Chinese tourists visiting Japan,” the release said.

Stores and businesses that sign up for LINE Pay will be able to accept NAVER Pay and WeChat Pay as payment options in the LINE Pay Global Alliance, and there won’t be any need for a different registration or screening process.

They will also be able to manage all of the options in a single account. 

“Because the global alliance combines the steps to accept multiple payment options into a single, streamlined process, accepting LINE Pay payments from users in Japan and other payment options from international tourists has never been easier,” the release said.

Just like with LINE Pay, participating merchants aren’t going to be charged fees for the acceptance of WeChat Pay payments until July 31, 2021. 

The partnership is one-way, for the benefit of WeChat Pay users traveling to Japan, and LINE pay won’t be accepted at WeChat Pay stations in China. The new service will be available through a QR code, and LINE Pay wants to continue to increase users of the service in Japan. 

WeChat is one of the most popular payment services in the world, with more than 1.118 billion users. 

“This is especially convenient for tourists because they can use their accustomed payment service, and eliminate the hassle of buying yen or using other payment options just for their trip,” the release said.

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Latest Insights: 

The Which Apps Do They Want Study analyzes survey data collected from 1,045 American consumers to learn how they use merchant apps to enhance in-store shopping experiences, and their interest in downloading more in the future. Our research covered consumers’ usage of in-app features like loyalty and rewards offerings and in-store navigation, helping to assess how merchants can design apps to distinguish themselves from competitors.

https://www.pymnts.com/digital-payments/2019/japans-line-pay-starts-wechat-pay-partnership/

UK Labour Party Wants To Reopen Closed Shops In New Plan

https://www.pymnts.com/news/international/2019/uk-labour-party-wants-to-reopen-closed-shops-in-new-plan/

The opposition U.K. Labour party has announced a plan to let local government reopen closed storefronts that have been unoccupied for at least a year in an attempt to revitalize British high streets, according to a report by The Financial Times

The empty properties have become a blight on the streets and a beacon shining a light on how much local economies are struggling. According to statistics cited by the Times, around 11.8 percent of stores are empty — but the number fluctuates based on area, and in some places the number is as high as 20 percent, with the highest on record being 30 percent.

Jeremy Corbyn, the Labour leader, said that the country’s “once-thriving high streets are becoming ghost streets,” and that the abandoned storefronts are “a sorry symbol of the malign neglect so many communities have suffered.”

He said he wants the areas to reach the type of potential he knows they can.

“Labour has a radical plan to revive Britain’s struggling high streets by turning the blight of empty shops into the heart of the high street, with thousands of new businesses and projects getting the chance to fulfill their potential,” he said.

The plan would involve allowing authorities to take control of the properties’ management the same way that it takes control of residential management orders, putting vacant homes back onto the market and into use. 

The terms of the proposed deal did not reveal who would move into the properties. However, ownership of the buildings would not change. The proposed plan would affect about 29,000 units. 

There’s also no time limit on how long the local government will take over the vacancies. Also, if the landlords of the properties decide that they want to sell, then the orders would lapse. 

There are other proposals in place to help high street as well, including free WiFi in the centers of town, free bus travel for people under the age of 25, and the annual re-checking of business rates.

Jake Berry, the minister for the Northern Powerhouse, opposed the plan.

“Jeremy Corbyn would wreck the economy, tax small businesses and scare off the investment needed to help our high streets, meaning more boarded up shops and fewer jobs,” he said.

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Latest Insights: 

The Which Apps Do They Want Study analyzes survey data collected from 1,045 American consumers to learn how they use merchant apps to enhance in-store shopping experiences, and their interest in downloading more in the future. Our research covered consumers’ usage of in-app features like loyalty and rewards offerings and in-store navigation, helping to assess how merchants can design apps to distinguish themselves from competitors.

https://www.pymnts.com/news/international/2019/uk-labour-party-wants-to-reopen-closed-shops-in-new-plan/

 LendingClub CEO On Interest Rates, Credit … And The Bank Charter Quest 

https://www.pymnts.com/consumer-finance/2019/lendingclub-ceo-on-interest-rates-creditand-the-bank-charter-quest/

Interest rates hold particular interest these days.

