10.16.17 Your morning briefing
The information you need to start your day, from PaymentsSource and around the Web:
Bad news for credit bureaus: The massive data breach Equifax disclosed in recent weeks wasn't enough to deter the IRS from awarding it a $7.2 million contract — but a second, smaller incident was. Equifax lost its IRS contract after its website was compromised, directing visitors to a bogus update page for Adobe Flash that was actually set up to distribute malware, Ars Technica reports. There is a ray of hope for Equifax, as the IRS has said it is conducting its own investigation and may restore the business agreement if it determines that Equifax is secure, the article states. But if Equifax does lose the deal, would its rivals be seen as more secure? TransUnion's website was serving up the same bogus Adobe Flash update page to visitors in Central America, Ars Technica reported in a separate article.
Can smart contracts be democratized? Entrepreneur Reuven Cohen has developed a service to remove some of the complexity behind the smart contracts that underpin transactions for cryptocurrencies. Called CoinLaunch, it's designed to build smart contracts to support Ethereum-based ICO tokens in a few minutes, circumventing the expensive team of blockchain lawyers, accountants and developers that are typically required to build smart contracts, reports TechCrunch. CoinLaunch's users follow a self-directed set of instructions that ask for data such as the name of the coin launch and the total issued. The next step is to build a smart contract that guides the usage of the tokens. Cohen told TechCrunch users are compliant with blockchain regulations, provided they follow a few instructions on CoinLaunch, which has an integrated compliance system to accommodate local regulations and money laundering protections. Cohen and his partner Randy Clemens are self-funding CoinLaunch and plan a token sale in 2018.
Work from home: Meesho, one of many startups focused on India's "housewife reseller" market, has raised $3.4 million in Series A funding led by SAIF Partners, TechCrunch reports. A graduate of Y Combinator's startup accelerator program, Meesho allows users to resell products from 1,000 suppliers online by marketing to their social network on WhatsApp, Facebook and Instagram; the items go directly from the supplier to the end consumer, so the resellers don't have to handle inventory. Twenty thousand resellers use the Meesho platform, out of an estimated market of 3 million resellers in India, the company told TechCrunch.
What could really hurt the U.K.: It's still unclear how the U.K.'s pending departure from the European Union will harm London's status as a financial and technology hub, but there's some detail emerging on what elements of the separation could be the most harmful. Brexit could result in the U.K.'s exclusion from the Digital Single Market, Single European Payments Area (SEPA) and other banking regulations; and Finextra reports this could harm U.K.-based startups, particularly in the payments industry, citing research from independent technology startup rating agency Early Metrics. This exclusion would place U.K. companies outside of common rules for data sharing, processing and risk-related standards. And more than 75% of financial technology startups rely on external technology to integrate payments or access market information across borders, according to Early Metrics, which adds the loss of passporting rights could hurt that access. London is still holding onto its technology capital status, with London being the top center for fintech investment globally in 2016, just ahead of the San Francisco area.
From the Web
PBOC inches closer to digital currency
China Daily | Sat Oct 14, 2017 - The People's Bank of China, China's central bank, has completed trial runs on the algorithms needed for digital currency supply, taking it a step closer to addressing the technological challenges associated with digital currencies, according to a top official associated with the project. Yao Qian, director-general of the Institute of Digital Money at the PBOC, said China's central bank has successfully designed a prototype that can regulate the supply of its future digital fiat currency. The successful simulation of money supply paves the way for the central bank to become the future sole regulator and policymaker governing the value of digital fiat currency, said Yao. Digital fiat currencies are the digital forms of a sovereign currency that is backed by the central bank. Unlike Bitcoin or other digital money issued by the private sector, the digital fiat currency has the same legal status as the Chinese yuan, the only fiat currency issued by the People's Bank of China. There is no timetable for the introduction of the currency, but once introduced, China is likely to become the first country that would deploy a digital fiat currency.
Rep. Patrick McHenry wants credit bureaus to stop using Social Security numbers by 2020
CNBC | Fri Oct 13, 2017 - Congressman Patrick McHenry wants credit bureaus to stop using Social Security numbers. McHenry introduced a bill that would ban the practice by 2020 in wake of Equifax's massive data breach that exposed millions of Americans' Social Security numbers. The legislation would also create regulations for credit bureaus and credit freezes. McHenry, a Republican from North Carolina, argues Social Security numbers were never intended to be essentially a national identification number. As for what to use instead, McHenry said the private sector can decide. Some possibilities could include blockchain technology, biometrics or personal identification numbers.
In the contactless payment era, why is cash making a comeback?
The Guardian | Sat Oct 14, 2017 - Approximately £500m worth of the coins are believed to still be in circulation. That is a lot of loose change. But official figures show the value of hard cash in the economy is increasing at a rapid rate. Annual growth in the run-up to last Christmas was the fastest in a decade, and the total value of all banknotes and coins has now surged to almost £83bn. That’s more than £1,200 in cash for every man, woman and child in the UK. Research shows the average person has about £77 in cash in their purse, pocket and at home. However, an increasing number have much more squirrelled away safely. And most of it is in £20 notes, which account for more than half of the total. But this is not a peculiar quirk of the British character. There are mountains of cash around the world – although you would struggle to see them. There were $1.5tn (£1.1tn) of US dollars in circulation last year, an increase of 6% on 2015, with more than a trillion made up of $100 notes. There were €1.1tn (£1tn) of euro notes in circulation in August, up by 6% on a year ago.
More from PaymentsSource
IBM brings in blockchain to speed up cross-border payments
IBM plans to use blockchain technology to power real-time execution for international transfers, joining the push to streamline a traditionally cumbersome payment type.
Commercial banks settle for 'second place' in corporate payments: Bottomline's Cheney
The bank that can effectively enable a corporate customer to manage its working capital and order-to-pay cycle, pay its employees, and provide analytics and insights to forecast cash flow will win the lion’s share of profits, writes Jessica Cheney, vice president of strategic solutions for Bottomline Technologies.
7 plans to kill cash and checks
Cash is resilient, especially during times of crisis or uncertainty. But there are significant efforts to make cash less relevant in areas where it has typically been a mainstay.
Embrace from businesses makes bitcoin mainstream
The convenience of receiving payments within seconds, with the minimal transaction fees that bitcoin provides, means a lot to a business, writes Mariam Nishanian from Dentacoin.
Cross-border payments finding more recipients with bank accounts
Fintech solutions to send cross-border payments to unbanked consumers through smartphones are gaining momentum globally, but the volume of remittances going to bank accounts in developing countries is also on the rise, according to Small World Financial Services.