As Sharing Services Face Backlash, Payments Takes A Bigger Role

Here’s some advice for your next, or first, trip to New Orleans (home of the PYMNTS Bureau of Crawfish): If you happen to be staying in an Airbnb and want to get in good with the locals, maybe just tell them you are staying in a hotel.

New Orleans is the site of one of the most significant and ongoing backlashes against the sharing economy, a global trend that probably won’t kill off Airbnb and other major players, but could create more hassles and pressures for some companies struggling to make it in this big, crowded market.

The backlash goes beyond rooms, apartments and houses to include instruments of transportation, which is among the latest areas of the digital economy to come under the scrutiny of politicians and regulators. At the same time, payments technology is advancing in the shared economy world, providing a counterforce of sorts.

Sharing Backlashes

In New Orleans earlier this year, city officials banned short-term rentals of homes “in historic residential neighborhoods, (with) none at all (allowed) in the Garden District and the French Quarter,” according to a local news report.

Proponents of the ban said such rentals contribute to higher rents for locals and an overall lack of affordable housing. Opponents said short-term rentals such as those offered via Airbnb help bring more tourism dollars not only to the city at large, but also to neighborhoods that tourists might not otherwise visit otherwise – resulting in local property owners getting a cut of that tourism pie.

Similar backlashes are playing out elsewhere – and not just for rental property.

Shared scooters have functioned as a reliable source of controversy as transportation transitions into more of a service offering. Among opponents’ main concerns? Storage of scooters along sidewalks, and potentially too many scooters getting in the way of pedestrians, bikes and even automobiles in crowded urban centers.

Those controversies have notably played out in San Francisco, though other cities, including Chicago and Los Angeles, are going through them at their own pace.

In Los Angeles, for instance, “scooters have been set on fire, tossed off balconies and even dumped into the ocean – a backlash that is a mélange of anger over so many tech companies popping up in Southern California and anger that they’re clogging up public spaces,” according to a newspaper report. “While the scooters have been billed as affordable and environmentally friendly transportation options, in California some complained about collisions or near-collisions with scooter riders on bike paths and streets.”

In Chicago, the warmer weather means the return of big outdoor music events and smaller neighborhood summer street festivals, both of which in the past have been places where scooter companies and others involved in the sharing economy have promoted their services and products – and places where controversy has originated in the past.

Role of Payments

None of this is meant to imply that the collective power of all these backlashes will knock the sharing economy off its track toward more growth. In fact, it is expected to produce global revenue of $335 billion by 2025, up from $15 billion in 2015, according to one recent estimate. And investors are still pouring capital into companies operating in the sector. One example is Drivezy, the car-sharing startup based in India, which is in the process of raising $100 million in equity funding and $400 million in asset financing as it seeks to expand.

Meanwhile, payments are playing a role in bringing more consumers into the sharing economy, and helping businesses operate more efficiently and profitably. Examples came from the February 2019 Payments and the Platform Economy Playbook, a collaboration between PYMNTS and Yapstone, that the sharing economy was in focus.

The research spotlighted HomeAway, the vacation rental marketplace, and the need to ensure trust in transactions that take place across the platform. Compliance and regulatory issues remain top of mind, of course, but so does the overall experience of both buyers and sellers. To facilitate that trust in the travel relationship beyond security concerns, HomeAway – which is part of Expedia Group – employs a global team of engineers, data scientists and customer support agents who are focused on educating customers across the eCommerce platform, and to improve the payment experience.

As sharing economy platforms expand globally and become more popular, the pressure is on to cater to consumers and to offer seamless experiences for both buyers and sellers to remain competitive. This means localizing their services and not taking a one-size-fits-all approach when it comes to payment methods and user experiences. This approach can likely help some companies taking part in the sharing economy weather any new backlashes to the business model and its impacts.

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Domino’s To Offer In-Car Ordering In Connected Cars

Drivers craving pizza while on the road will soon be able to order Domino’s right from the touchscreens in their cars, according to reports.

Beginning this year, millions of connected cars with compatible touchscreens will have the Domino’s AnyWare ordering platform loaded on them. Domino’s partnered with Xevo for the service, which will be available in some GM and Hyundai models.

The touchscreen platform can also find nearby stores and call in orders through the vehicle interface. Other brands like Starbucks and Dunkin’ have also said they will offer similar platforms.

According to IHS Markit, by 2024 there will be some 75 million vehicles with display screens, and many of them will be compatible with food ordering platforms.

Domino’s same-store sales are higher than the pizza industry average, but it didn’t meet analysts’ expectations in Q4. Pizza Hut is also reportedly working on vamping up its digital services, and recently announced a partnership with FedEx to test delivery robots.

