Pages Navigation Menu

The blog of DataDiggers

Categories Navigation Menu

CXA, a health-focused digital insurance startup, raises $25M

Posted by on Mar 13, 2019 in Asia, asia pacific, b capital, Banking, ceo, China, Co-founder, cxa group, economy, Eduardo Saverin, Europe, Facebook, Finance, funding, Fundings & Exits, healthcare, Indonesia, insurance, Louisiana, money, North America, openspace ventures, singtel, SingTel Innov8, Southeast Asia, Venture Capital | 0 comments

CXA Group, a Singapore-based startup that helps make insurance more accessible and affordable, has raised $25 million for expansion in Asia and later into Europe and North America.

The startup takes a unique route to insurance. Rather than going to consumers directly, it taps corporations to offer their employees health flexible options. That’s to say that instead of rigid plans that force employees to use a certain gym or particular healthcare, a collection over 1,000 programs and options can be tailored to let employees pick what’s relevant or appealing to them. The ultimate goal is to bring value to employees to keep them healthier and lower the overall premiums for their employers.

“Our purpose is to empower personalized choices for better living for employees,” CXA founder and CEO Rosaline Koo told TechCrunch in an interview. “We use data and tech to recommend better choices.”

The company is primarily focused on China, Hong Kong and Southeast Asia where it claims to works with 600 enterprises including Fortune 500 firms. The company has over 200 staff, and it has acquired two traditional insurance brokerages in China to help grow its footprint, gain requisite licenses and its logistics in areas such as health checkups.

We last wrote about CXA in 2017 when it raised a $25 million Series B, and this new Series C round takes it to $58 million from investors to date. Existing backers include B Capital, the BCG-backed fund from Facebook co-founder Eduardo Saverin, EDBI — the investment arm of the Singapore Economic Development Board — and early Go-Jek backer Openspace Ventures, and they are joined by a glut of big-name backers in this round.

Those new investors include a lot of corporates. There’s HSBC, Singtel Innov8 (of Singaporean telco Singtel), Telkom Indonesia MDI Ventures (of Indonesia telco Telkom), Sumitomo Corporation Equity Asia (Japanese trading firm) Muang Thai Fuchsia Ventures (Thailand-based insurance firm), Humanica (Thailand-based HR firm) and PE firm Heritas Venture Fund.

“There are additional insurance companies and strategic partners that we aren’t listing,” said Koo.

Rosaline Koo is founder and CEO of CXA Group

That’s a very deliberate selection of large corporates which is part of a new strategy to widen CXA audience.

The company had initially gone after massive firms — it claims to reach a collective 400,000 employees — but now the goal is to reach SMEs and non-Fortune 500 enterprises. To do that, it is using the reach and connections of larger service companies to reach their customers.

“We believe that banks and telcos can cross-sell insurance and banking services,” said Koo, who grew up in LA and counts benefits broker Mercer on her resume. “With demographic and work life event data, plus health data, we’re able to target the right banking and insurance services.

“We can help move them away from spamming,” she added. “Because we will have the right data to really target the right offering to the right person at the right time. No firm wants an agent sitting in their canteen bothering their staff, now it’s all digital and we’re moving insurance and banking into a new paradigm.”

The ultimate goal is to combat a health problem that Koo believes is only getting worse in the Asia Pacific region.

“Chronic disease comes here 10 years before anywhere else,” she said, citing an Emory research paper which concluded that chronic diseases in Asia are “rising at a rate that exceeds global increases.”

“There’s such a crying need for solutions, but companies can’t force the brokers to lower costs as employees are getting sick… double-digit increases are normal, but we think this approach can help drop them. We want to start changing the cost of healthcare in Asia, where it is an epidemic, using data and personalization at scale in a way to help the community,” Koo added.

Talking to Koo makes it very clear that she is focused on growing CXA’s reach in Asia this year, but further down the line, there are ambitions to expand to other parts of the world. Europe and North America, she said, may come in 2020.


Source: The Tech Crunch

Read More

How far are you willing to go for growth?

Posted by on Mar 1, 2019 in Banking, Finance, Government, infrastructure, money laundering, New York City, Policy, Revolut, The Extra Crunch Daily | 0 comments

There is a deep dilemma facing startup founders that I think just isn’t brought to light often enough. On one hand, almost all (and I do mean almost all) founders are reasonably ethical people. They can be over-optimistic, they can over-promise, they can be inexperienced around management, but at their core, they want to improve the world, build something new, and yes, make (a lot) of money while doing it.

Yet, if you really want to grow fast — so fast that you can go from piddling startup to $1.7 billion-valued banking unicorn in less than four years — then there are only so many ways to do that ethically. Or even legally, given that the laws around industries like banking aren’t designed for high growth, but rather sedentary expansion.

Here’s a lesson that I think founders internalize very, very early: growth solves all problems. And it is absolutely, 100 percent true. Growth absolutely solves all problems. Want to make your next fundraise a cinch? If you grow 5x or 7x year-over-year, watch as dozens of venture firms squabble to get access to that cap table. Want to hire faster and attract better talent? Growing at top speed is an easy way to lock in those people.

And if you think the board acts as a guard rail, you have never seen the giddy excitement of a VC who is seeing their yacht / Napa vineyard / Atherton estate being financed before their very eyes. Boards don’t ask tough questions in periods of high growth, they double down: “do everything to keep this rocket ship shooting for the stratosphere.”

In these situations, it is nearly impossible to balance growth and ethics. You can’t just say, “turn on the money laundering thing again and we will accept 5x instead of 7x” or whatever. The whole organism of the startup has been geared for growth. Hell, even the people not working for the company (but want to) are geared for growth. Every salary bump, equity distribution, performance evaluation, feedback, KPI and firing is predicated on growth.

Sometimes you get away with it, and sometimes you don’t. Uber got away with it, Zenefits did not.

So where does Revolut sit, which I’ve been foreshadowing here? By now, you might have come across the three-part story arc of Revolut, a digital banking service based in London. In part one, Revolut is a fintech darling founded in July 2015 that has since raised $336 million in venture capital within four years at a $1.7 billion valuation, according to Crunchbase.

Insane growth, huge market, real product. It’s the best first act for a startup one can possibly hope for.

Then the bad news started hitting hard this week. In act two, we get this Wired exposé by Emiliano Mellino that discusses the atrocious working conditions of the company along with deeply questionable employee interview tactics:

She did a 30-minute job interview over Google Hangouts with the London-based head of business development, Andrius Biceika, and was immediately told she had passed to the next round, which would involve a small test. “The surprise came when I received the task and it asked me to get the company as many clients as possible, with each one depositing €10 into the app,” says Laura.

And using fear to goad performance:

Last spring, CEO Nikolay Storonsky sent an announcement to all staff through the company’s Slack messaging service, saying that any members of staff “with performance rating [sic] ‘significantly below expectations’ will be fired without any negotiation after the review”.

