Several credit card firms have started forbidding Bitcoin and cryptocurrency purchases with various decent reasons. This very week, Apple Inc. in collaboration with two American multinationals financial services firms Mastercard Incorporated and Goldman Sachs Group, officially rolled out a new card providing customers 3% cash-back (discount) on products and services bought directly from Apple, and 2% discount on any products bought using Apple Pay – Apple’s electronic wallet service – and 1% on other related transactions.
Even though Apple Card has no yearly fees or other related transaction fees, it carries some fine print. Particularly, Apple’s credit card may not be in any way applied for cash advances or equivalents, and this ban takes account of cryptocurrencies such as Bitcoin (BTC), as revealed by the customer agreement published on Goldman Sachs’ official website.
In banning card purchases of digital currencies, Apple is being supported by other issuers and providers of credit cards including Citigroup Inc. based in New York City, JPMorgan Chase & Co. with its headquarters in NY, Bank of America (BofA) based in North Carolina and Capital One Financial Corporation based in Virginia. Credit card issuers seemingly don’t view cryptocurrencies including Bitcoin as digital gold, or a durable investment, just as a wide number of cryptoasset collectors do.
From February last year, all these four multinational financial services giants have prohibited their clients from purchasing cryptocurrencies including BTC using their cards on major virtual asset exchanges such as Coinbase. Another American financial services firm based in California Wells Fargo & Company, also barred its customers from buying digital assets using their credit cards since June last year. Also, Gemini cryptocurrency exchange only accepts clients to fund their accounts via bank, wire transfers or digital currency deposits.
The attempt of financial institutions to ban customers from making purchases using cryptocurrency may be attributed to security matters and the volatile nature of Bitcoin. Credit cards further have the risk of default. In addition, several credit card firms have tried to stop customers from participating in gambling and buying stocks in order to prevent compulsive behaviors that could cause financial disintegration.
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Dinner with Uber
Uber is piloting an Uber Eats feature that allows consumers to pre-order, pay, schedule a seating time and then eat food in restaurants, an expansion of Uber Eats take-out service and an attempt to reach a broader range of restaurants.
The ride sharing company believes its “automatic payment” experience is transferable to dining in, and can slow wait times at restaurants, reports Eater. The test cities are Austin, Dallas, Tucson and San Diego, and the dine-in option will reside alongside the delivery feature.
Uber is presuming many consumers will also use Uber to book a ride to the restaurant. Uber and other ride-sharing apps are under pressure to build ancillary services off of their core ride-sharing services to gain new revenue streams off of their pre-enrolled users.
Alipay has added “beauty filters” to its selfie-pay system in a new feature that’s expected to be live across the app’s brick-and-mortar merchant network in China within the next week.
The payment app is reportedly addressing a concern in China that facial recognition machines render unattractive images, reports TechCrunch, citing a Chinese language poll from Sina Technology that found 60% of respondents think they don’t look as attractive on facial recognition payment systems.
It’s an issue that could adversely impact in-store traffic if people aren’t comfortable with an image display at checkout. Smartphone maker Xiaomi has also recently developed image improvement technology, according to TechCrunch.
More pressure for Facebook
Facebook’s Libra has drawn regulatory pressure in the U.S. and Europe, and Japan is also joining the mix.
Japan’s central bank is concerned Libra will be tough to regulate because of the group of traditional currencies and government securities fall under diverse jurisdictions, reports Nikkei Asian Review.
Japanese regulators contend that by using a group of currencies, Facebook may be trying to avoid a large amount of control from one regulator, reports Coindesk.
Godfrey Mupanga, a Zimbabwe lawyer who has the support of Lawyers for Human Rights, is petitioning a recent move by the Zimbabwean government to outlaw U.S., South African and European currencies.
The government on June 24 declared the Zimbabwe dollar the official currency. Mthuli Ncube, the finance minister, made the decree shortly after telling the local media Zimbabwe isn’t ready to abandon its multi-currency economy, reports MoneyWeb, a local news site. Zimbabwe’s inflation rate for its local currency was 98% in May, MoneyWeb reports.
