Regulators Say Facebook’s Libra Will Need Scrutiny 

https://www.pymnts.com/cryptocurrency/2019/regulators-facebook-libra-fca-fsb/
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More financial regulators are talking about Libra and saying that Facebook’s recently announced cryptocurrency won’t launch without close scrutiny, according to a report by the Financial Times

The international Financial Stability Board (FSB) and the U.K.’s Financial Conduct Authority (FCA) have now both spoken publicly about the issue. 

Facebook wants to alter the financial landscape with the introduction of Libra, and it has said that payments with the currency will happen instantly and cost almost nothing. The company teamed up with Uber, Mastercard, Visa and others on the endeavor. 

Facebook execs want to be able to introduce and operate Libra without the same stringent regulations on traditional payment companies and banking institutions, but that doesn’t seem to be how things are lining up. 

The FSB and the FCA have joined with the Bank of England (BoE) and the G7 in speaking out about the currency and its need for regulation. 

FSB Chair Randal Quarles spoke about the issue in a letter to G20 before a summit in Japan this weekend. 

“Though crypto assets do not currently pose a risk to global financial stability, gaps may occur where crypto assets fall outside the scope of regulators’ authority or from the absence of international standards,” Quarles said in the letter. “A wider use of new types of crypto assets for retail payment purposes would warrant close scrutiny by authorities to ensure that they are subject to high standards of regulation. The FSB and standard setting bodies will monitor risks very closely and in a coordinated fashion, and consider additional multilateral responses as needed.”

Andrew Bailey, head of the FCA, said he and the FCA were in talks with the U.K. Treasury and BoE about regulating Facebook’s Libra.

“We will have to engage domestically and internationally, with Facebook and this other [Libra] organisation. They are not going to walk through authorisation without that,” Bailey said.

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Latest Insights: 

The Payments 2022 Study: Building A High-Performance Payments Team For Fraud Detection, a PYMNTS collaboration with Stripe, examines how digital platforms of all sectors and sizes plan to develop their anti-fraud teams as part of their their broader growth and development strategies. Drawing from an extensive survey from approximately 250 payments heads at digital platforms in the U.S. and abroad, our study analyzes how poor anti-fraud capabilities can harm platforms’ long-term growth strategies, and how they can build high-performing teams to tackle these challenges.

https://www.pymnts.com/cryptocurrency/2019/regulators-facebook-libra-fca-fsb/

BofA Debuts Digital Debit Card

https://www.pymnts.com/news/payments-innovation/2019/bofa-digital-debit-card/
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Bank of America (BofA) announced on Tuesday (June 25) that it’s launching a digital debit card, according to a release by the company.

It’s also making other additions to its banking app to help customers handle their finances while they’re on the move.

“This digital debit card has the same protections and benefits of a physical debit card and is immediately available to use in the mobile app. Through the mobile app, eligible clients can request a digital debit card for a new or replacement debit card,” the company said.

Customers can use the card to pay online or in stores using a mobile wallet, shop online with all the card details already in the app and get cash as well as make deposits at BofA ATMs.

“Our goal is to bring never-before-possible convenience to clients,” said David Tyrie, head of advanced solutions and digital banking at Bank of America. “With our new digital debit card, clients can transact immediately and avoid waiting for their permanent card. This feature is one of several new digital offerings that reinforce our commitment to making clients’ financial lives easier.”

The bank is also introducing Mobile Orders, which lets customers place orders for foreign currency through the app.

With Mobile Orders, “Clients traveling internationally can plan ahead and easily order foreign currency, choose a specific financial center for pickup or have it delivered to their home, and receive notifications every step of the way — all through the mobile app,” the bank said. “Small business clients can take advantage of Mobile Orders to preorder bills and coins in the denomination they need to keep their business moving. Clients can select a specific financial center for pickup and track their orders with real-time alerts and updates.”

BofA was also named “Best in Class” by Javelin Strategy & Research, in its 2019 Mobile Banking Scorecard and Online Banking Scorecard. BOA was named a leader in ease of use, security empowerment, financial fitness, customer service and account opening. 

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Latest Insights: 

The Payments 2022 Study: Building A High-Performance Payments Team For Fraud Detection, a PYMNTS collaboration with Stripe, examines how digital platforms of all sectors and sizes plan to develop their anti-fraud teams as part of their their broader growth and development strategies. Drawing from an extensive survey from approximately 250 payments heads at digital platforms in the U.S. and abroad, our study analyzes how poor anti-fraud capabilities can harm platforms’ long-term growth strategies, and how they can build high-performing teams to tackle these challenges.

https://www.pymnts.com/news/payments-innovation/2019/bofa-digital-debit-card/

Ocrolus Reels in $24 Million Investment

https://finovate.com/ocrolus-reels-in-24-million-investment/
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Automated document analysis platform, Ocrolus, has raised $24 million in funding in a Series B round led by Oak HC/FT. The new capital will help the company develop workflows for new document types, as well as improve the company’s analytic and fraud-detecting capabilities.

Ocrolus puts human empowered automation to work to help financial services firms and other companies make back office operations more efficient. Ocrolus’ technology leverages pattern recognition, crowdsourced data verification, and fraud detection to automatically analyze financial documents, digitize the data, and input it directly into the firm’s credit models. Even poor quality data scans from e-statements and smartphones can be effectively read by the technology and transformed into 99%+ accurate, validated datasets.

“Sometimes humans are better than robots,” Ocrolus CEO and co-founder Sam Bobley said. “We combine machine processes with live human intelligence to provide customers with a complete solution.”

Also participating in the round were FinTech Collective, and existing investors including Bullpen Capital and QED Investors. The investment takes the company’s total capital to more than $30 million.

