FAANG stocks (Facebook, Apple, Amazon, Netflix and Alphabet’s Google) may be getting all the attention from Wall Street and investors, but digital payment companies PayPal and Square could be better bets on the future of technology and payments.
Both stocks are up double-digits or more this year but have market capitalizations that are much smaller than their FAANG counterpoints. They are also in growth mode, launching new products, engaging in acquisitions and inking partnerships as the movement toward digital payments marches on.
PayPal A Darling Of Wall Street
Take PayPal for starters. The Palo Alto, Calif.-based digital payments stock is up more than 21% so far this year, with shares gaining nearly 5% in the past month alone. PayPal has a market capitalization of $106 billion, which is a far cry from the more than $1 trillion in value both Amazon and Apple commanded this summer.
It also has the praise of many on Wall Street with most of the firms that cover it rating it a strong buy. Instinent analyst Bill Carcache is the most recent one to heap praise on the payments company. Earlier this week he reiterated his buy rating and $120 price target, calling the company a “safe haven stock” similar to credit card companies Visa Inc. (V) and Mastercard Inc. (MA). The analyst noted in a research report covered by MarketWatchthat demand for Venmo debit cards is outstripping supply. Venmo is PayPal’s peer-to-peer payment app. At $120 a share, the Wall Street analyst thinks the stock can surge an additional nearly 35%.
PayPal Is In Growth, Buying Mode
It’s been a busy few months for PayPal, which was spun off from eBay back in July of 2015. Aiming to expand into new markets and offer more features, the company acquired iZettle in May for $2.2 billion. iZettle is a small business eCommerce platform operating mainly in Europe and Latin America. It followed up that acquisition with a purchase of payments company Hyperwallet in June for $400 million and its $120 million buy of Simility, the fraud protection company during the same month.
In a new interview, Ripple’s global head of strategic accounts expands on the growth of the company’s payment solutions xCurrent and xRapid.
Marcus Treacher told The Asian Banker both products are growing at a fast clip, with a burst of adoption in a number of regions.
“There is a lot of activity in the Middle East and in India, as you mentioned during the introduction, in Southeast Asia, and also in Latin America. We are seeing a lot of growth as well in Northern Europe. So there is really a nice global coverage that is building very quickly…
So, for the payment side, we have created a product called xCurrent. And xCurrent is what is at the heart of the Ripple network. That connects banks and payment companies together and enables money to move in seconds around the world.
The other component is xRapid. xRapid is where we can separately connect into the XRP ledger for very fast delivery of liquidity into the target country as required. When you put those two together, you get a very powerful payment delivery proposition which is using blockchain technology – but does not use any token – supported by a really powerful liquidity proposition which does use the token XRP. We don’t release the full figure, but it’s growing very, very quickly.”
Ripple has been a bit cagey when it comes to releasing new info on which companies plan to utilize xRapid. Ripple launched xRapid for commercial use in October, revealing that MercuryFX, Cuallix and Catalyst Corporate Federal Credit Union will utilize the technology to power payments.
Since then, Ripple has also confirmed that crypto exchanges Bittrex, Bitstamp, Bitso and Coins.ph will use xRapid to boost payments between the US and the Philippines, and the US and Mexico.
Overall, Ripple says at least one financial institution is signing up for one or more of its payment solutions every week, and according to Ripple’s global head of infrastructure innovation, nearly 200 banks and financial institutions are now on board.
As for whether Ripple will replace the legacy cross-border payments system SWIFT, Treacher says the San Francisco startup is working to dominate the space in the coming years.
“I think with the SWIFT and Ripple model, there may still be a role to play for the older hub structure messaging model such as SWIFT. However, we feel that for the bulk of payments, the real commercial flows and the resale flows – that will move to a much more open interconnection model which Ripple has created. So, certainly, we will dominate that central space. Whether that leads to a complete move into Ripple or not, we don’t really mind.
It is a big enough world. If Ripple is seen as an alternative to SWIFT at some point, then okay fine, but our sweet spot is bringing that high-volume, commercial flow which we think in the 21st century will be really, really important to support the economies of the world.”
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Oásis Supermercados, a Brazilian supermarket chain located in Rio de Janeiro, has recently started accepting cryptocurrency payments after asking a local exchange for information, and training its employees on how to do it.
