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Are Stablecoins Better Than Bitcoin?

Guest Post | Jan 20, 2021

stablecoins - Are Stablecoins Better Than Bitcoin?

If you’re new to the world of investing in cryptocurrencies, you might have heard of stablecoins. These are physically-backed assets that differ quite a bit from Bitcoin and other coins. If you’ve heard of them, you’re understandably curious as to what they’re about. This guide can help you with that.

How are Stablecoins Different from Bitcoin?

As mentioned, stablecoins are tied to a physical asset. Bitcoin is not. It has its own value backed by the electricity that goes into mining it. Stablecoins like Tether or TrueUSD are tied to the value of the US dollar. These are sold on most traditional exchanges. Otherwise, there are also precious metal-backed stablecoins. Coins like these are more often sold on dedicated platforms like Gold Exchange.

Now, you can probably infer that because stablecoins are tied to the value of physical assets, their value is inherently less volatile than Bitcoin. As you may know, Bitcoin can (and has) risen or fallen thousands of dollars at any given moment.

That volatility might be a boon for some experienced investors, but newer ones might want to avoid them. This is where stablecoins come into play.

Stablecoins like SilverCoin allow users to take advantage of cryptocurrency and blockchain technology without volatility. This way, they can invest in things like silver or gold without hassle, from anywhere in the world.

What are the Benefits of Stablecoins

When buying silver or gold physically, investors have to jump through tons of hoops. Buyers need to validate their identity, income, and other information. They also need to find a proper vendor to buy from and will often pay a premium for doing so. After all of that, they need to wait for the assets to be shipped or go pick them up. Then, they must store those assets. This could be in a safe they buy themselves or paying a company to secure the assets.

In other words, investing in physical assets can be a pain. With stablecoins, investors can buy fractional amounts of an asset instantly. There’s no need to reveal any identity, and the coins are held in a free digital wallet. That anonymity is huge for most investors, especially those interested in cryptocurrency. That, and the ability to buy fractional amounts, is significant for investors with fewer funds. It allows users to start earlier than they would otherwise, putting in as little or as much as they’d like.

See:  Cryptocurrencies vs. Precious Metals: Which is the Better Investment?

However, it’s worth noting that those looking to profit off of crypto might not enjoy stablecoins as much. Because these coins are tied to a physical asset’s value, the coin only raises or lowers its price as its physical counterpart does. For example, those investing in the Tether stablecoin must realize it is designed to sit at $1.00 per coin, give or take a few cents. There’s next to no way to profit from this.

Instead, it’s more for users to convert funds to another type of fiat or move them around the world faster and cheaper than traditional conversions. While some stablecoins can provide a profit, the reality is that’s not what they are designed for.

So, Which One is Better?

Technically, neither asset is “better” than the other. Both are great at what they’re designed to do, but each has its own set of flaws. Really, whichever one is better depends on what you’re looking for in a cryptocurrency.

If you’re trying to profit off of your investments, Bitcoin is probably the best option. If you’re more of a traditional investor or need to move funds, stablecoins are your best bet. In fact, central banks around the world are planning to release their own stablecoins for customer’s sake.

Regardless, do your research before investing in any asset. There’s always risk no matter where you put your funds.

 


NCFA Jan 2018 resize - Are Stablecoins Better Than Bitcoin? The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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OCC says Federally regulated banks can use stablecoins to conduct payments and other activities

Coindesk | Nikhilesh De | Jan 4, 2021

Brian Brooks OCC - OCC says Federally regulated banks can use stablecoins to conduct payments and other activitiesThe federal banking regulator published an interpretive letter addressing whether national banks and federal savings associations could participate in independent node verification networks (INVNs, otherwise known as blockchain networks) or use stablecoins. The letter said that these financial institutions can participate as nodes on a blockchain and store or validate payments.

Any banks that do participate in an INVN must be aware of the operational, compliance or fraud risks when doing so, an OCC press release warned.

Still, the OCC said INVNs “may be more resilient than other payment networks” due to the large number of nodes needed to verify transactions, which can in turn limit tampering.

See:  Stablecoins: Experience the Stability

Kristin Smith, executive director of the Blockchain Association, said on Twitter that

“the letter states that blockchains have the same status as other global financial networks, such as SWIFT, ACH, and FedWire.”

Brian Brooks, the Acting Comptroller of the Currency, said in a statement that while other nations have built real-time payments systems, the U.S. “has relied on” the private sector to create such technologies, seemingly endorsing the use of cryptocurrencies – specifically stablecoins – as an alternative to other real-time payment systems.