Around this time, CEO Nikolay Storonsky gave an interview to Business Insider where he said Revolut’s philosophy was to “get shit done”, a slogan that is emblazoned on the company’s London office walls in bright neon lights. In an echo to what was going on in these calls, Storonsky would go on to say in the interview that the company attracted people that want to grow and “growing is always through pain”.

Well, there is more growth to come, because act three is going to bring a very painful episode for the company. My colleague Jon Russell noted that Revolut’s CFO has resigned in the wake of a Daily Telegraph investigation showing that Revolut had switched off the anti-money-laundering safeguards at the company, because, well, it got in the way of growth.

Let’s be clear: We all love a rapidly growing startup. We all want to invest in or join a winner. But what are we willing to forego to get it? Are we willing to push ethical boundaries? Are we willing to use dark patterns to force those numbers higher? Are we willing to break the law and potentially go to prison? Our love of growth often knows no bounds.

In context, I’m sure Revolut’s decision came easily, but of course, for disinterested observers, the idea that you would switch off the AML system at a banking startup just looks like complete stupidity. Yet, I am not sure I am ready to blame the employees of Revolut (or its leaders, frankly) before I place the blame on a culture that demands extreme growth and dislikes it when the consequences come to bear. You can’t get extreme growth without something breaking. We need to decide which value is more important for us.

Extra Crunch ethics series

Not sure we are going to be able to answer all the questions posed by Revolut, but Extra Crunch will be hosting a series of dialogues around tech ethics in the coming weeks that will try to parse some of the tough challenges that come from technology and startups these days. Stay tuned.

Why fundamental self-interest causes U.S. infrastructure to fall flat on its face

Simon McGill via Getty Images

Written by Arman Tabatabai

Yesterday, DJ Gribbin, a fellow at Brookings and a senior U.S. government infrastructure official, published an op-ed in which he attributes the U.S.’ infrastructure struggles largely to 1) a misunderstanding of federal fund availability, 2) the fragmentation and variability of local infrastructure needs and 3) misaligned incentives for local politicians and contractors.

Local politicians push heavily for the federal government to cover a portion of their bill, advertising the money as free to their constituents. In reality, investing federal funds is a zero-sum game that requires either more taxation, higher debt or pulling money from elsewhere. What results are the competitive bid and bureaucratic review processes we discussed earlier this week that ultimately lead to gamesmanship and misinformation.

The federal-local coordination has grown more difficult as projects have become more localized with region-specific needs and benefits, compared to national projects of old like the highway system. Now, executing local developments depends on coordination between federal, state and local governments, leading to the political pissing contests we all know and love.

In Gribbin’s mind, the biggest flaw in the U.S.’ approach to infrastructure — also raised in our conversation with infrastructure expert Phil Plotch — is the misaligned incentive system that encourages bad behavior from all parties.

The complexity of approval and funding processes causes local politicians to either delay projects as they lobby for federal funding or to “overpromise and underdeliver” on costs and benefits to push a project through.

Similarly, competitive RFP bidding used to reduce cost estimates encourages contractors to similarly overpromise, leading to plan revisions, construction issues and delays that seem to be inevitable for every major project. Clearly more needs to be done to align the incentives of each of these players.

Software and infrastructure

JayLazarin via Getty Images

Written by Arman Tabatabai

New York City rail operators grew frustrated this week with the contractors hired to install a new safety system. Fumbled management and failed execution on what was thought to be a simple tech integration have caused multi-year delays, potentially pushing completion past the deadline set by the Federal Railroad Administration for railroads across the country to upgrade their safety systems.

Only about one-tenth of the mandated rails had successfully upgraded their system as of last year as local agencies continue to struggle with designing software and hardware platforms compatible with other trains that may use their lines. That pattern is also found in New York. From The Wall Street Journal article:

The projects have suffered a series of setbacks because of understaffing by the contractors as well as software and hardware failures. Those failures include the recall of antennas that were installed on more than 1,000 rail cars and that were later found to be defective.

“It was a novice error and we did not believe we had hired novices,” MTA board member Susan Metzger said.

The New York project mimics issues plaguing projects throughout the U.S., where contractors use the “overpromise, underdeliver” strategy to win competitive bids. Add in software incompetence and you get the mess that New York is facing now.

DC commutes suck more than in NYC and SF, even before Amazon materializes

Richard Sharrocks via Getty Images

Written by Arman Tabatabai

According to a new data set from Bloomberg, the cost of commuting into Washington, D.C. is higher than any other metro in the U.S. Though density is clearly a factor here, workers in the greater D.C. area face the longest commute time in the country at nearly 80 minutes on average. Bloomberg then derived a “score” for the opportunity cost of commutes based on average annual incomes and average total annual commuting hours per worker, weighted based for other externalities such as how early or late average departures were.

D.C. is in the midst of seriously expanding its Metrorail system but, unsurprisingly, the project has gone far from smoothly. Bloomberg’s findings stress the need for an improved transit system in the region, but based on precedent and progress to date it’s unclear if and when the full expansion will be complete and at what ungodly cost.

We’re planning on diving deeper into D.C.’s Metrorail expansion project as we read The Great Society Subway by Zachary Schrag, which just arrived at Extra Crunch HQ this week.

Obsessions

  • We have a bit of a theme around emerging markets, macroeconomics and the next set of users to join the internet.
  • More discussion of megaprojects, infrastructure, and “why can’t we build things?”

Thanks

To every member of Extra Crunch: thank you. You allow us to get off the ad-laden media churn conveyor belt and spend quality time on amazing ideas, people and companies. If I can ever be of assistance, hit reply, or send an email to danny@techcrunch.com.

This newsletter is written with the assistance of Arman Tabatabai from New York.


Source: The Tech Crunch

Read More

Revolut CFO resigns following money laundering controversy

Posted by on Mar 1, 2019 in Bank, Banking, ceo, challenger bank, Drama, Europe, Finance, Financial Conduct Authority, financial services, Japan, jp morgan, money, monzo, N26, North America, reporter, Revolut, Singapore, TC, the telegraph, TransferWise, United Kingdom | 0 comments

This hasn’t been a good week for challenger bank Revolut . The company, which offers digital banking services and is valued at $1.7 billion, confirmed today that embattled CFO Peter O’Higgins has resigned and left the business.

The startup and O’Higgins have been under pressure after a Daily Telegraph report that revealed that Revolt switched off an anti-money laundering system that flags suspect transactions because it was prone to throwing out false positives.

According to the Telegraph, the system was inactive between July-September 2018, which potentially allowed illegal transactions to pass across the banking platform. Revolut did not contact the Financial Conduct Authority to inform the regulator of the lapse, Telegraph reporter James Cook said.