Inverted yield curves. Fed fund rates. Even negative interest rates — in one bit of recent news on that point, a Denmark bank is effectively paying borrowers to take out mortgages, where rates are quoted in negative basis points.

Eventually, all of that has an impact on how much consumers and businesses pay when they borrow money.

Conventional wisdom may hold that alternative lenders — those companies that leverage data and analytics, along with various funding models matching investors with borrowers — could be harder hit than more traditional lenders by a volatile rate environment. It’s thought that lower rates and recession (or fears of recession) will cast a pall over borrowings, crimping consumer demand and investor returns, squeezing results at the alt-lenders themselves.

Scott Sanborn, LendingClub CEO, tells Karen Webster that conventional wisdom needs a gut check.

Sanborn tells Webster that, at least from where he and Lending Club sit, expanding origination services, honing cost efficiencies and introducing a broadened palette of credit offerings will help the company weather any near-term macroeconomic headwinds.

It’s an important point, because the data so far, even now, during a lingering trade war between the United States and China, and a global economic slowdown, the U.S. consumer remains solid. The latest retail sales reading was the strongest in months, up 70 basis points in July, beating expectations, and accelerating from the 30 basis points seen in June. The latest Bureau of Labor Statistics reports show wages up by mid-single-digit percentage points.

So at present, Sanborn said any recession is not likely to be consumer-led.

The fact that delinquencies have crept up a bit, and auto and student loans are up in recent reports is more a function of market dynamics than the consumers themselves, said Sanborn. He pointed to a supply-side crunch, following several years when LendingClub competitors jumped into the personal loan market late in the cycle and acquired customers without robust credit models in place. Those firms extended credit to borrowers who might have been the best choices to receive those loans. The current trends are moving toward what he termed a normalized base of loss, he told Webster.

Of the environment in general, he noted that as LendingClub’s investors are institutional in nature, the fact that the company can create a market each day and sell loans shows that investors are sanguine about the loans’ performance potential over the next three to five years.

Digging a bit into the characteristics of the LendingClub platform, he contended that the marketplace model is likely to continue to see healthy supply (in terms of investor capital) and demand (from borrowers) regardless of the rate environment.

He said LendingClub benefits from tapping into a pool of diversified investors, he told Webster, including scalable deep-pocketed investors with a broad range of risk tolerances.  Even in a downturn, he said, borrowers will desire credit and investors are going to be looking for yield.

“Which borrowers and which investors? Well, that will change,” he said.

The Rate Environment

As to how that will change: Amid rate cuts from the Fed and where at least some observers expect there to be more cuts in the offing, Sanborn noted that if nothing were else were to change (in terms of macro-economic shocks) and rates were to go down, Lending Club would benefit.

Credit card rates, he said, are at their highest level in 25 years, and with borrowers paying an average of 18 percent on those cards, alternative lending’s (and in particular LendingClub’s) value proposition remains healthy for both sides of the lending equation.

The cost of capital also decreases, so investors’ expectation of returns on their capital deployed comes down as well.

“If return expectations come down, we can lower the prices to borrowers and if we lower the prices the borrowers, even more of them find our offering attractive,” he said.

Looking Back To Look Ahead

Through the last few years and a rising rate environment, LendingClub has grown its originations by 60 percent since Sanborn took over as CEO three years ago.

In finetuning LendingClub’s operations and getting the firm ready for any number of economic outcomes, he said the company has been lowering its servicing and operating costs, embracing a variable model through the use of business process outsourcing.

Lower variable costs and lower fixed costs buffer LendingClub from shocks and help the company ramp up and ramp down on a short timeline, he said, adding that the past few years have proven the ability to navigate through a number of critics’ perceived threats.

Among those criticisms: LendingClub would not be able to deal effectively with a rising rate environment or with the entrance of banks as competitors. He countered that LendingClub, now on track to achieve profitability in the back half of this year, has indeed gained share and grown through a macro environment marked by rising rates. Also, he added, the online credit markets have seen the emergence of Citi, Barclays, and Goldman’s Marcus, the online direct bank that offers loans.

“We’re still here,” he said, with a nod toward Lending Club’s personal loan market share of 10.5 percent.

LendingClub and peers, he told Webster, have over the past few years been navigating a softening or normalization credit and personal lending environment. In reaction, he said, the company has trimmed higher risk customers, reducing credit by 20 percent over the past 18 months.

