Thursday, March 26, 2015

Bitcoin - A Comprehensive Analysis

With so much attention surrounding the cryptocurrency, many people may be aware of the bitcoin revolution as it took hold of the Internet a few years ago. However, while they may have heard about how it spread and took hold, many are still not aware of how it works and what purpose it serves online.

To learn more about the bitcoin, refer to the infographic below created by Stetson University's Online Master of Accounting Degree (Click to enlarge):

Stetson University Online Master of Accountancy Program

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Wednesday, March 25, 2015

United Kingdom Take a Step Forward in Regulation of Digital Currencies

Digital currencies are beginning to rise quickly in popularity with consumers increasingly looking into digital currency as a means of payment. The UK government, in their most recent budget report have announced their plans to support innovation in the nascent technology, whilst taking steps to prevent criminal use. Similar to the Consumer Financial Protection Bureau (CFPB), who recently proposed rules to help the development of the prepaid industry, the UK government are seeking to create an environment that will allow digital currencies to flourish whilst making it ‘a hostile environment for illicit users of digital currencies’.

At the beginning of March, cash was overthrown as the leading method of payment in the UK. More transactions were made digitally by credit, debit, or via other cashless methods than paying with cash. Predictions in 2023 show that digital transactions will have risen to a staggering 27 billion per year with cash being around 13 billion. With digital set to continue to be the leader in payments, the UK Treasury have seen the need for new regulation.

The main aim, just like with the CFPB’s new proposed rules, look closely at consumer protection as digital currencies in the past have been linked with many criminal activities. The bitcoin especially has been under a lot of scrutiny for its popular usage on the website Silk Road which was a marketplace for drugs, arms and other underground business. What many seem not to know is that bitcoins are not in fact anonymous; they can be tracked through the pseudonyms created by users to see every transaction ever made.

This budget announcement came soon after the Bank of England declared moves to undertake research into central bank issued digital currencies. Digital currencies have been pinpointed by the UK government as something with great potential but need a set of standards and best practices in order to decrease the volatility of prices in currencies such as bitcoins and to protect digital transactions that previously have not been particularly secure.

The UK’s move to embrace digital currencies shows that increased usage is expected in the future. The necessary regulation should allow consumers to feel more comfortable in becoming more reliant on digital transactions. Standardising digital currencies could help to adapt bitcoin and other virtual currency values for recording and transfers to help promote mainstream adoption.

It will be interesting to see whether other countries follow suit and devote more research into the support of digital currencies. However like with the CFPB’s proposed rules regarding prepaid payments, the standardising and regulation of digital currencies could mean a potential stifling in development and innovation within the industry that could limit longevity due to new innovations arising in the future.  

About the Author: Harry Kempe, a marketing intern at IIR USA, who works on various aspects of the industry including social media, marketing analysis and media. He is a recent graduate of Newcastle University who previously worked for EMAP Ltd. and WGSN as a marketing assistant on events such as the World Architecture Festival, World Retail Congress and Global Fashion Awards. He can be reached at  

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Tuesday, March 17, 2015

APEX Europe Announces Its Newest Retail Keynote

Announcing APEX Europe's Newest Keynote:

Ankur Gupta
Ankur Gupta, Director - Big Data, Sears Holdings Corporation

Retail organizations of all sizes have a wealth of untapped data.

Big Data Analytics have revolutionized the shopping experience and the way retail organizations engage their customers. At APEX Europe, you'll learn what big data technologies can reveal on customers and shopping behavior.

By applying these big data tools and techniques, retailers can turn this data into actionable insights for buying behavior and a Customer 360 view. Your customers expect a modern shopping experience...are you equipped with the tools needed to provide one?

Ankur Gupta is just the latest speaker in an all-star line-up of executive speakers, with prepaid, retail and technology speakers hailing from 25+ countries.

Register by this Friday, 20th March to hear Ankur's presentation and lock in the lowest possible price - tickets go up on 21st March - Save €300 now!

