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Epic v. Apple: The metaverse will not be monopolized

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Apple makes big bucks from its App Store since it launched it in 2008 with an initial 500 applications. The app ecosystem has grown into more than five million apps and into a huge business, with users spending $380 billion worldwide on in-app purchases. In 2020, Apple made $72.3 billion and Google made $38.6 billion. A recent California court decision may have opened the flood gates for crypto in-app purchases. Now Apple will have to give users the option to buy digital goods on the App Store or exit the app to buy directly from developers. The court’s decision gives developers and users choices to a wider array of payment options and potentially allowing users to make payments within the iOS ecosystem, using their cryptocurrency wallets.

Ilias Louis Hatzis is the founder and CEO at Kryptonio wallet. Please participate in our Crypto Wallet Survey, we could use your help. It’s seven simple multiple-choice questions about crypto wallets and you should be done in 60 seconds. The survey is completely anonymous.

Unlike personal computers, which let users download software from anywhere online, Apple’s mobile devices can download apps only from a single source, Apple’s App Store. This has been a huge and immensely profitable revenue stream for the company. Apple collects billions of dollars each year for the privilege of offering paid apps and in-app purchases to iPhone and iPad users.

But during the past month, Apple has been facing headwinds.

The company has been forced to change how it manages the App Store by authorities in Japan and South Korea. The European Union, Britain, and India also are investigating Apple’s App Store dominance. In the United States, Yvonne Gonzalez Rogers of the U.S. District Court for the Northern District of California ruled that Apple violated California’s laws against unfair competition by barring app developers from directing customers to other ways to pay for their services. She ordered Apple to start letting developers include links in their apps to other payment methods, within 90 days.

Companies like Newegg, Overstock, Sotheby’s, Starbucks, already accept bitcoin in their online stores. Now they will be also able to accept cryptocurrency directly from their mobile apps. Currently, Apple’s users can make purchases with cryptocurrency, using Apple Pay, with services like Coinbase and BitPay. This court decision may make it possible for smaller developers to accept direct payments from a crypto wallet, without having to go through Apple’s payment system.

This decision is hugely important for the cryptocurrency industry and opens another door to mainstream adoption.

The future of the global economy is digital and virtual. Cryptocurrencies and NFTs show that there’s a cultural shift towards virtual things. Apple customers spent $1.8 billion on digital items and services between Christmas and New Year’s leading into 2021. From 2015 to 2020, we saw an increase from $5 billion to $55 billion. In this evolving digital world, blockchains and NFTs will soon be at center stage.

Welcome to the metaverse.

In a nutshell, the metaverse is the digital world, where anything we can imagine can exist. The metaverse is this virtual world that has things that are similar to what we have in a real world, a functioning economy, and places where we can go and interact with others. It’s a shared virtual world in which land, buildings, avatars, and even names can be bought and sold, often using digital currencies. In this world, users can buy digital products and access them on any digital platforms they choose. It’s decentralized nature allows for instantaneous payments and lets two consenting parties transact without restriction.

Today, Apple’s App Store is the closest thing we have to a metaverse, where you can buy different digital experiences and use them on different platforms. But its downfall is its centralized payment system that gives more benefit to the platform, instead of the developer or the user, disincentivizing any kind of openness and portability.

If Gonzalez Rogers’s decision is any indication, the metaverse will not be monopolized. The court’s ruling enables developers to sell NFTs directly to players and collectors with full ownership over their digital items. This freedom of choice can help push cryptocurrency adoption and even help scale payment layers like Bitcoin’s Lightning Network.

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Source: https://dailyfintech.com/2021/09/20/epic-v-apple-metaverse-not-monopolized/

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Plaid targets payments: Look out traditional credit

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Thursday, Plaid launched what they called a “payment partner ecosystem,” a network of companies that will be using a Plaid-enabled “pay with bank” option at checkout.

It is the open banking giant’s first move into the payments space, less than a year after the Justice Department killed the Visa/Plaid merger. 

Instead of joining a major payments provider, Plaid aims to disrupt the Visa, Mastercard, and Amex payment empire. Partners like Square, Dwolla, and new arrivals to the Plaid ecosystem Checkout.com and Marqeta are members of the new program, building payment capabilities for the new age of fintech. 