“We shifted the focus,” he said, “and we shifted to higher quality consumers — and we also shifted the mix of funding towards banks. This allowed us to keep competing and as rates went up, rates moved up more slowly for banks.  This made our assets attractive.”

The funding mix sourced from banks, he said, range from high yield savings and brokered certificates of deposits (CDs) to funding from community banks that have low-cost deposits.

As LendingClub has tightened credit, he said, of some of the perceived riskier borrowers and some investors expressed enthusiasm for the riskier loans.

“Essentially we said ‘well, why don’t we let them put their money where their mind is,’ ” said Sanborn.

Earlier this month, the company launched its Select Plus platform, which lets investors approve borrowers who fall outside the current LendingClub criteria. Sanborn described Select Plus on the firm’s Q2 earnings call as an incremental opportunity to expand its customer base and existing as the next step in its “product to platform” strategy broadening services and products embraced by consumers, turning them into repeat customers.

Said Sanborn of Select Plus, “it enables us to turn a ‘no’ on our platform into a ‘yes.’”

The Bank Charter

Sanborn also expanded on the news that LendingClub is exploring a national bank charter — where he said on the earnings call that the company would strive to maintain its marketplace model and support it with a marketplace bank.

The bank charter, he said on the call, would drive growth and margins and through the medium-term help secure a new source of low-cost funding.

As Sanborn told Webster, there is a perception that alternative lending models are not highly regulated and they’re benefiting from that lack of oversight.

However, he countered, nearly half of LendingClub’s funding comes from banks, and banks are required by the Bank Services Act to treat third parties as an extension of their operations. He said the company has built up the three lines of defense — compliance,  control and infrastructure — that are required of a bank. Obtaining a national bank charter, he said, adds benefit to the cost the firm already bears.

He said that, upon establishing the bank charter, LendingClub would be able to offer more products and services to customers, including the ability to save money.

In one illustration, he said that in saving $80 a month on an auto loan, half of that money could be put into a high yield savings account so that when an individual is done paying off their loan, they have a nest egg built up to safeguard against future financial shocks.

“We’ve got a working, viable business at scale and the addition of the bank only enhances the capability of that business to generate value,” he told Webster. “We’ve got a lot of the infrastructure and controls that the regulators would expect to see in a financial institution,” he said. “So we feel good about the eventual outcome. The timing is TBD.”

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Latest Insights: 

The Which Apps Do They Want Study analyzes survey data collected from 1,045 American consumers to learn how they use merchant apps to enhance in-store shopping experiences, and their interest in downloading more in the future. Our research covered consumers’ usage of in-app features like loyalty and rewards offerings and in-store navigation, helping to assess how merchants can design apps to distinguish themselves from competitors.

https://www.pymnts.com/consumer-finance/2019/lendingclub-ceo-on-interest-rates-creditand-the-bank-charter-quest/

How Merchants Can Reverse The Subscription Churn Curse

https://www.pymnts.com/subscription-commerce/2019/how-merchants-can-reverse-the-subscription-churn-curse/

In many ways, consumers are living in a golden age of subscription commerce, with streaming services like Netflix offering award-winning series’ and movies, while Amazon Prime provides members with access to a growing bundle of content and services.

These prominent platforms are raising the bar of consumer expectations at a time when the subscription commerce market as a whole is getting more crowded, with providers offering meal kits, wardrobe boxes and myriad other products. Yet, many of these providers do not seem to realize that consumers expect more from their subscriptions these days – and they have little patience for subpar service.

This is among the key findings of the Q2 2019 Subscription Commerce Conversion Index: The Evolving Subscription Marketplace, a quarterly assessment by PYMNTS, in collaboration with Recurly, of more than 160 businesses based on 47 key features. These features include registration time, billing and product reviews. This edition also offers insights from a survey of more than 2,100 consumers, with a special focus on their attitudes toward digital media and streaming services.

Our research shows that there is a widening gap between leading subscription providers and the rest of the pack. According to the Index, Middle Performers, which make up 76 percent of the sample, saw their index scores decline, from 63.5 in Q1 2019 to 63.2 in in Q2, continuing a downward trend since 2017. Meanwhile, the top 20 providers improved their scores, earning 82.8 in Q2 2019, up from 80.3 in Q1.