Domino’s has been pushing into all kinds of new technologies, including ordering from smartwatches, TVs, Alexa and Google Home. It also delivers to non-traditional locations like zoos, beaches and park benches. In addition, the chain recently partnered with addressing company what3words to deliver to places and regions without easily discernible address locations.

“At Domino’s, we want pizza ordering to be simple and always within reach, no matter where a customer happens to be,” Domino’s Director of Digital Experience Chris Roeser said in a release. “This new AnyWare platform will make ordering pizza easy, whether you’re in the car waiting for the kids to finish soccer practice or you’re on your way home from work.”

Customers will also be able to place repeat orders and follow their pizzas’ progress on the screen.

“We’re excited to work with Domino’s, and to have them join the Xevo Market platform, which is already live in millions of vehicles on the road today,” Xevo CMO Brian Woods said in the release. “Domino’s is the world’s largest pizza company, and they’ve always been technological innovators. Xevo Market makes it possible for Domino’s to reach people directly in their cars, streamlining mobile ordering to help busy consumers save time.”

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Venmo gets aggressive on overdrawn payment accounts: report

Venmo, the digital payments unit of PayPal Holdings Inc., is threatening to send debt collectors after users who carry negative balances on their accounts, according to a new report in The Wall Street Journal.

The report says that Venmo has also changed its user agreement to allow it to recover funds from customer’s other PayPal accounts.


Topics: Mobile Apps, Mobile Payments


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FamilyMart Unveils Cashless App; Victoria Taps Into Mobile Transit Payments

Welcome to The Axis, your late look at payments news from around the world. Coverage includes the acceptance of smartphone payments for transportation in Australia. Finserve is looking to grow WeChat Pay’s and Alipay’s presence in Africa, Taiwan’s FamilyMart unveiled a “My Famipay” cashless payment app, and an LM Research survey discovered that over 60 percent of businesses in Croatia prefer cash payments.

Passengers on the Victorian government’s public transportation network will be able to pay for their trips via their smartphones by the close of the week, ZDNet reported. Through the myki mobile app, riders will be able to use their Android smartphones for payments. The system can be used at train stations and on Melbourne trams, as well as buses that are enabled for myki. Minister for Public Transport Melissa Horne said, according to ZDNet, “Mobile myki will make topping up and touching on quicker, and [traveling] easier.” The technology, which taps into Google Pay, was created with Google and NTT Data.

In other news, a regional financial institution in Kenya is looking to grow Alipay’s and WeChat Pay’s presence in Africa, Xinhua reported. Finserve Africa Managing Director Jack Ngare said, “We are currently at advanced stages of rolling out WeChat Pay and Alipay to merchants in the Democratic Republic of Congo (DRC) by the end of the year, and thereafter to additional Africa markets.” Finserve Africa is a wholly-owned subsidiary of Equity Bank, which also counts subsidiaries in Uganda, Tanzania and Kenya, among other countries. Through the payment gateway service, merchants will be able to take payments from Alipay and WeChat users in Central and East Africa.

On another note, Taiwan’s FamilyMart convenience store company unveiled a cashless payment app called “My Famipay” for smartphones, Taiwan News reported. Moreover, users can tap into the app, which will be available to Cathay United Bank or Taixin International Bank cardholders, to transfer gifts or tap into limited-time offers. Users who download the app and make a purchase with the service amid the product’s first public rollout phase will receive a reward, such as tea or coffee.

And an LM Research survey made for Auka, a Norwegian firm, found that over 60 percent of businesses in Croatia prefer cash payments, Total Croatia News reported. However, close to eight in 10 – or 77 percent – forecast that mobile payments will “prevail” during the decade to come. Roughly seven in 10 Croatian business take credit cards, and slightly more than one-third of firms accept contactless payments via mobile phone. Nearly half – 45 percent – of Croatian business that don’t currently accept mobile payments plan to consider doing so over the next year.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our March 2019 AML/KYC Tracker Report 

Consumer Utility and Telecom Payments Can Help Lenders Reach Underserved Population, Report Says

A person’s utility bill can reveal a lot about their financial profile. And many banks and alternative lenders are using this data to underwrite loans, Sanjoy Malik, CEO and co-founder of utility data provider Urjanet, told Bank Innovation.  “A consumer’s utility payment history reveals obvious things like does the person pay bills on time? How …Read More

Apple launches mobile payment card with Goldman Sachs, Mastercard

Apple has announced a major expansion into the digital payments space with Apple Card, a payment card built directly into the Apple Wallet app on iPhone that allows users to manage their finances on the device.

The payment system, developed with Goldman Sachs and Mastercard, will be available this summer and will give users cash back on purchases. Apple has developed a titanium card for account holders to use at merchants that don’t accept Apple Pay. The card bears no number, expiration date, CVV code or signature, making it more secure than traditional cards.