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Monday, March 16, 2015

Will new prepaid payments rules improve or hinder the development of the prepaid industry?

Prepaid cards are growing in popularity in today’s payments world with consumers becoming increasingly reliant on prepaid products in order to purchase goods and access funds. Director Richard Cordray of the Consumer Financial Protection Bureau (CFPB) predicted a total dollar value of general purpose reloadable cards to grow to around $100 billion by the end of 2014. The CFPB decided in 2014 that there needed to better rules in order to help to protect users in a way that is more similar to the security that comes from a credit or debit card.

Towards the end of 2014, the CFPB proposed new rules for prepaid accounts that will create amendments to the Electronic Fund Transfer Act and Truth in Lending Act. The rules fall under 4 main categories:

  1. Credit Protections – relates to credit products in prepaid accounts. Now means monthly billing statements, allowance of time to pay debts, late fees and limitations on fee and interest charges.
  2. Prepaid Protections – allow prepaid users to have the same protection as they would receive with a normal checking account. This includes easy access to account information and lost-card and fraud protection.
  3. Prepaid/Credit Distinction – rules to be implemented in order to distinguish between credit products and prepaid accounts.
  4. Prepaid Fee Disclosures – rules in order to standardise upfront disclosures and that card agreements must be publicly accessible. 

The rules will exclude cards that are marketed and labeled as gift cards or certificates. Also excluded are flexible spending accounts, medical savings account, health reimbursement arrangements and health savings accounts.

So are these rules going to be advantageous in the prepaid payments world? The general consensus is yes; much of the 870 page proposal is widely considered to be reasonable. The rule allows credit to be offered and will mean a decline in hostility from regulators in regard to the prepaid industry providing credit, so a measure of regulatory consistency has now been provided. Providers are now allowing check writing and bill paying to help persuade cardholders to use prepaid payments as their primary banking platform.

However the issue that has been raised by many in the industry is that the rules will stifle any future innovations into digital wallets, person-to-person payment systems and cryptocurrency products. The CFPB, some believe simply have too much power and so rulings like these tend to go unopposed. The Bureau has the power to break businesses due to its huge influence. The industry tends to accept new rules and regulations in the fear that if they say no there could be negative repercussions.

To me, looking in from the outside of the industry, it looks as if the rules will be advantageous to the ever-growing industry at present. Providing security and the ability to pay debts, limiting interest charges amongst other plus points will continue to increase the popularity of prepaid payments. However stifling the potential for development and innovation may in the long run mean a limit to longevity if another disruptive innovation within the payments world comes along.

About the Author: Harry Kempe, a marketing intern at IIR USA, who works on various aspects of the industry including social media, marketing analysis and media. He is a recent graduate of Newcastle University who previously worked for EMAP Ltd. and WGSN as a marketing assistant on events such as the World Architecture Festival, World Retail Congress and Global Fashion Awards. He can be reached at

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Tuesday, March 10, 2015

Digital Transactions Surpass Cash in UK

This past weekend saw the end of cash leading as the most popular payment method in the UK. On Sunday March 8th, more transactions were made via credit, debit and other cashless methods than that of cash.

The Payments Council had predicted that this switch would occur in the UK in 2015.

See the figures in the article from The Telegraph, one shows the total value of cash vs. credit transactions from 2014 and the credit transactions out valued cash at a rate of 250:1. This is due to the fact that large corporations who deal with high-value transactions rarely touch cash.

The figures also continue to show the decreasing average payment on a credit or debit card, the rise of contactless payments, and the decrease of average cash transactions over the last few years. These are telltale signs that cash is losing its grip on consumers and is being replaced by digital transactions.

It is suggested that by 2023, cash transactions will fall to just 13 billion and the cashless alternative will grow to a staggering 27 billion. 

The direction of the payments industry is hard to deny, as years pass cash will begin to become an obsolete payment method that is rarely used by the everyday consumer. As new technology continues to emerge, cash slips a little further from relevance.