The pressures facing subscription-based services are clearly demonstrated in two of the largest segments of the market: streaming content, including platforms like Netflix and Hulu, and digital media, which includes services like Audible and digital editions of newspapers and magazines. According to our research, 26.7 percent of digital media subscribers and 7.3 percent of streaming subscribers plan to terminate their subscriptions within a year.

These disenchanted subscribers’ concerns come down to cost and value. More than 30 percent of streaming subscribers who plan to cancel their accounts say they either can’t afford their plans or that they are not worth it. These are also the leading factors driving subscription abandonment for digital media subscribers.

In this climate, consumers are acutely aware of any shortcomings in the experience subscription services offer. Those that have subpar experiences registering and using digital content platforms are more likely to cancel their accounts. For example, 42.4 percent of those planning to cancel their streaming subscriptions considered their registration experience “somewhat easy” at best, compared to 11.7 percent of those who plan to keep their subscriptions.

To learn more about how subscription-based services can win the loyalty of members in this crowded market, download the report.

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Latest Insights: 

The Which Apps Do They Want Study analyzes survey data collected from 1,045 American consumers to learn how they use merchant apps to enhance in-store shopping experiences, and their interest in downloading more in the future. Our research covered consumers’ usage of in-app features like loyalty and rewards offerings and in-store navigation, helping to assess how merchants can design apps to distinguish themselves from competitors.

https://www.pymnts.com/subscription-commerce/2019/how-merchants-can-reverse-the-subscription-churn-curse/

Why It’s Time To Break Mobile Commerce Stereotypes

https://www.pymnts.com/mobile/2019/time-to-break-mobile-commerce-stereotypes/

Don’t count out older consumers when it comes to mobile commerce – that’s one trend going forward into the 2020s that is important as the population continues to age. That said, there seems little question that younger consumers will continue to drive most changes in mobile, including its often complex place in the retail and shopping chain.

In a new PYMNTS interview, Sri Narasimhan, head of strategy, partnerships and business development at LISNR, dug into the findings of new research from his company and PYMNTS on the state of mobile commerce as retailers strive to fully incorporate the evolving technology into their operations and value propositions. The conversation came as the old concept of “omnichannel” retail shifts toward serving the consumer along all touchpoints of the retail journey – one that more often involves online, mobile and brick-and-mortar activity.

Generational Shift

“A generational shift is taking place. We are all digital, all the time now,” Narasimhan told PYMNTS. “U.S. consumers crossed a critical milestone this year. For the first time, they are spending more time with their mobile devices than they spend watching TV. Consumers are relying on their phones more than ever to save time, save money and save stress.”

Indeed, when it comes to retail, those are among the most important factors for any merchant that seeks to elevate their mobile commerce game and gain an edge over competitors via the use of smartphones and other mobile devices.

PYMNTS-LISNR research demonstrates how younger consumers are driving this shift in the history of retail. For instance, the frequency of mobile usage grows as age decreases. Millennials and bridge millennials use apps most frequently for planning in-store purchases – 47.9 percent and 42.8 percent, respectively. (PYMNTS defines bridge millennials as consumers between 30 and 40 years old, a group that is more likely to have a college degree, be employed and earn higher salaries than other consumers.)

But older consumers are also taking part in the mobile revolution. Nearly 61 percent of Baby Boomers and about 37 percent of senior citizens qualify as either “frequent” or “occasional” users of mobile devices when it comes to planning trips to stores. According to the PYMNTS research, “frequent users use mobile apps to aid with in-store purchases at least once a week. Occasional users use apps in such a manner once a month to a few times per year.”

As Narasimhan told PYMNTS, “It’s striking to see an unexpectedly high level of mobile app use across generations. Even the so-called laggard segments in this population are highly engaged with mobile apps.”

But merchants need to make their mobile experiences count. As the PYMNTS research shows, most consumers do not like having too many mobile apps on their devices. More specifically, 77.6 percent of consumers have installed five or fewer merchant apps on their phones. That said, the research also found that consumers “who make half or most of their purchases online tend to have more apps installed than respondents who make most or all of their purchases in physical stores.” Even more on point, “42.6 percent of respondents who shop mostly online and 44.5 percent of those who make half of their purchases online were ‘very’ or ‘extremely’ interested in downloading merchants’ apps, compared to 30.3 percent of respondents who make most of their purchases in physical stores.”