Ocrolus demonstrated the Perfect Audit feature of its platform at FinovateFall last year. Perfect Audit provides cash-flow analytics from financial documents that have been digitized and analyzed by the Ocrolus platform. These analytics function as superior credit model inputs that enable lenders to price risk more effectively.

“Ocrolus is a unique company providing a rare combination of smart automation, analytics, and accuracy in its solution,” Oak HC/FT Venture Partner Dan Petrozzo said. “By combining its tremendous technology with an added human touch where required, the platform delivers amazing results for its customers.”

Last month, Ocrolus teamed up with inFactor to enhance the underwriting process for the small business financing platform. In April, the company partnered with fellow Finovate alum BlueVine to help accelerate financial application processing. Founded in 2014, Ocrolus is based in New York City.

https://finovate.com/ocrolus-reels-in-24-million-investment/

Walmart To Accept EBT Cards For Online Groceries

https://www.pymnts.com/news/retail/2019/walmart-snap-ebt-cards-online-groceries/
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Walmart will now accept SNAP (Supplemental Nutrition Assistance Program) to pay for online grocery orders at all of its pickup locations, according to a report.

Walmart started testing the program in 2017. On Tuesday (June 25), the retailer announced it was expanding the program to all of its more than 2,500 pickup locations.

Placing an order with SNAP is just like ordering with a debit or credit card. A customer enters their zip code on the ordering site to find the closest store, and then at checkout they simply pick the EBT card option for payment. When the customer gets to the store, they give their EBT card to a store associate.

Walmart has been adamant about the need to cater to low-income customers, saying that online shopping is not a luxury. The retailer aims to eventually expand the SNAP option to more than 3,100 stores by the end of 2019.

In April, Walmart announced it was participating in a USDA pilot program to test SNAP payment acceptance on stores’ websites. Amazon, Dash’s Market, Safeway and others also participated. Walmart is also running a pilot to charge a subscription fee for grocery delivery, at $98.

In other Walmart news, the company recently said it was planning to use self-driving cars to transport products between warehouses in hopes of slashing costs and boosting efficiency. Spokeswoman Molly Blakeman told CNBC the retailer is working with partner Gatik, a self-driving vehicle startup, to test a vehicle that will travel the two-mile route in Bentonville, Arkansas between two stores.

“We are working with city and state officials to obtain the approval we need to operate and plan to start the pilot program this summer, with the aim being to learn about the logistics of adding AVs into our ecosystem, operation and process changes, and more opportunities to incorporate this emerging technology,” Blakeman explained.

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Latest Insights: 

The Payments 2022 Study: Building A High-Performance Payments Team For Fraud Detection, a PYMNTS collaboration with Stripe, examines how digital platforms of all sectors and sizes plan to develop their anti-fraud teams as part of their their broader growth and development strategies. Drawing from an extensive survey from approximately 250 payments heads at digital platforms in the U.S. and abroad, our study analyzes how poor anti-fraud capabilities can harm platforms’ long-term growth strategies, and how they can build high-performing teams to tackle these challenges.

https://www.pymnts.com/news/retail/2019/walmart-snap-ebt-cards-online-groceries/

Mastercard, Nordic bank consortium in partnership to allow real-time and batch payments

https://www.mobilepaymentstoday.com/news/mastercard-nordic-bank-consortium-in-partnership-to-allow-real-time-and-batch-payments/
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Mastercard, Nordic bank consortium in partnership to allow real-time and batch payments

Javier Perez, president Europe at Mastercard, Claus Richter and Lars Sjogren, COO and CEO of P27

Mastercard and P27 Nordic Payments Platform AB, which is owned by the six largest Nordic area banks, announced a partnership to provide what they say is the world’s first platform to move real-time and batch payments across the region, according to a company release. 

P27 Nordic Payments Platform, which is jointly owned by Danske Bank, Handelsbanken, Nordea, OP Financial Group, SEB and Swedbank, will work with Mastercard to allow instant payments between individuals and businesses across the region to replace the existing payments infrastructure with a faster, safer and more secure payment system. 

“This exciting partnership will build a world first in terms of a cross region and multi-currency faster payments area,”Javier Perez, president Europe at Mastercard, said in the release. “It is also evidence of Mastercard’s vision to drive real choice by being the trusted provider of new payment experiences and broadening our reach into fast bank account flows.”

The payment platform is subject to government approvals and final investment commitments. 


Topics: Mobile Banking, Mobile Payments, Money Transfer / P2P, Region: EMEA, Regulatory Issues

Companies: MasterCard


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https://www.mobilepaymentstoday.com/news/mastercard-nordic-bank-consortium-in-partnership-to-allow-real-time-and-batch-payments/

Tijuana Flats taps DoorDash for delivery expansion

https://www.mobilepaymentstoday.com/news/tijuana-flats-taps-doordash-for-delivery-expansion/
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Tijuana Flats is partnering with DoorDash to expand delivery options and celebrate the partnership with free delivery fees on orders of $15 or more through June 30.

The Tex-Mex fast casual will offer made-to-order items from its original extensive menu via the service at over 100 locations, according to a press release.

“From our famous seasoned chips to our bangin’ chicken, and everything in between, our brand has always been committed to providing fresh food and fast,” said CEO Brian Wright in the release. “So, it only makes sense that we provide our guests with their Flats’ favorites when, where and how they want.”
 
 Tijuana Flats also offers delivery services to its guests via Postmates and Uber Eats.

