Controversial

What’s Next, This Week

Uncle.

That’s what even we say at times when we look at the thousands of news items that gush into our databases over the course of any given day. Multiply that times any given week and any given month and, yes, it’s hard not to throw up your hands and throw in the towel.

On those days, we thought it would be nice if someone would just make a nice easy to digest list of the “need to know” data points that are driving the payments ecosystem forward each week.

So we decided to build it ourselves.

And here is edition number 1 of our right-at-your-fingertips guide to the important facts, figures and concepts that the last seven days have produced so that you are more than ready to get a jump on the next seven…

May 11 | The Week That Was All About ….

Alternative Financial Services


SMBs
on average wait 1-3 days to move funds from a line of credit into a spending account. Alternative lending platform Kabbage is trying to shorten that window with a new card product that links right to a small business’ credit line.

“The card product came about from research with our customer base and the difficulties of accessing their line of credit was a consistently named difficulty we were hearing,” Kabbage Head of Product Jason Dell told PYMNTS. “What we are basically offering small business customers [is] direct access to their account with us, by putting Kabbage in their wallet when they are at the point of sale and they want to utilize their available line.”

Credit Sesame, a credit management service, snapped up $16 million in an oversubscribed Series D round, underscoring the importance that consumers (and now investors) are now placing on money and credit management services.

“We are not just a credit scoring company,” CEO Adrian Nazari told PYMNTS in a recent interview. “In addition to Free Credit Score and Monitoring (what Credit Karma offers), is an advisory approach in helping people manage their entire debt/loans, track and help consumers achieve their financial goals, and protect their credit and identity all in one place and for free. We are like Betterment or Schwab for a consumer’s credit and liabilities.”

Alternative lenders saw approval rates fall 61.2 percent in March to 61.1 percent in April. Big Bank loan approval rates for SMEs stood at 21.7 percent, up from 21.6 percent the month prior. This marks the sixth month in a row that mainstream banks have improved their SME loan approval rates. Are banks getting more inclusive or are businesses getting stronger?

Ten percent of American households reported income levels that varied as much as 50 percent year-to-year. In a report released in 2014, The Federal Reserve reported that about 31 percent of American households experienced income swings — with 10 percent of those saying their income varied “quite a bit” month to month. We can thank the new sharing economy for that variability.

ECommerce Watch

Amazon is No. 1, with a score of 84.08 on the Reputation Institute’s annual reputation ranking – marking its second year in a row in the top spot. Apple slid from 57th to 187th and did not make it in the Top 20 of its own industry. The slide seems surprising given its focus on security via the mobile device and payments and some of the life-changing experiences that it enables via the Apple Watch (for blind people) and the chronically ill (via HealthKit).

“There’s no question Apple is at the top for innovation,” said Brad Hecht, Chief Research Officer at Reputation Institute. “Their challenge is Apple has a much more inward culture that focuses more on what Apple does than what they can do to benefit society and their customers. They haven’t been as effective in explaining how they’re more open and transparent.

Walmart is launching a subscription service (codenamed “Tahoe”) to rival Amazon Prime which will cost $50 a year. The service will ship products to shoppers in three days or fewer, and will be available for more than 1 million products. For now, however, Walmart’s Tahoe is available by invite only. Will this help consumers start their path to purchase on Walmart now with more frequency?

“We’ve heard from customers that they want shipping that’s predictable and shipping that’s affordable,” Walmart spokesperson Ravi Jariwala said in confirming the new service. “We think there is an opportunity to put a price point that’s affordable in front of them.”

Almost 66 percent of eCommerce businesses spend over 70 percent of their marketing dollars on customer acquisition alone. Ah, but are they going after the right customers? Acquisition is important, but only if the target is the right target.

Investments

Investors threw $639 million into Fintech investment to kick off May.  Payments Fintech, Security/Fraud and Alternative Finance collectively snapping up 86 percent of total investment. We’re now disappointed if we don’t see $1 billion each week, which tells you the importance of perspective.

Pinterest has secured another big round of funding –  $186 million in its latest round. A recent SEC filing shows that Pinterest raised $367 million, but this most recent funding series secured by the company hit — bringing its total amount raised to $553 million between the two rounds. When oh when will commerce be something they “pin” their future to?