Merchant Lessons

Those findings carry significant lessons and messages for merchants going into the 2020s. “Every merchant out there is seriously rethinking their retail strategy,” Narasimhan said. “User preferences are changing, and merchants are digging deep into their core value propositions to play to their unique strengths.”

Such strengths typically include building a better in-store experience to meet those evolving consumer expectations for omnichannel retail, and meeting changing consumer demands from younger shoppers.

But when it comes to understanding user shopping preferences, nothing is set in stone. The mobile push is still relatively young, and merchants and consumers are still figuring out what works in specific situations with particular consumer groups. That experimentation will continue in 2020 alongside the growth of demonstrably engaging cross-channel experiences.

“There’s a lot of room to grow,” Narasimhan said. “It’s just that merchants have to find their sweet spot.”

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Latest Insights: 

The Which Apps Do They Want Study analyzes survey data collected from 1,045 American consumers to learn how they use merchant apps to enhance in-store shopping experiences, and their interest in downloading more in the future. Our research covered consumers’ usage of in-app features like loyalty and rewards offerings and in-store navigation, helping to assess how merchants can design apps to distinguish themselves from competitors.

https://www.pymnts.com/mobile/2019/time-to-break-mobile-commerce-stereotypes/

Can Email Change The Payments Game For SMBs?

https://www.pymnts.com/digital-payments/2019/can-email-change-the-payments-game-for-smbs/

Poor cash flow is a business killer. Almost half of all businesses fail within the first four years because of poor cash flow management. A big part of that ongoing struggle is the pervasiveness of checks as the primary method for how businesses, particularly small businesses, are paid — and the delays and uncertainty overpayment that can create.

However, efforts are picking up to move more of those payments from checks to digital methods. Also, that push was the main subject of a new PYMNTS discussion featuring Karen Webster and Farhan Ahmad, founder and CEO at Bento for Business.

Just a few weeks ago, the company launched its new service called Bento Pay. The tool enables business owners to send immediate, digital payments to creditors using only a stored email address — the company said the service is made possible via a new integration to the Dwolla ACH payment application programming interface (API).

When it comes to B2B commerce — specifically, commerce involving smaller operators in that space — the stakes and problems are enormous. The B2B small business commerce market is expected to reach $9 trillion in the U.S. by 2020. Even so, some 80 percent of small to medium-size businesses (SMBs) still use paper checks for payments. Bento Pay is designed, according to Ahmad, to eliminate second-guessing payment preferences or dealing with the hassles of paper checks. That, in turn, gives those businesses more transparency and greater control over their cash flows.

Take the example of the water cooler supplier to an office, as Ahmad did during the PYMNTS discussion. Say that the company’s bill is $100 monthly. Instead of writing a check — and wasting time associated with that paper-based task — the buyer of that water can use the email-based system to settle the bill. That reduces friction, of course, and the email serves as a familiar tool by which both parties to the transaction can get on board the digital B2B payments train. “For a seller, I get a choice about how I want to be paid, and in what timeframe,” he told Webster.

The interest is there, he said. When given the option to pay via check or digitally, businesses are increasingly opting to pay via those non-paper methods, he said, drawing upon this own company’s experiences.

Yet the check persists.

As Webster pointed out, the reason checks endure in the world of B2B payments is that they are a simple solution for those transactions between suppliers and buyers. All a seller has to know is the invoice number, the amount to be paid, the name of the business and the business address to make a payment via check. Digital payments, in general, tend to require more work — another challenge that, according to Ahmad, the Bento Pay email-based system is designed to overcome.

As he told Webster, the most significant disruptions in any space are often the most straightforward tools for complex but obvious problems — and that applies to B2B payments. Not only can the email-based system allow better control over the timing and method of those payments between suppliers and buyers, but the email serves mainly as a bridge to get suppliers on board to load their credentials. That, in turn, enables buyers to tap into those preferred methods to pay.

“We are basically building that supply directory without having to call up people and negotiate with them,” Ahmad said. “We are building it in a crowdsourced way by the virtue of solving a problem.” Even so, he made sure to point out more than once, the company’s intention was not to deliberately build out a supply directly — it was mainly a side effect of the Bento Pay offering. “We are not a workflow solution, either.”