“We’re entering a new world where people hold bigger balances in fintech apps, and paying by digital wallets is the norm. In 2020, global use of mobile wallets exceeded cash for the first time for in-store payments,” Plaid Head of revenue and partnerships Paul Williamson wrote in a blog post.

“Plaid wants to help any company, no matter their size, industry, or technological capability, harness the account-to-account payment opportunity while decreasing risk for the ecosystem.”

To do this, Williamson said Plaid is launching an ecosystem of payments partners.

Payment partner ecosystem

The idea is to bypass credit cards altogether and enable customers and businesses to transact through direct bank transfers, avoiding the fees of traditional credit. Plaid connects 11,000 institutions by enabling virtually every type of digital transaction, and adding direct payments is a logical, lucrative next step.

Plaid is betting big — but their data shows it’s a winning hand. A July 4,000 person survey found that 48% of people in the UK and US use fintech daily, and 70%-79% use fintech for banking and payments. 

They are banking on the $503 billion mobile payments market of 2020, and their release cited a hopeful analysis that put the global mobile payments economy at more than $2.3 trillion in 2023

Just the rumor that Plaid might start enabling payments convinced lawmakers to call off a $5.3-billion merger deal back in January, worried Visa was only trying to take down the competition before it was too late.

Now, Plaid could lead the charge of fintechs against the more traditional card and credit companies. 

How does Plaid’s open banking work anyway? It encrypts user bank account data to connect users to apps like Robinhood, Venmo, and Coinbase.

For example, in the myth of Pyramus and Thisbe, two Babylonian lovers whispered through a wall: If customers are Pyramus trying to talk to fintech Thisbe, Plaid would be the hole in the wall. 

With a growing partner ecosystem, those connections expand more to e-commerce checkout or even buy now pay later. 

“Many of the fastest-growing fintechs globally are powered by Plaid and Checkout.com’s best-in-class APIs. Our partnership will connect Plaid’s account verification and Checkout.com’s payment services to make account funding accessible, seamless, and secure for fintechs and merchants alike,” Tracy Meng, VP of Partnerships at Checkout.com. said.

“This is just the beginning of our shared journey to unlock the future of embedded finance.” 

The post Plaid targets payments: Look out traditional credit appeared first on LendIt Fintech News.

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Source: https://www.lendacademy.com/plaid-targets-payments-look-out-traditional-credit/

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This Week in Fintech ending 22 October 2021

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This week our experts brought you the following insights based on their experience as investors, entrepreneurs & executives.

Monday Ilias Hatzis our Greece-based crypto entrepreneur (Founder & CEO at  Kryptonio a “keyless” non-custodial bitcoin and cryptocurrency wallet, that lets users manage bitcoin and crypto, without private keys or passwords and Weekly Columnist at Daily Fintech) @iliashatzis wrote Everyone is building a wallet

I was not surprised by Square’s decision to enter the crypto wallet business. In June, at the Bitcoin 2021 Conference in Miami, Jack Dorsey revealed that Square was toying with the idea of a hardware wallet, in order to make bitcoin custody more mainstream. In August, Facebook revealed that it is ready to launch its Novi digital wallet, but it’s on hold until it obtains the necessary regulatory approvals. A few weeks ago, I read that Robinhood is testing a new crypto wallet and cryptocurrency transfer features for its app. Robinhood is planning to allow its customers to send and receive digital currencies off its platform. Today, Robinhood allows users to buy cryptocurrencies, but to be able to send and receive crypto along with paying for things like NFTs in crypto, you need to have a wallet. In April, Revolut started to let users send crypto to external wallets, but they can’t receive coins, since they haven’t issued individual wallets yet and cryptocurrencies are stored in a pooled virtual currency account. With more than 100 crypto wallets and growing, this sector is getting crowded. Everyone wants to play a direct role in the $2.5 trillion crypto market.

Editor note: What is worse, for your money to be stolen or lost? For the person it is the same. 

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Tuesday Bernard Lunn, CEO of Daily Fintech and author of The Blockchain Economy wrote: Part 3 Competition to Ether from Bitcoin and “wannabees”.