 


Topics: In-App Payments, Mobile Apps, Mobile Payments, Restaurants

Companies: Tijuana Flats


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https://www.mobilepaymentstoday.com/news/tijuana-flats-taps-doordash-for-delivery-expansion/

G20 Finance Board: Libra Will Need To Be Watched Closely 

https://www.pymnts.com/news/regulation/2019/g20-finance-board-facebook-libra-regulation/
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Randal Quarles, chair of the Financial Stability Board (FSB), said there won’t be a specific item on the agenda about Facebook’s Libra at the G20 summit in Japan, but that regulators will need to closely watch the proposed cryptocurrency, according to a report by Reuters.

Quarles said there is no current global threat from crypto in terms of affecting stability, but that there could be gaps that fall outside the scope of regulators’ power, which need to be scrutinized.

“A wider use of new types of crypto assets for retail payment purposes would warrant close scrutiny by authorities to ensure they are subject to high standards of regulation,” Quarles said. “The FSB and standard-setting bodies will monitor risks very closely and in a coordinated fashion, and consider additional multilateral responses as needed.”

In March of last year, G20 finance ministers and central bankers said they would monitor crypto, but that they wouldn’t take any sort of concrete action. However, the FSB did acknowledge that if Libra is successful, they would have to take a different approach.

The FSB said it met with Facebook about Libra, but the meeting was based on generalities and not about anything too detailed.

A central bank forum in Switzerland, the Bank for International Settlements (BIS), said lawmakers need to come together quickly and coordinate a response to new cryptocurrencies like Libra.

The FSB was instrumental during the financial crisis 10 years ago when governments bailed out lenders; it mostly focuses on ensuring that rules are followed.

One concern is that worldwide capital markets are being separated by national regulators, which is prompting some banks to keep huge amounts of capital locally in case they go under. The FSB called that “prepositioning” and said the topic would be on the agenda. The goal is to find an agreement that ensures banks are comfortable that they have enough capital, but not so much that it affects the worldwide financial market.

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Latest Insights: 

The Payments 2022 Study: Building A High-Performance Payments Team For Fraud Detection, a PYMNTS collaboration with Stripe, examines how digital platforms of all sectors and sizes plan to develop their anti-fraud teams as part of their their broader growth and development strategies. Drawing from an extensive survey from approximately 250 payments heads at digital platforms in the U.S. and abroad, our study analyzes how poor anti-fraud capabilities can harm platforms’ long-term growth strategies, and how they can build high-performing teams to tackle these challenges.

https://www.pymnts.com/news/regulation/2019/g20-finance-board-facebook-libra-regulation/

European supervisor offers some flexibility on deadline for strong customer authentication

http://www.linklaters.com/en/insights/blogs/fintechlinks/2019/june/european-supervisor-offers-some-flexibility-on-deadline-for-strong-customer-authentication
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New EU standards for securing electronic payments apply from 14 September. In response, payment firms have been developing strong customer authentication procedures, but some may not be ready in time. So the European Banking Authority has suggested that regulators could give some firms extra time to apply SCA.

Background to strong customer authentication

What is SCA?

SCA involves authenticating a payment based on two out of the following three elements: 

  • knowledge (something only the user knows, like a password)
  • possession (something only the user has, like credit card)
  • inherence (something the user is, like a fingerprint).

The elements must be independent so that the breach of one does not compromise the reliability of the others. The authentication process must also keep the payer’s security credentials confidential.

What do the rules mean?

From 14 September 2019, EU firms providing payment services must apply these new authentication standards in certain scenarios e.g. when a payer accesses her account online or tries to make an electronic payment.

For many payment service providers, this means developing SCA-compliant processes and investing in hardware systems and/or new communication interfaces.

EBA opinion

What has the EBA said?

The EBA has published an opinion on SCA in which it acknowledges that implementing the new standards in time might be difficult for some. The EBA says that it cannot postpone the deadline for compliance but that national regulators may on “an exceptional basis” give additional time to allow firms to prepare.

What are the conditions?

The EBA says that the additional time must be limited. Payment service providers must have agreed a plan with their regulator for meeting the new rules. This plan must also be executed “in an expedited manner”. Even so, where this regulatory flexibility is applied, firms should have some breathing space to finish building their SCA processes and systems and communicate the changes with customers.

Examples of SCA

What could be used to comply with SCA?

The opinion also suggests whether some authentication approaches which are already used in the market may comply with SCA.

For example, according to the EBA:

  • knowledge may include passcodes, PINs and memorised swiping paths (but not email addresses or user names)
  • possession of a card can be evidenced by a card reader or a QR code (but an app installed on a phone would not be sufficient)
  • inherence covers iris scanning, voice recognition and keystroke dynamics (but not memorised swiping paths).
What happens next?

For firms which agree an alternative plan with their regulator, the EBA says it will specify later in the year the date by which these plans need to be completed. Otherwise, the legal deadline for implementing SCA has not changed. The EBA also says it does not plan to publish any more guidance on SCA other than via its Q&As.

http://www.linklaters.com/en/insights/blogs/fintechlinks/2019/june/european-supervisor-offers-some-flexibility-on-deadline-for-strong-customer-authentication

Brex Taps i2c Payment Platform 

https://www.pymnts.com/news/partnerships-acquisitions/2019/brex-i2c-payment-platform/
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Digital banking and payments processing company i2c has announced that Brex, a corporate card for entrepreneurs and growing businesses, is “leveraging the i2c payment platform to power the next phase of growth and rapid innovation,” according to a release

“As Brex has skyrocketed in popularity, so too has the maturity of its client base. As a result, Brex has expanded its initial offering, which addressed the needs of early stage startups, to address both the evolving needs of its existing clients and a new segment to drive growth for the company,” the release said. “Brex now focuses on larger tech companies including eCommerce brands and businesses in the life sciences industry. Features include more detailed accounting controls, the ability to review and approve purchases, and integrations with popular accounting solutions.”

Joseph DeRosa, EVP of global sales at i2c, said the two companies merge together well. 