The legal petition contends currency moves in Zimbabwe require parliamentary approval, and as such the executive decision is unconstitutional.
E-commerce platform BigCommerce is expanding its relationship with Klarna beyond the U.S. to include several of Europe’s biggest markets.
The move will enable BigCommerce merchants in the U.K., Germany, Austria, Switzerland, the Netherlands, Norway and Finland to offer customers all of Klarna’s installment-style credit options including Pay Later and Slice it, according to BigCommerce.
BigCommerce began working with Klarna in the U.S. in 2016, enabling merchants to offer customers instant installment-loan payments on big-ticket purchases such as audio gear.
Yahoo Finance | Thu July 4, 2019 – Fujitsu Laboratories have created a blockchain-powered system which checks the identity of online payment participants. Decentralized Identification (DID) provides individuals and businesses with a tool to rate other users’ trustworthiness during online transactions.
The Business Times | Fri July 5, 2019 – Australia’s three biggest banks said they will test a new bank-guarantee platform for shopkeepers that uses a shared database, claiming the project would mark the world’s first use of blockchain technology to process retail financing.
The Wall Street Journal | Thu July 4, 2019 – For all its crypto styling, Facebook ’s Libra looks less like bitcoin and more like a 50-year-old type of investment fund that has attracted intense regulatory scrutiny since the 2008 financial crisis. Investors should be skeptical of claims it can escape the same kind of attention.
It’s too early to measure the market effect of New York City’s contactless payment acceptance pilot launched at transit locations barely a month ago, but many merchants in the immediate area may not be ready if demand spikes.
Brazil has one of the world’s worst payment fraud problems, which has come in handy for ClearSale as it tries to cut transaction decline rates for online payments globally. The Olympics also came in handy.
The Apple Card is made of titanium and eliminates much of the information found on a typical card — no printed number, expiration date, or security code.
The sleek design of the card follows in the footsteps of other aesthetically pleasing cards geared toward millennials, including the Chase Sapphire Reserve Card, Venmo’s card, and even the Magnises card from Billy McFarland of Fyre Festival fame.
Earlier this year, Apple debuted a physical credit card to work with its virtual payment service, and people took note of its sleek and minimalist design.
The Apple Card is designed to be used as an alternative to Apple Pay, which lives in the Wallet app on the iPhone, in places that don’t accept it.
The Apple Card doesn’t feature numbers printed on the front and back, unlike a typical credit card with a 15- or 16-digit card number, an expiration date, and a three- or four-digit security code. All the off-white, titanium card has on it is the cardholder’s name, a chip, and the Apple logo in the top-left corner.
Other exclusive, high-end credit-card companies — including Citi, Chase, and Capital One — have taken a similar route, tightening their customer base by applying high annual fees and spending minimums.
But it’s not just established banks and credit-card companies attempting to lure millennials with design. Young fintech companies have started following suit.
Then there’s the Magnises card, created by Billy McFarland of Fyre Festival infamy and endorsed by the rapper Ja Rule. The black card catered to young people who couldn’t afford the luxurious Centurion Card but wanted the exclusive benefits that Magnises advertised, like entry to elite parties and celebrity events, a swanky members-only pad, and a service for scoring in-demand concert tickets and restaurant reservations.
That venture burned out, but the idea was there. Apple has capitalized on it, with more features to draw people in to apply: no annual fees, late-payment fees, over-limit fees, or foreign-transaction fees, and a cash-back program called Daily Cash that’s free to use for Apple Pay customers.
While reports of the demise of cash may be exaggerated, many businesses and consumers clearly enjoy the convenience of mobile and other digital forms of payment. According to Worldpay’s 2018 Global Payments Report, e-commerce will surpass $4.6 trillion globally by 2022, while the UNCTAD predicts mobile payments will exceed credit card payments in the developed world this year.
Mobile cash is catching on in the world’s less-advanced economies, in some cases leapfrogging traditional banking as unbanked citizens increasingly use phones to connect to the digital economy. In the developing world, banks are offering phone-operated money-transfer and mobile wallets, facilitated by real-time payment trackers and distributed ledger technology (DLT). Coupled with new digital assistants and chatbots, these developments represent a vast change in individuals’ relationship with their financial institutions. As these changes take hold among customers, they force banks, in turn, to rethink how they innovate.