“Apple Card builds on the tremendous success of Apple Pay and delivers new experiences only possible with the power of iPhone,” Jennifer Bailey, vice president of Apple Pay, said in the announcement. “Apple Card is designed to help customers lead a healthier financial life, which starts with a better understanding of their spending so they can make smarter choices with their money, transparency to help them understand how much it will cost if they want to pay over time and ways to help them pay down their balance.”

The card charges no late fees, over-the-limit fees, annual fees or international fees. And the app can show users what their interest payments would be for a purchase depending on how long they plan to spread out the payments.

Users get 2 percent cash back on regular purchases and 3 percent cashback on purchases from Apple.

Customers can sign up for the card in minutes through the Wallet app on their iPhone and use the service right away in retail stores, in apps or at online sites. Customer service is available 24 hours a day using Messages and customers can get real-time transaction and balance information using the Wallet function.

Also today, Apple announced a new subscription-based television service starting in May called Apple TV Plus, which will feature original programming from major artists such as Stephen Spielberg, Jennifer Anniston, Oprah Winfrey and Reese Witherspoon.

Customers will be able to buy premium services à la carte. Pricing has not been announced for the video service, which will be available via iPhone, iPad and Apple TV.

Apple lastly introduced Apple News Plus, an app-based subscription service that allows users to read more than 300 popular magazines, newspapers or digital publications for $9.99 a month.


Topics: Card Brands, In-App Payments, Mobile Apps, Mobile/Digital Wallet, Mobile Payments, Retail


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Stay On CFPB Payday Lending Rule Upheld

A federal judge late last week ordered a stay on the August 2019 compliance date tied to the “payday lending rule” mandated roughly two years ago by the Consumer Financial Protection Bureau (CFPB).

As reported late last week across outlets such as American Banker, the rule had been drafted under the tenure of Richard Cordray, who had served as the previous director. The new Director Kathleen Kraninger has proposed eliminating one of the components of the rule, which put in place new underwriting requirements for lenders (such as verifying borrowers’ ability to repay the payday loans). The rule also had another component, focused on how often a lender can try to debit payments from a customer’s bank account.

The ruling, per U.S. District Judge Lee Yeakel, means the stay (which has been in place since November), well, stays, resulting in the delay of the rule’s implementation. The judge wrote in his March 19 ruling that he had not received a request to lift the stay.

The Kraninger-proposed rollback of the aforementioned underwriting requirements came last month, and several trade groups, such as the Community Financial Services Association of America, had asked Judge Yeakel to delay compliance dates until the underwriting rollback had been completed. The CFPB had asked the court to wait until a separate case had been decided. That case, in which a payday lender has challenged the CFPB’s very constitutionality, is still with the Court of Appeals for the Fifth Circuit.

Separately, but also germane to the CFPB, Kraninger said late last week that she would lengthen the terms of members of the Consumer Advisory Board and three other committees that advise the Bureau from one year to two. In addition, noted The Washington Post, half of the committee’s existing members can continue serving, and the number of in-person board meetings is being boosted from two to three annual meetings.

Beyond the CFPB, and at the state level in Illinois, a state Senate committee last week voted to approve legislation that would keep state banking regulators from punishing financial institutions, including banks and credit unions, for doing business with medical marijuana enterprises. Those firms, noted The Chicago Sun Times, would still be subject to federal laws (and possible prosecution under those laws).

“I would say this is kind of the grey area we’re in right now,” Jerry Peck of the Community Bankers Association of Illinois told the Senate Financial Institutions Committee, as reported by the Times. “This is still illegal federally.” The bill, known as Senate Bill 2023, is co-sponsored by Senator Toi Hutchinson and Michael Frerichs, state treasurer. Frerichs testified to the Committee that “there haven’t been wholesale raids of banks doing business with legal entities in their states, but these people are conservative by nature. They’re worried that could happen, and what that would mean for the overall concerns of their banks.” He added that “some have found a financial institution – a bank or credit union – that will accept deposits, allow them to write checks, but some have not, and they’re operating out of cash, putting all their money into safes and handling payroll with duffel bags full of cash, which we think is dangerous. That’s the problem this legislation is looking to solve.”

Moving down under, in Australia, Reuters reported the country’s new budget has earmarked an additional $550 million (in Australian dollars) to enhance regulatory efforts focused on the financial services sector. Treasurer Josh Frydenberg said over the weekend that the funds will be allocated with $400 million Australian dollars slated for the Australian Securities and Investments Commission, with the remaining tally to be given to the Australian Prudential Regulation Authority over the next four years.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our March 2019 AML/KYC Tracker Report 

Apple Debuts Apple Card, A Virtual (And Physical) Credit Card

And so a tech giant gets into the credit card game.