“Brex’s focus on innovation in corporate credit cards aligns well with i2c’s mission to provide the most configurable and stable payments platform in the industry,” DeRosa said. “i2c’s ability to manage flexible corporate account structures, department and employee level control, and easy administration of expenses is a perfect fit.”

The company’s payment platform will give Brex advanced APIs and a diverse suite of program management tools so issuers can launch programs quickly, customize features and communicate with cardholders more effectively.

Cosmin Nicolaescu, vice president of engineering at Brex, said i2c has helped the company a lot.

“Working with i2c has been a great enhancement to our payments processing capabilities,” Nicolaescu said. “i2c’s flexible issuer processing platform gives us room to expand faster than before. This will enable Brex to deliver more innovative solutions to an even broader range of customers moving forward.”

Brex has a focus on corporate cards, and in 2018 launched a card specifically for startups. The company is backed by Y Combinator Continuity, Peter Thiel, Max Levchin and others. It has raised $315 million in equity. 

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Latest Insights: 

The Payments 2022 Study: Building A High-Performance Payments Team For Fraud Detection, a PYMNTS collaboration with Stripe, examines how digital platforms of all sectors and sizes plan to develop their anti-fraud teams as part of their their broader growth and development strategies. Drawing from an extensive survey from approximately 250 payments heads at digital platforms in the U.S. and abroad, our study analyzes how poor anti-fraud capabilities can harm platforms’ long-term growth strategies, and how they can build high-performing teams to tackle these challenges.

https://www.pymnts.com/news/partnerships-acquisitions/2019/brex-i2c-payment-platform/

P2P Payments Find Fans In The Black Market

https://www.pymnts.com/digital-payments/2019/p2p-payments-black-market-zelle-venmo/
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Peer-to-peer (P2P) payments continue to gain popularity among consumers, with two of the biggest providers, Zelle and Venmo, reporting ongoing and significant gains. But amid that growth is a fresh trend that could present challenges for law enforcement — the use of such payment methods for illicit transactions, including drug deals.

Official evidence of that is relatively sketchy, but it isn’t difficult these days to find a drug dealer or buyer who relies on mobile P2P payments for those types of transactions. It would seem not wise to use those methods for illegal transactions, but no matter the product, seamless payments appeal to all types of buyers and sellers.

P2P and Millennials

Surveys and other types of reports are taking note of this apparent trend. For instance, according to one report from LendEDU, a student loan refinancing company, about 33 percent of millennials had paid for drugs via Venmo — and that was in late 2017. About a fifth, by comparison, had used Venmo for gambling. The report noted that “one interesting point is that any and all transactions made on Venmo will be on file, like a payment made with a credit card. Those who use Venmo for suspect transactions run the risk of leaving behind a paper trail that could come back to haunt them.”

As another report on this payment trend points out, P2P services do offer privacy settings, but not everyone takes advantage of them, and that includes people involved in drug transactions. That report’s researcher “pieced together love affairs and arguments from the public messages sent between Venmo users, and analyzed the eating habits of one woman who washed down 209 pizzas with 280 transactions for Coca-Cola – all in one year.”

P2P Growth

It’s unclear how big of an issue this is for law enforcement, but it’s very clear that P2P payments are growing significantly, and show signs of continuing to do so.

For instance, during the first quarter of 2019, Zelle sent $39 billion through its network via 147 million transactions, the company said in a news release. Payment values went up 54 percent year over year, and payment volume increased 72 percent. The Zelle network is used by an upward of 5,391 financial institutions (FIs), either through a mobile banking app or by registering a debit card with Zelle’s app. A possible limit to Zelle’s service — at least, for the time being — is its status as a payment method that relies on bank rails, not card rails. The payment receiver may not be connected with a bank that has integrated with Zelle.

Venmo, meanwhile, stood out as one of the best bits of news from PayPal’s first-quarter earnings. For the first time, PayPal CEO Dan Schulman released Venmo user numbers: 40 million active monthly users, defined as those who used the service once in 12 months. Venmo processed $21 billion in total payment volume during the first quarter and is on pace to process $100 million over the course of the year. Total P2P volume for PayPal — which includes payments made through core PayPal and Venmo services — grew 41 percent to $42 billion. Anyone with a bank account and debit card can use Venmo, a likely factor in its P2P reach.

Partnerships are driving P2P growth, as demonstrated by Venmo, by giving the service more than just a P2P focus. Schulman told analysts that Venmo’s growth was not only as a P2P payment network, but as a payment method for its active customer base. He pointed to recent partnerships with ChipotleGrubhub and Uber, among other merchants, as contributing to the growth.

P2P is finding more use in payments innovation as retailers and service providers rise to consumer demand for more options to split tabs and perform other quick, mobile transactions.

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Latest Insights: 

The Payments 2022 Study: Building A High-Performance Payments Team For Fraud Detection, a PYMNTS collaboration with Stripe, examines how digital platforms of all sectors and sizes plan to develop their anti-fraud teams as part of their their broader growth and development strategies. Drawing from an extensive survey from approximately 250 payments heads at digital platforms in the U.S. and abroad, our study analyzes how poor anti-fraud capabilities can harm platforms’ long-term growth strategies, and how they can build high-performing teams to tackle these challenges.

https://www.pymnts.com/digital-payments/2019/p2p-payments-black-market-zelle-venmo/

The Future of Finance: introducing our new mini-series

http://www.linklaters.com/en/insights/blogs/fintechlinks/2019/june/future-of-finance/the-future-of-finance
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The Bank of England has boldly announced the need to overhaul existing financial markets infrastructure to ready the UK for the fourth industrial revolution. With this, it has published the findings of a review on the future of finance over the next decade and laid out its response to them.