How long will it be until cash is no longer carried by the everyday consumer? Only time will tell but right now it seems as if it is sooner rather than later.

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Thursday, March 5, 2015

Top 5 Reasons You Can't Miss APEX Europe

At APEX Europe, you'll join an international community and get in-person insights, valuable face time with peers and partners and access to consumer research and case studies you won't hear anywhere else. This is where 250+ payments, retail and technology executives are convening to build the next generation of inter-connected commerce.

With a focus on consumer experience and intra-industry collaborations, All Payments Expo Europe is the most relevant gathering of Europe's payments players, including retailers, programme managers, card networks, processors, issuers/acquirers, financial institutions, payments start-ups, technology and investors.

The Top 5 Reasons You Can't Miss APEX Europe:

  1. The only European payment & financial services event where retail, mobile, data and technology intersect to grow connected commerce
  2. Partner with 250+ movers and shakers in the prepaid, retail & technology industries
  3. Sharpen Your Strategies with insights from industry leaders
  4. Design your company's solutions to challenges in regulation, consumer awareness and interoperability
  5. Uncover new ways for payments technology to acquire new customers, deepen loyalty, leverage data and improve the financial health of consumers
Download the programme.

Register with the code XU2940BLOG by 20 March & save €300!

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Friday, February 27, 2015

Mark your calendars for APEX Europe | Brochure now available!

APEX Europe is the international meeting place for prepaid, technology and retail executives to grow business and identify consumer needs.

Access Insights: Hear next generation consumer needs - and gain a better understanding of how to position your company to capture new business.

Participating retailers include: Home Retail Group, Zalando SE, Coop Danmark, Dansk Supermarked, M&S, Tesco Bank, John Lewis, Nordic Choice, Auctionata and more
Hear from other merchants on the new path to purchase:
  • How omni and multi channel strategies are impacting every customer touch point, from in-store payments to gift cards
  • How mobile can tangibly improve customer engagement and drive bigger conversions and increase in-store visits
  • How mobile can tangibly improve customer engagement and drive bigger conversions and increase in-store visits
  • How digital gift cards are transforming brick-and-mortar institutions' strategies
  • The impact of ApplePay and digital wallets on retail marketing and couponing
  • The implications of new in-store technologies, including iBeacon and geolocation
  • How e-commerce executives are anticipating customers' evolving needs across Europe     
Participating programme managers include: Bankable, IQcard, Tuxedo Money Solutions, Perfect Incentive, 3V, WEX, Payment Card Solutions (UK) Ltd., eNett International and more
Hear from industry stakeholders on new consumer needs:
  • New innovations in grants administration
  • Prepaid's evolving role in gaming
  • The rise of new use cases, including social media payments, prepaid for the affluent and alternative banking platforms
  • The latest developments in corporate payments, and how to identify new opportunities
  • The implications of the latest regulations, and the impact on product development
  • The latest consumer-centric links between prepaid and loyalty
  • What's blocking global issuing?
  • Partnership opportunities with new players, from cryptocurrency to P2P technologies     

Join attendees from across Europe to meet, partner and devise powerful new partnerships. Use the code XU2940BLOG to save. Register now to lock in the lowest rates.

We look forward to meeting you in Marbella, Spain in May this year!   

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Thursday, February 26, 2015

Live at APEX | The Benefit of Linking Bitcoin Implementation to the Existing Payments Structure

Live at Apex: The Benefit of Linking Bitcoin Implementation to the Existing Payments Structure

Welcome to the fourth and final installment of the “Live at APEX” series on the official All Payments Expo Blog. The final session at this year’s conference addressed the benefits of linking bitcoin implementation to the existing payments structure. It focused on the market opportunities for Bitcoin in the under-served and financial wellness categories. I would like to thank our panel, Ed Boyle (Blade), Steve Beauregard (GoCoin), Cathy Corby Iannuzzelli (Corby & Company), and our moderator, Tim Sloane (Mercator Advisory Group) for joining us today. It has been an amazing 3 days and I hope you, the reader, enjoyed reading as much as I enjoyed writing.