O’Higgins, who joined the company from JP Morgan three years ago, made no mention of the saga in his resignation statement:

Having been at Revolut for almost three years, I am immensely proud to have taken the company from £1m revenue to £50m revenue during this time. However, as Revolut begins to scale globally and applies to become a bank in multiple jurisdictions, the time has come to pass the reigns over to someone who has global retail banking experience at this level. My time at Revolut has been invaluable and I’m so proud of what myself and the team have achieved. There is no doubt in my mind that Revolut will go on to build one of the largest and most trusted financial institutions in the world.

In a separate statement received by TechCrunch, Revolut CEO Nik Storonsky said that O’Higgins had been “absolutely pivotal to our success.”

The resignation caps a terrible few days for Revolut, which was the subject of a report from Wired earlier this week that delved into allegations around its challenging workplace culture and high employee churn rate.

“Former Revolut employees say this high-speed growth has come at a high human cost – with unpaid work, unachievable targets, and high-staff turnover,” wrote guest reporter Emiliano Mellino, citing the experiences of numerous former employees.

Those incidents included prospective staff being told to canvass for new customers as part of the interview process. The candidates were not compensated for their efforts, according to Wired. Revolut later removed the demands from its hiring processes.

Revolut is headquartered in the UK, where it launched its service in the summer of 2015. Today, it claims over four million registered users across Europe — it is available in EEA countries — although it plans to extend its presence to other parts of the world are taking longer than expected.

The company said last year it aims to launch in Singapore and Japan in Q1 of this year — so far neither has happened — while it also harbors North American market plans. Entries to the U.S. and Canada were supposed to happen by the end of 2018, according to an interview with Storonsky at TechCrunch Disrupt in September, but they also appear to have been delayed.

Revolut is generally considered to be the largest challenger bank in Europe, in terms of valuation and registered users, but other rivals include N26, Monzo and Starling. Even Transferwise, the global remittance service, now includes border-less banking features and an accompanying debit card.


Source: The Tech Crunch

Read More

Nigerian fintech firm TeamApt raises $5M, eyes global expansion

Posted by on Feb 28, 2019 in africa, Asia, Banking, Canada, cellulant, ceo, CFO, Chief Information Officer, consumer finance, economy, engineer, ethiopia, Europe, Finance, flutterwave, Lagos, Mexico, money, Nigeria, online payments, paystack, POS, Series A, TC | 0 comments

Nigerian fintech startup TeamApt has raised $5.5 million in capital in a Series A round led by Quantum Capital Partners.

The Lagos based firm will use the funds to expand its white label digital finance products and pivot to consumer finance with the launch of its AptPay banking app.

Founded by Tosin Eniolorunda, TeamApt supplies financial and payment solutions to Nigeria’s largest commercial banks — including Zenith, UBA, and ALAT.

For Eniolorunda, launching the fintech startup means competing with his former employer, the later stage Nigerian tech company Interswitch.

The TeamApt founder is open about his company going head to head not only with his former employer, but other Nigerian payment gateway startups.

“Yes, we are in competition with Interswitch,” Eniolorunda said. But he also said that the Nigerian fintech startups Paystack and Flutterwave—both of which facilitate payments for businesses— are competitors as well.

TeamApt, whose name is derivative of aptitude, bootstrapped its way to its Series A by generating revenue project to project working for Nigerian companies, according to CEO Eniolorunda.

“To start, we closed a deal with Computer Warehouse Group to build a payment solution for them and that’s how we started bootstrapping,” he said. A project soon followed for Fidelity Bank Nigeria.

TeamApt now has a developer team of 40 in Lagos, according to Eniolorunda, who spent 6 years at Interswitch as developer and engineer himself, before founding the startup in 2015 .

“The 40 are out of a total staff of about 72 so the firm is a major engineering company. We build all the IP and of course use open source tools,” he said.

TeamApt’s commercial bank product offerings include Moneytor— a digital banking service for financial institutions to track transactions with web and mobile interfaces—and Monnify, an enterprise software suite for small business management.

TeamApt worked with Sterling Bank Nigeria to develop its Sterling Onepay mobile payment app and POS merchant online platform, Sterling Bank’s Chief Information Officer Moronfolu Fasinro told TechCrunch.

On performance, TeamApt claims 26 African bank clients and processes $160 million in monthly transactions, according to company data. Though it does not produce public financial results, TeamApt claimed revenue growth of 4,500 percent over a three year period.

Quantum Capital Partners, a Lagos based investment firm founded by Nigerian banker Jim Ovia, confirmed it verified TeamApt’s numbers.

“Our CFO sat with them for about two weeks,” Elaine Delaney said.

TeamApt’s results and the startup’s global value proposition factored into the fund’s decision to serve as sole-investor in the $5.5 million round.

“The problem that they’re solving might be African but the technology is universal. ‘Can it be applied to any other market?’ of course it can,” said Delaney.

Delaney will take a board seat with TeamApt “as a supportive investor,” she said.

TeamApt plans to develop more business and consumer based offerings. “We’re beginning to pilot into much more merchant and consume facing products where we’re building payment infrastructure to connect these banks to merchants and businesses,” CEO Tosin Eniolorunda said.

Part of this includes the launch of AptPay, which Eniolorunda describes as “a push payment, payment infrastructure” to “centralize…all services currently used on banking mobile apps.”

The company recently received its license from the Nigerian Central Bank to operate as a payment switch in the country.

On new markets, “Nigeria comes first. But we’re also looking at some parts of Europe. Canada is also hot on list,” said Eniolorunda.  He wouldn’t specific a country but said to look for a TeamApt expansion announcement by fourth quarter 2019.

TeamApt joins several fintech firms in Africa that announced significant rounds, expansion, or partnerships over the last year.  As covered by TechCrunch, in September 2018, Nigeria’s Paga raised $10 million and announced possible expansion in Ethiopia, Asia, and Mexico. Kenyan payment company Cellulant raised $53 million in 2018, targeted to boost its presence across Africa. And in January, Flutterwave partnered with Visa to launch the GetBarter global payment product.

The fintech space has also been the source of speculation regarding the continent’s first tech IPO on a major exchange, including Interswitch’s much anticipated and delayed public offering.

TeamApt’s CEO is open about the company’s future intent to list. “The project code name for the recent funding was NASDAQ. We’re clear about becoming a public company,” said Eniolorunda.


Source: The Tech Crunch

Read More

The plot to revive Mt. Gox and repay victims’ Bitcoin

Posted by on Feb 7, 2019 in Apps, Banking, Bitcoin, blockchain, Brock Pierce, coinlab, cryptocurrency, cryptocurrency exchange, Developer, Gox Rising, Lawsuit, Mt. Gox, payments, peter vessenes, Security, Startups, Sunlot, TC | 0 comments

It was the Lehman Brothers of blockchain. 850,000 Bitcoin disappeared when cryptocurrency exchange Mt. Gox imploded in 2014 after a series of hacks. The incident cemented the industry’s reputation as frighteningly insecure. Now a controversial crypto celebrity named Brock Pierce is trying to get the Mt. Gox flameout’s 24,000 victims their money back and build a new company from the ashes.