Continue to the full article --> here


Office of the Comptroller of the Currency| Release | Jan 4, 2020

stablecoins for payments - OCC says Federally regulated banks can use stablecoins to conduct payments and other activitiesFederally Chartered Banks and Thrifts May Participate in Independent Node Verification Networks and Use Stablecoins for Payment Activities

WASHINGTON—The Office of the Comptroller of the Currency (OCC) today published a letter clarifying national banks’ and federal savings associations’ authority to participate in independent node verification networks (INVN) and use stablecoins to conduct payment activities and other bank-permissible functions.

“While governments in other countries have built real-time payments systems, the United States has relied on our innovation sector to deliver real-time payments technologies. Some of those technologies are built and managed by bank consortia and some are based on independent node verification networks such as blockchains,” said Acting Comptroller of the Currency Brian P. Brooks.

“The President’s Working Group on Financial Markets recently articulated a strong framework for ushering in an era of stablecoin-based financial infrastructure, identifying important risks while allowing those risks to be managed in a technology-agnostic way. Our letter removes any legal uncertainty about the authority of banks to connect to blockchains as validator nodes and thereby transact stablecoin payments on behalf of customers who are increasingly demanding the speed, efficiency, interoperability, and low cost associated with these products.”

The agency letter concludes a national bank or federal savings association may validate, store, and record payments transactions by serving as a node on an INVN. Likewise, a bank may use INVNs and related stablecoins to carry out other permissible payment activities. In deploying these technologies, a bank must comply with applicable law and safe, sound, and fair banking practices.

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Engaging in INVN within the federal banking system may enhance the efficiency, effectiveness, and stability of payments activities and achieve the benefits of real-time payments already enjoyed in other countries. For example, such activities may be more resilient than other payment networks because of the decentralized nature of INVNs, which allows a comparatively large number of nodes to verify transactions in a trusted manner. An INVN also limits tampering or adding inaccurate information to the database because information is only added to the network after consensus is reached among the nodes validating the information.

Banks must also be aware of potential risks when conducting INVN-related activities, including operational risks, compliance risk, and fraud. New technologies require enough technological expertise to ensure banks can manage these risks in a safe and sound manner. Banks have experience with managing such risks, which are similar to those of other electronic activities expressly permitted for banks, including providing electronic custody services, acting as a digital certification authority, and providing data processing services. Among the compliance risks, banks should guard against potential money laundering activities and terrorist financing by adapting and expanding their compliance programs to ensure compliance with the reporting and recordkeeping requirements of the Bank Secrecy Act and to address the particular risks of cryptocurrency transactions.

Banks should develop and implement new activities consistently with sound risk management practices and should align with banks’ overall business plans and strategies.

Continue to the Full Interpretive Letter (PDF) --> here

 


NCFA Jan 2018 resize - OCC says Federally regulated banks can use stablecoins to conduct payments and other activities The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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NCFA’s Fintech Confidential Issue 3 (Dec 2020) is here! Happy Holidays…

NCFA | Craig Asano | Dec 17, 2020

Fintech Confidential issue 3 cover - NCFA's Fintech Confidential Issue 3 (Dec 2020) is here!  Happy Holidays...Dear Global Fintech & Funding Communities,

The National Crowdfunding & Fintech Association of Canada (NCFA) and partners are excited to present Vol. 1 Issue 3, FINTECH CONFIDENTIAL, a digital pop-up of the 6th annual 2020 Fintech & Financing Conference and Expo (FFCON20) held virtually across themed 8 weeks from July 9 to August 27 and co-hosted by NCFA and Toronto Finance International.

The main theme of FFCON20 was “RISE”, reflecting the joint efforts of the two associations, NCFA and TFI, to build and increase the success and sustainability of Canada’s fintech and financial sector.   There were many moving parts this year and a brand-new digital format with the event bringing together 100+ thought leaders, 50+ partners, and more than 500 attendees, 2 challenges and the inaugural Fintech Draft pitching and demo competitions.  Congratulations to the winners:  SolidBlock and MazumaGo (formerly DivDot)!  Thanks to all the partners, speakers, attendees, volunteers and the entire organizing team for making FFCON20 an impactful and amazing online experience for Canada’s fintech and funding community.

