Bitcoin may get a lot of attention, but it is only part of the broader digital currency equation.
In the drive to bring crypto into consumers’ wallets and, in turn, into the merchants’ tills, broadening acceptance while also increasing ease of use in spending will be critical.
To that end, BitPay CEO Stephen Pair, Fancy CEO Greg Spillane and Jomashop Vice President Alex Sternberg said in the latest On the Agenda that moving from hype to everyday commerce will unlock trillions of dollars of spending power.
It’s been a heady ride for cryptos, to put it mildly, as they have swung wildly in price — thanks in no small part to a stream of tweets and emojis from Elon Musk about bitcoin or Dogecoin.
Cryptos have so captured the public imagination that, as PYMNTS has found, only 8 percent of the population has not heard of bitcoin or its peers.
Spillane remarked that “there’s so much buzz. There are so many different types of coins, and every single day, it seems like there’s new hype and buzz around another coin that comes out.”
Beyond speculation lies the prospect of actually spending cryptos, in a way that brings the digital offerings into mainstream use cases.
The desire is there, and the inching toward the mainstream is there, too. As PYMNTS research has shown, 16 percent of the U.S. population — about 30 million consumers — owns cryptocurrency, and about 24 million consumers plan on acquiring cryptos in the future.
A significant number of consumers — 45 million of them, or 18 percent of the population — have used bitcoin and its brethren to make purchases. Said Pair of those numbers: They’re not all that surprising, and the intent to buy and use crypto cuts across young and old consumers, as well as industries ranging from traditional retail to auto dealerships.
“For the past couple of years, we’ve been really talking about the numbers of crypto users being in the tens of millions, and for the merchants that use our platform, our focus on is helping them reach that that new demographic of user and raising awareness of their products and services with these new consumers,” said Pair.
Consumers Eager To Spend
The panelists remarked that individuals want to find a way to spend “dry money” — a euphemism for the savings and cash they’ve accumulated in the pandemic — in new, digital ways, especially as the value of their crypto holdings grows. They want to spend their capital gains, said Pair.
That brings us to an age where, for instance, Dogecoin can make the leap from joke coin to spendable, alternative payment method (Pair said that Doge, in recent months, has gone from 2 percent of transactions on the platform to about 12 percent in a matter of just weeks). And that’s why, as PYMNTS has found, 64 percent of customers say they have bought cryptos with the intention of being able to spend them.
Jomashop’s Sternberg said that consumers have been increasingly interested in leveraging their crypto into everyday spend, with money stored in digital wallets, moving beyond P2P activity. Purchases on Jomashop run the gamut, from $100 sunglasses to watches that retail for thousands of dollars, dovetailing with PYMNTS’ data that show a range of purchases clustering at the sub-$100 level.
Fancy’s Spillane noted that the largest purchase to date made with crypto has been for a $27,000 Hermes bag – though the average order size has been around $100. Volumes have been on a tear, as average order volumes of items purchased with crypto have increased fivefold.
“So there’s tons of money out there,” he said. “By providing easy and frictionless options for people to go ahead and transact to make purchases from $50 to $50,000, it’s been great — and I think retailers are missing out if they’re not capturing that.”
Merchants would do well to consider accepting crypto, said the panel, as 51 percent of crypto owners would be more likely to shop with a retailer that accepted it.
Acceptance can be seen as a form of competitive advantage, at least for now, said Sternberg. “But at the end of the day, as cryptos become more mainstream, they’ll just be another form of alternative payment that will be like a credit card,” he told Webster. “It’s going to become something like an Apple Pay transaction.”
The Anti-Fraud Incentive
Spillane said that roughly 30 percent of his own firm’s customer base is international, with consumers in more than 140 countries. An increasing percentage of purchases are being made with cryptos, which is an incentive for merchants to accept them.
But there’s another incentive that will broaden acceptance, he said: Cryptos have strong anti-fraud characteristics in place, particularly with cross-border transactions, which have been marked by relatively high fraud rates. (Pair said that only a few years ago, as many as one in 50 card transactions done internationally were fraudulent, a number that has increased as so much of commerce has shifted online.)
Pair also noted that crypto payments are akin to cash or wire transactions. They are immutable (moving as they do over blockchains), eliminating the specter of chargebacks (or friendly fraud), which lowers the cost of business for merchants.