Pierce spoke to TechCrunch for the first interview about Gox Rising — his plan to reboot the Mt. Gox brand and challenge Coinbase and Binance for the title of top cryptocurrency exchange. He claims there’s around $630 million and 150,000 Bitcoin are waiting in the Mt. Gox bankruptcy trust, and Pierce wants to solve the legal and technical barriers to getting those assets distributed back to their rightful owners.

The consensus from several blockchain startup CEOs I spoke with was that the plot is “crazy”, but that it also has the potential to right one of the biggest wrongs marring the history of Bitcoin.

The Fall Of Mt. Gox

The story starts with Magic: The Gathering. Mt. Gox launched in 2006 as a place for players of the fantasy card game to trade monsters and spells before cryptocurrency came of age. The Magic: The Gathering Online eXchange wasn’t designed to safeguard huge quantities of Bitcoin from legions of hackers, but founder Jed McCaleb pivoted the site to do that in 2010. Seeking to focus on other projects, he gave 88 percent of the company to French software engineer Mark Karpeles, and kept 12 percent. By 2013, the Tokyo-based Mt. Gox had become the world’s leading cryptocurrency exchange, handling 70 percent of all Bitcoin trades. But security breaches, technology problems, and regulations were already plaguing the service.

Then everything fell apart. In February 2014, Mt. Gox halted withdrawls due to what it called a bug in Bitcoin, trapping assets in user accounts. Mt. Gox discovered that it had lost over 700,000 Bitcoins due to theft over the past few years. By the end of the month, it had suspended all trading and filed for bankruptcy protection, which would contribute to a 36 percent decline in Bitcoin’s price. It admitted that 100,000 of its own Bitcoin atop 750,000 owned by customers had been stolen.

Mt. Gox is now undergoing bankruptcy rehabilitation in Japan overseen by court-appointed trustee and veteran bankruptcy lawyer Nobuaki Kobayashi to establish a process for compensating the 24,000 victims who filed claims. There’s now 137,892 Bitcoin, 162,106 Bitcoin Cash, and some other forked coins in Mt. Gox’s holdings, along with $630 million cash from the sale of 25 percent of the Bitcoin that Kobayashi handled at a precient price point above where it is today. But five years later, creditors still haven’t been paid back. 

A Rescue Attempt

Brock Pierce, the eccentric crypto celebrity

Pierce had actually tried to acquire Mt. Gox in 2013. The child actor known from The Mighty Ducks had gone on to work with a talent management company called Digital Entertainment Network. But accusations of sex crimes led Pierce and some team members to flee the US to Spain until they were extradited back. Pierce wasn’t charged and paid roughly $21,000 to settle civil suits, but his cohorts were convicted of child molestation and child pornography.

The situation still haunts Pierce’s reputation and makes some in the industry apprehensive to be associated with him. But he managed to break into the virtual currency business, setting up World Of Warcraft gold mining farms in China. He claims to have eventually run the world’s largest exchanges for WOW Gold and Second Life Linden Dollars.

Soon Pierce was becoming a central figure in the blockchain scene. He co-founded Blockchain Capital, and eventually the EOS Alliance as well as a much-derided “crypto utopia” in Puerto Rico called Sol. His eccentric, Burning Man-influenced fashion made him easy to spot at the industry’s many conferences.

As Bitcoin and Mt. Gox rose in late 2012, Pierce tried to buy it, but “my biggest investor was Goldman Sachs. Goldman was not a fan of me buying the biggest Bitcoin exchange” due to the regulatory issues, Pierce tells me. But he also suspected the exchange was built on a shaky technical foundation that led him to stop pursuing the deal. “I thought there was a big risk factor in the Mt. Gox back-end. That was my intuition and I’m glad it was because my intuition was dead right.”

After Mt. Gox imploded, Pierce claims his investment group Sunlot Holdings successfully bought founder McCaleb’s 12 percent stake for 1 Bitcoin, though McCaleb says he didn’t receive the Bitcoin and it’s not clear if the deal went through. Pierce also claims he had a binding deal with Karpeles to buy the other 88 percent of Mt. Gox, but that Karpeles tried to pull out of the deal that remains in legal limbo.

The Supposed Villain

Sunlot has since been trying to take over the rehabilitation proceedings, but that arrangement was derailed by a lawsuit from CoinLab. That company had partnered with Mt. Gox in 2012 to run its North American operations but claimed it never received the necessary assets, and sued Mt. Gox for $75 million. Mt. Gox countersued, saying CoinLab wasn’t legally certified to run the exchange in the US and that it hadn’t returned $5.3 million in customer deposits. For a detailed account the tangle of lawsuits, check out Reuters’ deep-dive into the Mt. Gox fiasco.

CoinLab co-founder Peter Vessenes

This week, CoinLab co-founder Peter Vessenes increased the claim and is now seeking $16 billion. Pierce alleges “this is a frivolous lawsuit. He’s claiming if [the partnership with Mt. Gox] hadn’t been cancelled, CoinLab would have been Coinbase and is suing for all the value. He believes Coinbase is worth $16 billion so he should be paid $16 billion. He embezzled money from Mt. Gox, he committed a crime, and he’s trying to extort the creditors. He’s holding up the entire process hoping he’ll get a payday.” Later, Pierce reiterated that “Coinlab is the villain trying to take all the money and see creditors get nothing.” Industry sources I spoke to agreed with that characterization

Mt. Gox customers worried that they might only receive the cash equivalent of their Bitcoin according to the currency’s $483 value when Gox closed in 2014. That’s despite the rise in Bitcoin’s value rising to around 7X that today, and as high as 40X at the currency’s peak. Luckily, in June 2018 a Japanese District Court halted bankruptcy proceedings and sent Mt. Gox into civil rehabilitation which means the company’s assets would be distributed to its creditors (the users) instead of liquidated. It also declared that users would be paid back their lost Bitcoin rather than the old cash value.

The Plan For Gox Rising

Now Pierce and Sunlot are attempting another rescue of Mt. Gox’s  $1.2 billion assets. He wants to track down the remaining cryptocurrency that’s missing, have it all fairly valued, and then distribute the maximum amount to the robbed users with Mt. Gox equity shareholders including himself receiving nothing.

That’s a much better deal for creditors than if Mt. Gox paid out the undervalued sum, and then shareholders like Pierce got to keep the remaining Bitcoins or proceeds of their sale at today’s true value. “I‘ve been very blessed in my life. I did commit to giving my first billion away” Pierce notes, joking that this plan could account for the first $700 million he plans to ‘donate’.

“Like Game Of Thrones, the last season of Mt. Gox hasn’t been written” Pierce tells me, speaking in terms HBO’s Silicon Valley would be quick to parody. “What kind of ending do we want to make for it? I’m a Joseph Campbell fan so I’m obviously going to go with a hero’s journey, with a rise and a fall, and then a rise from the ashes like a phoenix.”