And not just any tech giant – it’s Apple, the company whose payment services were touted (by at least some) as a credit card killer.

News came Monday (March 25) that Apple – specifically, through its payments service Apple Pay – has launched the Apple Care credit card.

As reported, the company said users sign up for the card through their iPhone, can get approval through the device and can begin using the card immediately. The card is stored in the company’s Wallet application, and can keep users informed of transactions and minimum payments due, while helping them track spending habits.

Beyond the virtual card, CNET reported, the company is also rolling out Apple Card as a physical, titanium card, launching in partnership with Goldman Sachs and Mastercard (which will be responsible for payments processing).

In a Monday statement, Mastercard’s President of North America Craig Vosburg said the card is one for “our digital era,” and that at the core of the new Apple offering lies Mastercard’s token and M Chip technologies, which store the card on digital devices without exposing sensitive data. “Mastercard brought token services to Apple Pay in 2014, and late last year announced its strategy to enable token services on all cards by 2020,” according to the statement.

Among other virtual card features announced by Mastercard are cashback rewards of 2 percent, which are paid out each day the card is used for transactions. For the physical card, the cash back rate is 1 percent.

The company has said there are no late fees, international fees or penalty interest rates. There are also no credit card numbers, required signatures or CVV codes, according to The Verge – as that information is already stored in the Wallet app.

Said CEO Tim Cook at an announcement heralding the card, “while we all need them, there are things about the credit card experience that could be so much better.” The launch comes, notably, after Apple Pay did not show quite the adoption rate some observers had expected. CNET pointed to the PYMNTS stats showing that fewer than a third of iPhone owners have used the services once or more.

The cross-ties with Goldman come after reports earlier this month that Goldman would look to continue its push toward making inroads with a broader audience beyond wealthy and corporate clients.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our March 2019 AML/KYC Tracker Report 

WEX Continues M&A Strategy With EG Fuel Card Takeover

After posting better-than-expected fourth-quarter earnings results, commercial payments firm WEX announced plans to acquire the fuel card assets of EG Group, Go Fuel Card.

In a press release on Monday (March 25), WEX said it will acquire Go Fuel Card, the fuel card operations of the European fuel station EG Group. The unit, based in the Netherlands, will broaden WEX’s fleet payments operations across Europe. Go Fuel Card has a presence in the Netherlands, France, Belgium and Luxembourg, servicing smaller businesses and large enterprises.

“The addition of the Go Fuel Card business will strengthen our position in Europe by expanding our footprint in attractive markets and broadening our card acceptance through an independent, proprietary card network,” said WEX President of Global Fleet Scott Phillips in a statement. “I am also extremely excited about the opportunity to partner with EG Group to expand our fleet business throughout EG locations in the U.S., Europe and Australia. This is an attractive business that projects further reductions to our sensitivity for retail fuel prices, while providing us a strong pathway for organic growth and value creation over time.”

WEX did not reveal financial details of the takeover, but said it plans to close the acquisition in the second quarter of 2019.

The company released its 2018 Q4 earnings results on Monday (March 25), posting $381.2 million in revenues, a 14.9 percent year-over-year increase. Rising fuel prices contributed $13.5 million in revenues for the company, according to Zacks reports, with WEX now having 10 consecutive quarters of double-digit, top-line growth.

Its fleet solutions unit saw a 15 percent year-over-year increase, the publication said, with the firm processing 139.5 million fuel transactions in the quarter.

M&A is a key component of WEX’s growth strategy. Earlier this year, the company completed its acquisition of corporate bill payment firm Noventis after announcing a deal in October that enables WEX to provide virtual cards for corporate bill payments. The company also recently acquired Discovery Benefits, Inc.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our March 2019 AML/KYC Tracker Report 

Lyft’s Losses Ahead Of IPO To Test Markets’ Tolerance With Startups

Lyft, the ride-hailing startup that’s going public via an initial public offering later this week, is shaping up to have lodged the most losses in the run-up to an IPO.

According to a report in The Wall Street Journal citing S&P Global Market Intelligence, Lyft has had losses of $911 million in the twelve months leading up to its IPO, which is higher than any other startup in the U.S. that went public. Uber, noted the paper, is losing more than $800 million each quarter. Uber is going public at some point in 2019.  The Lyft IPO will be a big test for investors’ appetite for startups that aren’t making money since the dot com boom and subsequent crash. In the 1990s, startups with steep losses were going public left and right, raising billions of dollars.  Many of them went on to implode. Fast forward to 2019, and lots of internet-based companies are eyeing the public markets again.

