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Daily Briefing - 9 February 2017

"That chip on your credit card isn't stopping fraud after all," at least according to Fortune magazine. The report, citing Javelin Strategy & Research, notes that the success of chip and PIN in preventing in-store fraud has driven more financial crime online, with cybercriminals responsible for a 40 percent rise in card-not-present fraud. Fraud driven by online identity theft meanwhile rose 16 percent over the previous year, with total credit card fraud rising by $700 million in the US."Another area that saw lots of new activity is account takeovers, which increased 61 percent over 2015 to 1.4 million incidents. Incidents where new accounts were opened in consumers' names without their knowledge — since warnings or notifications are being intercepted by the hackers — increased 40 percent, to 1.8 million victims.

Dutch payments processor Adyen reported an 80 percent increase in payment transaction volumes in 2016 to $90 billion. Much of this growth comes on the back of its work for global online players such as Uber and Spotify — and its processing of advertising payments to Facebook, which is probably the reason that Mark Zuckerberg invested in Adyen via the Iconiq Capital fund. However, what makes Adyen's results interesting is that the e-commerce business has moved into in-store payments in a big way in recent years, recognising that high-end retailers in particular want to offer sophisticated payments channels to stores. Adyen's chief executive told Lafferty News in 2015 that the business was trialling in-store systems: "We are agnostic about who we work with. We believe that consumers should pay with whichever method they prefer. We don't promote one payment method above another." That approach seems to be working. For all the joys of e-commerce and the convenience of online ordering, many businesses recognise that shoppers still enjoy the sensation of well-designed retail — and Adyen's data collection and analytics appear to be proving attractive to retailers.

Is something ugly brewing in the Facebook commercial ecosystem? Three apparently unrelated stories came to the attention of Lafferty News this week. In Ireland, a major case is bubbling up as Austrian lawyer Max Schrems, inspired by Edward Snowden's story, continues his action against Facebook's desire to crunch data on all of its customers in the United States. Schrems initially brought the case against Facebook through the Irish Data Protection Commission — Facebook's EMEA headquarters is based in Dublin and thus falls under the remit of that body, which has now decided that the future of the transatlantic data channels is once again in doubt as it does not seem to afford sufficient protection to Europeans. Secondly, Facebook issued a statement this week saying that advertisers will no longer be able to use "multicultural advertising segments — which consist of people interested in seeing content related to the African American, Asian American and US Hispanic communities" for ads that promote housing, employment and credit opportunities. Add in this third story and you're looking at something deeply troubling which crosses into fake news and a targeting of ethnic groups for political purposes. The story, which looks at Facebook's ability to deliver personalised messages to its users, appeared first in Zurich's Das Magazin and was reprinted on Vice's Motherboard site. It includes this quote from data miners Cambridge Analytica, hired by the winning presidential campaign: "We are thrilled that our revolutionary approach to data-driven communication has played such an integral part in President-elect Trump's extraordinary win."

And indeed, astonishing amounts of data are now produced daily: in 2016, this figure stood at 2.5 exabytes (or 2.5 billion gigabytes) per day. Since one gigabyte can hold a feature-length film, think of a third of the world's population uploading a Hollywood movie every day and you start to get a good idea. It's not only big corporations generating this amount of data — it's you and me with our smartphones commenting, Instagram-ing, Pinteresting, Snapchatting, WeChatting and so on. It's notable how differently fintechs and banks see Big Data. Fintechs treat it like a pet monkey that's allowed to roam freely throughout the office. Banks seem to treat Big Data like a glowering gorilla that's best kept locked up in the basement. Both seem to worry that the Big Data monkey/gorilla is going to develop human-like intelligence before too long. Lafferty News gets lots of invites to attend conferences and panels about 'Big Data, Artificial Intelligence, and Machine Learning' and usually responds by googling "small but cheap islands for sale beyond the reach of Terminator robots".

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