Despite a challenging year for many, the fintech industry continues to demonstrate its resilience, creative capacity, and thirst to create valuable partnerships and financial products/services that benefit millions of consumers, small businesses, and the economy.  As covid accelerates the adoption of digital trends, it has spotlighted the social and economic gaps that saw fintechs pivot to work on supportive solutions from mobilizing low-cost capital campaigns to personal finance apps that help users better manage their finances, spending, savings, and investment habits.

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Digital identity, CBDCs (and digital assets), AI, and sustainable finance are all taking off as governments and industry work to collaborate on overhauling Canada’s digital infrastructure, data rights, privacy and standards that will set the stage for years to come.  The second round of open banking consultations that were delayed due to the pandemic were suddenly announced in November with many organizations, fintechs and incumbent banks coming together to discuss the scope, governance, implementation, and accreditation of a made in Canada OB solution.  We urge the OB committee to remain laser-focused on consumer interests while looking globally for insights to implement a principles-based, inclusive, broad-scoped and competitive framework as swiftly as possible.

We hope you enjoy this issue of Fintech Confidential magazine – it certainly makes for great holiday reading!  While everyone relentlessly strives to achieve success in 2021, we encourage you to bring in the new year with good health and to be mindful that we are all in this together, and to help others in your community more than ever before.  Peace, happiness, and best wishes for an incredible year and journey ahead.

All the best
Craig Asano
Founder and CEO
NCFA Canada

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NCFA Jan 2018 resize - NCFA's Fintech Confidential Issue 3 (Dec 2020) is here!  Happy Holidays... The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Liquid Avatar, Lumedic, Loop Insights, The Campus Agency and TripXpertz Form Consortium to Manage Verifiable Identity Credentials for COVID-19 Vaccinations

KABN | David Lucatch | Dec 8, 2020

KABN systems north america  - Liquid Avatar, Lumedic, Loop Insights, The Campus Agency and TripXpertz Form Consortium to Manage Verifiable Identity Credentials for COVID-19 Vaccinations

Verified Self Sovereign Identity, together with a complete end-to-end issuance and verification health credentials ecosystem, ensures individuals have full privacy and control of personal healthcare data, including vaccination records, so they can securely start returning back to public life, freely.

TORONTO, ON and GIBRALTAR / ACCESSWIRE / December 8, 2020 / The KABN Network, together with KABN Systems NA Holdings Corp. (CSE:KABN) (the "Company" or "KABN North America"), a Canadian fintech company that specializes in continuous online identity verification, management and monetization in Canada and the US, through its biometrically and identity verified Self Sovereign Identity platform, Liquid Avatar (www.liquidavatar.com), today announces the formation of a consortium of industry leaders that will empower people to start getting back to the activities, people and places they have been missing in their lives. The consortium has developed an integrated solution that enables healthcare issuers, individuals and verifiers to have a digital COVID-19 verifiable identity healthcare credential that is secure, user managed and controlled to ensure privacy, transportability and ease of use. This solution supports the foundation for the acceptance of digital Healthcare Passports.

This consortium initially includes the Lumedic Exchange, to power the healthcare credential ecosystem; Loop Insights (MTRX), a leader in automatic contact tracing; The Campus Agency, to support on campus programs at over 2,000 US Colleges and Universities; and TripXpertz, an organization that works with over 1,000 travel and tourism boards, airlines, wholesalers and resorts, together with Liquid Avatar's Self Sovereign Identity platform to empower the worldwide Healthcare industry to issue Identity-based Verifiable Credentials through a secure, effective and cost-efficient ecosystem.

See:  Liquid Avatar and The KABN Network Launch Cloud-based Biometric Identity Verification for Self Sovereign Identity, Digital Wallets and Verified Credentials

This ecosystem will allow qualified Health Professionals with the ability to issue a Verifiable Credential that enables venues and other facilities to verify both the issued credential and the known user in real-time to grant access and / or services. This partnership built on a Trust over IP (TOIP) open standards framework, and the World Wide Web Consortium's (W3C) specifications for decentralized identifiers for credential management, can power interoperable COVID-19 vaccination and other verifiable credentials across a host of user managed and controlled digital wallets and applications. This process can be used for multiple use cases such as Education, Workplaces, Tradeshows, Healthcare, Sporting Events, Concerts, Entertainment, Travel, Places of Worship, Senior Living, and other facilities, venues and locations and opens the door to further opportunities for commercial and consumer opportunities.

