Tag Archives: noyes

Apple – Klarna: Equipment Financing

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Last week, Apple launched Apple Upgrade, a device leasing program for iPhone, Apple Watch, Mac, and iPad in the United States, provided by Klarna. Apple simultaneously retired the iPhone Upgrade Program (financed by Citizens Bank) and iPhone Payments.

This is a very big deal, and it is the culmination of a strategy I first outlined over a decade ago. Equipment financing has always been the prize. Everything else Apple has done in consumer finance (Apple Card, Apple Pay Later, Apple Card Monthly Installments, the savings account) was either a stepping stone, a learning exercise, or a partner accommodation. Apple Upgrade is the main event.

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Visa Stablecoin Platform

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Exec Summary

  • Consumers never wanted stablecoins, they wanted 5% yield or a crypto off ramp, BIS data confirms retail use is under 1% of volume
  • Stablecoins are a settlement innovation, networks did not hijack them, incumbents always adopt new tech to compete
  • Visa’s value is governance, operations, and distribution, VSP is just the next network in the network of networks
  • VSP = single Visa managed environment to mint, burn, move, and manage OUSD, with wallet as a service, passkeys, maker/checker controls
  • OUSD first because compliance and trust win, banks trust banks, not Circle, 63% of corporates want stablecoin access via their bank (EY Parthenon)
  • Use cases anchor on ramps and off ramps, treasury funding, global payouts, merchant settlement, stablecoin linked cards ($7B settlement run rate, 160+ programs)
  • VSP is to stablecoin what Visa DPS is to debit, same playbook, different rails and connection points
  • Visa enables Bank Issuers without picking winners, Mastercard bought BVNK and owns a single roadmap, overlap is real but philosophies differ
  • Enablement models win, every member becomes an investor in the network’s growth
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FISV: Star Sale? Retailer and Industry Feedback

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Short update on my industry discussions yesterday (in very brief form). 

Retailers

  • Convinced US Banks would attempt to follow COF/Discover model and that Banks were not concerned about the politics. 
  • Emphasize banks want control, with most seeing that BAC/WFC would make sense as owners of STAR
  • Agreed that retailers would react to price increases, but only top 20 retailers have payment teams with enough depth to act on a plan (ex turn off Star).
  • Believed acceptance rate and processor incentives would be a key hurdle, but that if pricing was around 125bps there was room to create superior processor incentives. 
  • Loss of Tap to Pay and eCommerce (ie no PIN Debit) were consensus consumer impacts with no clear workaround. 
  • Agree that retailers would strongly lobby OCC and CPFB that this was an obvious effort to end run Durbin. May seek to block acquisition. 
  • Discover is an EMVCO member with most tools that would allow conversion of Pulse to dual message. No path for STAR (or EMVCo membership)
  • Bank Consortium could use this as a path toward Zelle acceptance at POS (for 125 bps). This was probably the biggest “new” insight I gained

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Proposed Stablecoin KYC Rule

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The Fed/FinCEN and OFAC just revealed their proposed Stablecoin KYC rule and consistent with the GENIUS Act it entails bank-level KYC requirements for Stablecoin Issuers (see blog: No more Stablecoin “rewards”). This combined with the 303-page FinCEN/OFAC rule on transaction monitoring and secondary uses places substantial compliance burdens on Stablecoin issuers. So much that it is said the hottest job in Fintech is in Stablecoin compliance.

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APIs – More Banks to Follow JPM – Pricing Implications

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As I stated in my Monday blog, Open Banking is dead in the US. Pay by Bank (and open banking) is effectively dead in the US. This follows JPMorgan’s move to push out its new API pricing structure to data aggregators and other third parties in the first week of July. This development comes as the “new” CFPB seeks to vacate its Section 1033 rule.

The latest is that we can expect most other major banks to roll out their own pricing within the next two weeks. These banks will have different pricing, as there was no coordination among banks. JPM has always been the most forward in protecting consumer data. A new pricing floor for data access has been established. Now that other analysts have weighed in, I can recap the pricing framework. 

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Tipping Point for Plastic (Card)?

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Will Visa Acceptance Cloud (VAC) be a watershed event that simplifies merchant acceptance and embedding payments into iOT? Changing the merchant side of the network has been a nightmare for all. VAC enables a radical expansion of merchant network capacity with one big asterisk. (Sorry for Typos)

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DeFi, CBDCs and Web 3.0

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My perspective has been evolving as I work to build out infrastructure for “when Crypto grows up” in my new Company. I’m pleased to report that Accept Payments (acc3pt.com) went live this month and is expanding our private rollout as we fine tune all of the CX. Thought for the day… Its about trust.. 

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Case for CBDC – Market Efficiency

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Sorry for typos here.  

As most of you know I love to read the arcane (ex favorite book is Weak Links – related blog) and I love economists. Today I’m reading some of Thomas Phillippon’s research (NYU’s economist and author of The Great Reversal: How America Gave Up on Free Markets). Many of you will recall I covered Dr. Phillppon’s work in my 2015 blog Changing Economics of Payments. My summary of Phillippon’s work:

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ApplePay Accept (Mobeewave) in October

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Note comment June 2022 – This blog did not anticipate the creation of Visa Acceptance Cloud which completely eliminated the device certification requirements.

My track record on Apple is pretty good.. having broken the Apple Pay news in 2014 and Last August I announced the Apple/Mobeewave acquisition. Apple is great at keeping secrets… perhaps the best tech company in the world in this regard. My latest forecast? Apple will enable payment acceptance in the US this October with Elavon as a payment processing partner.

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Walmart – Banking and FinTech

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As always pardon the typos

It seems like only yesterday that 30 members of Congress wrote the acting chairman of the FDIC to stop Walmart Bank.

“Wal-Mart’s plan, to have its bank process hundreds of billions in transactions for its own stores, could threaten the stability of the nation’s payments system,”

30 Members of US Congress, March 2006

Of course, we all know that Walmart pursued a different course to deliver services. Partnerships (MGI, Moneygram, Paypal, …) and banking in a box (literally an isle with prepaid cards). Most analysts discount or “write off” Walmart’s achievements in financial services.  Given Walmart doesn’t break out financial performance of Money Center, analysts are left with the tea leaves of MGI and GDOT reports. There is little doubt that comparing Money Center financial metrics to tier 1 banks would leave most unimpressed. However, Walmart has created a portfolio of banking services that supports their overall retail strategy and creates overwhelming loyalty amongst their core customer base.  

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