Those benefits, contended Pair, are driving crypto-at-checkout to become the leading form of alternative payments across some verticals, moving swiftly from low-single-digit percentages to 10 percent of checkout volumes or more in a short span of time.
The lure of crypto is also becoming apparent in B2B, said Pair, where companies have found it attractive to be paid in digital currencies rather than going the invoice/check or card route, where transactions take days or months to settle.
“In parts of the world where the banking system is more well-developed, they don’t realize there are parts of the world where there just aren’t great payment options,” Pair said.
Traditional payments are slow, expensive or both. Against that backdrop, stablecoins are proving to be a strong choice for firms that don’t want the swings of bitcoin and other cryptos to have an impact on their balance sheets.
“We really want the buyers to be able to pay in whatever currency they want to pay in, and for the recipients to be able to get settled in whatever currency they prefer,” said Pair of those B2B transactions.
Eliminating The Friction
In consumer-led commerce, there is still friction inherent in the process, of course, where in most cases, there’s been the need to put fiat in a digital wallet. Buy cryptos on an exchange, and get that crypto converted into fiat at the merchant as transactions are completed.
Pair noted that there have always been crypto users that want to use crypto, “and nothing but crypto. They want to live their entire lives with it,” he said — and in some cases, they might even consider getting their salaries paid in crypto if that were an option. Those users seek out merchants who will accept cryptos as direct payments — and if they can’t do it directly, they will link debit cards (a Mastercard debit card, for example) to wallets and wallets to platforms, and go that route.
As with any online transaction, friction can be the deciding factor in embracing, or discarding, crypto as a payment modality. In other words, where they buy matters.
As Pair said: Where they make that first purchase could mean the difference between them continuing to make that purchase repeatedly — or not. “If they have a great experience with that first payment, then they’re more likely to do it again,” he remarked.
Jomashop’s Sternberg said the mechanics of the payments are getting simpler, as consumers are able to pull up digital wallets, plug in different cryptos and check out with a few clicks, a process that is attractive to both the consumer and the merchant. The fewer steps in the checkout process, he said, the more transactions will occur.
Looking out into the future, Fancy’s Spillane said crypto will become a “de facto” payment choice. “There is a lot of money out there that these younger consumers have” locked up in crypto, he noted, “and they’re looking for ways to spend in almost a turnkey kind of fashion. That’s exciting.”
BGL releases investment portfolio solution Simple Invest 360
BGL Corporate Solutions, Australia’s leading supplier of SMSF administration and ASIC company compliance solutions, announces the release of its new investment portfolio solution, Simple Invest 360.
This newest addition to BGL Product Suite provides a portfolio management solution for trusts, companies and individuals. The kind of efficiency we’ve seen clients achieve in their SMSF processing with Simple Fund 360, can now be achieved for trusts, companies and individuals. Simple Invest 360 uses the same award-winning proven technology that powers Simple Fund 360, Australia’s #1 SMSF administration solution.
“I am incredibly proud to be in a position where we can now offer 3 incredible cloud based solutions to our clients,” writes BGL’s Managing Director, Ron Lesh. “We’ve built a reputation for offering market leading solutions for SMSF Administration and ASIC Corporate Compliance, so to have a third product, complementary product is a really great achievement by the team.”
“We have been testing Simple Fund 360 and getting client feedback for over 6 months,” added Lesh. “And as we speak, there are over 30,000 portfolios loaded on the Simple Invest 360 – 5 free portfolios for each of our 6.000+ Simple Fund 360 clients. Our BETA finished with over 3,000 portfolios loaded onto Simple Invest 360.”
Simple Invest 360 provides a comprehensive portfolio solution with smart CGT based to handle all different investment asset types in one unified solution. Be it listed or unlisted securities, ETFs, property trusts, wrap accounts, crypto currencies or direct property, Simple Invest 360 can handle it all. The software automates all tedious CGT record-keeping as well as providing simple and financial and tax reporting saving time and money no matter what the tax structure – trusts, companies or partnerships or individuals.
Simple Invest 360 is fully integrated with CAS 360 and Simple Fund 360 as well as providing integrated accounting workpapers, digital signing, over 350 data feeds, registry integration and BGL SmartDocs – our industry leading paper to data solution. “The power of our three fully integrated BGL solutions together is a game changer!” said Lesh.