Ethereum is perceived as better than Bitcoin because it can run smart contracts. The inconvenient truth for Ethereum fans is that you can also run smart contracts on the Bitcoin blockchain and the innovation in this space looks vibrant with projects such as Sphinx on the Lightning Network and Stacks (fka Blockstack).

There are also many blockchain platforms positioning as competition to Ethereum.

Editor note:this part 3 will annoy those who have invested in the altcoins who I  have denigrated in the title with the word “wannabees”.

Wednesday Alan Scott Managing Director EMEA at 24 Exchange @Alan_SmartMoney wrote his weekly roundup of Stablecoin news.

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Thursday

Rintu Patnaik, an Insurtech expert based in India, wrote: Largest Indian Bank Deftly Scales Its Embedded Platform

Until the end of this decade, Asia is expected to account for half of global consumption growth, presenting a $10 trillion opportunity. Half of upper-middle income households are expected in Asia, with one in every two consumer transactions likely to be generated from the region. The consumer markets are changing with new growth avenues for financial services players. While in Y2K, 15% of Asia’s population constituted the consuming class, by 2030, 70% of Asia’s total population may be part of the consuming class. Digital ecosystems are mushrooming across Asia with highly integrated super apps that offer a one-stop-shop for a range of services. Although super apps emerged in China, Asian economies including India, Indonesia, Japan, South Korea, and Vietnam now have leading super app players.

Editor note: Rintu does a deep dive into the tech/biz strategy behind one of India’s & Asia’s growth stars.

Christian Dreyer @x3er, the Swiss based CFA who focusses on how XBRL changes our world wrote his weekly roundup of XBRL news.

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Friday Howard Tolman, a well-known banker, technologist and entrepreneur in London, wrote his weekly roundup of Alt Lending news.

Bernard Lunn, CEO of Daily Fintech and author of The Blockchain Economy wrote: Is Affirm ($AFRM) the growth star of Fintech 50 Index due to winning in the BNPL (Buy Now, Pay Later) market? 

Affirm is a publicly traded stock in the Fintech 50 Index that could be the winner in the BNPL (Buy Now, Pay Later) segment of the Fintech market.

Affirm was not the first innovator in BNPL. That prize goes to Klarna which we first covered in 2014 (mentioning Affirm as a follower). The market winner is not necessarily the first innovator – think Facebook beating myspace.

Editor note: Answer to the headline question is wait and see. In theory Affirm ($AFRM) is a leading player in a hot market but we will have to see how quarter to quarter growth plays out to see if Affirm ($AFRM) is a real growth star.

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Source: https://dailyfintech.com/2021/10/22/this-week-in-fintech-ending-22-october-2021/

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Is Affirm ($AFRM) the growth star of Fintech 50 Index due to winning in the BNPL (Buy Now, Pay Later) market? 

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Affirm is a publicly traded stock in the Fintech 50 Index that could be the winner in the BNPL (Buy Now, Pay Later) segment of the Fintech market.

Affirm was not the first innovator in BNPL. That prize goes to Klarna which we first covered in 2014 (mentioning Affirm as a follower). The market winner is not necessarily the first innovator – think Facebook beating myspace.

BNPL is what you do in the physical world (pay the barista only after you have your coffee) but for much bigger items. Doing that digitally means managing fraud and deadbeats, which is what the Credit Card industry does so well. BNPL requires tracking users, for example via their confirmed national ID. This is easy in small homogenous countries in Europe. Affirm is making BNPL work in a large non-homogenous market (America) with a weak national ID (Social Security numbers). China has strong national ID and India has Aadhaar so BNPL should also work well in Asia.

BNPL is a great market that solves a Category 1 problems on both sides of the network:

– For consumer = less time/hassle buying on a mobile phone

– For  merchant = less mobile shopping cart abandonment

The Bull case for Affirm ($AFRM) is:

– Lending is the revenue model of banking, a huge market

– The key to lending is at point of sale which is what BNPL does

– Affirm is the Only BNPL that is publicly traded

  • Affirm is winning in reviews such as this one from Investopedia
  • There may be network effects from more merchants leads to more borrowers leads to more merchants and so on

The Bear case for Affirm ($AFRM) is:

– Affirm are not making money yet, stock price will crash when interest rates rise

– BNPL is easy to copy; there is not much technology moat.