When it comes to moving more B2B payments into the digital realm, there remains a massive amount of work, and it will take years before digital payments become the norm for most companies. However, that work is progressing, and if someone really can figure out a simple way to do this, that could help fuel more digital innovation and acceptance.

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Latest Insights: 

The Which Apps Do They Want Study analyzes survey data collected from 1,045 American consumers to learn how they use merchant apps to enhance in-store shopping experiences, and their interest in downloading more in the future. Our research covered consumers’ usage of in-app features like loyalty and rewards offerings and in-store navigation, helping to assess how merchants can design apps to distinguish themselves from competitors.

https://www.pymnts.com/digital-payments/2019/can-email-change-the-payments-game-for-smbs/

Happy 15th IPO Anniversary Google!

https://www.pymnts.com/google/2019/happy-15th-ipo-anniversary-google/

I wouldn’t be buying Google stock, and I don’t know anyone who would

Silicon ValleyEntrepreneur, Inventor and Futurist Jeffery Kaplan on Google’s 2004 IPO 

 One of the more amazing powers of overwhelming and undeniable success is its power to change the collective recollection of the past, even the relatively recent past. Alphabet, with an $800 billion+ market cap, hundreds of millions of active daily users, and stable duology with Facebook for the bulk of web’s advertising revenue has inarguably succeeded since IPO went off 15 years ago today (Aug. 19, 2004).

It has succeeded so commandingly that one can get a false impression that it was always a foregone conclusion that it would do so. However, Google’s winding history to its IPO 15 years ago had all kinds of places where it might have gone off the rails. Larry Page and Serge Brin, Google’s founders, didn’t much like each other at first. Once they got over that and built a search engine — they couldn’t find anyone interested in investing in it. They tried to sell themselves to Yahoo And AltaVista in 1998 for $1 million. Both took a pass.

The firm’s first big Cinderella moment was in August of 1998 shortly before Google incorporated when Stanford Professor David Cheriton and a business associate of his Andy Bechtolsheim each wrote them a check for $100,000.

Yahoo got a second, albeit more expensive bite at the apple in 2002, two years before Google went public, with months of negotiations between the firms. But, ultimately, Yahoo wanted to pay around $3 billion for Google, and then Yahoo CEO Terry Semel balked when Google firmly insisted on a $5 billion sale price.

“Five billion dollars, 7 billion, 10 billion. I don’t know what they’re really worth – and you don’t either. There’s no [expletive] way we’re going to do this!” Semel reportedly told his staff.

In fairness, in 2002 Yahoo’s entire market cap was $5 billion in the post dot com bubble burst world — and the Google deal was mainly a merger, not an acquisition. Yahoo’s annual revenue was approximately eight times of Google’s at the time. Less than five years later, Google had decimated Yahoo’s search advertising revenue, and by 2017 Google was the second-largest company on the planet, and Yahoo was basically no more, sold off to Verizon for, ironically, a little less than $5 billion.

However, while it is easy to judge the errors of the past as shortsighted — the problem of Semel’s thought, or later Jeffery Kaplan’s on the eve of the Google IPO 15 years ago, wasn’t immediately apparent. Google — later Alphabet — has been overwhelmingly successful.

At the end of its IPO 15 years ago, one might not have predicted that.

The Rocky Road To The Public Markets

Google had high hopes for its core mission on the eve of its IPO — a fact we know because of the investor letter they released just before it happened in 2014:

Our intense and enduring interest was to objectively help people find information efficiently. We also believed that searching and organizing all the world’s information was an unusually important task that should be carried out by a company that is trustworthy and interested in the public good. We believe a well-functioning society should have abundant, free and unbiased access to high-quality information. Google therefore has a responsibility to the world. 

Their ideals were high — the execution of the IPO itself was … less so.

The run-up to the IPO is also remembered as a comedy of errors — Google executives were reportedly “too casual” during the pre-IPO roadshow, bankers didn’t get how the search engine concept was going to make money,  the company was frequently panned and mocked in the media (“Giggle” was a commonly recurring nickname on The Drudge Report) and, perhaps most damagingly, the smartest people in the room in tech circa 2004 were all very sure Google had no future.