The course set by the Bank could have a profound impact on the landscape of the UK’s financial system in the coming years. For example, it has now committed to consult on what level of access to its payments infrastructure and balance sheet may be appropriate for fintechs and innovative business models, and the appropriate package of obligations that would come with those new rights.

The series will begin with a number of bitesize posts exploring the Bank’s stated direction across the following themes:

  • Shaping tomorrow’s payment system
  • Enabling innovation through modern financial infrastructure
  • Supporting the data economy through standards and protocols
  • Championing global standards for finance
  • Promoting the smooth transition to a low-carbon economy
  • Adapting to the needs of a changing demographic
  • Safeguarding the financial system from evolving risks
  • Enhancing protection against cyber-risks
  • Embracing digital finance

Stay tuned to our FintechLinks blog for more.

http://www.linklaters.com/en/insights/blogs/fintechlinks/2019/june/future-of-finance/the-future-of-finance

US SEC Sues Social Media Company Kik for “illegal” Initial Coin Offering of Kin tokens

http://www.linklaters.com/en/insights/blogs/fintechlinks/2019/june/us-sec-sues-social-media-company-kik-for-illegal-initial-coin-offering-of-kin-tokens
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The SEC recently filed a complaint against Kik Interactive Inc., a Canada-based social media company, for conducting an “illegal” offer and sale of $100 million worth of blockchain-based digital assets known as “Kin tokens” from May to September 2017. 

Regardless of the outcome, this lawsuit could be the perfect opportunity to end the continuing confusion over the regulation of cryptocurrency in the United States. In particular:

(1) As the first case in which the SEC has pursued an initial coin offering (ICO) issuer in federal court, it may help to resolve critical issues in the regulation of cryptocurrencies, including whether, and under what circumstances, U.S. securities laws apply to ICOs and related promotional activities by issuers.

(2) It will also allow the court to explore whether the offer and sale of a digital asset like Kin tokens, which were issued and sold before a network was developed to allow them to be spend, would be considered an offering of securities that is required to be registered with the SEC.

The case

Kik’s pivot from social media messaging to digital tokens

According to the SEC’s complaint, before 2017, Kik enjoyed its heyday as a social-media messaging company; however, once the social media business began to decline, Kik decided to “pivot” to digital tokens as a way of raising new capital.

Through the sale of 1 trillion Kin tokens to approximately 10,000 investors, Kik was able to raise nearly $100 million in total. Instead of registering the offering, Kik filed a Form D and sought the exemption by only accepting funds from ‘accredited investors’.

Violation of registration requirements

In the complaint, the SEC charges Kik with violating the registration requirements of Section 5 of the Securities Act of 1933 and states that Kik did not qualify for the securities registration exemption. “Kik deprived investors of information to which they were legally entitled, and prevented investors from making informed investment decisions,” said Steven Peikin, co-director of the SEC’s division of enforcement, in a statement.

The SEC seeks to prohibit Kik from violating US securities law registration requirements, to disgorge funds raised through its ICO and to pay a fine. The agency has requested a jury trial for this matter.

Kik’s defence

On the other hand, Kik’s primary defense is that its digital tokens, Kin, should not be considered securities. Rather, Kik argues that Kin is more similar to digital currencies such as Bitcoin and Ether, which the SEC does not regulate as securities. 

Importance of the pending trial

Evolving legal landscape

The legal landscape concerning cryptocurrencies is still evolving, and it is important to have clarity as to the scope of the SEC’s ability to regulate digital assets.

If the ruling favors Kik, it could set a precedent for other blockchain startups to take a similar approach and raise funds in an ICO. According to MarketWatch, Kik is not the only startup that pursued the ICO route. In 2018 alone, there were nearly 300 ICO-related offerings raising about $8.7 billion. A favorable ruling could pave the way for further ICOs, while a negative decision would likely further accelerate the pullback from the ICO market for US investors.

Related SEC action

This case also shows that the SEC is not shying away from taking actions against ICO issuers that have failed to register their offering. Since its recently released guidance on what it expects of an ICO in April 2019, the SEC has already charged three companies for failing to comply with regulations and settled with those companies.

Kik looking to fight back

This time, though, Kik has stated that it intends to fight the SEC. Ted Livingston, Kik’s CEO, said in a statement: “This is the first time that we’re finally on a path to getting the clarity we so desperately need as an industry to be able to continue to innovate and build.” 

How we can help

To find out more on the recent U.S. regulatory developments, read our Token Resistance – Recent US Regulatory Developments. Moreover, if you have any questions, please contact any of the people listed on the right, or your usual Linklaters contacts.

http://www.linklaters.com/en/insights/blogs/fintechlinks/2019/june/us-sec-sues-social-media-company-kik-for-illegal-initial-coin-offering-of-kin-tokens

ACI Worldwide Rolls Out Disbursement Services

https://www.pymnts.com/disbursements/2019/aci-worldwide-aite-group-debit-cards/
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To allow businesses to send money to consumers’ bank accounts in real time using their debit cards, real-time electronic payment and banking solutions provider ACI Worldwide announced the rollout of ACI Disbursement Services. The debit card disbursements tap into the Visa Direct and Mastercard Send real-time payments platforms, the company said in an announcement.

“It currently takes several days to send out disbursements to consumers, which is unacceptable in a world where consumer expectations for instant and digital payments are high,” ACI Worldwide Executive Vice President Sanjay Gupta said in the announcement. “We’re excited to launch ACI’s Disbursement Services to help transform consumers’ payment experience and reduce business costs associated with printing and mailing checks.”