Lyft isn’t the only heavily investor-backed, money-losing startup that will debut on the public markets this year. In addition to Uber, WeWork, which manages office space, plans to go public later this year and has had losses of $1.2 billion in the first nine months of last year, reported The Wall Street Journal.  These losses have been made possible because of the level of venture capital the startups are able to raise. With promising revenue growth, investors bet the spending will be worth it. But it’s not clear how these companies will fare if the economy goes into a recession, since many weren’t around when the last one hit.  “Many of their business models have not been tested fully,” Ilya Strebulaev, a Stanford University business professor told The Wall Street Journal. “I would not be surprised if many of these companies would not be as successful as investors expect them to be.” The paper noted Groupon, Moderna, Snap and Vonage Holdings, four of the five companies with the biggest losses ahead of their IPO, went on to perform poorly.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our March 2019 AML/KYC Tracker Report 

InfinityAR Is Being Acquired By Alibaba’s Israel Machine Vision Laboratory

InfinityAR, the Israeli mixed reality platform company, announced Monday (March 25) that it’s being acquired by Alibaba’s Israel Machine Vision Laboratory.

In a press release, the company said that it had been partnering with the Israel Machine Vision Laboratory for three years, working together to accelerate the development of frontier technologies such as artificial intelligence, augmented reality and computer vision.

“We look forward to be joining Alibaba, a world-class innovative global technology company, and as part of the company’s Israel Machine Vision Laboratory,” said Motti Kushnir, chief executive officer and co-founder of Infinity Augmented Reality, in the press release. “Alibaba’s expertise in turning technologies into next-generation products will be a great platform for the future technologies of computer vision, AR and AI.”

Once the deal, terms of which were not disclosed, is complete, InfinityAR’s research and development team will work from Alibaba’s lab in Israel. It’s one of the labs the Chinese eCommerce giant rolled out to explore computer vision and navigation. During the past year, InfinityAR said Alibaba’s lab has been partnering with Tel Aviv University to advance studies in video analysis and machine learning.  “Alibaba is delighted to be working with InfinityAR as one team after three years of partnership. The talented team brings unique know-how in sensor fusion, computer vision, and navigation technologies. We look forward to exploring these leading technologies and offering additional benefits to customers, partners and developers,” said Prof. Lihi Zelnik-Manor, head of Alibaba Israel Machine Vision Laboratory.

 Alibaba’s purchase of InfinityAR is one of many in recent years the eCommerce giant had made to branch into different businesses. With eCommerce in China getting saturated, Alibaba has set its sights around the world to expand.  That’s not to say Alibaba isn’t growing, just at a slower pace than in years past. For 2018 Alibaba had revenue growth of 41 percent to 117.3 billion yuan.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our March 2019 AML/KYC Tracker Report 

Yunji To Raise As Much As $200 Million Via IPO

Yunji, the Chinese eCommerce company that has a link to WeChat, the popular China-based messaging app, is raising as much as $200 million via a initial public offering in the U.S.

Reports that cite a Securities and Exchange Commission filing from last week say the Chinese eCommerce startup is aiming to raise money as it expands its business. In the fall Reuters reported Yunji was preparing to go public via an initial public offering (IPO), aiming to raise $1 billion at a valuation of between $7 billion and $10 billion.

Yunji capitalizes on apps like WeChat to reach and sell to people. Yunji makes most of its money from selling to users. Its rival Pinduoduo, which raised $1.63 billion via a listing on the Nasdaq, makes the majority of its money from advertising fees levied on merchants, noted the reports.  Yunji is behind Pinduoduo in terms of revenue and users. Yunji ended 2018 with 23.2 million buyers compared to its rival’s 272.6 million monthly active users, according to reports. It counts CDH Investments and Huaxing Growth Capital as investors.

While Yunji has seen fast growth, it hasn’t been scandal free. In 2017 the company was fined $1.4 million by the Chinese government for allegedly engaging in pyramid selling. The company apologized and vowed to overhaul its marketing strategy. From the beginning, Yunji charged people a fee to join the eCommerce site — and for the fee, they were able to take advantage of discounts and perks. They were also granted permission to open their own tiny store on the site. They got paid for selling products to others and recruiting new members to the eCommerce platform. That enabled it to create a big network at a fast rate, but it raised the ire of regulators in China.  Despite the overhaul of its marketing strategy,  reports say Yunji warned in its prospectus that China could change what constitutes a pyramid scheme at any time, which could be a risk to the company’s business.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our March 2019 AML/KYC Tracker Report 

Venmo Going After Customers With Negative Balances

Venmo, the digital money transfer company owned by PayPal, is going after consumers who have a negative balance in their accounts.

According to a report in The Wall Street Journal, citing customer service emails reviewed by the paper, Venmo is threatening to involve debt collectors to pursue customers with negative balances. It also recently overhauled its user agreement to state that it can recover money owed from customers from their other PayPal accounts.