Financial services are costliest for the poorest individuals. In fact, “[t]he average underbanked household has an annual income of only $25,500, yet spends 10 percent of that on fees and interest charged by the alternative financial service sector.” To make matters worse, the number of banks in the U.S. reached its lowest total since 1934, in 2013 and this number is continuing to decrease. Rural areas have been hit particularly hard by these bank closures and considering that 85 percent of the poorest counties in the U.S. are rural, the closures disproportionately affect low-income households.

Nearly all non-debt financial services require an initial “cash-in” in order to use the services. Many banks require a minimum balance to open and maintain a checking account, and failure to do so results in a penalty, thereby making opening and maintaining a bank account prohibitively expensive for low-income households. This forces these individuals to turn to alternative financial services, many of which charge “an arm and a leg” to use their services. The question is whether Bitcoin can provide the unbanked and underbanked with improved access to financial services. The answer is YES!

As previously discussed in, “Live at APEX: Digitizing of Money Movement, Remittance, and P2P,” Bitcoin is radically changing the remittance and P2P industries. This is because Bitcoin’s cost structure fits very well within these industries. For example, traditional remittance companies charge 8-12% per transaction, whereas a Bitcoin transaction does not require a fee. It should be noted that to incentivize the Bitcoin network to expedite the transaction, there is generally about a 4¢ fee. Nonetheless, this cost savings is large enough to radically change the remittance industry.

Moreover, unlike banks that require minimum balances, there is no minimum Bitcoin balance requirement. In fact, the smallest amount a person can have is 0.00000001 BTC, called a Satoshi, or approximately 0.00025 of a penny. Because a single bitcoin can be broken down into such small amounts, it can be used to conduct transactions in U.S. dollars, as well as in Tanzanian shilings. This has important implications for remittances and P2P payments because anyone can send value to anywhere in the world, without having to rely on a third party intermediary.

Cross-border transactions can require up to seven intermediaries before they are completed; Bitcoin requires zero. Not only do these intermediaries add to the cost that is borne by customers, but the process is also very time-consuming. This is a reason why companies such as Money Gram and Western Union are able to charge such high fees for remittances; they speed up the process. Their services are still slower, more expensive, and generally less convenient than Bitcoin. They do however solve the “last mile problem,” which is something that Bitcoin has not yet solved. While it is easy to send and receive Bitcoin, only a small number of merchants accept it and it may be difficult to convert into fiat currency, but this is changing.

More than $100 million in venture capital was invested in Bitcoin companies this past year. Companies, such as Ripple Labs and Circle Financial are designing solutions to solve the last mile problem. There has also been significant investment in Bitcoin ATM companies to make it easier to obtain bitcoin (find one near you). Plenty of other areas along the supply chain have also been invested in and are currently being worked on.

Although we are not there yet, by linking Bitcoin implementation to the existing payments structure and decreasing costs, the lives of hundreds of millions of unbanked and underbanked individuals around the world will be improved by giving them access to inexpensive financial services. It does not however end with remittances and P2P payments. E-mail was the first application of the Internet and services such as Netflix were previously inconceivable. A digital currency is only the first application of Bitcoin. The next one is just waiting to be conceived.

Matt Gertler is the Head of Strategy at the Digital Currency Council (“DCC”) and is pursuing his JD/MBA at USC. He is experienced in FinTech, having worked for Venmo, Braintree Payment Solutions, and Earnest before joining the DCC.

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Wednesday, February 25, 2015

Live at APEX | Exploring the Right Bitcoin Applications for Retailers

Live at Apex: Exploring the Right Bitcoin Application for Retailers

 Welcome back to the official All Payments Expo Blog. We just wrapped up the “Omnichannel Forum: Exploring the Right Bitcoin Application for Retailers.” The forum addressed how technological innovation will change the face of retail by considering the latest experiments in point-of-sale (“POS”), loyalty, and gift card applications. I would like to thank our panel, Brad Chun (TechCaf√©), Judd Bagley (, and Sony Singh (Bitpay), and our moderator, Steve Beauregard (GoCoin) for joining us today.