Sixty-five percent of U.S. consumers indicate that it is important to have the ability to receive instant payments from government agencies or businesses that owe them money, per Aite Group. At the same time, it was noted that 70 percent report that they would choose an instant payment option for disbursements if it were available. Through ACI Disbursement Services, banks and insurance companies along with other organizations that offer reimbursements, claims, and other similar payments can offer a way to disburse funds to consumers as well as small businesses on their debit cards.

Talie Baker, a senior analyst in the retail banking and payments practice of Aite Group, said in the announcement, “Consumers want to be paid instantly when they are owed money, and they want to choose the payment method for disbursements received.” Baker continued, “In addition, convenience and speed are the most important factors U.S. consumers consider when choosing a payment method for disbursements.”

Baker noted, however, that most disbursements take two days or longer to arrive, which that can result in a poor consumer experience. “Offering a solution to this growing market challenge will be important as the number of disbursements are expected to double in the next two years.” Baker said.

As it stands, Disbursement Services is one of the many different services of ACI’s UP Bill Payments. The platform powers entire bill payments operations to let business streamline bill presentment and payment processing complexities to improve results while taking away application silos.

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Latest Insights: 

The Payments 2022 Study: Building A High-Performance Payments Team For Fraud Detection, a PYMNTS collaboration with Stripe, examines how digital platforms of all sectors and sizes plan to develop their anti-fraud teams as part of their their broader growth and development strategies. Drawing from an extensive survey from approximately 250 payments heads at digital platforms in the U.S. and abroad, our study analyzes how poor anti-fraud capabilities can harm platforms’ long-term growth strategies, and how they can build high-performing teams to tackle these challenges.

https://www.pymnts.com/disbursements/2019/aci-worldwide-aite-group-debit-cards/

Grab Backs UK Startup Splyt Technologies

https://www.pymnts.com/news/investment-tracker/2019/grab-splyt-technologies-funding/
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In a move that will extend the reach of its services outside of Southeast Asia, Grab has extended a partnership with Splyt Technologies and invested in the United Kingdom-based startup. Through the technology, Grab users venturing beyond that region can make ride reservations and have those fulfilled by Splyt’s partners without the need for an additional app, Reuters reported.

Through the partnership between Splyt and Grab, Alipay and Ctrip clients visiting Southeast Asia can hail Grab rides via their own apps. Although Splyt doesn’t operate its own ride-hailing service, it does provide partners with that option in more than 1,000 cities. At the same time, it was noted that the investment by Grab is part of an $8 million fundraising round.

The partnership falls into Grab’s strategy of becoming a so-called “super-app” through expanding its service from food delivery and payments to transport, according to the report. Separately, last year, Grab rolled out a suite of application programming interfaces (APIs) for developers dubbed GrabPlatform, with the mission to create the first everyday super-app in Southeast Asia.

The Splyt investment comes as news surfaced that Grab had notched $4.5 billion in a round of funding led by SoftBank’s Vision Fund. Grab said SoftBank’s Vision Fund accounted for a third of the investment, according to reports in March. The ride-hailing startup said the most recent fundraising effort was the largest private investment round to hit Southeast Asia.

Grab President Ming Maa said the company is still receiving a lot of interest from investors and could take on more funding this year. Grab “look[s] forward to welcoming more global industry leaders as partners in 2019,” Maa said in a statement, according to reports. Meanwhile, Masayoshi Son, SoftBank’s chief executive, said the company is excited to be part of Grab’s progress as it grows.

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Latest Insights: 

The Payments 2022 Study: Building A High-Performance Payments Team For Fraud Detection, a PYMNTS collaboration with Stripe, examines how digital platforms of all sectors and sizes plan to develop their anti-fraud teams as part of their their broader growth and development strategies. Drawing from an extensive survey from approximately 250 payments heads at digital platforms in the U.S. and abroad, our study analyzes how poor anti-fraud capabilities can harm platforms’ long-term growth strategies, and how they can build high-performing teams to tackle these challenges.

https://www.pymnts.com/news/investment-tracker/2019/grab-splyt-technologies-funding/

India-Based Banking Startup Open Raises $30M To Help SMBs

https://www.pymnts.com/news/investment-tracker/2019/open-india-banking-smb/
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A “neo-bank” startup called Open and based in Bangalore has raised $30 million in a Series B funding round, according to a report by TechCrunch.

Tiger Global led the funding round, and Tanglin Venture Partners, AngelList Syndicate, Speedinvest and 3one4 Capital all participated. The company is now valued at $150 million and has raised $37 million so far.

The India-based startup acts like a bank but has services to aid small and medium-sized businesses (SMBs) specifically. In India, many SMBs have trouble with accounting, bookkeeping and payroll, and Open has a platform that automates many of those necessary tasks. 

It also helps to keep track of money, and where it goes.

Anish Achuthan, founder and CEO of Open, said the platform helps to ease the minds of SMB owners. 

“We have a small business owner from Ahmedabad on our platform. They see 59 transactions from their customers in its bank account every few hours. Prior to using our service, they were juggling all day to figure out where these transactions originated from or went to,” he said. “Because on their bank statement, they only see one-line description of a transaction’s detail.”

He added that the services provided by Open are not generally available to SMBs through banks, or if they are, exorbitant fees are charged. Open has more than 100,000 customers, and Achuthan said the company process around $5 billion in transactions yearly. There’s also an average of 20,000 new clients coming on board every month.

Achuthan said he wanted to create Open to help the business community, “but building a bank in India comes with its own set of regulatory challenges, so we looked at what FinTech startups were doing in other parts of the world for inspiration,” he said.

The startup has 85 employees and will use the money to expand with more products, workers and services. The company plans to launch a credit card for SMBs with a 30-day interest-free credit line for backed startups. The next goal for signups is 1 million.