The move comes as the unit of PayPal continues to suffer from losses. It also underscores the challenges that banks and money transfer companies face in making payments faster and more convenient while also earning a profit.

According to the report, the majority of the $62 billion in Venmo’s payment activity is derived from money transfers, for which the company does not charge a fee. Instead, Venmo assumes the cost of processing them, which hampers its ability to earn profits.

Amid its latest actions to recover the money it is owed, Venmo is facing a backlash among customers who argue that the company is going after the wrong users. Customers owing as high as $3,000 down to as little as $7 were threatened with debt collection efforts. The paper reported that some of the customers who received threats from collectors had negative balances only because someone had taken over their account, or because they were tricked into sending a payment to a scammer.

Venmo declined to disclose how many times it has sent out collection letters, or whether it followed through on them. A spokeswoman did confirm Venmo changed its user agreement in order to access other PayPal accounts. “These changes, which have been a PayPal policy for a while, are a result of our efforts to drive policy consistency across platforms,” the spokeswoman told the news wire in an email.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our March 2019 AML/KYC Tracker Report 

As Biometrics Advances, Laws And Regulations Try To Catch Up

Biometrics are increasingly being relied upon to secure payments and commerce while making transactions more seamless for consumers, a trend that seems all but certain to increase in the coming months and years. But the laws and regulations governing biometrics have yet to catch up to the reality of their use, and that’s perhaps most apparent when it comes to two recent, high-profile cases in Illinois.

The Illinois Biometric Information Privacy Act, commonly known as BIPA, not only stands as the strictest biometric privacy law in the U.S., but also serves as the model for other laws that have been crafted or are being considered by other states (much as Europe’s GDPR has sparked other data privacy efforts around the world). There exists no similar federal law in the U.S.

The Illinois law requires that companies collecting biometric information like iris and facial scans or fingerprint data get prior consent from individuals. Companies also have to let people know how they’re going to use the data and the amount of time the records will stay in their possession.

BIPA Scope

Since the law’s enactment in 2008, an estimated 200 class-action and other lawsuits have been filed that claim violations of BIPA. Suits have been filed against Six Flags and Google for those companies’ alleged violations of the state law. Recent rulings in those cases have brought a sense of unclarity to the application of biometric law, which means companies using biometrics find themselves uncertain of their best moves and practices. Many companies that use biometrics across a broad swath of industries in Illinois have been affected, including Snapchat, Google, Facebook and Shutterfly.

The Supreme Court in Illinois ruled on Jan. 25 that a teen can sue the Six Flags amusement park over violation of the Illinois biometric privacy law in a case that could have repercussions for tech giants like Google and Facebook. The alleged BIPA violation occurred when the amusement park scanned the teen’s fingerprint as part of the season pass process.

Meanwhile, also in January, a federal judge dismissed a BIPA lawsuit against Google because, the judge said, there was a lack of “concrete injuries” suffered by the plaintiffs. That suit, filed in March 2016, accused Google of breaking Illinois state law by collecting and storing biometric data from photographs via facial recognition software through its Google Photos service.

Legal Contradiction?

In short, the U.S. federal court found that, in the Google case, since there was no harm, there was no standing for the lawsuit. But in the Six Flags case, the mere (alleged) violation of BIPA was enough to constitute standing.

The seemingly contradictory outcomes of those two recent cases are understandably leading to some confusion and questions when it comes to ongoing and future deployments of biometric authentication and related technology. That holds especially true as attitudes among consumers, regulators and lawmakers seem to be hardening when it comes to digital privacy issues in general.

“It remains to be seen how future courts will treat Google, Six Flags and other decisions under BIPA,” read a recent analysis of the cases from Morrison Foerster. “Regardless of whether federal courts manage to separate the issue of standing from substantive issues under BIPA itself, the clear position taken in Six Flags means no court, federal or state, will be able to ignore it.”

Future Biometric Cases

In other words, the analysis said, “In future cases, concerns about security and/or personhood are likely to become more pronounced, which may also pave the way for more and more courts to follow the ruling in Six Flags. The key takeaway is this: Potential exposure to liability under BIPA and other biometric privacy laws is real, and companies and other organizations that collect biometric data need to ensure that they comply with applicable law.”

Illinois is not the only place where precedent and practices are being established for biometric law, and not the only state where companies in the business of biometric authentication, payments and commerce should focus their attention. Two U.S. senators – Missouri Republican Roy Blunt and Hawaiian Democrat Brian Schatz – have introduced legislation that would prevent businesses from collecting and using facial recognition data without the consent of consumers. And the city of San Francisco has mulled a ban on facial recognition that would apply to city departments, not consumers.