Liquid Avatar's Self Sovereign Identity (SSI) platform, which includes user biometric validation and a bank-grade verified identity credential, is available to consumers at no cost. Liquid Avatar enables users to verify and manage their identity and access credentials in a cloud-based, biometrically-secure application. Users have complete control over their digital assets (like wallets, passwords and more), identity, and data through easy to use avatars that can be shared, on a permission-basis with others. The COVID-19 Verifiable Healthcare Credential combines healthcare data with the user's biometrically verified identity credential. When a request is made by a Verifier, the User has a choice of which attributes are shared, creating a private verification transaction between themselves and a verifier. While much of the technology and services are already in place, the launch of the healthcare credential pilot is expected to take place in the first quarter of 2021 to coincide with the expected release of the COVID-19 widespread vaccination program.

This program will not only be able to verify identity credentials for the Covid-19 vaccines, diagnostic and antibody testing, but will also be able to support a wide range of immunizations and healthcare records.

"We want to empower users to return to public life and the things they once did freely, pre-COVID-19, with ease and continued safety, with this and future credentials," said David Lucatch, CEO of KABN. "Our goal is to help get everyone back to life as efficiently and effectively as possible, so a sense of "normality" can be reestablished. Liquid Avatar and the ecosystem, together with this amazing group and a growing list of partners, will potentially enable businesses, schools, entertainment venues, and more do the normal things that they do and give users the power to engage with them as they did before the pandemic changed our lives."

Healthcare issuers and individuals will be granted access to the system at no cost. Verifiers wishing to access the system will be charged a nominal subscription and micro-payment per verification, making it very cost efficient and effective to use the system for small and medium sized enterprises all the way up to major airlines, venues and facilities. The partners are committed to making the services affordable to all parties, so that everyone can get back to their everyday lives.

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The KABN Network is working with leading industry partners to provide a safe and effective ecosystem that supports the issuance, ownership and verification of these verified identity and access credentials and is proud to be working with the following partners at the outset of this announcement covering a wide range of technologies, issuer, consumer and verification engagement, with additional partners to be named as the program grows.

Trust over IP Foundation (ToIP)

As a member of the Trust over IP Foundation (www.trustoverip.org) steering committee, The KABN Network is committed to the organization's open-standard framework and tech stacks. ToIP recently released its Covid-19 Credentials Initiative ("CCI") Governance Framework for public review.

"Trust over IP offers an important new model for how to assemble the pieces that create working and reliable digital trust ecosystems. We are very excited to see momentum growing for real-world cases where the model is being used to make people's digital lives simpler and better. This includes the KABN Network becoming part of the Lumedic Exchange," said John Jordan - Executive Director of the Trust over IP Foundation. "We hope to see this momentum continue, and more organizations using the Trust over IP model to create solutions that benefit individuals and businesses."

Lumedic Exchange

The KABN Network, as a founding partner, is working with the Lumedic Exchange (www.lumedic.io), an open-standards, decentralized framework for the healthcare industry giving patients greater control over their health data.

Chris Ingrao, Chief Strategy Officer of Lumedic, a US-based Health technology company, part of Providence Health Systems ecosystem, comments: "Lumedic recently launched the Lumedic Exchange, the first healthcare ecosystem of its kind dedicated solely to community-driven standards development for patient-intermediated information exchange using verifiable credentials, to support secure exchange of vaccination information."

Loop Insights, Inc.

Powering professional sports, entertainment, collegiate and other venues and facilities with Automatic Contract Tracing, Loop Insights, Inc. (www.loopinsights.ai) (MTRX) has developed a fully managed contactless check-in platform that securely transfers contact information and triggers real-time notifications at scale.

"The success Loop has had with our recent NCAA sporting events using our venue tracing and management tools, only reinforces the need for a unified verifiable credential that consumers and businesses can trust. Working with KABN and Liquid Avatar and their digital identity platform will provide our customers - and ultimately consumers - with the level of trust required to provide personal information such as COVID testing results, vaccination proof, payment, and other sensitive personal information required in today's changing landscape. We are thrilled to be one of the first partners to work with KABN and Liquid Avatar on an end to end solution that will provide this safety, security, and peace of mind required to protect consumers looking to return to a new way of life where mobile devices and personal information will be at the forefront of nearly every interaction", Rob Anson, President and CEO Loop Insights.

The Campus Agency

With reach to over 2,000 US College and University campuses and over 1.5 Million Gen Z students, alumni and families, The Campus Agency (www.thecampusagency.com) has been supporting innovative direct to student and online marketing programs for over 40 years.