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Latest Insights: 

The Payments 2022 Study: Building A High-Performance Payments Team For Fraud Detection, a PYMNTS collaboration with Stripe, examines how digital platforms of all sectors and sizes plan to develop their anti-fraud teams as part of their their broader growth and development strategies. Drawing from an extensive survey from approximately 250 payments heads at digital platforms in the U.S. and abroad, our study analyzes how poor anti-fraud capabilities can harm platforms’ long-term growth strategies, and how they can build high-performing teams to tackle these challenges.

https://www.pymnts.com/news/investment-tracker/2019/open-india-banking-smb/

Digital Manufacturing Platform Carbon Raises $260M

https://www.pymnts.com/news/investment-tracker/2019/digital-manufacturing-carbon/
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Carbon, a digital manufacturing platform, has raised more than $260 million in a funding round led by Baillie Gifford and Madrone Capital Partners, according to a release by the company.

Temasek, Arkema, Johnson & Johnson Innovation, Fidelity Management & Research Company, Adidas Ventures, JSR Corporation and Sequoia Capital all participated in the round.

Carbon has raised upwards of $680 million so far. 

“Carbon plans to use this new capital to expand R&D efforts, establishing its first Advanced Development Facility (ADF), and to fuel international growth and expansion in Europe and Asia. The ADF will enable Carbon’s engineering teams to improve Carbon’s platform and workflows in scaled-up manufacturing environments to better support its customers and partners,” the company said. “These strategic areas of investment will allow Carbon to continue delivering on the promise of 3D printing by enabling its customers in industries including healthcare, automotive, and consumer goods to accelerate product innovation and create breakthrough products that are digitally manufactured at scale.”

Dr. Joseph DeSimone, Carbon’s CEO and co-founder, said the company wants to innovate. 

“With the Carbon Platform, powered by our Digital Light Synthesis™ technology, companies are finally breaking free of the constraints of traditional polymer manufacturing methods to make what’s next now, and at speeds and volumes never before possible,” he said.

Carbon is going to use the capital to invest in developing reusable materials and to improve the capabilities of its software, like the company’s Digital Manufacturing Cloud.

“Carbon’s software objectives will emphasize automated design tools focused on algorithmic lattice generation, as well as improved digital factory workflow, including fleet monitoring, quality control, and compliance information management,” the company said. “As part of this expansion, Carbon will continue developing and improving the automation, monitoring, and analytics software that enables large-scale production on the Carbon Platform.”

Greg Penner, founder and general partner at Madrone Capital Partners and chairman of Walmart, said he was impressed by the company. 

“What impresses me about Carbon is their diversification across markets and industries,” Penner said. “Through their partnerships with large-scale manufacturers in automotive, healthcare, and consumer goods, they are proving that, with their Digital Light Synthesis™ technology, additive manufacturing in larger scale production is becoming a reality across industry sectors. This is an inflection point for the company, and we’re proud to be able to contribute to Carbon’s future success.”

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Latest Insights: 

The Payments 2022 Study: Building A High-Performance Payments Team For Fraud Detection, a PYMNTS collaboration with Stripe, examines how digital platforms of all sectors and sizes plan to develop their anti-fraud teams as part of their their broader growth and development strategies. Drawing from an extensive survey from approximately 250 payments heads at digital platforms in the U.S. and abroad, our study analyzes how poor anti-fraud capabilities can harm platforms’ long-term growth strategies, and how they can build high-performing teams to tackle these challenges.

https://www.pymnts.com/news/investment-tracker/2019/digital-manufacturing-carbon/

P27 Nordic Payments Platform Teams With Mastercard

https://www.pymnts.com/news/partnerships-acquisitions/2019/p27-nordic-payments-platform-mastercard/
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Mastercard and P27 Nordic Payments Platform have teamed up to provide the Nordic market with a real-time and batch payments system, according to a release by the company.

“By working together, the partnership will connect people across the cluster of countries using multiple currencies. This bold ambition will transform how money moves for consumers, businesses, society and the payments industry itself,” Mastercard said in the release. “This major investment (program) is a world first in terms of a real-time and batch multi-currency platform and will replace the existing payment infrastructure, enabling instant and secure payments at lower costs and increased competitiveness. Participants will be able to send and receive funds immediately across the Nordic markets at a lower cost and with higher security.”

The addition of the system to the region will add to the speed and convenience of banking, Mastercard said, and more products and services based on the platform will be added in the future.

Javier Perez, president of Mastercard Europe, said he’s excited about the partnership.

“This exciting partnership will build a world first in terms of a cross region and multi-currency faster payments area. It is also evidence of Mastercard’s vision to drive real choice by being the trusted provider of new payment experiences and broadening our reach into fast bank account payment flows,” he said. “The Nordic markets are global leaders in the development and usage of electronic payments, and this new infrastructure will maintain their advantage over the rest of the world.”

The CEO of P27 Nordic Payments Platform, Lars Sjögren, said the new system will be good for the region.

“This is change for real. By joining forces across the Nordics, we will be able to develop instant payment solutions in a way that each country never would accomplish by themselves,” he said. “By sharing the costs between the Nordic countries, we will get a state-of-the-art payment infrastructure in the Nordics with the highest standard when it comes to security and efficiency, further boosting innovation and growth in the Nordics.”

P27 Nordic Payments Platform is owned by Danske Bank, Handelsbanken, Nordea, OP Financial Group, SEB and Swedbank.

