Today’s payment news roundup includes a look at more fears and concerns around Libra, the spreading losses related to Uber and WeWork, fresh PYMNTS research on subscription commerce and churn and a new tool that enables small and medium-sized business (SMB) operators to access their funds instantly via digital and mobile channels.
No one said it would be simple.
New regulation principles to govern digital currencies are in the works by the European Union’s finance commissioner after fears ignited by Facebook’s planned Libra coin launch.
France and Germany are among the many countries alarmed that the size and scope of Libra could disrupt legal control over the currency. The EU largely rejected regulations on cryptocurrency until Libra was announced in June.
“Europe needs a common approach on crypto-assets such as Libra,” European Commission Executive Vice President-Designate Valdis Dombrovskis told EU lawmakers in a confirmation hearing reported by Reuters. “I intend to propose new legislation on this.”
Analysts are starting to weigh in on the mounting damages SoftBank could incur after such mishaps as WeWork and Uber, and it’s not pretty. SoftBank Chief Executive Officer Masayoshi Son may have led the global technology conglomerate to some $5.4 billion in losses, analysts concluded. Estimated profits for SoftBank’s Vision Fund, its central investment arm, were slashed by $5.4 billion to an operating loss of $3.44 billion for the September quarter.
Two senators said that Libra is a risk to the payments business and to global financial networks. The legislators pointed to news articles that indicate Libra’s lack of transparency.
PayPal left Libra on Oct. 4. The association is now comprised of 27 member firms, including Uber and Coinbase.
PayPal’s $500 million investment in Uber just before its initial public offering (IPO) dropped 34 percent. Its investment in Latin American retailer MercadoLibre dropped 10 percent.
In an email to Bloomberg, a PayPal spokeswoman indicated that the company’s quarterly guidance does not incorporate expectations for Uber and MercadoLibre’s stock price performance during the quarter, given the “inherent difficulty” in predicting stock market fluctuations for publicly traded companies. As a result, PayPal said they have elected to update the market after quarter-end to disclose the impact on its earnings. In 2019, including the loss being recognized in the third quarter, the company’s investments have resulted in $0.11 in unrealized gains, PayPal stated.
Subscription-based offerings can be key to helping business-to-consumer (B2C) companies establish long-running relationships and lock down more predictable revenue streams. Effective subscription offerings require careful strategizing around payments, however. Should customers’ recurring payments fail, due to credit cards expiring or other issues, this could produce involuntary churn in which otherwise willing customers are accidentally dropped.
Fresh PYMNTS research digs deep into this issue.
Cash flow is that thing that can keep a business owner or executive up at night — and night after night, after night. Cash flow is that thing that can ruin a cocktail hour with thoughts of missing payroll, or make minds drift while watching a baseball game with worries about how to afford vital supplies. Cash flow is that thing that, if handled poorly, can kill a business, with the dangers usually higher for smaller operations.
Can a brand new digital offering help ease those pressures?