Welcome to our new Payments Insider newsletter, a morning email with the top news and analysis on the digital payments industry, produced by BI Intelligence.
WHY BITCOIN MATTERS ACCORDING TO A LEGENDARY TECH INVESTOR. With over 20 years of experience and investment in the tech industry, Andreessen Horowitz co-founder Marc Andreessen is no stranger to predicting the future of tech.
Andreessen’s next big bet? Companies that are building the rails for the Bitcoin network. Andreessen Horowitz currently has $US50 million invested in Bitcoin startups and the venture capital firm is looking for new opportunities.
Andreessen has a new article in the New York Times that is worth a read in full, but we’ll look at just one of his important insights.
Andreessen makes the great point that Bitcoin’s value is a “classic network effect.” In other words, the value of the Bitcoin network is tied to the number of people who use it.
Those that argue that Bitcoin is a bubble get that the number of people flocking to Bitcoin is what is driving up the price. Since transaction volume is relatively low, they may be right that Bitcoin is currently overvalued. What the Bitcoin bubblers are missing, though, is that once the rails are built for Bitcoin to function as a payments network, it can begin to provide real value to merchants and consumers because it provides a solution to pain points like credit card fraud, high transaction fees, and chargebacks.
It is worth noting, however, that while Andreessen Horowitz is investing in companies that are building the rails, Marc Andreessen is invested minimally in the digital currency itself. (The New York Times)
LAS VEGAS CASINOS MAKE A BET ON BITCOIN. The D casino and the Golden Gate will now accept Bitcoin at their front desks, restaurants, and gift shops. Bitcoin will not be accepted on the gambling floor, however. The casinos, both owned by Derek Stevens, join the growing ranks of companies that now accept Bitcoin, including the Sacramento Kings and Overstock.com. (Salon via Associated Press)
BITCOIN COULD ELIMINATE CREDIT CARD FRAUD. About one in 50 credit card transactions are fraudulent and merchants eat that cost according to Bitpay co-founder Stephen Pair. Bitcoin offers a huge opportunity to merchants because sensitive information is not transferred in Bitcoin transactions. This makes the potential for fraud minimal. Bitpay is a Bitcoin payments processor. (Bloomberg)
WORLDPAY SAYS MOBILE PAYMENTS WILL REACH 117 BILLION BY 2017. The global payment processor says that mobile payments, which include payments made with mobile wallets connected to cards or a user’s mobile bill according to the company’s definition, will rise to 117 billion by 2017, up from 18 billion in 2012. That means that by 2017 mobile wallet payments will account for 3% of global transactions. (WorldPay)
WELCOME, INSIDERS: The Payments Insights newsletter is now Payments Insider, a reflection of our increasing emphasis on the day’s most important topics in payments, as well as news exclusives of interest to industry insiders. We look forward to the newsletter becoming an even more important part of your morning routine.
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WHY PAYMENTS FOR PUBLIC TRANSPORTATION HAVEN’T GONE MOBILE. While moving from paper tickets to mobile payments would improve efficiency and perhaps cut the costs associated with public transportation in the U.S., there are still two major barriers that are keeping smartphone payments out of the subways and off the buses. The first is that while smartphone penetration has reached 62% in the U.S., payment technology needs to be truly ubiquitous for it to be adopted for public transportation. The second reason is that it is very difficult for planners to figure out what type of infrastructure to invest in since payment technology is evolving so fast. For example, a few years ago everyone was talking about NFC as the next step in payment technology, but now there is a lot of hype surrounding Bluetooth LE beacons. This brings in to question whether switching over to mobile payments will ever be truly cost effective for major infrastructure investments like public transportation. (Mobile Commerce Daily)
SWEDISH BANK CANS MOBILE PAYMENT APP. Swedbank, one of the primary banks in Sweden, announced that it is shutting down its QR code-based mobile payment app, called Bart. The bank reportedly decided to discontinue Bart because of low adoption among merchants and consumers. Should any mobile payment app catch on in Sweden, there is a good chance it will be Stockholm-based Seamless’s SEQR app. Seamless, not to be confused with the American food ordering service, charges less than 1% per transaction, which is two-thirds the cost of an average card transaction. (Finextra)
SWIPELY HELPS RESTAURANTS GROW SALES BY TRACKING MENU AND SERVER PERFORMANCE. Swipely, a cloud-based payments marketing platform for food and hospitality industries based in Providence, Rhode Island, just announced new features that can help restaurants determine things like which wine the most loyal customers drink most often and which servers are the best in terms of sales. The company currently serves over 1000 restaurants and bars in 33 states. (Reuters)
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