According to local news outlet Portal do Bitcoin, the chain’s clients in Rio de Janeiro will now be able to pay for their things using Bitcoin, Bitcoin Cash, and Litecoin, according to one of the firm’s managers Douglas Andrade.
Speaking to the local publication Andrade noted that his brother Thiago was the one who came up with accepting cryptocurrency payments, after seeing a video explaining how to do it. After the video peaked their interest, Oásis Supermercados called a crypto exchange to get more information.
The firm reportedly has an annual turnover of $6.5 million and 90 employees, 20 of them cashiers. All of them, Andrade noted, have been trained to accept cryptocurrency payments. He was quoted as saying:
It’s really easy. It’s like a payment by credit card. The client says which cryptocurrency he wants to pay, the operator types in reais and the system already converts to that crypto. Then just scan the QR code and you’re done.
The chain will be accepting cryptocurrencies via CoinWISE, a firm that turns the cryptocurrencies they receive into reais and sends them over three days after the payments were made.
The local news outlet points out that since the system was recently implemented, no cryptocurrency payment has yet been received, although Andrade claims the news has spread and some have already suggested it should start accepting other cryptocurrencies, including NANO.
The firm’s administrator credited a former employee with introducing them to the cryptocurrency ecosystem and telling them how to invest. The move comes as Bitcoin appears to be recovering from a year-long bear market that saw its price drop over 80% from its all-time high.
Notably, as CCN covered, Brazil’s Department of Federal Revenue (RFB) has revealed it’s looking to monitor the activities of business dealing with cryptocurrency, in what it claims to be an attempt to prevent tax evasion and money laundering. Its approach seemingly hasn’t deterred Oásis Supermercados’ owners.
Coinbase customers in the U.S. can now make withdrawals into their PayPal accounts.
According to a blog post, U.S. customers can withdraw their Coinbase balances to PayPal immediately and without any fees. The new arrangement allows customers to quickly convert their cryptocurrency holdings to cash, wrote Allen Osgood, who works on product at the exchange.
Coinbase announced it was bringing back a PayPal integration last month, noting that customers will only be able to make withdrawals using PayPal. Users won’t be able to buy cryptocurrencies via PayPal.
A spokesperson for the exchange told CoinDesk that “there is new functionality that was improved from the prior one,” adding:
“There is new technical work to make this possible, and that was done in conjunction with PayPal.”
On Friday, Osgood wrote that the partnership provides Coinbase customers an alternative to the traditional federal wire or automated clearing house (ACH) network that they were previously required to use.
“These traditional finance networks can add up to two business days to a withdrawal. We’re always looking for ways to not only meet the bar set by traditional finance, but raise it. That’s why we rebuilt our integration to ensure that the speed and reliability of PayPal withdrawals does just that.”
The service is only available to U.S. customers for now, a Coinbase spokesperson confirmed to CoinDesk. Support for PayPal withdrawals in other nations will continue to be added across 2019, Osgood wrote on Friday.
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The Society for Worldwide Interbank Financial Telecommunication (SWIFT) has announced its decision to launch a pilot Global Payment Initiative (GPI) service which aims to compete with the growing threat of competing blockchain and fintech solutions provided by institutions like Ripple, JP Morgan and Transferwise.
Still in its initial stages, the ambitious pilot aims to “build the foundation of a new integrated and interactive service that will significantly improve efficiencies in the payments process and which will ultimately be made available to all 10,000 banks across the SWIFT network.”
A recent GPI test, was successfully conducted in October, carrying out instant cross-border payments with banks in China, Singapore, Thailand and Australia. Equipped to enable speedy identification and elimination of errors and omissions in payment data such as missing or incorrect beneficiary information or incomplete regulatory information, SWIFT hopes the GPI payments service will enable speedy and seamless transactions, thereby reducing delays and costs, as well as improving customer experience.
Taking on Blockchain’s Threat
With the move, SWIFT has turned its attention to containing the threat of blockchain-based fintech startups offering the same services at a cheaper price. One such blockchain project is J.P.Morgan’s Interbank Information Network (IIN). Launched in September, it now boasts a membership count of more than 130 banks, including Satander and Societe Generale.