When Kenya’s largest mobile operator, Safaricom, launched M-Pesa with Vodacom in 2007, it quickly morphed from a microloan repayment service into a money-transfer scheme by repurposing the user’s SIM card and phone account into a bank account for virtual currency. This somewhat accidental discovery is fast becoming a global phenomenon. According to the Global Acceptance Transaction Engine (GATE) Mobile Wallet Trends Annual Report, 2.07 billion consumers worldwide will use a mobile wallet to make a purchase in 2019, up nearly 30% from the 1.6 billion consumers recorded at the end of 2017.
According to The Next Phase of Digital Wallet Adoption, a Forrester report commissioned by JPMorgan Chase, features that encourage respondents to use digital wallets over other payment methods include order-ahead-and-pay, coupon/reward redemption, and self-service pay-at-table. Such features are usually only available within single-store apps or limited restaurant partnerships, although they are included in the leading global wallets—Apple Pay, Android Pay, and Samsung Pay. A killer wallet app would provide a full range of these features and, perhaps most important, include a large range of providers, avoiding the need for multiple apps.
Millennium IZI, the mobile banking solution of Millenium BIM, one of Mozambique’s largest banks, enables customers to perform most financial transactions on their mobile phones. It recently offered interoperability with M-Pesa, Vodafone’s mobile phone–based money transfer service, financing and microfinancing service; the tie-up resulted in over one million transactions between the two platforms in the first few months after launch.
Since unveiling its mobile wallet, payit, in February of last year, First Abu Dhabi Bank has used it to promote financial inclusion. In addition to allowing expatriates from the United Arab Emirates to send cash back home, users can send money to friends, pay bills, split bills and shop online. Payit also allows them to make purchases in stores via sound-wave technology. This is especially handy for merchants, as it allows them to accept payments using regular cash registers and doesn’t require them to install new hardware.
Last year, Moldova’s Moldindconbank allowed customers to withdraw and add cash to a card account using a mobile phone by adding scanning devices to its ATMs. By sending a barcode image generated in the mobile app to another party, the customer can enable that person withdraw cash by scanning the image on their smartphone.
In Pakistan, Telenor Microfinance Bank, in partnership with Valyou Malaysia, is spearheading an international remittance wallet, powered by Alipay’s blockchain technology. Unlike the previous wire-based remittance services, this one can save money by cutting out intermediaries and time, as transactions take seconds. Telenor claims the new mobile wallet improves transparency, thereby nurturing greater customer confidence in Pakistan’s macroeconomic stability.
Underpinning the shift to mobile cash is the adoption of real-time payments trackers. Since launching a corporate real-time tracker in April 2018, the UAE’s Mashreq Bank has experienced a 64% reduction in calls to its customer-service unit for payment inquiries, and a 77% increase in the number of searches on the payment tracker.
To provide greater transparency around the movement of funds and reduce inquiry volumes, the National Bank of Kuwait (NBK) leveraged the unique end-to-end transaction reference (UETR) required to identify transactions across national borders, introduced by SWIFT through the launch of the global payment innovation (GPI) platform. NBK integrated the UETR with the NBK customer portal using an application program interface (API) for fetching transaction-related information from SWIFT GPI and feeding this information into its customer portal. Prior to the launch of the service, clients couldn’t track the date and time of funds settlement to the final beneficiary.
Many see GPI as the correspondent banking industry’s response to the disruptive forces of blockchain, and the solution to some of the transparency and tracking issues that have traditionally plagued payments. But banks are no longer tied to their own in-house service offerings; like their customers, they can shop around for the solutions that best match specific clients needs. Thus, many banks are offering both GPI and the Ripple blockchain to give customers greater choice and align themselves with the new reality of banking as a service (BaaS). After introducing the GPI tracking initiative, NBK saw the number of queries drop 60%, but it sees Ripple as necessary to meet the specific needs of expatriates working in Kuwait who previously relied on money-transfer agencies to send cash home.