– BNPL needs to disrupt Credit Card networks in order to scale and investors are valuing the Credit Card network brands as if such disruption was unlikely.

– Klarna may beat them as Klarna a) dominate the profitable high end of the market b) have top tier VC who will do an IPO if markets stay bullish.

Answer to the headline question is wait and see. In theory Affirm ($AFRM) is a leading player in a hot market but we will have to see how quarter to quarter growth plays out to see if Affirm ($AFRM) is a real growth star.

Daily Fintech’s original insight is made available to you for US$143 a year (which equates to $2.75 per week). $2.75 buys you a coffee (maybe), or the cost of a week’s subscription to the global Fintech blog – caffeine for the mind that could be worth $ millions.

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Source: https://dailyfintech.com/2021/10/22/is-affirm-afrm-the-growth-star-of-fintech-50-index-due-to-winning-in-the-bnpl-buy-now-pay-later-market/

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Payments

Alt Lending week ended 22nd October

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Klarna founder Sebastian Siemiatowski gives us his view on the world

Interesting piece of philosophy in nothing else. Klarna the worldwide phenomenon of the Buy Now Pay Later (BNPL) product puts down his success to the “dirty tricks” played by banks. He also acknowledges that he wants Klarna to become a de facto part of the lending establishment. Nobody would begrudge the chap his success nor his wish to make the world a better place but having been around in the low level finance area for at least some of my career I find the two things somewhat incompatible. His ambition was to start a business. Anyone with that objective does not do it for the good of the planet but to make money. On top of that he wants to take on the credit card companies and why not? But whatever he wants to do lending money to people who he knows nothing whatever about is not really unparalleled good news. The FCA is currently showing interest in the sector. There is a requirement for the product but it will over time attract a large amount of the wrong type of client. Those who can’t afford it, who can’t manage their finances and get themselves into trouble. Making billions out of these people is never going to get you into the establishment. This part of the market will never be flavour of the month.

Bonus Bonanza for City Bankers

Apparently Investment banking revenues are booming and with it the bonus allocation for those in the city. If anyone wants to know why this is when the world has just suffered a pandemic that has killed millions of people, I suggest that they read Tom Wolfe’s brilliant novel about Investment banking in New York “Bonfire of the Vanities”. It will tell you all you need to know. When I was trying to sync this article using Google more or less the same headline came up over and over again spanning the last two decades. In between this the masters of the universe had through design exported the systemic collapse of the US real estate market to practically every bank in the world and the taxpayers of multiple countries had borne the bills.  Doesn’t seem fair does it: and its not but life isn’t fair.  Just because markets are frothy and values extraordinary undeserving people earn lots of money. Giss a job.

British Digital Challenger Zopa Get backing from SoftBank

In another familiar repeat performance Zopa gets a $ 1 billion valuation from SoftBank and is looking at an IPO sometime next year. Zopa ticks all the boxes. It posted an $ 18 million loss last year although this was mostly due to its spending on the new banking side of its operation. Zopa are acknowledged as experts in the peer to peer lending space but are now branching out into mainstream lending. One of SoftBank’s sallies this year was to have a punt on Greensill. You can’t win them all. The space is already beginning to look crowded and the values are astronomically optimistic. To cap this they have also invested in both Oak North and Revolut who are in the same crowded field. None of them look like they are doing anything very innovative but perhaps that is me just being cynical. All banks operations these days are digital to some extent. But digital banking is increasingly looking like small deposit gathering with payment capability tacked on. This town does not look big enough for all of them and if the losses continue to rack up expect some bargains to emerge from the inevitable wreckage.

Howard Tolman is a well-known banker, technologist and entrepreneur in London,We have a self imposed constraint of 3 news stories per week because we serve busy senior Fintech leaders who just want succinct and important information.For context on Alt Lending please read the Interview with Howard Tolman about the future of Alt Lending and read articles tagged Alt Lending in our archives.

Daily Fintech’s original insight is made available to you for US$143 a year (which equates to $2.75 per week). $2.75 buys you a coffee (maybe), or the cost of a week’s subscription to the global Fintech blog – caffeine for the mind that could be worth $ millions.

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Click here to access.

Source: https://dailyfintech.com/2021/10/22/daily-fintech-week-ended-22nd-october/

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