IIN, claims to minimizes friction in the global payments process, enabling payments to reach beneficiaries faster and with fewer steps. With its membership still growing, IIN promises banks the ability to resolve errors and compliance issues speedily by sharing information on a mutual distributed ledger.
SWIFT’s GPI, on the other hand, uses an Application Programming Interface (API) which enables banks to access each other’s data to validate recipient account information before payment is processed, thereby avoiding errors and delays.
An excerpt from the statement released by SWIFT reads:
“Fully integrated with GPI payments, the service will facilitate real time dynamic bank-to-bank interaction using APIs to improve the predictability and efficiency of international payments, and look at using predictive analytics. It will later be complemented with a post-payment investigation and reconciliation service that will allow for fast resolution of the remaining factors, typically arising from compliance or regulatory requirements, which can slow down the payments process.”
The pilot GPI pre-validation service is set to kick off at the beginning of 2019 with 15 selected banks including J.P. Morgan, Barclays, Bank of China and CitiGroup, among others. According to SWIFT, the service is expected to provide total transparency to payment beneficiaries and originators, making the cost, routes and delivery of their funds highly predictable.
This post credited to ccn Image from Shutterstock.
Beginning Nov. 26, Ohio will begin accepting Bitcoin payments for twenty-three kinds of business taxes. The state will become the first in the United States–and one of the first governments in the world–to accept cryptocurrency.
Up until now, there have been concerns that Bitcoin would not become a suitable means for conducting payments, instead, describing the cryptocurrency as a store of value. Opponents have described Bitcoin as “slow and costly.”
However, moves by the Ohio Treasurer’s office directly counter those criticisms. Through the use of the payment service BitPay, Ohio State now offers Bitcoin as a means to of paying state taxes.
According to the Ohio Treasurer’s website, twenty-three kinds of business taxes will be available for payment in crypto, including utility tax, sales tax, and employee withholdings. The website states that the state is adopting crypto payments because they are secure, transparent, and low cost:
“Cryptocurrencies cannot be transferred to third parties without user initiation, thereby practically eliminating fraud; Anyone can view all transactions on the blockchain network; Payments on the blockchain can be tracked on a second-by-second basis; a minimal fee is charged to confirm transactions on the blockchain network.”
The payment option will not only be limited to Bitcoin, as the website states, “the Treasurer’s office looks forward to adding more cryptocurrencies in the future.”
Furthermore, the state is looking to gain a foothold as a blockchain technology epicenter, with the Treasurer’s Office stating, “[we are] working to help make Ohio a national leader in blockchain technology.”
Adoption by Ohio serves as a harbinger of things to come. Use of Bitcoin and other cryptocurrencies have the opportunity to make governments more secure, more transparent, and more efficient. This move is the first of many to bring us into a world where this technology is leveraged to improve our day-to-day lives as citizens.
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Square’s mobile payments application, Cash App, posts impressive growth for Bitcoin transactions despite the bearish cryptocurrency market. In Square’s Q3 shareholder letter the company reports $43 million in Bitcoin revenues, contributing $560 thousand to quarterly net profit.
Square is a merchant services and mobile payments company based out of San Francisco. Founded in 2009, the company is known for its portable point of sale systems such as Square Reader and Square Register. Since inception, Square has become one of the most popular payment services for small and medium-sized businesses in the United States.
In a series of progressive moves, Square was one of the first major payment processors to support Bitcoin transactions.
The company made its first foray into crypto payments in March of 2017when Square Market, a tool for establishing eCommerce storefronts for small businesses, would also support Bitcoin payments.
The company continued to push for Bitcoin support in its more widely used Cash App (formerly Square Cash). Cash App is a mobile application that allows individuals and businesses to send and receive money through an online alias.
Another competitor, PayPal’s Venmo is yet to offer any cryptocurrency support. Square’s push into the cryptocurrency market led to a surge in downloads for Cash App, surpassing Venmo mobile money service. Cumulative downloads for the Cash App now total 34 million, exceeding Venmo’s 33 million for the first time ever, according to data aggregated from the Google Play and Apple App stores.
Square is one of the first mainstream payment processors to tackle the shortcomings of cryptocurrency payments. Issues such as price volatility, long confirmation times, and poor ease of use still make cryptocurrency a cumbersome option for retail payments. However, Square is tackling many of these issues head-on.
By leveraging its large user base and popularity among small businesses it is possible Square could become a leader in crypto payment processing.