As biometric uses for payments and commerce advance, consumers can bet on more such pushes as the case law gets worked out.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our March 2019 AML/KYC Tracker Report 

Naspers To Create, List New Internet Company To House Tencent Stake

Naspers, the South African company, is gearing up to spin off and list its Amsterdam internet assets in a new group that will include all of its $134 billion stake in Tencent Holdings, the Chinese technology giant.

In a press release issued Monday (March 25), Naspers said it will list “NewCo,” a global consumer internet group, on Euronext Amsterdam, with a secondary listing on the Johannesburg Stock Exchange in South Africa. In addition to Tencent, the new company will comprise all of its companies and investments in the sectors of online classifieds, food delivery, payments, etail, travel, education and social and internet platforms, among others. Some of those brands include Tencent, mail.ru, OLX, Avito, letgo, PayU, iFood and Swiggy, among others. NewCo is expected to be 75 percent owned by Naspers, with a free float of around 25 percent.

NewCo will be Europe’s largest internet company by asset value, noted the company. “Forming and listing a new, global consumer internet group on Euronext Amsterdam is a significant step for Naspers. It will provide a strong platform to attract incremental investor capital, which is well-aligned to our growth goals,” said Bob van Dijk, chief executive of Naspers, in the press release.

“The listing will present an appealing new opportunity for international tech investors to have access to our unique portfolio of international internet assets,” he continued. “It will comprise some of the world’s leading and fastest-growing internet companies that are playing an increasingly important role in helping people improve their daily lives in some of the most exciting markets on the planet. As well as opening up investment to a broader category of investors, the listing aims to reduce our weighting on the Johannesburg Stock Exchange, which we believe will help us maximize shareholder value over time.”

Naspers said the listing on Euronext Amsterdam aims to help investors gain access to the company, which constitutes nearly 25 percent of the JSE SWIX index. That compares to 5 percent five years ago. The weighting now exceeds most South African institutional investors’ single stock limits, which means they may have to sell shares of Naspers as the company grows.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our March 2019 AML/KYC Tracker Report 

Banesco USA Favors Fintechs over In-house Teams to Implement New Tech

Working with $11.9 million from its shareholders to continue growing and investing in technology this year, Banesco USA entered into an agreement recently with Silicon Valley-based accelerator Plug and Play Fintech. The Coral Gables, Fla.-based bank may be a community bank, but it’s thinking big when it comes to digital transformation. President and CEO Jorge …Read More

Domino's, Xevo launch connected car pizza ordering with GM, Chrysler

Domino’s Pizza is working with in-vehicle commerce creator, Xevo Inc., to launch AnyWare pizza ordering capabilities, which will be preloaded in Chrysler and GM cars beginning late this year. The in-vehicle Domino’s app is powered by an automotive commerce platform in connected cars called Xevo Market, a news release said. Domino’s told Pizza Marketplace via email, that GM and Chrysler will feature the systems in their cars, and will announce the models affected at a later date.

“At Domino’s, we want pizza ordering to be simple and always within reach, no matter where a customer happens to be,” Domino’s Director of Digital Experience Chris Roeser, said in the release. “This new AnyWare platform will make ordering pizza easy, whether you’re in the car waiting for the kids to finish soccer practice or you’re on your way home from work.”

Through the systems, customers can order from the pizza brand via in-vehicle touchscreen. In fact, once customers are logged into the system, they can place their most recent orders again, then follow their progress via Domino’s Tracker to determine when the pie is out of the oven. The capability also allows customers to find the nearest local store and order from that location. 

“We’re excited to work with Domino’s, and to have them join the Xevo Market platform, which is already live in millions of vehicles on the road today,” Xevo CMO Brian Woods said in the release. “Domino’s is the world’s largest pizza company, and they’ve always been technological innovators. Xevo Market makes it possible for Domino’s to reach people directly in their cars, streamlining mobile ordering to help busy consumers save time.”

Domino’s has not yet responded to a request for details about the initiative. 

Photo: Provided


Topics: Mobile Apps, Restaurants

Companies: Xevo Inc., Domino’s


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11 Startups Show Their Latest and Greatest at INV Fintech Demo Day

Eleven startups participated in the Demovation challenge at the Bank Innovation Ignite conference in Seattle earlier this month. These startups, diverse in focus, comprised a wide range of the fintech ecosystem,  including payments, security and blockchain.

The winner of the competition- an identity proofing and verification startup Diro Labs, received admission to the INV Fintech Accelerator, this publication’s sister company, and an advertising package on Bank Innovation’s website.

The competition was sponsored by INV Fintech, and its partner Fiserv, a multinational financial technology provider.

The judges of this competition were Susan French, Head of Product at BBVA Open Platform; Rob Guilfoyle, CEO at Abe AI and Theo Moumtzidis, Managing Director at Delos Advisors.