But to make this happen, Sunlot needs at least half of those Mt. Gox users seeking compensation, or roughly 12,000 that represent the majority of assets, to sign up to join a creditors committee. That’s where GoxRising.com comes in. The plan is to have users join the committee there so they can present a united voice to Kobayashi about how they want Mt. Gox’s assets distributed. “I think that would allow the process to move faster than it would otherise” Pierce says. “Things are on track to be resolved in the next three to five years. If [a majority of creditors sign on] this could be resolved in maybe 1 year.”

Beyond providing whatever the Mt. Gox estate pays out, Pierce wants to create a Gox Coin that gives original Mt. Gox creditors a stake in the new company. He plans to have all of Mt. Gox’s equity wiped out, including his own. Then he’ll arrange to finance and tokenize an independent foundation governed by the creditors that will seek to recover additional lost Mt. Gox assets and then distribute them pro rata to the Gox Coin holders. There are plenty of unanswered questions about the regulatory status of a Gox Coin and what holders would be entitled to, Pierce admits.

Meanwhile, Pierce is bidding to buy the intangibles of Mt. Gox, aka the brand and domain. He wants to then relaunch it as a Gox or Mt. Gox exchange that doesn’t provide custody itself for higher security. Despite the recent crypto recession with prices at multi-year lows, he believes there’s room for another exchange with a brand tied to the early heyday of Bitcoin.

“We want to offer [creditors] more than the bankruptcy trustee can do on its own” Pierce tells me. He concedes that the venture isn’t purely altruistic. “If the exchange is very successful I stand to benefit sometime down the road.” Even if the revived Mt. Gox never rises to legitimately challenge Binance, Coinbase, and other leading exchanges, Piece believes it’s all worth the effort. He concludes, “Whether we’re successful or not, I want to see the creditors made whole.” Those creditors will have to decide for themselves who to trust.


Source: The Tech Crunch

Read More

Many popular iPhone apps secretly record your screen without asking

Posted by on Feb 6, 2019 in analyst, app-store, apple inc, Banking, iOS, iPhone, iTunes, Mobile, mobile app, mobile software, operating systems, Privacy, Security, Smartphones, terms of service, travel sites | 0 comments

Many major companies, like Air Canada, Hollister and Expedia, are recording every tap and swipe you make on their iPhone apps. In most cases you won’t even realize it. And they don’t need to ask for permission.

You can assume that most apps are collecting data on you. Some even monetize your data without your knowledge. But TechCrunch has found several popular iPhone apps, from hoteliers, travel sites, airlines, cell phone carriers, banks and financiers, that don’t ask or make it clear — if at all — that they know exactly how you’re using their apps.

Worse, even though these apps are meant to mask certain fields, some inadvertently expose sensitive data.

Apps like Abercrombie & Fitch, Hotels.com and Singapore Airlines also use Glassbox, a customer experience analytics firm, one of a handful of companies that allows developers to embed “session replay” technology into their apps. These session replays let app developers record the screen and play them back to see how its users interacted with the app to figure out if something didn’t work or if there was an error. Every tap, button push and keyboard entry is recorded — effectively screenshotted — and sent back to the app developers.

Or, as Glassbox said in a recent tweet: “Imagine if your website or mobile app could see exactly what your customers do in real time, and why they did it?”

The App Analyst, a mobile expert who writes about his analyses of popular apps on his eponymous blog, recently found Air Canada’s iPhone app wasn’t properly masking the session replays when they were sent, exposing passport numbers and credit card data in each replay session. Just weeks earlier, Air Canada said its app had a data breach, exposing 20,000 profiles.

“This gives Air Canada employees — and anyone else capable of accessing the screenshot database — to see unencrypted credit card and password information,” he told TechCrunch.

In the case of Air Canada’s app, although the fields are masked, the masking didn’t always stick (Image: The App Analyst/supplied)

We asked The App Analyst to look at a sample of apps that Glassbox had listed on its website as customers. Using Charles Proxy, a man-in-the-middle tool used to intercept the data sent from the app, the researcher could examine what data was going out of the device.

Not every app was leaking masked data; none of the apps we examined said they were recording a user’s screen — let alone sending them back to each company or directly to Glassbox’s cloud.

That could be a problem if any one of Glassbox’s customers aren’t properly masking data, he said in an email. “Since this data is often sent back to Glassbox servers I wouldn’t be shocked if they have already had instances of them capturing sensitive banking information and passwords,” he said.

The App Analyst said that while Hollister and Abercrombie & Fitch sent their session replays to Glassbox, others like Expedia and Hotels.com opted to capture and send session replay data back to a server on their own domain. He said that the data was “mostly obfuscated,” but did see in some cases email addresses and postal codes. The researcher said Singapore Airlines also collected session replay data but sent it back to Glassbox’s cloud.

Without analyzing the data for each app, it’s impossible to know if an app is recording a user’s screens of how you’re using the app. We didn’t even find it in the small print of their privacy policies.

Apps that are submitted to Apple’s App Store must have a privacy policy, but none of the apps we reviewed make it clear in their policies that they record a user’s screen. Glassbox doesn’t require any special permission from Apple or from the user, so there’s no way a user would know.

Expedia’s policy makes no mention of recording your screen, nor does Hotels.com’s policy. And in Air Canada’s case, we couldn’t spot a single line in its iOS terms and conditions or privacy policy that suggests the iPhone app sends screen data back to the airline. And in Singapore Airlines’ privacy policy, there’s no mention, either.

We asked all of the companies to point us to exactly where in its privacy policies it permits each app to capture what a user does on their phone.

Only Abercombie responded, confirming that Glassbox “helps support a seamless shopping experience, enabling us to identify and address any issues customers might encounter in their digital experience.” The spokesperson pointing to Abercrombie’s privacy policy makes no mention of session replays, neither does its sister-brand Hollister’s policy.

“I think users should take an active role in how they share their data, and the first step to this is having companies be forthright in sharing how they collect their users data and who they share it with,” said The App Analyst.

When asked, Glassbox said it doesn’t enforce its customers to mention its usage in their privacy policy.

“Glassbox has a unique capability to reconstruct the mobile application view in a visual format, which is another view of analytics, Glassbox SDK can interact with our customers native app only and technically cannot break the boundary of the app,” the spokesperson said, such as when the system keyboard covers part of the native app, “Glassbox does not have access to it,” the spokesperson said.

Glassbox is one of many session replay services on the market. Appsee actively markets its “user recording” technology that lets developers “see your app through your user’s eyes,” while UXCam says it lets developers “watch recordings of your users’ sessions, including all their gestures and triggered events.” Most went under the radar until Mixpanel sparked anger for mistakenly harvesting passwords after masking safeguards failed.

It’s not an industry that’s likely to go away any time soon — companies rely on this kind of session replay data to understand why things break, which can be costly in high-revenue situations.