According to Square’s Q3 shareholder letter, the company had revenues totaling $43 million related to Bitcoin transactions, up 16 percent from last quarter. The transactions contributed $560 thousand to the company’s net income, up 33 percent from last quarter, with a net margin of 1.3 percent on all Bitcoin transactions conducted through the service.
These figures indicate impressive growth in transaction volume despite the bear market. Since the release of Cash App’s Bitcoin support, cryptocurrency market capitalization has decreased by approximately 66 percent while Bitcoin transactions on Cash App grow unabated. This consistent quarterly growth may signal growing adoption despite the decreases in market capitalization.
Square is making strides in addressing the issues that make cryptocurrency impractical for payments in brick-and-mortar stores. As cryptocurrency becomes easier to use mass adoption will follow.
Square’s stock is up 218 percent from this time last year, down 4 percent in the last month.
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Matthias Steinig, a German developer whose focus seems to be on the development of Lightning Network-enabled technologies to serve consumers, has created two projects to date which are notable and Lightning-related. The first is an e-commerce solution which supports Lightning transactions in the traditional web store format. A demonstration of it is live here. The second is perhaps more interesting and certainly more novel: a rentable electric bicycle that allows the user to pay for “boosts” (wherein the electric motor kicks in and the cyclist can do less work) for tiny amounts of bitcoin.
Steinig announced his invention on Twitter recently and published the code on GitHub.
The bike rental system has two components, both of which operate on cheap Raspberry Pi hardware, with stable code that is relatively easy (written in Python) for commercial developers to tweak and potentially improve upon. The first is the server component, which authorizes the bike’s battery to deliver a “boost” to the bike for a given, prepaid length of time, and the second is the component attached to the bicycle, which includes a wireless receiver and an LCD screen.
Dubbed “Lightning Bike,” the system is simple enough: the user makes a payment of as little as 250 satoshis (not quite two cents at current market rates) for one minute, and the battery kicks on for a “boost.” That’s really the long and short of it from the user perspective.
In the words of Steinig himself:
“Once the payment has been made, the system will power on for the selected time and you can start driving !!! After the end of the paid time, the system switches off and the power supply is interrupted – of course you can continue driving, but only with muscle power. The program returns to the home screen and you can book new time again. If it did not work, the start screen will be displayed and you can try it again.”
Under the Hood
Lightning Bike’s software component is written in standard, modern Python, and all of the code used is open source. As to the hardware, the bike portion is best done on a Raspberry Pi Zero, as this is the smallest device that Raspberry Pi offers. It seems logical that any ARM processor with the appropriate dependencies for Raspberry Pi could also act as a substitute, with likely a few necessary code modifications.
For the server component, in the demonstration model a slightly larger Raspberry Pi 3 is used. However, this could be replaced with a large-scale server for operations which actually wanted to implement this system with dozens, hundreds, or thousands of bikes involved. The novel design itself, it’s important to note, only pertains to the rental of the payment for the “boosts” and electricity themselves; thus a separate or integrated system would necessarily need to be developed and implemented for the rental of the bike itself. That said, a perfectly reasonable business model would be to allow the bikes to be freely checked out in a given geographical space and earn money from the electric boosts alone. One thing is for sure: upkeep is low in a business like this.
The Power of Lightning and Micropayments
A long-standing debate in bitcoin circles used to be whether or not bitcoins should be used to pay for something as trivial as a coffee. One camp believed that the size of BTC blocks should be increased to accommodate this with low transaction fees, while the other camp figured that second-layer protocols, like the Lightning Network, made a lot more sense in terms of efficiency.
Steinig’s creation demonstrates that not only cups of coffee can be paid for, but much smaller transactions even, with the base unit in his e-bike system being less than $0.02 USD. The speed and efficiency of the Lightning Network and its ability to settle transactions in the blink of an eye — in a consumer-facing application such as Lightning Bike, even — is overwhelmingly evident in this seemingly simple invention.
The increasing popularity of rental bikes in metropolitan areas makes Lightning Bike a relevant, viable business model which has the opportunity to bring bitcoin into the consciousness of folks all over the place.