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Latest Insights: 

The Payments 2022 Study: Building A High-Performance Payments Team For Fraud Detection, a PYMNTS collaboration with Stripe, examines how digital platforms of all sectors and sizes plan to develop their anti-fraud teams as part of their their broader growth and development strategies. Drawing from an extensive survey from approximately 250 payments heads at digital platforms in the U.S. and abroad, our study analyzes how poor anti-fraud capabilities can harm platforms’ long-term growth strategies, and how they can build high-performing teams to tackle these challenges.

https://www.pymnts.com/news/partnerships-acquisitions/2019/p27-nordic-payments-platform-mastercard/

India Tells eCommerce Firms To Comply With New Foreign Investment Rules

https://www.pymnts.com/news/international/2019/india-ecommerce-foreign-investment-rules/
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To discourage eCommerce firms from offering hefty discounts, India has told the companies that they have to make sure they are complying with new rules for foreign investment. Commerce Minister Piyush Goyal has said the government is ready to listen to concerns, but is committed to shielding small merchants from predatory behavior on the part of firms that are foreign-funded, Reuters reported, citing unnamed sources.

Goyal reportedly made the comments in a closed-door meeting with multiple online retail firms. The discussion comes during a week when U.S. Secretary of State Mike Pompeo is set to travel to New Delhi and trade tensions have risen between the two nations. And, while the country imposed new foreign direct investment (FDI) rules to aid small merchants numbering in the hundreds of thousands, a right-wing group along with small businesses believe that issues remain.

They claim eCommerce retailers tap into business structures that are complex to skirt federal rules while still using billions of dollars for discounts. The government is said to have put the new policy into place following complaints by small traders that claim that large eCommerce companies used their inventory control from affiliated vendors to make an unfair marketplace that had major discounts.

The report comes after news surfaced in January that new restrictions in India were poised to have an impact on Flipkart as well as Amazon and impact how each can do business on their online marketplaces. The firms had until Feb. 1 to comply with the new restrictions, which were announced in December.

U.S.-India Strategic Partnership Forum (USISPF) President Mukesh Aghi said, according to reports in January, “A sudden change in rules is not helpful.” Aghi continued, “It sends a message to groups that the environment is not transparent.” As previously reported, India made sure to protect small merchants when it opened the country to foreign capital in the 1990s, but it wasn’t as clear with its rules when online shopping came into play.

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Latest Insights: 

The Payments 2022 Study: Building A High-Performance Payments Team For Fraud Detection, a PYMNTS collaboration with Stripe, examines how digital platforms of all sectors and sizes plan to develop their anti-fraud teams as part of their their broader growth and development strategies. Drawing from an extensive survey from approximately 250 payments heads at digital platforms in the U.S. and abroad, our study analyzes how poor anti-fraud capabilities can harm platforms’ long-term growth strategies, and how they can build high-performing teams to tackle these challenges.

https://www.pymnts.com/news/international/2019/india-ecommerce-foreign-investment-rules/

ATM manufacturer Diebold Nixdorf adds branch-like capabilities

https://bankinnovation.net/2019/06/atm-manufacturer-diebold-nixdorf-adds-branch-like-capabilities/
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Diebold Nixdorf’s DN Series automated teller machine, now in pilot with 18 financial institutions. Image provided by Diebold Nixdorf.

Against the tide of dropping ATM numbers globally as customer use cash less often, Diebold Nixdorf is adding capabilities to its ATM machines to encourage adoption. The goal is to provide customers with a comprehensive service offering including deposits, bill payments, the ability to interact with mobile devices and other tasks customers would go to …Read More

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https://bankinnovation.net/2019/06/atm-manufacturer-diebold-nixdorf-adds-branch-like-capabilities/

In the battle for top of wallet, Citi adds instant card rewards redemption

https://bankinnovation.net/2019/06/in-the-battle-for-top-of-wallet-citi-adds-instant-card-rewards-redemption/
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Citibank is hoping instant cash back rewards at checkout will encourage more card use and grow customer affinity with the brand.

In July, the bank is enabling instant reward redemption capability at checkouts from both Android and iOS devices, for both online and physical store transactions. The feature is made possible through a partnership with Mastercard.

Citibank

The goal is to encourage customers to redeem their credit card rewards for cash back as frequently as possible — no matter how small the purchase or for partial funding of purchases. It’s an effort to entice customers to make Citi cards their default payment method and encourage customer loyalty.

“Our customers work hard to earn those points,” said Mary Hines, head of customer engagement and innovation for Citi branded cards, in a briefing with reporters Tuesday. “We want to make them as rewarding as possible, and we can deliver personalization by enabling them to redeem for whatever they want.”

Unlike personalization efforts that comb through data to suggest products to customers, personalization through instant rewards redemption puts control into the hands of the customer on how and when they would like to use their reward balances, Hines explained. “You personalize [the experience] by giving the customer the choice to get exactly what they want from the merchant, dining and entertainment establishments,” she said. The bank declined to comment on the specifics around which purchases are eligible beyond “most of the things you do every day — dining, shopping, entertainment — are eligible.”

When asked whether encouragement of small redemptions reduces the bank’s balance sheet risk due to unclaimed rewards, Citi said the bank’s motivation is to encourage card use to build more of an ongoing relationship with the customer. “When people redeem, they’re more engaged and more loyal to your brand,” said Hines.

According to Ted Rossman, analyst at CreditCards.com, instant rewards redemption is a tool to encourage more frequent use of Citi’s cards among its customer base, with the objective to make Citi cards the most commonly used payment method among its customers. “It’s all about which card is at the top of your wallet —  it’s where all issuers want to be,” he said. “It’s whatever gets you to use that card more regularly. That’s why ongoing rewards are becoming more important than sign-up bonuses.”

The instant rewards redemption feature launched one day after the bank eliminated benefits from many of its cards effective Sept. 22, including a “price rewind” feature for online purchases along with trip cancellation and interruption protection. The bank reportedly cited “sustained low usage” as the rationale for the move.

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https://bankinnovation.net/2019/06/in-the-battle-for-top-of-wallet-citi-adds-instant-card-rewards-redemption/