50 Cent Gets Paid In Bitcoin: BitPay

BitPay:

BitPay, world leader in business solutions for the Bitcoin digital currency announces today that 50 Cent’s new album Animal Ambition can be purchased at http://shop.50cent.com with bitcoin.

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Sending Bitcoin Over Facebook: QuickCoin

PCWorld:

The Bitcoin Disclosures

Finra. The SEC. And now top regulators in Connecticut and Georgia; All are decrying the risks behind virtual currencies, in particular Bitcoin.

It’s a righteous move –one that is, interestingly enough, being heralded by a group of Bitcoin businesses.

During a public hearing this past week in Chicago hosted by the Conference of State Bank Supervisors, several cryptocurrency entrepreneurs (including executives from CoinX and BitPay) had this to say:

The panelists urged state and federal regulators to provide clear and consistent regulatory expectations and guidance without restricting innovation.  The panel commended the Task Force for issuing model consumer guidance to provide more information to consumers considering transacting in virtual currencies.

Read the entire press release, here

From one of my stories this week:

The state Department of Banking and Finance had a stark warning for Georgians late last month: If you invest or use digital currencies, such as Bitcoin, you are largely on your own.

As a part of the guidance, the department recognized the growing popularity of this new way to pay, as well as its propensity to be abused by cheats and fraudsters.

Regulators can do little to help if you get ripped off.

“At this point, you do realize, right, that’s not an FDIC insured institution?” said Kevin Hagler, commissioner of the Georgia Department of Banking and Finance, in an interview with The Atlanta Journal-Constitution.

 

Square’s Balance Sheet: Fortune

The downfall of payments processing company Square shouldn’t be news to anyone who is deeply entrenched in the industry.

The company’s balance sheet was always mysterious to those that understand the business behind transactions; But Fortune, this week, got its hands on some interesting information:

Some earlier reports suggest Square loses money on every transaction in its core payments business. But internal e-mails show that gross margins on transactions — the amount of profit left after paying card processors, payment networks and other intermediaries — are a relatively healthy 34%. On a $100 transaction, the company takes a cut of about $3, which it records as revenue and from which it earns about $1 in gross profit. According to the internal e-mails, company is processing about $30 billion in transactions annually, which would put its gross profit at an annual rate of about $300 million. (These figures exclude the transactions Square handles on behalf of Starbucks; more on that below.)

Accenture Study Breeds MasterCard Blow Back

From an @AmerBanker story about U.S. Bank (By Mary Wisniewski) in which an Accenture study was cited:

… a recent study from fintech vendor Accenture predicts that U.S. banks could lose 35% market share by 2020 to new competitors ranging from small payments firms to Internet giants, like Google, to retailers.

That one line (in a much larger story not even about the report) caused Theodore Iacobuzio, who is the vice president in charge of Global Insights at MasterCard’s interdisciplinary thought leadership organization, to strike back :

… what the Accenture study points to is real, and a real competitive dynamic: “Another 20 percent could shift to retail-driven players with a mass-market focus—under partnerships between big-box retailers and banks, and potentially independent ventures by retailers.”

Nuclear winter gets reduced to a “potentially”. So much for the big bad 35 percent. And the original American Banker story was about a payment app from….U.S. Bank.

All of this heat and noise in my opinion unintentionally obfuscates the real situation, which is less a threat than a fact of life: competition is increasing pricing pressure, pushing margins down across the payments ecosystem. The question these predictive stories need to answer is: what are we going to do about it?

You can read the Accenture release and find the larger study, here.

At Heart of Mobile Payments: Merchants, Carriers

Note: I’ve been thinking about this story (conceptually) for the past week or so. These are some thoughts that folks can yell at me about — telling me where I’m wrong and how to better think about the birth of mobile payments in America.

Please feel free to do so at either @SeanSposito, or Sean.Sposito@ajc.com

If the birth of iPhone opened innovators’ eyes wide to the possibility of a new way to pay, then Starbucks was that promise delivered.

In 2009, the Seattle company began working on a pilot that used smartphones and 2-D QR codes to complete transactions.

The system launched nationwide two years later. Within weeks, people paid for lattes’ with money they moved digitally into prepaid account roughly 3 million times.

(Ironically, the first prank call ever made on an iPhone was to a Starbucks in Silicon Valley; Check out minute 5:33, below.)

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Several Reasons Why @Coin is a (Complete) Waste

Note: I originally wrote this post before I left American Banker. It wasn’t published because I was unable to shore up some of the facts. Now that I have I’ve decided to publish it here because several folks have asked me about the utility of this particular digital wallet. 

It’s enticing.

A snazzy marketing video. The promise of a true digital wallet that works today. A single card, a Coin, with a rewritable mag stripe, that’s hooked up to several different accounts.

If you have been watching the tech press (read: TechCrunch) over the past week or so, you’ve become acquainted with the device. It’s now on pre-sale. And it’s gained orders worth tens of thousands of dollars.

But there are plenty of reasons why I’m skeptical of Coin.

First, it’s an old idea, based on old technology.

Earlier this year a company, called iCache, was working on a iPhone case. The Geode.

There was a single card came with the case that would be rewritten by a slot in the back. It was funded by kickstarter and separately by investors.

Overall,  it was a great marriage of software, security and transactions.

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