True Cost of Financial Crime Compliance Global Report Reveals that Costs Reached $213.9 Billion in 2021
LexisNexis Risk Solutions, a global data and analytics firm, has published its annual True Cost of Financial Crime Compliance Global Report.
The results shared in the new report have been prepared after conducting an extensive survey of 1,015 financial crime compliance decision-makers at established financial institutions such as banks, investment companies, funds managers, and insurers.
The expected total cost of financial crime compliance across various financial institutions reached $213.9 billion this year, exceeding the $180.9 billion reported during 2020. Most of the considerable YoY increase is due to financial activities taking place in Western Europe and the US.
The key decision-makers who participated in the research study are responsible for managing financial crime compliance procedures like sanctions monitoring, know your customer (KYC) remediation, anti-money laundering (AML) and transaction monitoring.
The main findings from the LexisNexis report are shared below:
Western Countries Continue to Spend Highest on Compliance – Western European countries and the United States (together) accounted for 82.7% of global total estimated costs.
Germany and the US reportedly cover or account for the majority of cost increases at $9.6 billion and $8.8 billion respectively. Germany notably outsized all other nations by a significant amount.
Mid to large financial institutions / service providers have been leading this growth where all regions, with the exception of the Middle East and South Africa, reported double-digit percentage growth in costs related to ensuring compliance.
Less Consensus on Operational Challenges – During the past several years, there has been general consensus on the top-ranked compliance issues within financial institutions. But there was considerably less uniformity in 2021’s survey.
Customer risk profiling, sanctions screening, regulatory reporting, identifying politically exposed persons (PEPs), KYC for account onboarding and efficient alerts resolution have been similarly ranked as significant challenges.
Different regions reported varying degrees to which particular challenges are more serious, however, less consensus was seen on the top or main challenges to compliance.
Pandemic Impact – The COVID-19 crisis has reportedly left a major imprint on compliance officials and their departments, which has made existing issues even worse and has also contributed to a rise in time and funds required to ensure due diligence.
Mid and large companies based in Canada and the United States and certain areas in Latin America (LatAm) reported considerable COVID-related expense increases.
The main operational challenges became even more prominent or significant in these particular markets since awareness about the pandemic became more widespread. The report from LexisNexis reveals that there’s been increased alert volumes and suspicious transactions, inefficiencies with alert resolution and due diligence, significantly more manual work required and limitations with proper risk profiling/sanctions screening/PEP identification.
Technology Investment Leads to Better Outcomes – Financial institutions adopting and implementing tech solutions to ensure financial crime compliance have generally been more prepared and less affected overall by rising regulatory requirements and the pandemiic.
When compared to companies that channeled considerably more of their yearly compliance costs to labor, those that set aside costs more toward tech are now reporting smaller YoY financial crime compliance operations cost increases, reduced overall costs per full-time worker and fewer COVID-related issues.
Leslie Bailey, VP, Financial Crime Compliance for LexisNexis Risk Solutions, stated:
“Criminals will never cease to become more sophisticated, but a multi-layered solution approach to financial crime compliance can facilitate a more cost-effective, efficient compliance approach, as well as one that benefits the larger organization. Financial institutions should investigate both the physical and digital identity attributes of their customers, leveraging data analytics to assess risks and behaviors in real time.”
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Wealthtech Firm Endowus Hires Veteran Banker as Its Chief Advisory Officer
Singapore-based digital wealth advisor Endowus has announced the appointment of Wei Mei Tan as Chief Advisory Officer.
In her new role, Wei Mei will drive strategic initiatives to accelerate Endowus’ growth trajectory and provide leadership in curating the advisory and investment solutions delivered to clients across all segments.
As a member of Endowus’ Investment Committee, Wei Mei will also be responsible for building portfolio strategies and fund selection.
With over 20 years of financial markets experience, Wei Mei brings to Endowus an extensive background in building digital advisory platforms and investment strategies, having held senior leadership roles at top-tier private banks.
She was most recently a Managing Director at Deutsche Bank as the Global Co-Head of Advisory & Investment Solutions, where she was responsible for building the bank’s dbXpert wealth advisory platform.