Then-Microsoft CEO Steve Ballmer predicted Google would trade flat for years, The New York Times reported that tech insiders were calling Google a  “sucker’s bet.”

“I’m not buying. … Past experience leaves the taste that a few people — never ourselves — will make out the first day, but that it’s not likely to appreciate a lot in the near future or maybe even the long future,” Apple co-founder Steve Wozniak told The Times.

Further adding to the IPO complication picture — the Google IPO adopted the somewhat unusual Dutch auction format. In a Dutch auction, investors enter their bids for the number of shares they want to purchase as well as the price they are willing to pay. The highest bidder gets their allotment until all shares are sold down. This, at the time, was found incredibly confusing by just about everyone.

Throw into the mix an incredibly ill-time interview with Playboy magazine, a  Securities and Exchange Commission investigation, the fact that at $100 per share the stock was already trading at roughly 40 times earnings and the fact that tech stock on the Nasdaq spent most of 2004 in the basement — and it is no small wonder that the run-up to the IPO is often remembered as a catastrophe that could have quickly sunk Google.

Ultimately, however, the run-up was worse than the experience itself. When the IPO went off on Aug. 19, 2004, Google brought in $1.8 billion and ended up pricing 19.6 million shares at $85 — meaning it just cleared the low end of its revised price expectation of $85-$95.

It was not the result  Google had hoped for — the desired outcome was to sell 25.9 million shares somewhere between $108 and $135.  However, Google did manage to end the day with an 18 percent bump to a stock price of $100.34.  Wasn’t the wholesale blowout some had hoped for before the wind-up went so wrong, but it wasn’t quite the disaster some had forecast either.

The Next 15 Years

So, of course, a stumbling beginning didn’t end up being all that predictive. By the end of the year, Google’s stock price had doubled. By early 2006 Google’s share of the search market had grown to 67 percent, while Yahoo’s had fallen to less than a third.

Remember Ask Jeeves?

That’s OK, no one else did either within three years of Google’s IPO.

Also, Google is no longer the same company it was during the 2004 IPO — starting with that it is no longer Google at all — as of 2015 it became Alphabet and Google became sub-branch. The expansions have rolled in fast and frequent since then: in 2006, it bought YouTube and became a media company; in 2008, it launched the Android operating system for mobile; in 2011, it launched its third incarnation of a wallet and began its long, twisty road through the payments ecosystem; in 2016, it launched the Google Home smart speaker; and earlier this summer, it launched its newly redesigned shopping program.

And that, of course, is just an abbreviated list.

The moral of the story is that the little search engine no one wanted and almost no one understood at first, the one that kind of flubbed its initial public offering has, 15 years later, proved to the world the real value of building the best search engine. One might end up creating the home page for the global internet around that search function — and get an opportunity to build an entire and very sticky consumer ecosystem around it.

That part is a much steeper hill to climb, now 15 years later and where the competition for search isn’t Yahoo or Ask Jeeves or even Bing, but Amazon, merchant aggregators and, increasingly, voice. Exactly what the next 15 years of Google is all about.

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Latest Insights: 

The Which Apps Do They Want Study analyzes survey data collected from 1,045 American consumers to learn how they use merchant apps to enhance in-store shopping experiences, and their interest in downloading more in the future. Our research covered consumers’ usage of in-app features like loyalty and rewards offerings and in-store navigation, helping to assess how merchants can design apps to distinguish themselves from competitors.

https://www.pymnts.com/google/2019/happy-15th-ipo-anniversary-google/

Palestinian Terrorist Group Uses Bitcoin To Raise Money

https://www.pymnts.com/blockchain/bitcoin/2019/palestinian-terrorist-group-bitcoin-money/

Hamas, the militant Palestinian group, has come up with a new way to raise funds for its terror campaigns: bitcoin.

The New York Times reported that the latest version of a website set up by the group’s military wing, known as the Qassam Brigades, provides every visitor with a unique bitcoin address to allow them to send the digital currency so that the donations are nearly impossible for law enforcement to trace.

The site is available in seven languages and also features a video that explains how to acquire and send the digital currency without authorities catching on.

This latest report follows recent warnings by government authorities and organizations about an increase in Islamist terrorist organizations using bitcoin and other digital coins to raise funds.