After all, it’s actually impossible to pay only 2 cents on a Visa or Mastercard transaction without the seller losing money, most such transactions having a fixed minimum fee higher than that. Even micropayments via PayPal would not be feasible for transactions this small. Thus, in the case of Lightning Bike and services like it that will flourish over time, bitcoin or other cryptocurrencies fill a void that traditional financial infrastructures simply could not while still making money.
This post credited to ccn Featured Image from Matthias Steinig/Twitter
Hitachi Payments is entering a joint venture with the State Bank of India, the country’s largest bank, to establish a digital payments platform
The collaboration sees Hitachi Payments, the wholly-owned Indian payments subsidiary of 108-year old Japanese conglomerate Hitachi, join the State Bank of India (SBI) in developing a sweeping digital payments platform with applications in point-of-sale solutions (POS) and mass transit roadways in the country.
Hitachi Payments is investing in SBI Payment Services for a 26% stake, a press release confirmed, building on its relationship with the state-owned bank as its technology provider for card and digital payments since 2011.
Specifically, the tech giant is using its expertise in big data analytics and artificial intelligence (AI) to introduce “Lumada”, its IoT platform to the Indian payments sector.
“Hitachi will provide wide range of services contributing to “Digital India” by creating innovative solutions with ‘Lumada’,” Hitachi said. “With this joint-venture, Hitachi will accelerate digitalization of financial services in India by linking up digital payments platform to state-of-the-art digital technologies of “Lumada”, and also will provide solutions for mass transit sector and e-commerce businesses.”
Hitachi Payments notably manages over 55,000 ATMs and 850,000 POS devices in India. With over 420 million customers, the State Bank of India also has over 6 million POS terminals in the country. The bank sees over 70% of its current network managed by Hitachi Payments.
Hitachi president and CEO Toshiaki Higashihara added:
“By establishing the joint venture with SBI, Hitachi will further contribute to the development of digital payments in India by building a state-of-the-art digital payments platform and leveraging SBI’s robust customer network.”
This post credited to ccn Image from Shutterstock.
From Visa’s potential entry into the world of crypto to a new app bringing XRP to social media, here’s a look at some of the stories breaking in the blockchain metaverse.
Visa & Crypto
In a new interview with CNBC’s Jim Cramer, Visa CEO Al Kelly says Visa is prepared to implement cryptocurrency if need be.
“If we actually think that crypto starts moving from being more of a commodity to actually really being a payment instrument…
If it goes in that direction, we will move in that direction. We want to be in the middle, Jim, of every payment flow in the world regardless of how it happens or what the currency is behind it. So if we have to go there, we will go there. But right now, it’s more of a commodity than a payment vehicle.”
BitcoinNew data reveals Bitcoin adoption is on the rise in Canada.
According to a report from the Ontario Securities Commission and the Bank of Canada, the number of Canadians who own Bitcoin went from 2.9% in 2016 to 5% in 2017.
“The increase in Bitcoin ownership was seen more in certain demographic groups. The 18-to-24 age group, already one of the main users of Bitcoin in 2016, grew the most in ownership, from 6 to 14% in 2017. Most other age groups saw increased ownership as well, but the differences were usually not significant. The exception was the 45-to-54 age group, where ownership grew almost four times over from 0.9 to 3.5%.”
Ripple and XRP
In a new interview with the UK fintech outlet Bobsguide, Ripple’s head of strategic accounts says there’s little reason for Ripple to collaborate with the international payment network Swift.
“If you look at the value of Swift versus Ripple, it’s hard to see the incentive for us to collaborate. Swift may want to chat. They may see value in Ripple and the model that we’re developing.
I think it’s very important to keep things clean and focused. That’s how we’ve succeeded up until now. The entire stack we’ve created is fresh and new and free of legacy. It’s a very elegant proposition from top to bottom. We don’t really want to pollute that. Whether there’ll be some commercial arrangement, I don’t know.”
Meanwhile, the popular XRP Tip Bot just released an app for iOS and Android. The platform allows anyone to send XRP to users on Twitter, Telegram and Discord.
Tron founder Justin Sun and Binance CEO Changpeng Zhao met up at the United Nations in Geneva, Switzerland to boost blockchain’s use in the non-profit sector of the economy.
At the World Investment Forum, Zhao unveiled his company’s new blockchain-based donation portal, the Blockchain Charity Foundation. Tron recently contributed $3 million in donations to the new initiative.