At Credit Suisse, Wei Mei was the APAC Head of Portfolio Solutions and successfully launched CS Invest. Wei Mei also spent 6 years at UBS Wealth Management where she was the APAC Head of Mandate Specialists, advising ultra-high net worth clients on asset allocation and portfolio construction.
Wei Mei is a graduate of Harvard Business School and Nanyang Technological University. She is a Temasek scholar and holds Chartered Financial Analyst (CFA), Chartered Accountant (CA), and Chartered Alternative Investment Analyst (CAIA) designations.
She is also an adjunct lecturer at Nanyang Technological University.
This news comes on the heels of their recent S$23 million fundraise by Lightspeed Venture Partners and Softbank Ventures Asia.
Samuel Rhee, Chairman and Chief Investment Officer at Endowus said,
“As an industry veteran, I believe her wealth of experience in client advisory and investment solutions will be essential in our next stage of growth and in meeting the needs of our clients.
Endowus is expanding its range of client solutions and bringing onboard new best-in-class fund products across various asset classes, and Wei Mei’s expertise will contribute to our clients finding more solutions suitable to their investment needs.”
London’s DNA Payments Group Enters £100M Deal with Alchemy Partners
London-based DNA Payments Group, the fast-growing “vertically integrated” payments firm, has entered a £100 million deal with Alchemy Partners (Alchemy).
With an operations based hub in Kent, DNA presently serves more than 45,000 merchants including established online and offline retailers to SMEs, offering them with 70,000+ terminals which make “over 20 million transactions worth over £600m a month.”
As mentioned in a release, DNA is one of just a few players in the United Kingdom and Europe with fully Cloud enabled omni-channel payment processing capabilities, and also “provides a variety of SaaS and PaaS solutions to major global acquirers and payment schemes.”
The investment by Alchemy “sees DNA well positioned to benefit from the strong market opportunity, with the UK beginning to see signs of a recovery from the Covid-19 pandemic,” the announcement noted.
Arif Babayev and Nurlan Zhagiparov, the founders of DNA, stated:
“Alchemy’s investment marks a historic day for DNA and is a huge endorsement of our company and our technology. We have been looking for the right partner with the right ethos, vision and experience and we are lucky to have found this partnership with Alchemy.”
The past year has been quite challenging for businesses, and at DNA they have been “fully dedicated to helping [their] customers manage through the pandemic,” the firm’s management noted while adding that during the last few months DNA has expanded its digital commerce solutions and payment methods, “providing merchants with Pay by Link, Checkout v3, ApplePay, Pay by Bank, PayPal, Open Banking and many other new capabilities.”
As noted in the update:
“This transaction will allow us to accelerate our growth, helping more merchants accept payments quickly and easily, both in-store and online. Our technology and vertical integration give us an unparalleled advantage in servicing our partners and customers, but also provide a great foundation for bolt-on acquisitions.”
This investment will allow us to further improve our product offering and continue with our business strategy of making key acquisitions to grow our presence “not only in the UK but also internationally,” the firm’s management added while pointing out that they have “more than doubled [their] estate size and turnover in the past 18 months.”
Toby Westcott, Partner at Alchemy Partners, remarked:
“We are delighted to be partnering with DNA. Alchemy is always looking for opportunities to partner with talented business founders and uncover attractive investments that others may not be able to access.”
Wescott also mentioned:
“We are focused on helping companies grow and develop, and having worked closely with both Arif and Nurlan during this extraordinary period caused by the Covid 19 pandemic, it was clear that DNA and Alchemy’s goals, missions and values were closely aligned. Merchants’ increasing need for omni-channel payments solutions combined with the strength of DNA’s product proposition creates a compelling investment opportunity and we are excited to join DNA on its journey to build a leading payments business in the UK and expand into Europe.”
DNA Payments was advised by Proskauer, Houlihan Lokey and EY and Alchemy was advised by Macfarlanes and PwC on this transaction.
Launched in 1997, Alchemy aims to target key opportunities across Europe to team up with and work with management teams, assisting them with creating value by addressing problems, helping “take difficult decisions and driving through change.”
Since introducing its services, Alchemy has finalized more than 190 transactions, investing £4 billion+ into firms and organizations based in 14 different countries.
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