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Bitcoin May Be Elegant But That's Not Enough For It To Disrupt The Payments System

Feb 10, 2014, 18:44 IST

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FELIX SALMON SAYS BITCOIN WON'T BE DISRUPTIVE TO PAYMENTS. Reuters' Felix Salmon points out that one reason Bitcoin enthusiasts like Ben Horowitz, Dan Primack, and John Gapper think the digital currency will be disruptive to the current payments system is because Bitcoin provides a way to transfer digital content between two people without copying it, and without more than one person owning it at once. In effect, it allows digital property to have the same characteristics as physical property.

Salmon argues that there are already examples of technology that effectively creates digital property that is owned by only one person or group at a time and that allows for it to be exchanged in a fast and inexpensive way. In particular, the example he gives is the technology underlying the stock markets. Ownership of stock can't be copied and people can't get access to it unless they pay for it. In a nutshell, he is saying that while elegant, Bitcoin won't be disruptive to digital payments because it doesn't add much more value than other solutions that are already in the system. (Reuters)

Over three-quarters of Americans are not familiar with Bitcoin. Bitcoin is a really exciting topic in payments, but outside of the tech media ecosystem it's still a foreign concept, according to new research conducted by OMNITEL on behalf of The Street. When surveyed, 76% of American respondents said that they were unfamiliar with Bitcoin. Still, it's important to note, 75% of respondents were interviewed via landline telephone. The high percentage of respondents who answered using landline telephone likely skewed the data toward a subset of Americans who may not be digitally inclined. Consider that back in 2012 36% of Americans said they didn't have a landline telephone, according to a survey by the Center For Disease Control. (The Street)

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XIAOMI LOOKS LIKE IT WILL GET INTO PAYMENTS. On December 26, 2013 Xiaomi founder Lei Jun registered a new company called Beijing Xiaomi Payment Technology Ltd. with the Beijing Administration for Industry and Commerce, according to Technode. Xiaomi hasn't commented on its plans for the company beyond acknowledging its existence, but if the low-end smartphone manufacturer is planning to get into payments it would face stiff competition from both Alipay, a payment method offered by Alibaba, China's answer to Amazon, and social media behemoth Tencent's Tenpay. (Technode)

A CLEAR EXPLANATION OF EMV. Confused about what EMV is and why it's newsworthy? We've covered this topic in depth, but for those who need an introduction or a refresher, Business Insider's Jim Edwards has a great article on what EMV or "Chip and PIN" technology is and what it means for consumers and merchants. (Business Insider)

FORGET CHIP AND PIN, THE U.K. HAS CONTACTLESS CARDS. Contactless payment cards need only be moved near a card reader in order to complete a transaction, and they only require pin entry periodically. They have not been particularly fast to take off in the U.S. but in the U.K., adoption has been more widespread. Through the first nine months of 2013, Visa saw transaction volume of about $740 million in the U.K. from NFC-based contactless cards and smartphone payments - that's up four times from 2012, according to Mark Austin, director of contactless for Visa Europe.

While contactless cards require a bit less from the consumer to conduct a transaction, there is debate as to whether they're safe. The cards do have a ~$32 transaction cap in the U.K., but since the transaction does not involve a PIN number for every transaction or even a signature, there's nothing to keep a thief who's obtained the card from using it for multiple transactions. In terms of safety, contactless cards are about as safe as the swipe and sign credit card payments used in the U.S. But in the U.K., where higher-level chip and PIN security on credit cards is the standard, contactless cards seem like a step back in security in favor of faster transactions. (Computing)

WELCOME, INSIDERS: Don't forget to sign up and get it every morning in your inbox. Please email johnh@businessinsider.com with news and tips.

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AT SHOPRITE YOU CAN SCAN YOUR GROCERIES IN THE AISLE. ShopRite is a grocery chain that operates in Connecticut and New Jersey. The company is testing out a new payment system that allows shoppers to scan items they wish to purchase from grocery aisles using their mobile phones. Then shoppers pay for groceries by scanning their phones at self-service checkouts. The hope is that the checkout process will become speedier if scanning items takes place while customers are still shopping. (Mobile Payments Today)

NBS PAYMENTS SOLUTIONS BUYS PAYMENTS TERMINAL PROVIDER EQUINOX. Toronto-based payment terminal provider NBS Payment Solutions announced the completion of its acquisition of the assets of Arizona-based payments terminal provider Equinox. The terms of the deal were not disclosed, but NBS will operate under the name Equinox in the U.S. market. (Market Wired via NBS)

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