How many people are thinking about the fragmentation of the payments system? It's possibly merchants that first notice the superabundance of payments methods now that mobile phones are added into the mix, and most notably in places with advance payment options. Singapore is one such place. "E-payment in Singapore has been criticised for being confusing, with many options: Apple Pay, Android Pay, Dash, DBS PayLah, ez-link, Nets, CashCard, Liquid Pay and Samsung Pay, in addition to store-specific cards and credit and debit cards," according to the Straits Times. "Some merchants may accept one option and not another." Noting that merchants still need to pay the three percent charge for accepting Visa or Mastercard through Apple Pay and Samsung Pay, Dr Teo Hock Hai of the National University of Singapore says that buyers and sellers have nothing to gain from engaging in mobile payments. Still, in for a penny, in for a pound: Singapore will continue to push innovation in payments, with the latest scheme backing a Central Addressing System for the collection of mobile numbers for e-payments. The government hopes that this will eventually lead to drop in merchant charges and bring more small businesses into the payment acceptance infrastructure.
How is China coping with this fragmentation, given that its payments businesses offer many ways around the established networks? Barron's magazine reckons that there will be a 60 percent upside for Alibaba and Tencent, which, between them, account for a vast share of the online payments market. "Alibaba and Tencent have already firmly established themselves there, with 55 percent and 33 percent market share, respectively. JPMorgan sees online payments rising by four times, to 202 billion yuan ($29.3 billion), by 2020," says Barrons. According to JPMorgan China Internet analyst Alex Yao, online payments are the most important infrastructure of fintech "because with their duopoly structure firmly in place, the companies can branch out into other areas of Internet finance such as consumer loans and wealth management". With the state banks focused on corporate business, this leaves a big open market for consumer and small business lending — though JPMorgan analysts note that the government will be hoping that banks and fintech businesses enter into collaborations much like those happening in the West, with the banks providing capital and fintech providing credit ratings and tech support. A fascinating read over on the Barron's blog.
Oxfam, the British charity focused on global poverty, has generated priceless amounts of publicity in recent years by paying attention to banking and finance. It has just released a report called Opening the Vaults, enabled by new rules on transparency. "In Europe, only one sector is required to publicly report its profits and tax on a country-by-country basis — the banking sector, as a result of regulation following the financial crisis," according to Oxfam's introduction to the report. "This report showcases research by Oxfam that uses this new transparency data in depth for the first time to illustrate the extent to which the top 20 EU banks are using tax havens, and in which ways." Some of the major findings are listed below, and we expect to hear some outrage from an Irish government that categorically denies that Ireland is a tax haven. Some banks are reporting profits in tax havens while reporting losses elsewhere. For example, Germany's Deutsche Bank registered low profits or losses in many major markets in 2015 while booking almost €2 billion in profits in tax havens. "Luxembourg and Ireland are the most favoured tax havens, accounting for 29 percent of the profits banks posted in tax havens in 2015. The 20 biggest banks posted €4.9 billion of profits in the tiny tax haven of Luxembourg in 2015 — more than they did in the UK, Sweden and Germany combined; Banks often pay little or no tax on the profits they post in tax havens. European banks paid no tax on €383 million of profit they posted in seven tax havens in 2015; In Ireland, European banks paid an effective tax rate of no more than six percent — half the statutory rate — with three banks (Barclays, RBS and Crédit Agricole) paying no more than two percent." So it turns out that the big banks and Apple do have something in common!
If in doubt, blame North Korea, which is becoming a modern-day equivalent of Muammar Gaddafi's Libya. (For years Gaddafi happily took the blame/credit for a series of attacks carried out most likely by Syria — as illustrated in Adam Curtis's documentary Hypernormalisation.) Part of a new mania in the mainstream media for 'discovering' lines of code in hacker software that apparently point directly to the perpetrators, the New York Times is now claiming that Pyongyang-directed hackers are behind the Bangladeshi spectacular last year. The piece claims that North Korean hackers have been deployed into other countries where they can make use of superior infrastructure to hijack foreign banks and earn hard cash for North Korea. A recent attack on Polish banks is cited as further evidence of this threat from Kim Jong-un. The newspaper cites research from well-known cybersecurity firm Symantec but, on close examination, the New York Times article is throwing together allegations and suppositions: "'We found multiple links, which gave us reasonable confidence that it's the same group behind Bangladesh as the Polish attacks," said Eric Chien, a researcher at Symantec, which studied both attacks. The firm has not traced the attacks to a specific country's government."
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