Digital ledger technology, in which transactions are recorded in multiple places at the same time, further facilitates and builds confidence in digital payments security, since details are verifiable. In Belarus, Alfa Bank’s first exposure to DLT was as a user of Ethereum’s blockchain technology. In 2018, it migrated to Hyperledger Fabric to provide real-time airline ticket payments for corporate agents of S7 Airlines, Russia’s largest domestic carrier. Previously, agents could only purchase tickets against a bank guarantee—which usually meant 100% cash covered—or by payments in advance, usually with significant excess to ensure that future needs were covered. Now, customers are released from bank guarantees, advances are returned and pay-as-you-order transactions are the rule. Its flexible approach to technology puts Alfa in a position to scale the solution for other business cases.
Similarly, Nuggets, an e-commerce payments and identification platform, leverages blockchain technology to ensure that end users are in full control of their data, offering users a digital vault that they can access for payments, logins and ID verification.
Next Up: Applying AI to Payments
The next step, say bankers, is to move from making the mechanics of payments mobile to making them simpler as well. From there, it becomes easier to offer advice in a mobile setting. China Guangfa Bank, for example, developed CGB HuiPay to simplify payment processes by applying artificial intelligence and machine learning on various payment decisions to provide smarter, personalized experiences for every client.
User experience also lies behind DBS Bank’s corporate chatbot, Joy. Although readily available for retail banking customers, Joy was Asia’s first corporate virtual assistant. It enables DBS to address multiple customer inquiries at once, minimizing wait times, and is available 24/7.
While convenience is eroding consumer skepticism, mobile payments are still far from being universally accepted. Almost 90% of US consumers prefer to pay by cash, credit card or debit card over mobile alternatives, despite the fact that 77% of the population own a smartphone, according to Simon-Kucher & Partners. Mobile payments, whether through an app or a wallet, are safer than cards in at least one respect: Merchants don’t receive the customer’s account or card details—only a unique, one-time code. Yet respondents cited confidence (70%) and security concerns (40%) as the biggest barriers to mobile payment adoption.
This lingering confidence gap underscores the need for banks to emphasize creativity and flexibility if they want to retain customers and win new ones. The days of one-size-fits-all payments are over; the banks making the most of the new era of digital cash are the ones that are embracing the power of personalization and collaboration.
Payments Innovators 2019
Public Utilities Payments Monitoring and Control
China Guangfa Bank
First Abu Dhabi Bank (FAB)
Corporate Real-time Payments Tracker
Millenium bim Mozambique
Millennium IZI interoperability
National Bank of Kuwait (NBK)
Real Time End-To-End Payment Tracking on Customer Payments
Last month, meanwhile, cryptocurrency wallet Spend integrated Apple Pay functionality, allowing users to fund contactless mobile payments with any …
Apple will target cryptographic developer tools at this year’s Worldwide Developers Conference (WWDC) 2019, the company revealed in the event program for June 5.
During a session scheduled for Wednesday at the ongoing event, titled “Cryptography and your Apps,” Apple will unveil a new tool dubbed “CryptoKit,” which will debut as an update in iOS 13.
CryptoKit will focus primarily on developers, allowing them to build in more security functionality for apps with better support.
“System frameworks encrypt both data at rest and data in transit in a transparent way for you. This functionality is available by simply setting an attribute. However you may want to do more to protect your users’ data,” the event description reads. It continues:
“CryptoKit is a new Swift framework that makes it easier and safer than ever to perform cryptographic operations, whether you simply need to compute a hash or are implementing a more advanced authentication protocol.”
The ongoing WWDC comes as social media users keep an increasing eye out for any hint Apple is changing its somewhat hands-off approach to the cryptocurrency industry itself.
Small moves, such as in-app SF symbols — those compatible with Apple’s San Francisco font — now including a bitcoin (BTC) logo, did not go unnoticed by commentators this week.
Last month, meanwhile, cryptocurrency wallet Spend integrated Apple Pay functionality, allowing users to fund contactless mobile payments with any one of around 20 cryptocurrencies.