POS transactions are going to undergo a massive overhaul in the coming years. Beginning in October 2015, merchants that do not switch to the Europay-MasterCard-Visa (EMV) chip standard will be liable for any resulting credit fraud. This is coinciding with a switch from Windows XP based systems to cloud based POS solutions. A significant benefit of storing the system on the cloud is that it is much easier to change or add more functionality. For example, if the system is stored in the cloud, merchants can begin accepting Bitcoin almost immediately. Such a change previously would have required getting new hardware if not completely replacing the old system.

But why would a retailer want to accept bitcoin? Traditional payment processors charge 2-3% whereas bitcoin merchant service providers provide this service for 1%. This does not take into account credit fraud, which increases the 2-3% cost to merchants. Bitcoin is also fully secure, so there is no concern for many credit frauds, such as charge backs. Additionally, Bagley shared statistics from Overstock, showing that the average Bitcoin transaction is three-times greater than the average USD transaction. He suggested that Overstock’s most loyal customers are those that pay in Bitcoin.

Once the EMV standard is implemented, the new POS systems will be NFC-enabled. This will allow retailers to accept mobile payments such as Apple Pay and Google Wallet. When you consider beaconing and push notifications alongside these new payment methods, retailers can interact with customers in new ways. Communication does not end when customers leave the store, but may be triggered when they or near it, or even at home when watching a retailer’s commercial. While the last idea might only be an idea currently, it is not a stretch of the imagination that future generation televisions will have the capability to share this information.

Bill Ready (PayPal) explains the importance of mobile in the retail space is that consumers are looking to fill spare moments throughout the day with their mobile devices. He says that “if a retailer can get an app on a consumer’s phone, [it has a] tremendous opportunity to interact with that consumer,” regardless of the customer’s location. This allows retailers to create contextualized experiences tailored to individual customers. Presumably this will increase sales. Considering that both Apple Pay and Google Wallet still rely on the credit card networks, and still suffer with the same 2-3% processing fee, the question remains of how Bitcoin can be implemented alongside a mobile strategy.

We are probably still a few years away. Ideally, customers would be able to link a debit or credit card to a Bitcoin wallet and behind the scenes have the payment processor convert the USD into Bitcoin seamlessly. While we are not quite there yet, Xapo has created a Bitcoin debit card that may solve this problem. However, it is currently in beta testing and not available in the U.S. or India. A solution that is available in the U.S. is provided by one of our sponsors, Gyft. Gyft purchases gift cards as a wholesaler and resells them to its customers. While they can pay by credit card or Bitcoin, customers are encouraged to pay by Bitcoin by being offered an extra 3% in reward points because there are no transaction fees. A Forbes article explains how this method was vital in the author only paying in Bitcoin for a week.
Matt Gertler is the Head of Strategy at the Digital Currency Council (“DCC”) and is pursuing his JD/MBA at USC. He is experienced in FinTech, having worked for Venmo, Braintree Payment Solutions, and Earnest before joining the DCC. If you have any questions, please tweet @magertler using, #APEXLV15, and they may be included in a future post.

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Live at APEX | Digitizing of Money Movement, Remittance, & P2P

 Live at Apex: The Digitization of Money Movement, Remittance, and P2P

 Welcome back to the official All Payments Expo Blog. We recently concluded the “Disruptive Technology Forum: Digitizing of Money Movement, Remittance, & P2P.” The forum centered on the many changes that are occurring in the movement of money, from new rules and regulations to an influx of non-traditional, online players. I would like to thank our panel, Tammi Shapiro (Fiserv), Ajay Hans (Mobetize, Corp.), and Peter Kelly (ABRA), and our moderator, Robert Courtneidge (Locke Lord) for joining us today. Their insight and expertise greatly simplified a very complicated and rapidly changing ecosystem.

