Yes, No, Maybe: Bitcoin, Bank of America And Apple Pay

Last week was short on work days due to the Monday holiday, but what the work week lacked in hours it made up for in action. The Visa acquisition of Visa Europe was approved by regulators, Amazon set Alexa free on browsers, Lending Club flipped the script and went looking for a loan and Walmart, well, Walmart did so many things last week that you should probably click over to Karen Webster’s commentary this week to get the skinny.

Like we said: short on days, long on events.

And the hits just kept on coming — both good and bad — as the week rolled on. What do you need to know to get ready for the week ahead?

Well…

 

Bitcoin’s Big Bounce

There are a lot of bitcoin — and digital currency — enthusiasts the world over who’ve likely spent a good part of a week muttering some variation on the phrase “told ya so.” As 2015 was giving way into 2016, bitcoin boosters were saying that 2016 was going to be the year of the surge. Which was a pretty bold claim to make on Christmas Eve, considering that 2015 was a year marked by apocalypses and indictments for Planet Bitcoin.

But the surge has commeth. As of the writing of this piece, the price of bitcoin has surged for the last week and is just under $580 per bitcoin.

So, is bitcoin making a comeback?

Hard to say. Bitcoin has done this — jumped up over $500 — before, only to race to $600 and then begin tumbling back down below $500 again.

That said, bitcoin is now at a 21-month price high, and the climb this time looks a little more convincing. Before this, bitcoin’s 2016 high was at around $378 back in January.

So, it’s bouncy as heck but on an up-bounce. Why?

China is the reigning explanation at present. Chinese investors essentially pushed the price of bitcoin by 21 percent in a four-day period. As of the end of last week, that big pop had notched $1.2 billion into bitcoin’s market cap, according to data from blockchain.info.

Those Chinese investors are looking for new and more productive asset classes. Similar booms have recently been observed in equities, bonds and commodities trading, all with an accompanying deflation once the roving gang of investors moves on to the next big thing. The recent devaluation of the yuan has also motivated some Chinese consumers to seek bitcoin as a hedge.

And hedging is not easy in China, as regulations strictly control how much money (and to where) investors can transfer funds overseas. For that reason, in fact, Beijing has worked hard to limit bitcoin trade. Nonetheless, two Chinese exchanges — Huobi and OKCoin — collectively account for some 92 percent of global trading in bitcoin.

Also driving price is a perceived coming fall in supply. Every four years, the algorithm that spits off bitcoin through “mining” halves the number of bitcoin it releases in an attempt to keep inflation from occurring. The next scheduled difficulty level-up is expected in a few weeks, which is driving lots of activity in the section.

The magic number, however, is $1,242.

That was bitcoin’s top price — hit on Nov. 29, 2013.

It has a ways to go before reclaiming that ground.

 

Bank of America Just Says No To Its Own Mobile Wallet

It can feel, these days, as though anyone who is anyone is starting a mobile wallet all their own — every store, every bank, every technologist.

And that they all have “Pay” slapped on to the end of their name.

Everyone that is except Bank of America.

Instead, based on a recent interview, Bank of America is doing what we’ve long said issuers should be doing instead: making sure that they are everywhere the larger digital wallet ecosystem takes them.

“We want to be in an open wallet ecosystem,” Hari Gopalkrishnan, client-facing platforms technology CIO at Bank of America Merrill Lynch, told Bank Innovation. “It’s an open wallet strategy.”

Woot, woot!

Bank of America has decided to be Switzerland and take an equally promotional tone with Apple Pay, Android Pay, Samsung Pay and Visa Wallet on its digital wallet page. Bank of America’s message is pretty simple: Use whatever you want; just please make sure to put your Bank of America-issued card in there and do all the spending with it.

Woot, woot, woot!

Bank of America has decided it doesn’t need a wallet so much as it needs to be top of everyone else’s.

What BoA has also been focused on is promoting Samsung Pay and Android Pay as a way to make contactless ATM withdrawals.

“How channels come together — a seamless bridge from mobile to the call center, for example — is critical,” Gopalkrishnan said in the interview. “The customer experience has to span channels, and our focus has to be not channels or products but customers.”

As for now, the priority for Bank of America is focused on two things: “New forms of authentication,” Gopalkrishnan said, and getting to top of wallet. Regardless of what type of wallet that is.

Finally…

 

Apple Pay’s International Headache

Interchange fees — unpopular in the U.S., nearly nonexistent on the global stage.

Which, as it turns out, is a big problem for a mobile wallet like Apple’s, which installs a little toll collector on each transaction that gobbles up a little piece of that fee every time it’s used. It’s not a big toll in the U.S. — 15 basis points (0.15 percent or $0.15 per $100 transaction) — but for the rest of the world, well, that’s turned out to be a different story.

But earlier this year, it looked like that stumbling block was cleared — or, at least, diminished — as Apple’s payment platform finally managed to get off the ground outside the U.S. Presently, Apple Pay is online in some form or another in six countries among a limited range of banks.

But things are running less than smoothly.

Apparently, a mixture of technical difficulties, tepid consumer interest and bank resistance has forced something of a stumble out of the gate for the team over at Apple.

“Bendigo Bank is experiencing some unforeseen technical issues in accepting Apple Pay payments at selected merchant terminals,” a spokeswoman for the bank told Reuters, adding that a lack of wider industry engagement in launching the service limited the lead time in testing the new technology.

Apple Vice President Jennifer Bailey said such experiences were premature and not representative. “Like any set of major technology changes, it takes time,” she said. “We want to move as quickly as possible; we push it as quickly as possible.”

No matter how fast it wants to push it, however, Apple is far from the only player in any of these countries pushing a mobile payments solution.

And then, there is the international reality that consumers just aren’t that into Apple Pay as of yet. Apple Pay usage netted out at around $10.9 billion last year, most of which was spent in the U.S.

That may not sound too bad, unless one considers that, over on the other side of the Pacific, Alibaba and Tencent are collectively pulling down $1 trillion in mobile transactions per year. Apple’s total yearly take is basically a couple of minutes worth of those services.

And while anecdotal information out of the U.K., China and Australia indicates that core Apple fans like the service, it isn’t showing much in the way of mass appeal.

Hmmm … what an oddly familiar refrain … in the nearly two years since its launch, usage in-store in the U.S. has declined.

 

So, what did we learn this week?

It might be a good time to be a bitcoiner — the promised surge is upon us. Of course, a broken clock is right twice a day, so it might just be worth keeping an eye on that.

Bank of America decided that everyone else can run the mobile race, as long as everyone continues using those BoA cards. And Apple Pay continues its slog everywhere it happens to go.



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