Whine and Dime #0008


BPAY looks like it will be the first institution to offer instant payments on the Australian banks' New Payments Platform (NPP). NPP has a real opportunity to shake up the banking landscape in Australia, as long as the Big4 banks participate. As the article says (my emphasis):

The move echoes the plans of the failed MAMBO (Me At My Bank Online) project run by the big four banks and BPAY that had a similar plan but collapsed after NAB and ANZ pulled out over fears some banks would get a competitive advantage because they were better prepared for the change.

What should have happened with the NPP rollout was for the RBA to regulate that by a particular date, all banks in Australia with a retail banking license were mandated to receive an incoming NPP payment from any participating institution. There would be no need to mandate that a bank originate payments, only that they receive them. If for commercial reasons, a bank chose not to offer the ability for their customers to create NPP payments, so be it. However, they would be obliged to receive them.

This would have ensured a minimum level of service for all customers of all banks to receive payments. It would have meant that all accounts could be addressed with an immediate payment. It would have bedded down the basic infrastructure, and it would have allowed for a slow and steady roll-out. Importantly, it would give an opportunity to progressive banks to roll-out payment origination capability and draw customers away from any less-progressive institution that might be lagging behind. This approach is similar to what happened with the rollout of Faster Payments in the UK. It would be a clear win for consumers, and a clear win for competition.

Australia could be at risk of getting the worst of all possible outcomes. The industry is spending a shedload of money, the less technically competent banks are already lagging behind where they need to be for roll-out, and there are questions about what functionality will be available for customers at release. It could end up right where M@MBO left off: in a pile on the floor.


The customer service from @TheTileApp was fantastic this week after I received a post-delivery bill from the courier for UK VAT. There were multiple problems with this process. Firstly, the VAT was, for some reason, calculated on a USD price of $70, when the delivered items were only USD$48. But on top of that, the courier company charged a GBP£12 processing fee! Tile refunded the difference after an email to support. Thanks, and well played @TheTileApp. Much appreciated.

Industry News

More traditional FIs take the bitcoin plunge, with the likes of MasterCard, Bain Capital Ventures, and New York Life investing in bitcoin Digital Currency Group. DCG is setting itself up as "the nexus of blockchain technology and finance", a bold claim, but potentially profitable if the stars line up.

Last week, The Economist thought that the technology behind bitcoin could transform how the economy works by describing it "a machine for creating trust." It's more like a machine that allows parties to collaborate without the need for trust, but the general point is well made. If blockchain technology really takes off, then there are whole swathes of the financial services business that will be obviated.

This week the Economist digs into the technology behind bitcoin in "The great chain of being sure about things". Unlike last week's article that seemed to miss the point on trust versus trustless transactions on the blockchain, this one gets underneath the way that the tech behind bitcoin lets people "who do not know or trust each other build a dependable ledger". That's the real key: trustless transactions. It's a huge innovation with profound implications.

Heartland CEO thinks that blockchain could power trillions in bank transactions, mostly through the elimination of middlemen. A lot of banking is little more than trusted mediation, so the potential for change is huge.

As the bitcoin price hits USD$400 this week, it is worth asking what a 'fair price' for BTC should be. If, as Startup L Jackson suggested about a year ago, that the long term value is around the USD$60 mark, then $400 seems a bit overpriced.

And maybe even $60 is overpriced if you believe Jamie Dimon from JPMorgan who says "Bitcoin will not survice":

"This is my personal opinion, there will be no real, non-controlled currency in the world. There is no government that's going to put up with it for long ... there will be no currency that gets around government controls."

Of course someone vested in the establishment money system would take that position. But fiat currency is such a powerful tool of the nation state, it seems unlikely central governments will ever give up control of it without a fight. What would Murray Rothbard have thought about bitcoin?

Motley Fool is reporting that "JPMorgan Chase is crushing it in payments". The advantage stems from a long-term agreement to use the Visa network, in combination with some savvy data products that it provides to merchants. Full-service payments is such a scale play that when the really big players like this get involved, you wonder what the future looks like for regional processors. Even those that might be relatively large within a region today.

In what will undoubtedly be a fillip for uptake in a number of international markets, American Express will bring Apple Pay to card members during late 2015 for Canada and Australia, and for Singapore, Spain and Hong Kong in 2016.

If an Australian bank had eliminated foreign transaction fees for small business cards like Wells Fargo plans to do, it would have saved me a fortune in banks charges over the last couple of months.

Visa is going to be buy Visa. That's US-based Visa to buy Visa Europe. For USD$21b. Given that so many mega-mergers fail to deliver consumer value, it will be interesting to see how this plays out given the 16 billion transactions worth of sales that the EU cards processing operation will add to the business.

According to Trustev (a company that helps retailers and banks prevent online fraud), not that many people are actually using Apple Pay even though they have it on their phones. The problem with this article, however, is that it conflates "having Apple Pay activated on a phone" and "being able to pay at an NFC/contactless terminal". These two things are not the same. So whilst the data may be correct about usage, the authors need to synthesise the two data sets of "users who have Apple Pay enabled" and "NFC/contactless enabled POS terminals" and ask the question "how many users with Apple Pay enabled on their phone have used Apple Pay at an NFC/contactless terminal?" That would be a far more interesting analysis.

Maybe this Mitek service offering instant, assured driver license authentication on mobile devices could help some UK banks get over the obsession with the horrible UX that is Verified by Visa?

"How Venmo won in one of the most crowded spaces in tech" tells a great story of excellent execution. Precisely the kind of thing that Jason and I didn't quite manage to do with Tillless. It's a laundry list of salient lessons for next time around.

Blog Posts

Worth Following

  • @DCGCo - combining blockchain technologies and finance
  • @activateinc - strategy consulting responsible for the epic slide deck above
  • @arampell - SV VC GP @a16z

Nerding Out