In an APEX podcast, Rik Willard (MintCombine) suggests that Bitcoin and other alternative financial services are potential category killers in remittances. He gives the example of Mpesa, a service that allows people to transfer money throughout Kenya almost instantaneously and inexpensively. For example, there is a 12% transaction fee to transfer money from the U.K. to Kenya with conventional remittance companies, whereas there is only a 3% fee with Mpesa. Seeing as 90% of Kenyans are unbanked, but 80% of Kenyans have mobile phones, Mpesa and other similar financial services are radically changing the remittance industry.

Still, services such as Mpesa charge a 3% fee and Bitcoin, as well as other alternative financial services offer means to transfer value at a near-zero cost. One such service is Venmo, which allows two individuals to send money to one another, called person-to-person (“P2P”) payments. There is no fee if the money originates from the user’s bank account or debit card, but there is still a 3% fee for using a credit card. Meanwhile, companies such as Circle Financial and Ripple Labs are attempting to change this by developing platforms based on the Bitcoin system that enable the transfer of money anywhere in the world for pennies, if not for free. This is in contrast to Venmo, which is currently limited to people residing in the U.S.

Seeing as Bitcoin and other alternative financial services improve upon a number of deficiencies in how we currently move money, it is not surprising that banks are studying Bitcoin intensively. In fact, Bank of America, JPMorgan Chase, Citigroup, Goldman Sachs and Wells Fargo have all published reports on Bitcoin for their customers. Bank of America reported that Bitcoin may emerge as a serious competitor to traditional money-transfer providers. Still, Bitcoin cannot be massively adopted until there is further regulatory clarification. Barry Silbert (SecondMarket) explains that “banks are waiting for clearer guidance at the federal level on how businesses are having interactions with bitcoin,” in addition to other state regulatory concerns.

DISCLOSURE: What follows is a summary of important legal and regulatory issues, but it does not cover every legal or regulatory issue. You should always consult counsel. If you would like to find a certified digital currency attorney, you can check the member directory at the Digital Currency Council.

At the federal level, the Financial Crimes Enforcement Network (“FinCEN”) imposes certain requirements on money service businesses (“MSB”). A business may be considered a MSB if it offers any of the following products and services: money orders, traveler’s checks, money transmission, check cashing, currency exchange, currency dealing, and prepaid access. The regulations require MSBs to ensure that their services are not being used for nefarious activities and requires that these companies: file Suspicious Activities Reports, implement an anti-money laundering (“AML”) program, and check customers against OFAC’s Specially Designated Nationals List, in addition to a number of other requirements.

Because Bitcoin is pseudo-anonymous, it is not known who the real-identities of the parties to the transaction are, only their Bitcoin addresses. This is a major reason why banks were initially hesitant to engage with Bitcoin: they are worried that they will be punished for not getting sufficient information about their customers. Bitcoin companies are beginning to find ways to obtain this information from customers, which has led to banks beginning to partner with Bitcoin companies. There is still a long way to go. For example, because of U.S. regulations, Bitcoin wallet, Xapo, is unable to offer its debit card product in the U.S. until it can find a banking partner.

This lack of clarity also exists at the state level. Whereas states such as North Carolina and Texas regulate Bitcoin Companies within their existing money transmitter laws, states such as New York are attempting to create an entirely new type of license, coined the “BitLicense.” The BitLicense is highly controversial as some welcome clarity while others point out that Bitcoin is a technology and not something that should be regulated. The proposed BitLicense is currently undergoing its second iteration, with New York welcoming comments on the proposal until March 6, 2015. You can read the most recent proposed regulations here.

Matt Gertler is the Head of Strategy at the Digital Currency Council (“DCC”) and is pursuing his JD/MBA at USC. He is experienced in FinTech, having worked for Venmo, Braintree Payment Solutions, and Earnest before joining the DCC. If you have any questions, please tweet @magertler using, #APEXLV15, and they may be included in a future post.

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