“We’ve focused a lot since the beginning of the year on our relationship with employees and on what role we play in the modern startup environment,” noted co-founder Evan Sharp. “We’re trying to build this opt-in culture, and we think this is the way to do it. …People want to work at a company that has their best interest in mind.”

Mobile Transactions

Alibaba saw a 352 percent annual increase in mobile revenue from 2014. The firm also reports over 217 million active monthly mobile users across its eCommerce app platforms. Alipay accounts for 78 percent of transactions made on its eCommerce platforms. And since Alibaba accounts for 76.2 percent of China’s mobile GDV, that means that Alipay is payment enabling much of China’s overall retail volume.

“Alibaba is very much a mobile company,” Joseph Tsai, Alibaba executive vice chairman noted. “We believe that the continued trend towards mobile provides us with a unique advantage to deliver a better consumer experience, as well as more value to merchants, because mobile users shop more frequently and we can serve them more targeted search results. We believe the increasing use of our mobile apps will field significant future growth in our China commerce retail business.”

Security

Chase said it will convert more than 70 percent of all its credit and debit cards by the end of 2015: 80 percent of its cardholder spending to be done using chip-enabled cards. At present, Chase currently has more than 22 million chip cards in the market. The real question is whether merchants who are still dragging their feet will be more motivated to move faster to embrace EMV if they see more consumers with cards in their hands.

“Fraud and security threats facing consumer payments today is a complex issue that can’t be solved with any single technology,” said Gordon Smith, CEO of Chase Consumer and Community Banking. “We’re working to employ a variety of approaches to protect our customers – adopting chip technology is a critical step on this journey.”

Sixty-six percent of breaches take months or even years to discover. Over the course of 155 days, one famous retailer suffered a massive security breach, compromising 56M cardholder accounts, with a total estimated breach cost of $1B. This length of time also swells the cost to the issuers who need to reissue more cards. It costs, on average, $7.99 for an issuer to reissue a card that has been compromised.

The global annual cost of data breaches will quadruple to as much as $2.1 trillion in 2019, according to a May 12 report from U.K.-based Juniper Research. We aren’t particularly thrilled that the hackers are moving away from what we know how to stop, and shifting to ways that seem much more difficult and dangerous to prevent, much less get rid of.

“Currently, we aren’t seeing much dangerous mobile or IoT malware because it’s not profitable,” James Moar, the report’s author, wrote. “The kind of threats we will see on these devices will be either ransomware, with consumers’ devices locked down until they pay the hackers to use their devices, or as part of botnets, where processing power is harnessed as part of a more lucrative hack.”

Around The World

India’s Citrus Pay snags $25 million in funding from a consortium in investors, most notably PayPal co-founder Peter Thiel. Well, we have to admit we like the name and like keeping the fruit analogies alive – Orange, Apple, Nectar, and now Citrus.

“The entire idea is to become a leader in consumer payments. Unlike being only a player in wallets, we also need to have a strong merchant proposition. We want to expand our base to 70 million consumers and reach over 25,000 merchants from the current base of 3,500 merchants,” noted Citrus Managing Director Amrish Rau.

Visa Inc. may make a bid for former unit Visa Europe for as much as $20 billion. Visa management has said there is a 40 percent chance that Visa Europe would exercise the put option; the company estimated that doing so would cost the company more than $10 billion and as much as $20 billion. This would make Visa a truly global network and under one management structure. The big question is whether the purchase of Visa Europe also means the birth of a new bank-run scheme. That was at least the rumor a while back if Visa Europe was acquired by Visa.

“Over the long term, we absolutely would love Visa Europe to be part of the company. …It just to us makes extraordinary amount of sense. Sooner is better,” CEO Charles Scharf said in March. “We think the company should have debt. The question is, at what time, for what reason. And, when you got someone with a put the size of Visa Europe, we need to be conscious of factoring that financing into our thinking.”

That’s our first glance at last week’s data upfront. Want us to follow something a little more closely for you? Let us know on twitter: @pymnts.

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Latest Insights: 

The Which Apps Do They Want Study analyzes survey data collected from 1,045 American consumers to learn how they use merchant apps to enhance in-store shopping experiences, and their interest in downloading more in the future. Our research covered consumers’ usage of in-app features like loyalty and rewards offerings and in-store navigation, helping to assess how merchants can design apps to distinguish themselves from competitors.

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