But for the fact that the app developers don’t publicize it just goes to show how creepy even they know it is.


Got a tip? You can send tips securely over Signal and WhatsApp to +1 646-755–8849. You can also send PGP email with the fingerprint: 4D0E 92F2 E36A EC51 DAAE 5D97 CB8C 15FA EB6C EEA5.


Source: The Tech Crunch

Read More

A private equity bet in Latin America proves the strength of fintech investments there

Posted by on Jan 22, 2019 in Argentina, Banking, Brazil, David Velez, E-Commerce, economy, Finance, Latin America, money, nubank, payments processing, Prisma, Private Equity, TC, Technology, Tencent | 0 comments

Latin America is getting another fintech unicorn thanks to Advent International’s acquisition of a 51 percent stake of Prisma Medios de Pago, an Argentine payments company formed as a joint venture between Visa International and local banks.

The deal, which values Prisma at $1.42 billion, is yet another sign of Latin America’s growing prominence for global investment and the central role that fintech plays in the development of an innovation economy in the region.

Prisma Medios de Pago is the leading payments company in Argentina, and one of the largest in Latin America, with a full suite of services including point-of-sale hardware rental, e-commerce gateways, transaction processing, payments processing and electronic bill pay.

Its newest business line, TodoPago, offers peer-to-peer payments, mobile wallets, point of sale offerings, QR code payments and e-commerce payments to merchants.

Across Latin America, fintech startups have hit billion-dollar valuations and raised hundreds of millions as investors vie for a piece of the region’s growing e-commerce and financial services markets.

Brazil’s StoneCo Ltd., a provider of payment technology and services, is worth more than $6 billion after its October 2019 initial public offering. It’s a decline from the $9 billion pop the company had back when it debuted on the Nasdaq, but still represents a healthy valuation for the Latin American technology company.

Waiting in the wings are companies like Brazil’s NuBank, which reached a $4 billion valuation last year on the strength of a significant investment from the Chinese technology giant, Tencent.

At the time, company co-founders Cristina Junqueira and David Velez said the opportunity for financial services startups to achieve significant scale was far higher in emerging markets like Brazil than in developed markets, because the barriers to banking are so much higher.

Financial services, Velez said, has been controlled by massive oligopolies that have erected unfair obstacles to wealth creation for the masses. Nubank and other companies like it are working to change that.

An article from Fintech Futures last year outlined just how large the opportunity was for Latin America. In 2018, roughly half the population of Latin America was unbanked. In Brazil, about 40 percent of the country have no access to traditional banking services and its small businesses face a credit gap of $237 billion, according to a McKinsey study cited by Fintech Futures.

Investment in fintech has soared alongside the opportunity. Two years ago, fintech investment on the continent nearly hit $600 million, and public offerings like Stone and PagSeguro point to public market appetite for the sector.


Source: The Tech Crunch

Read More

TechCrunch Conversations: Direct listings

Posted by on Jan 19, 2019 in Airbnb, Banking, Barbara Gray, Barry McCarthy, Brady Capital Research, Brookline Capital Markets, chegg, Community, Cooley, Cooley LLP, Eric Jensen, Finance, funding, Government, Graham Powis, initial public offering, IPO, Jay R. Ritter, Jay Ritter, Josh Kuzon, Netflix, Pandora, Policy, Private Equity, Reciprocal Ventures, secondaries, slack, Spotify, Spotify IPO, Startup Initial Public Offering, TC, Technology Crossover Ventures, university of florida, Venture Capital | 1 comment

Last April, Spotify surprised Wall Street bankers by choosing to go public through a direct listing process rather than through a traditional IPO. Instead of issuing new shares, the company simply sold existing shares held by insiders, employees and investors directly to the market – bypassing the roadshow process and avoiding at least some of Wall Street’s fees. That pattens is set to continue in 2019 as Silicon Valley darlings Slack and Airbnb take the direct listing approach.

Have we reached a new normal where tech companies choose to test their own fate and disrupt the traditional capital markets process?  This week, we asked a panel of six experts on IPOs and direct listings: “What are the implications of direct listing tech IPOs for financial services, regulation, venture capital, and capital markets activity?” 

This week’s participants include: IPO researcher Jay R. Ritter (University of Florida’s Warrington College of Business), Spotify’s CFO Barry McCarthy, fintech venture capitalist Josh Kuzon (Reciprocal Ventures), IPO attorney Eric Jensen (Cooley LLP), research analyst Barbara Gray, CFA (Brady Capital Research), and capital markets advisor Graham A. Powis (Brookline Capital Markets).

TechCrunch is experimenting with new content forms. Consider this a recurring venue for debate, where leading experts – with a diverse range of vantage points and opinions – provide us with thoughts on some of the biggest issues currently in tech, startups and venture. If you have any feedback, please reach out: Arman.Tabatabai@techcrunch.com.


Thoughts & Responses:


Jay R. Ritter

Jay Ritter is the Cordell Eminent Scholar at the University of Florida’s Warrington College of Business. He is the world’s most-cited academic expert on IPOs. His analysis of the Google IPO is available here.

In April last year, Spotify stock started to trade without a formal IPO, in what is known as a direct listing. The direct listing provided liquidity for shareholders, but unlike most traditional IPOs, did not raise any money for the company. Slack has announced that they will also conduct a direct listing, and it is rumored that some of the other prominent unicorns are considering doing the same.

Although no equity capital is raised by the company in a direct listing, after trading is established the company could do a follow-on offering to raise money. The big advantage of a direct listing is that it reduces the two big costs of an IPO—the direct cost of the fees paid to investment bankers, which are typically 7% of the proceeds for IPOs raising less than $150 million, and the indirect cost of selling shares at an offer price less than what the stocks subsequently trades at, which adds on another 18%, on average. For a unicorn in which the company and existing shareholders sell $1 billion in a traditional IPO using bookbuilding, the strategy of a direct listing and subsequent follow-on offering could net the company and selling shareholders an extra $200 million.

Direct listings are not the only way to reduce the direct and indirect costs of going public. Starting twenty years ago, when Ravenswood Winery went public in 1999, some companies have gone public using an auction rather than bookbuilding. Prominent companies that have used an auction include Google, Morningstar, and Interactive Brokers Group. Auctions, however, have not taken off, in spite of lower fees and less underpricing. The last few years no U.S. IPO has used one.

Traditional investment banks view direct listings and auction IPOs as a threat. Not only are the fees that they receive lower, but the investment bankers can no longer promise underpriced shares to their hedge fund clients. Issuing firms and their shareholders are the beneficiaries when direct listings are used.