"We are really excited to be working with KABN and Liquid Avatar and be a member of this consortium. COVID-19 has impacted the lives of students and faculty on college campuses in such a major way, and we are looking forward to being part of a solution that provides campus communities with the tools and resources they need to return to their way of lives, safely and securely," Chris Nyland, Chief Operating Officer, The Campus Agency

TripXpertz

Powering over 1,000 travel and government tourism boards, airlines, travel wholesalers and resorts in US, Canada, Mexico, the Caribbean and around the world, to more effectively reach their intended travel audiences with end to end travel marketing management, booking and analytics solutions TripXpertz (www.tripxpertz.com) is changing the way the travel industry reaches travelers and how travelers can receive better value from their travel experiences.

"Our Priority Protection Passport program is aimed at restoring consumer confidence and trust in travelling again and piece-of-mind while away," says Brad Miron, CEO of TripXpertz. "This partnership gives us, and our multiple program stakeholders, the ability to verify an individual's identity with certainty, while maintaining security and privacy - In the context of Priority Protection Passport, Liquid Avatar and the capabilities of the Verifiable Identity Healthcare Credentials are foundational to what we must deliver to attract, assure and welcome back tourists to destinations."

For more information on the program and / or how to become a consortium partner or participant, please visit www.liquidavatar.com

About KABN North America - www.kabnnaholdco.com

KABN Systems NA Holdings Corp. through its wholly owned subsidiary KABN Systems North America Inc. focuses on the verification, management and monetization of Self Sovereign identity, empowering users to control and benefit from the use of their online identity. The KABN proprietary technology suite includes 4 key products:

Liquid Avatar is a verified Self Sovereign Identity platform empowers users to create high quality digital icons representing their online personas. These icons, in conjunction with KABN ID, allow users to manage and control their digital identity and Verifiable Access and Identity Credentials, and to use Liquid Avatars to share public and permission based private data when they want and with whom they want. www.liquidavatar.com

KABN ID is an Always On, biometric and blockchain based digital identity validation and verification platform allowing users to continuously and confidently prove themselves throughout the online community.

KABN Systems NA Holdings Corp. is publicly listed on the Canadian Securities Exchange (CSE) under the symbol "KABN" (CSE:KABN)

If you have not already joined our mailing list, and would like to receive updates on KABN Systems NA Holdings Corp., please click here to join!

For more information, please visit www.kabnnaholdco.com or www.kabnsystemsna.com

For further information, please contact:

David Lucatch
Chief Executive Officer
647-725-7742 Ext. 701
ir@kabnsystemsna.com

 


NCFA Jan 2018 resize - Liquid Avatar, Lumedic, Loop Insights, The Campus Agency and TripXpertz Form Consortium to Manage Verifiable Identity Credentials for COVID-19 Vaccinations The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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He Asked His Team How to Avoid Layoffs. Their Response Thrilled Him

Entrepreneur | Stephanie Schomer | Dec 2, 2020

dan price gravity payments - He Asked His Team How to Avoid Layoffs. Their Response Thrilled Him

Before making a tough decision that impacts your team's future, Gravity Payments CEO Dan Price has a simple suggestion: Ask them for advice. It worked for him.

The year 2020 was rocky. Millions of people were laid off or furloughed. The pain may continue into the near-term future — but even once our lives stabilize, this won’t be the only time an economy stumbles. Companies will again face this choice: Eliminate a great team that’ll be difficult to rebuild, or somehow absorb massive financial losses.

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says there’s a third way, and he proved it out this year. The solution, he says, is to act as a team. “Your team is so much smarter than you,” Price says. “Mine is. Give power to your people, be honest and democratic. They will find solutions that you can’t see.”

Price made waves in 2015 when he took a million-dollar pay cut to institute a $70,000 for his employees, so he isn’t the kind of boss who is quick to do layoffs. But he was feeling pressure this year. His company, Gravity Payments, processes payments for more than 20,000 — and as their revenue disappeared at the onset of the pandemic, so did Price’s.

“We were losing $1.5 million a month,” he says. “We had three months before we’d be out of .”

He explained this to his team of 200, and they offered a solution: Instead of layoffs, let them anonymously volunteer for pay cuts. “I thought it was crazy,” Price says. “I figured we’d waste a week’s worth of time to learn it wouldn’t .”

He was wrong. His team volunteered nearly half a million dollars a month off their salaries. Some offered their total pay; others offered 50 percent; others offered 5. (Price capped all contributions at 50 percent.) “It extended our runway to somewhere between six and 12 months,” he says. By late summer, he was confident enough in Gravity’s future that he paid back all employees.