“You are going to see more of this,” said Yaya Fanusie, a former analyst with the Central Intelligence Agency who now works as a consultant on criminals using cryptos. “This is going to be a part of the terrorist financing mix, and it is something that people should pay attention to.”

While Hamas has traditionally received hundreds of millions of dollars of donations from foreign governments like Qatar, and the Islamic State in Syria was able to obtain money through taxes and fees collected in the territories it controlled, both organizations have lost access to a significant portion of money through various sanctions.

“They seem to be reacting to all the economic sanctions by saying, ‘We are going to try using Bitcoin,’” said Steven Stalinsky, the executive director of the Middle East Media Research Institute (MEMRI), a nonprofit that tracks and translates communication from terrorist groups.

MEMRI recently exposed a video by a leading sheik with one of the biggest terrorist groups in Syria, Hayat Tahrir al-Sham, where he explained how bitcoin could be used for charitable donations.

And online researchers have recently discovered campaigns by Syrian militants that requested donations be sent to bitcoin addresses posted on social network Telegram.

“I think we are still in the experimentation phase for terrorist groups — they are trying to figure out how best to do this,” said Juan Zarate, who was the deputy national security adviser for combating terrorism under President George W. Bush and is now an adviser to Coinbase. “What’s a challenge is that you see them continuing to experiment.”

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Latest Insights: 

The Which Apps Do They Want Study analyzes survey data collected from 1,045 American consumers to learn how they use merchant apps to enhance in-store shopping experiences, and their interest in downloading more in the future. Our research covered consumers’ usage of in-app features like loyalty and rewards offerings and in-store navigation, helping to assess how merchants can design apps to distinguish themselves from competitors.

https://www.pymnts.com/blockchain/bitcoin/2019/palestinian-terrorist-group-bitcoin-money/

UK’s Labour Party Wants To Take Over Vacant Retail Properties

https://www.pymnts.com/news/retail/2019/uk-labour-party-wants-to-take-over-vacant-retail-properties/

The UK’s Labour party wants to allow local authorities to take over vacant properties in an effort to give the country’s retail market a boost.

The stores being taken over have been vacant for at least 12 months, according to the Financial Times. Around 11.8 percent of stores around the UK are currently vacant, according to the Local Data Company. In some towns the rate is over 20 percent, with the highest figure coming in at 33 percent. An estimated 29,000 retail units have been vacant for 12 months.

Labour leader Jeremy Corbyn was expected to reveal the plans this weekend, saying that the UK’s “once thriving high streets are becoming ghost streets” and boarded-up shops have become “a sorry symbol of the malign neglect so many communities have suffered.”

“Labour has a radical plan to revive Britain’s struggling high streets by turning the blight of empty shops into the heart of the high street, with thousands of new businesses and projects getting the chance to fulfill their potential,” he is set to say.

There was no revelation as to who would occupy the properties once they have been taken over.

This is just one of the party’s plans to revitalize the country’s retail sector. Other ideas include an annual revaluation of business rates, free WiFi in town centers, free bus travel for under-25s, and ending ATM charges and Post Office closures.

In response to the announcement, Jake Berry, the minister for the Northern Powerhouse, said that the government was focused on delivering Brexit in order to “get on with leveling up opportunities across our country and breathe new life into high streets and town centers.”

“Jeremy Corbyn would wreck the economy, tax small businesses and scare off the investment needed to help our high streets, meaning more boarded-up shops and fewer jobs,” he added.

And Ion Fletcher, director of finance and commercial policy at the British Property Federation, said that while the organization supported helping struggling town centers, allowing local authorities to reopen shops “simply shifted the challenge of finding an occupier from the private to the public sector.”

He explained that the idea raised “worrying questions about what rights property owners would have in such cases. Many landlords are happy to let out property on a meanwhile basis with little or no rent, but the sad fact is that in many places property owners find it difficult to find an occupier even at zero rent.”

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Latest Insights: 

The Which Apps Do They Want Study analyzes survey data collected from 1,045 American consumers to learn how they use merchant apps to enhance in-store shopping experiences, and their interest in downloading more in the future. Our research covered consumers’ usage of in-app features like loyalty and rewards offerings and in-store navigation, helping to assess how merchants can design apps to distinguish themselves from competitors.

https://www.pymnts.com/news/retail/2019/uk-labour-party-wants-to-take-over-vacant-retail-properties/