If auctions and direct listings are so great, why haven’t more issuers used them? One important reason is that investment banks typically bundle analyst coverage with other business. If a small company hires a top investment bank such as Credit Suisse to take them public with a traditional IPO, Credit Suisse is almost certainly going to have its analyst that covers the industry follow the stock, at least for a while. Many companies have discovered, however, that if the company doesn’t live up to expectations, the major investment banks are only too happy to drop coverage a few years later. In contrast, an analyst at a second-tier investment bank, such as William Blair, Raymond James, Jefferies, Stephens, or Stifel, is much more likely to continue to follow the company for many years if the investment bank had been hired for the IPO. In my opinion, the pursuit of coverage from analysts at the top investment banks has discouraged many companies from bucking the system. The prominent unicorns, however, will get analyst coverage no matter what method they use or which investment banks they hire.


Barry McCarthy

Barry McCarthy is the Chief Financial Officer of Spotify. Prior to joining Spotify, Mr. McCarthy was a private investor and served as a board member for several major public and private companies, including Spotify, Pandora and Chegg. McCarthy also serves as an Executive Adviser to Technology Crossover Ventures and previously served as the Chief Financial Officer and Principal Accounting Officer of Netflix.

If we take a leap of faith and imagine that direct listings become an established alternative to the traditional IPO process, then we can expect:

  1. Financing costs to come down – The overall “cost” of the traditional IPO process will come down, in order to compete with the lower cost alternative (lower underwriting fees and no IPO discount) of a direct listing.
  2. The regulatory framework to remain unchanged – No change was / is required in federal securities laws, which already enable the direct listing process. With the SEC’s guidance and regulatory oversight, Spotify repurposed an existing process for direct listings – we didn’t invent a new one.

  3. A level playing field for exits – Spotify listed without the traditional 180 day lock-up. In order to compete with direct listings, traditional IPOs may eliminate the lock-up (and the short selling hedge funds do into the lock-up expiry).

  4. Financing frequency; right church, wrong pew – Regardless of what people tell you, an IPO is just another financing event. But you don’t need to complete a traditional IPO anymore if you want to sell equity. Conventional wisdom says you do, but I think conventional wisdom is evolving with the realities of the marketplace. Here’s how we’d do it at Spotify if we needed to raise additional equity capital. We’d execute a secondary or follow-on transaction, pay a 1% transaction fee and price our shares at about a 4% discount to the closing price on the day we priced our secondary offering. This is much less expensive “financing” than a traditional IPO with underwriter fees ranging from 3-7% (larger deals mean smaller fees) and the underwriter’s discount of ~36% to the full conviction price for the offering. You simply uncouple the going public event from the money raising event.


Josh Kuzon

Josh Kuzon is a Partner at Reciprocal Ventures, an early stage venture capital firm based in NYC focused on FinTech and blockchain. An expert in payments and banking systems, Josh is focused on backing the next generation of FinTech companies across payments, credit, financial infrastructure, and financial management software.

I think the implications of direct listing tech IPOs are positive for venture capitalists, as it creates a channel for efficient exits. However, the threat of low liquidity from a direct listing is significant and may ultimately outweigh the benefits for the listing company. 

Direct listing tech IPOs offers a compelling model for company employees and existing investors in pursuit of a liquidity event. The model features a non-dilutive, no lock-up period, and underwriting fee-less transaction, which is a short-term benefit of the strategy. Additionally, as a publicly traded company, there are longer-term benefits in being able to access public markets for financing, using company stock to pay for acquisitions, and potentially broaden global awareness of an organization. However, these benefits come with tradeoffs that should not be overlooked. 

One concern is the circular problem of liquidity. Without a defined supply of stock, it can be difficult to generate meaningful buyside demand. A floating price and indeterminate quantity will dampen institutional interest, no matter how great the listing company may be. Institutions require size and certainty; not only do they desire to build large positions, but they need to know they can exit them if needed. Without consistent institutional bids, sellers are less motivated to unwind their stakes, for fear of volatility and soft prices.

I believe institutional investors and their brokers are crucial ingredients for a properly functioning public equities market structure. They help make markets more liquid and efficient and serve as a check on companies to drive better business outcomes for their shareholders. A lack of institutional investors could be a very expensive long-term tradeoff for a short-term gain.

For companies that have significant brand awareness, don’t need to raise additional capital, or already have a diverse institutional investor base, the direct listing model may work out well for them. Few companies, however, fit this profile. Many more will likely have to work a lot harder to persuade the capital markets to participate in a direct listing and even if successful, may ultimately come back to bite them as they evolve and require additional capital markets cooperation.


Eric Jensen

Eric Jensen is a partner at Cooley LLP. He advises leading technology entrepreneurs, venture funds and investment banks in formation, financing, capital market and M&A transactions, and in in the past seven years was involved in over 55 offerings, raising over $21 billion, for companies such as Appian, Atlassian, Alteryx, Avalara, DocuSign, FireEye, Forty Seven, LinkedIn, MongoDB, NVIDIA, Redfin, SendGrid, ServiceNow, Tenable, Zendesk, Zulilly and Zynga.

It is challenging to draw market lessons from a single completed “direct listing.” The degree of interest I am seeing, often without folks knowing what it means, shows that the IPO model has issues. So first I describe to a client what it means – an IPO without the “I” and the “O”, meaning you are not selling any stock and therefore you don’t have a set initial stock price. These factors mean that a direct listing is relevant only for a small subset of private companies – those that:

  1. Sold stock to a number of institutional buyers that are likely to hold or increase their interest once trading begins;
  2. Are large enough (and didn’t restrict transfers) such that an active trading market developed as a private company, to be used as a proxy for the public trading price;
  3. Don’t need to raise primary capital, and
  4. Want to make their mark by doing something different, at the expense of placing IPO stock in the hands of new investors they have selected.

There is no evidence to indicate that it accelerates public market access, any company that can do a direct listing could do an IPO. The SEC doesn’t go away, and compared to the highly tuned IPO process, SEC scrutiny is actually higher. As least based on Spotify, it doesn’t put investment bankers out of a job, nor does it dramatically reduce total transactions costs. Spotify had no lock-up agreement, so the VCs I know love this feature, but it is not inherent in a direct listing, and IPOs don’t require lock-ups.

In my book, too soon to tell if it is the reverse Dutch Auction of its day.


Barbara Gray

Barbara Gray, CFA is a former top-ranked sell-side Equity Analyst and the Founder of Brady Capital Research Inc., a leading-edge investment research firm focused on structural disruption. She is also the author of the books Secrets of the Amazon 2.0, Secrets of the Amazon and Ubernomics.

Although Spotify successfully broke free of its reins last April and entered the public arena unescorted, I expect most unicorns will still choose to pay the fat underwriting fees to be paraded around by investment bankers. 

Realistically, the direct listing route is most suitable for companies meeting the following three criteria: 1) consumer-facing with strong brand equity; 2) easy-to-understand business model; and 3) no need to raise capital. Even if a company meets this criteria, the “escorted” IPO route could provide a positive return on investment as the IPO roadshow is designed to provide a valuation uptick through building awareness and preference versus competitive offerings by enabling a company to: a) reach and engage a larger investment pool; b) optimally position its story; and c) showcase its skilled management team.