Continue to the full article --> here

 


NCFA Jan 2018 resize - He Asked His Team How to Avoid Layoffs. Their Response Thrilled Him The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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The future of European payments: Strategic choices for banks

McKinsey & Company and Euro Banking Association | Nov 24, 2020

European payments - The future of European payments: Strategic choices for banksPayments and accounts services are at the core of banks’ offering to customers. They contributed about a third of European banks’ total revenues in 2019 (Exhibit 1), and represent banks’ leading source of customer interactions.

Banks’ payments revenues have grown steadily at about 3 percent per year over the past six years. However, some specialist payments providers—processors, acquirers, schemes, and others—have achieved double-digit growth rates over the same period (Exhibit 2). This suggests that banks’ traditional role at the centre of the payments ecosystem may be coming under challenge.

High ambitions, significant challenges

Almost two-thirds of the executives and experts who were surveyed as part of a joint effort undertaken by McKinsey & Company and the Euro Banking Association between November 2019 and November 2020, believe that banks will continue to be the leading players in European payments over the next five years.

european banking and account services - The future of European payments: Strategic choices for banks

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However, survey respondents and interviewees identified a number of challenges faced by banks. These included increasing competition (especially from tech companies and fintechs), the rise of technologies that could allow other payments providers to come between banks and their customer relationships, the lack of flexibility in banks’ operating models, the constrained revenue environment, rising customer expectations, and the complex regulatory outlook. Executives also identified gaps in the capabilities and practices needed to grow their payments business, especially in technology, organisational agility, and monetisation models.

The outlook for the European payments sector

On the stock markets, payments specialists outperformed the overall European banking sector between January and November 2020, with a shallower decline and a bigger rebound. Interviewees noted that banks continue to be affected by mounting credit losses and low interest rates; payments specialists stand to gain from the shift to digital commerce and electronic payments; fintechs have opportunities to target a broader pool of customers and capitalise on their cost advantages, but are more exposed to structural factors because of the narrower focus of their customer relationships; and big tech companies have ample resources to invest but may come under increased scrutiny from governments and regulators.

Despite the uncertainties, the interviewees saw the outlook for payments as broadly positive. Most felt the crisis of 2020 would not damage their strategic position, and could even improve it.

The strategic choices facing banks

In defining their strategy for each customer segment and step in the payments value chain, banks can choose to lead, accelerate, follow, or reduce their payments footprint, depending on their wider aspirations and starting point.

See:  Banks have lost a quarter of the payments franchise to new players

As technological advances, evolving customer behaviour, new market dynamics, and changing regulatory agendas converge with the after effects of the pandemic, the early 2020s may become an inflection point for payments. Despite the uncertainties of the current environment, this could be the moment for banks to secure the growth of value in their payments business over the next cycle—and to come together with other stakeholders to solve sector-wide challenges and capture opportunities.

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NCFA Jan 2018 resize - The future of European payments: Strategic choices for banks The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Payments Startup Stripe in Talks for Funding at $70 Billion Valuation or More

Bloomberg | Katie Roof and Scott Deveau | Nov 24, 2020

stripe founders John and patrick - Payments Startup Stripe in Talks for Funding at $70 Billion Valuation or MorePrivate financial technology business Stripe Inc. is in talks to raise a new funding round valuing it higher than its last private valuation of $36 billion, according to people familiar with the matter.

The valuation being discussed could be more than $70 billion or significantly higher, at as much as $100 billion, said one of the people, who asked not be identified because the matter is private. That would make it currently the most valuable venture-backed startup in the U.S., according to CB Insights.

Stripe’s software, which competes with Square Inc. and Paypal Holdings Inc., is used by businesses to accept payments. According to its website, Stripe’s customers include Amazon.com Inc., Salesforce.com Inc., Lyft Inc. and Instacart Inc.

See: 

Lightspeed and Stripe Partner to Launch New Payments Feature

Stripe, the world’s most valuable private fintech company, is getting into lending

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The company has benefited during the pandemic with more shoppers turning to e-commerce. It’s gone on offense during the downturn this year, starting a card-issuing service for U.S. clients and agreeing to acquire a Nigerian startup to expand in Africa.

Brother Founders

Irish brothers John and Patrick Collison founded Stripe in 2010. The duo sold their first company for $5 million when they were teenagers and are now worth about $4.3 billion each, according to the Bloomberg Billionaires Index.

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NCFA Jan 2018 resize - Payments Startup Stripe in Talks for Funding at $70 Billion Valuation or More The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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