9.7.17: Your morning briefing

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Welcome to the PaymentsSource Morning Briefing, delivered daily. The information you need to start your day, including top headlines from PaymentsSource and around the Web:

Will Alibaba take advantage of NAFTA's demise? President Trump is pressuring the North American Free Trade Agreement (NAFTA), a move that could open the door to other deals, such as an agreement between Mexico's government and Alibaba to incorporate products and services from Mexican companies into Alibaba's e-commerce platform and other affiliated payment and shopping functions. Reuters reports Mexican President Enrique Pena Nieto has just finished a trip to China as part of a broader strategy to find new markets for Mexican goods. NAFTA is responsible for about $1.2 trillion in early trade between the U.S, Mexico and Canada. Representatives from these three countries are having talks to reform NAFTA, through no definitive deal has been reached.
Bad talk for voice payments: Siri and Alexa are starting to take hold as options to execute payments, but there are some emerging security risks that could be a problem for voice technology. Researchers from Zhejiang University in China have found a way to attack Siri and Alexa through ultrasonic frequencies, reports Engadget. These frequencies are too high for human ears, but the microphones on smartphones can "hear" them. Researchers found that by using ultrasonic frequencies, they could trick the artificial intelligence-driven virtual assistants into opening malicious websites and unlocking doors with web-connected "smart locks." Using what's called a DolphinAttack, the researchers translated human voices into ultrasonic frequencies, then played them back from a smartphone with an amplifier, ultrasonic transducer and a battery. These items cost about $3 and can work with Siri, Google Assistant, Samsung S Voice, Alexa and other voice assistants, according to Engadget.

About face: Facial recognition is another emerging technology that's drawing interest from payment companies, though like voice assistance it also has some challenges — namely what happens when the person is wearing a mask or scarf. Developers are working on ways to circumvent that, according to The Verge, which reports the new technology would use neural networks and "deep learning" to feed a data mine with people wearing face coverings. In general, this technology has caused some controversy given the implications for privacy and surveillance. But for financial companies, the technology could improve the ability to recognize a user accurately by making the recognition technology more dynamic and workable in different climates. Facebook has built trained neural networks that can recognize people based on air, body shape and posture, reports The Verge. The University of Basel has build a 3D model of a target's face based on what it can "see."

Will EU banks get fintech green light? The European Commission is reconsidering banking rules that govern how banks spend money on software, a welcome move for banks that face security risks and encroachment from startups and third-party mobile payment systems. Reuters reports the EC may change the classification of IT spending to an "investment" rather than a "cost." That change means banks would no longer have to set aside capital to cover software expenditure. Reuters estimates that would loosen more than €20 billion in capital for IT investment compared to the €60 billion that's expected to be spent on bank IT in the European Union this year. Banks have long lobbied for this change, citing a need to respond to developments in payments technology, mobile financial services and competition from startups that don't have the same rules. Banks can also use this flexibility to respond to data breaches and other risks.

From the Web

Welcome to the new social shoppers
China Daily | Thu Sep 7, 2017 - Social media is transforming the online shopping business in China and fueling growth for the internet's big two players. Alibaba Group Holding Ltd reported that revenue jumped by a staggering 56 percent to 50.2 billion yuan ($7.4 billion) in the quarter which ended on June 30 compared to the same period last year. Rival Tencent Holdings Ltd came up with a similar set of stellar numbers with revenue soaring 54.8 percent to 49.6 billion yuan. These bloated figures were triggered by surging sales online with Tmall, Alibaba's internet flagship retail hypermarket, profiting from social media trending. Naturally, China's largest e-commerce platform and Tencent are looking for new streams of growth as they reach near saturation point in their home market.

Credit-card fraud probe exposes alleged D.C. dogfighting ring called ‘DMV Board’
The Washington Post | Wed Sep 6, 2017 - An investigation into a long-running credit-card fraud scheme in the D.C. area led to the exposure of a D.C.-area dogfighting ring last week called the “DMV Board,” according to federal prosecutors in the Eastern District of Virginia. The government seized seven pit bulls from a home in Southeast Washington and six from a home in Temple Hills, Md. The homes had been searched as part of the credit-card probe. The dogs were being used in fights in the District, Maryland and Virginia, according to a court filing by Assistant U.S. Attorney Gordon Kromberg. At the home in Temple Hills, FBI agents found a fighting ring stained with blood, along with training equipment, dog trophies and performance-enhancing drugs. More pharmaceuticals, chains, collars, whips and other items associated with dogfighting were found in the D.C. house.

Company behind new ICO says increased regulation is a 'positive thing'
CNBC | Thu Sep 7, 2017 - A Hong Kong-based fintech firm is launching an initial coin offering as part of its plans to revolutionize how payments are conducted. Octo3 Group is a start-up that currently sells a range of financial technologies, but it's hoping to bring its global payment processing network onto a blockchain platform. As part of that move, the company plans to hold a digital token sale from Oct. 3 to 31. The move could change the entire payment landscape, Chairman Ajmal Samuel told CNBC. Currently, "many merchants cannot accept different payment methods and consumers ... cannot pay with those particular payment methods which they have," Samuel told CNBC. Those challenges stem from the large number of intermediaries, such as banks and financial service firms, involved in issuing, processing and acquiring payments. But the situation could soon change, he said.

More from PaymentsSource

Square to apply for industrial bank, inflaming ILC debate
WASHINGTON — The payment processor Square is seeking an industrial loan company, according to several sources familiar with the matter, further sparking debate over whether fintech companies should be allowed to use the controversial charter.

Faster payments to make ACH debits trickier for B-to-B
Business payments can process much faster in the next couple of weeks, creating a whole new set of benefits and corresponding risks.

LevelUp, Onosys partner to expand consumers’ order-ahead options
Boston-based mobile payments platform LevelUp is teaming with Onosys, a Cleveland-based maker of digital ordering platforms for restaurants, to help both companies expand consumers’ access to eateries with order-ahead capabilities.

Geoswift's translator tackles China's tricky payments language barrier
Hong Kong-based Geoswift got its start by creating technology powering cross-border tuition payments sent by families from China to colleges abroad, but when Geoswift saw corporate payments into China begin to grow, its biggest barrier wasn’t technology, but language.

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