Although the concept of democratizing capital markets by providing equal access to all investors is appealing, if a large institution isn’t able to get an IPO allocation, they may be less willing to build up a meaningful position in the aftermarket. The direct listings option also introduces a higher level of pricing risk and volatility as the opening price and vulnerable early trading days of the stock are left to the whims of the market. Unlike with an IPO, with benefits of stabilizing bids and 90 to 180 days lock-up agreements prohibiting existing investors from selling their shares, a flood of sellers could hit the market.


Graham Powis

Graham A. Powis is Senior Capital Markets Advisor at Brookline Capital Markets, a division of CIM Securities, LLC. Brookline is a boutique investment bank that provides a comprehensive suite of capital markets and advisory services to the healthcare industry. Mr. Powis previously held senior investment banking positions at BTIG, Lazard and Cowen.

While Spotify’s direct listing in 2018 and recent reports that Slack is considering a direct listing in 2019 have heightened curiosity around this approach to “going public,” we expect that most issuers in the near-to medium-term will continue to pursue a traditional IPO path. Potential benefits of a direct listing include the avoidance of further dilution to existing holders and underwriter fees. However, large, high-profile and well-financed corporations, most often in the technology and consumer sectors, are the companies typically best-suited to pursue these direct listings. By contrast, smaller companies seeking to raise capital alongside an exchange listing, and with an eye on overcoming challenges in attracting interest from the investing public, will continue to follow a well-established IPO process.

A case in point is the healthcare segment of the US IPO market, which has accounted for one-third of all US IPO activity over the last five years. The healthcare vertical tilts toward small unprofitable companies with significant capital needs and, as a result, direct listings aren’t likely to become a popular choice in that industry. Since 2014, unprofitable companies have accounted for more than 90% of all healthcare IPOs completed. Furthermore, the biotechnology subsector has been by far the most active corner of the healthcare IPO market, and biotechnology companies are voracious consumers of capital. Finally, healthcare IPOs tend to be relatively small: since 2014, healthcare IPO issuers have raised, on average, only 47% of the amount raised by non-healthcare issuers, and more than half have already returned to the market at least once for additional capital.


Source: The Tech Crunch

Read More

New policy puts revenue squeeze on China’s payments giants

Posted by on Jan 17, 2019 in alibaba, alibaba group, Ant Financial, Asia, Bank, Banking, Beijing, China, E-Commerce, financial services, insurance, mobile payment, online payments, payment, payments, Tencent | 0 comments

The era that saw China’s mobile payments providers making handsome interest returns on client money has officially ended.

Starting this week, non-bank payments companies must place 100 percent of their customer deposit funds under centralized, interest-free accounts as Beijing moves to rein in financial risks. In the past, third-party payments firms were allowed to hold pre-paid sums from buyers for a short period of time before transferring the money to merchants. This layout allowed companies like Alibaba’s payments affiliate Ant Financial and Tencent to earn interest by depositing customer money into bank accounts.

Exactly how much money Ant and Tencent derived from these deposits is unclear. Both companies declined to comment on the policy’s revenue implications but said they have complied with the rules and finished transferring all customer reserve funds to a centralized clearing system.

Here are some numbers to help grasp the scale of the lucrative practice. The central bank gave a two-year window for all payments firms to complete the transition as it gradually raised the reserve funds ratio, which climbed to 85 percent in November. By then, total customer funds deposited by non-bank payments companies into central custodians hit 1.24 trillion yuan ($180 billion), while another estimated 260 billion yuan was yet to come under regulated control, shows data published by the People’s Bank of China.

Collectively, the giants account for more than 90 percent of China’s third-party mobile payments and 34 percent of all third-party, internet-based payments (which include both PC and mobile transactions), according to research firm Analysys.

While the regulatory control surely has measurable revenue implication on payments firms, some experts point to another adverse consequence. “Now that payments companies are no longer putting deposits into their [partnering] banks, they lose bargaining power with these banks that charge commissions for handling their mobile payments,” an employee from a major payments firm told TechCrunch on the condition of anonymity.

Tencent doesn’t break down how much it makes from payments but the unit has grown rapidly over the past years while its major income source — video games — took a hit last year. Meanwhile Ant Financial has been diversifying its business to go beyond financial services. It has earnestly marketed itself as a “technology” company by opening its proprietary technologies to a growing list of traditional institutions like banks and insurance companies. Reuters reported earlier that technology services will make up 65 percent of Ant’s revenue in about four years, up from an estimated 34 percent in 2017.


Source: The Tech Crunch

Read More

Equifax, Western Union, Priceline settle with New York attorney general over insecure mobile apps

Posted by on Dec 18, 2018 in Bank, Banking, computer security, computing, credit scoring, E-Commerce, mobile app, New York, Priceline, Security, wi-fi | 0 comments

New York’s attorney general has settled with five tech and financial giants, requiring each company to implement basic security on their mobile apps.

The settlements force Credit Sesame, Equifax (yes, that Equifax), Priceline, Spark Networks and Western Union to ensure data sent between the app and their servers are encrypted. Specifically, the attorney general said their apps “could have allowed sensitive information entered by users — such as passwords, social security numbers, credit card numbers, and bank account numbers — to be intercepted by eavesdroppers employing simple and well-publicized techniques.”

In other words, their mobile apps “all failed” to properly roll out and implement HTTPS, one of the barest minimum security measures in any modern app’s security.

HTTPS certificates (also known as SSL/TLS certificates) encrypt data between a device, like your phone or computer, and a website or app server, ensuring any sensitive data, like credit card numbers or passwords, can’t be intercepted as it travels over the internet — whether that’s someone on the same coffee shop Wi-Fi network or your nearest federal intelligence agency.

These certificates are more common than ever, not least because when they’re not incredibly cheap, they’re completely free — and most modern browsers these days will bluntly tell you when a website is “not secure.” Apps are no different, but without a green padlock in your browser window, there’s often very little to know for sure on the face of it that your data is traversing the internet securely.

At least, with financial, banking and dating apps — you’d just assume, right? Bzzt, wrong.

“Although each company represented to users that it used reasonable security measures to protect their information, the companies failed to sufficiently test whether their mobile apps had this vulnerability,” the office of attorney general Barbara Underwood said in a statement. “Today’s settlements require each company to implement comprehensive security programs to protect user information.”

The apps were picked out after an extensive batch of app testing in an effort to find security issues before incidents happen. Underwood’s office follows in the footsteps of federal enforcement in recent years by the Federal Trade Commission, which brought action against several app makers — including Credit Karma and Fandango — for failing to properly implement HTTPS certificates.

In taking action, the attorney general gets to keep closer tabs on the companies going forward to make sure they’re not flouting their data security responsibilities.


Source: The Tech Crunch

Read More