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KENYAN TELECOM REJECTS PUSH BY COMPETITORS TO USE ITS MONEY TRANSFER AGENTS. M-Pesa is a mobile money transfer service that was developed by the Kenyan telecom Safaricom. Its phenomenal success in Kenya makes it a good case study for how mobile money might catch on in the rest of the world.
Safaricom subscribers can get money into their M-Pesa accounts by depositing cash at bricks-and-mortar money transfer agencies. These transfer agents are important because many of the people who use M-Pesa don’t have bank accounts so they can’t transfer money into their M-Pesa accounts online. Once subscribers have added a balance to their accounts they can use their mobile phones to transfer money to other mobile users.
Two competing telecoms, Airtel and Essar Kenya, have similar mobile money transfer services, but they don’t have large networks of bricks-and-mortar transfer agents. To solve this problem the two telecoms have been pushing Safaricom and the Kenyan government to allow their customers to make deposits at transfer agents that work with Safaricom. Understandably Safaricom has pushed back against this.
Safaricom already has a 73% share of the mobile market in Kenya and M-Pesa is extremely popular among Kenyans. So, if Safaricom can continue to disallow its competitors from using its transfer agents it might drive Airtel and Essar Kenya subscribers to make the switch over to Safaricom. (Telecompaper)
M-PESA ON THE PATH TO SUCCESS, BUT IT DOESN’T LOOK GOOD FOR BITCOIN. While we’ve argued that Bitcoin’s greatest potential is as a payments network, David Evans of PYMNTS says that it may be a bust. Evans compares the early days of M-Pesa to the early days of Bitcoin and shows that the number of M-Pesa transactions taking place has grown quickly, while Bitcoin transactions have remained relatively stagnant. From the data, he argues that M-Pesa is following the same trajectory as all successful emergent payments systems, while Bitcoin is following the path of failures. Evans does take a step back, however, to say that the fate of Bitcoin is still anyone’s guess. (PYMNTS)
U.S. WILL GET BITCOIN ATMS: Bitcoin ATM-maker Robocoin will install the first U.S. Bitcoin ATMs in Seattle and Austin this month. The company has already opened a Bitcoin ATM in Vancouver, which has additional security measures and is regularly staffed by a company rep who explains how to use the machine. Asia is also expected to get Bitcoin ATMs from Robocoin soon. (The Verge)
SQUARE IS MAKING MOVES TO ATTRACT LARGER MERCHANTS. The biggest question facing Square is whether or not the company will be able to attract larger merchants. It looks like we could get an answer in the near future. Square is building a sales team to bring the company’s point-of-sale products to mid-market merchants, according to a job posting from the company. Until now, the company has primarily gone after small- to medium-sized merchants. (LinkedIn via Square)
QUOTE OF THE DAY. “We have been observing a great deal of entrepreneurial activity in digital currency, and the trend is only accelerating. We want to signal to the market our position and help lead the way in building out the ecosystem constructively, and that begins with using it,” said Sheri Kaiserman, head of equities, Wedbush Securities. (Wedbush Securities)
SINGLE-USE VIRTUAL CARDS COULD BE THE ANSWER TO CARD-NOT-PRESENT FRAUD. Following the Target data breach there has been a lot advocacy for the “chip and PIN” payment card standard in the United States. Unlike “swipe and sign” magnetic stripe payment cards, chip cards are difficult to duplicate, so if they were adopted in the United States it would probably lead to a reduction in credit card fraud that takes place at the point-of-sale. The chip standard, however, won’t necessarily stop card-not-present fraud. This type of fraud is most often perpetrated on e-commerce sites. One possible solution is single-use virtual card services which are offered by the major card networks. These services allow users to generate a single use credit card number and security code. Since single use credit card numbers can only be used once, they offer users an added level of protection when shopping online. (BankTech)
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HOW CHINA IS REVOLUTIONIZING PAYMENTS. Last week we reported on how China is building a nationwide mobile payments system. Business Insider has a great article detailing the payments landscape in China. (Business Insider)
STARTUP AIMS TO MAKE MOBILE COMMERCE EASY. For mobile commerce to take off, users need to have an easy way to enter payment information like credit card numbers into their smartphones. Palo Alto-based Jumio is attempting to make this easier with its Fastfill service which launched last week. Users take pictures of their payment cards with their smartphones and then Fastfill scans the picture for relevant payment information, which it then uses to automatically fill out mobile commerce checkout forms. (American Banker)
PAYMENTS INDUSTRY GETS THE GREEN LIGHT ON MARIJUANA PAYMENTS. The Financial Crimes Enforcement Network (FinCEN) says financial services companies are allowed to process marijuana purchases in states where the drug is legal. Marijuana is still illegal according to federal law, but is legal according to state law in Colorado and Washington. This has been putting payments processors and card networks in a difficult spot in terms of knowing whether or not they should process transactions that come through marijuana-related business. (FinCEN)
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