Read on to see the entire list of participants and what they do:

Avocado Payments: Founder and CEO Chris Sturm demonstrated Avocado’s QR code-based payment system, which would allow users to pay for a range of transactions, from medical bills to in-store purchases. Avocado takes advantage of new camera features on smartphones, which automatically capture QR codes, to produce an easy and secure form of payments. “Avocado has short-circuited the path between the customer and the merchant, allowing for an easier and more reliable payment experience,” said Chris Sturm, founder and CEO Avocado, during his demo.

Budgit: With just a few lines of code, Budgit, an INV Fintech Class 6 company, allows financial institutions to deploy an omni-channel wellness experience with solutions from best-in-breed Fintech providers. Ruben Izmailyan, CEO of Budgit, told the audience at Demvoation that “working with the team at INV, we had a eureka moment. We realized that the solution was to put the bank in the center by turning it into a financial hub for its customers.”

Community Capital Technology: CCT is a loan marketplace for community banks and other financial institutions. The platform is designed to serve and empower financial institutions focused on serving local and regional communities across the United States. CCT’s intuitive platform provides seamless online access to originators, purchasers, and investors across the U.S., to buy, sell or participate out loans. CCT is based in New York City and is an INV Fintech Class 6 member. “Before CCT was developed, you had a fragmented set of siloed institutions based on particular types of credit or geographic focus that were heavily intermediated. With Community Capital, we connect all those nodes into a single platform that generates transparency around how credit is being priced,” said CEO Garrett Smith.

Diro: The Demovation winner is a blockchain based digital security firm that allows capture of web documents behind secure logins across the web and government websites by individual consumers. Diro uses a decentralized private key with a decentralized custody solution to secure the access and storage of important documents. “Our product is not just better then video KYC, it’s even better than physical KYC, because you are verifying from the absolute original source,” said Vishal Gupta, founder of Diro.

Also See: BI Ignite 2019: ID Verification Startup Diro Wins DEMOvation Challenge

Exagens: The Exagens personal banker is the only digital AI-powered relationship manager proven to dramatically increase engagement and digital sales to retail & SMB clients, providing banks with a cost-effective solution to increase customer lifetime value. Exagens uses behavioral sciences, machine learning and AI to engage with a bank’s customer base. As Exagens President Michael Stojda said at the competition, “by focusing on the why, the when and the how of financial decision making, we’ve created a highly effective behavioral based relationship manager which engages and convinces people to take specific financial action in their best interests.”

Fintel Labs: An INV class 5 alumnus, Fintel Labs launched the Fintel Cloud, an AI cloud for the financial service industry. The Fintel Cloud can be leveraged to allow banks to build solutions for retail banking, asset management, capital markets, wealth management and more. “We are providing (FIs) with building blocks to build new AI solutions. Our vision is to be the AWS of fintech,” said Krish Gopalan, CTO of Fintel Labs. Fintel’s Eva Money is a voice chat bot available in several languages that helps users keep track of their finances.

IGTB: iGTB is a white label digital transaction banking platform that leverages Machine Learning and predictive analytics, delivered through APIs and an omnichannel UX. This enables banks to accelerate customer self-service and both upsell and cross sell their services by providing clients with context-aware recommendations on the best-next action or best-next offer needed to meet their immediate objectives.

Judi.Ai: Through its AI driven loan adjudication platform, JUDI.AI provides financial institutions with a configurable, AI driven loan adjudication platform with a unified credit engine for SMB and consumer lending. Judi.AI reduces the time it takes to process applications, and its easy loan application takes just minutes to complete, according to its CEO and co-founder Troy Wright. “What we’ve done here is specifically solved for lending to small businesses using artificial intelligence,” Wright said.

Kapitalwise:  INV Fintech Class 6 member Kapitalwise powers deeper relationships between financial institutions and their customers, offering personalized recommendations and helping consumers set and achieve financial goals. Using the power of machine learning and predictive analytics, KapitalWise’s solution uncovers opportunities for savings and investing for FIs and their customers.

OpenDoor: OpenDoor Securities is an institutional, electronic trading platform designed specifically for buy-side and sell-side firms to meet in one place and trade US off-the-run treasuries and TIPS (Treasury Inflation Protected Securities). OpenDoor has been live for 20 months, managing over $1.4 trillion in orders year to date.

Operant.ai: Toronto-based Operant.ai presented its solution to a relatively untapped market: debt collections. The startup uses AI to more efficiently help banks and collections agencies recover debt by suggesting optimal times to contact debtors. Operant’s technology can effectively identify when a debtor is most likely to repay. INV Fintech has been working with the Class 6 member to find the right institutions and targets to deploy their cutting-edge collections platform.

To apply to INV Fintech Class 7, click here. 

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