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BITCOIN COMPANIES LOOK FOR FDIC-LIKE INSURANCE OPTIONS. One of the reasons that people trust retail banks for storing their money is that in the United States, those institutions are backed up by the Federal Deposit Insurance Corporation (FDIC). Even if a bank collapses, customers can be reasonably sure that they won't lose their full deposit.
Companies that provide Bitcoin wallets don't have this advantage. If you lose your Bitcoin wallet or your computer is hacked and someone steals your Bitcoin, there isn't much you can do about it. But there are a whole host of solutions Bitcoin startups are designing to overcome this problem.
Here are three:
- London-based Bitcoin wallet, Elliptic, began offering customers deposit insurance offered by Lloyd's of London on January 9th. If Elliptic loses a customer's Bitcoin due to mismanagement. Lloyd's of London will provide a reimbursement in a government-backed currency.
- San Francisco-based Bitcoin wallet provider Coinbase stores some 97% of the Bitcoin under the company's management offline. The idea is that by taking the data the represents Bitcoin offline it can't be stolen by hackers.
- Trezor and Butterfly Labs are working on a technological solution called "Bitsafe." Bitsafe is a piece of hardware that carries a Bitcoin wallet, but it is designed so that other software can't be installed. The idea is that hackers won't be able to break into this hardware in the same way as they would on a laptop or a mobile phone.
The largest hurdle for Bitcoin startups that want to provide traditional deposit insurance is achieving clarity on how Bitcoin will be regulated. Until this happens private insurers and banks will likely remain wary of any deals that would provide a safety net to those who want to use Bitcoin. (Payments Source)
SOME CLUES ON APPLE'S MOVE INTO PAYMENTS. A number of executives have been selected to start building a payments service with Apple, according to a new report from the Wall Street Journal. Apple's iTunes and App Store chief Eddy Cue has reportedly met with payments industry executives to discuss what role Apple might play in the space. In addition, Jennifer Bailey, who ran Apple's online stores, has now been moved into a new position where she will build a payments business for Apple, according to the report. If the report turns out to be true and Apple is moving into the payments space it wouldn't be all that surprising. We have written extensively on advantages Apple would have if the company chose to move into the payments space. (Wall Street Journal)
GLOBAL PAYMENTS ACQUIRES PAYPROS. Legacy payments processor Global Payments announced a deal on Friday to acquire California-based payments technology provider PayPros for $420 million in cash. PayPros provides technology solutions to 58,000 small- and medium-sized businesses. "Our acquisition of PayPros will expand our direct distribution, add new vertical markets, accelerate growth in our largest geography and further enhance our existing integrated solutions business with the addition of PayPros's talented team," said Global Payments's President and CEO Jeffrey S. Sloan.
CITIBANK AIMS TO MAKE ATMS BETTER. ATM interfaces haven't evolved much in the last decade and they are in need of a face lift. Citibank is moving to make the ATM experience better for consumers in two ways. First, it's consolidating the software that runs on all of its 3,000 ATMs. Second, it's improving the software by allowing customers to do things like check their balances without leaving the screen they are on. The hope is that the new software will cut down on transaction times. The news is yet another indicator that retail banks are feeling the pressure to update antiquated systems in an effort to stay relevant to their customers. (American Banker)
WELCOME, INSIDERS: The Payments Insights newsletter is now Payments Insider, a reflection of our increasing emphasis on the day's most important topics in payments, as well as news exclusives of interest to industry insiders. We look forward to the newsletter becoming an even more important part of your morning routine.
Don't forget to sign up and get it every morning in your inbox. Please email johnh@businessinsider.com or BI Intelligence director mballve@businessinsider.com with news and tips.
MICHAELS IS INVESTIGATING A POTENTIAL DATA BREACH. On Saturday, arts and crafts retailer Michaels said that it was looking into a potential data breach after reports of fraudulent activity on customers cards. Whether or not a breach actually occurred has not been confirmed. If it is confirmed, Michaels will join Target and Neiman Marcus as the latest American retail chain to suffer a security compromise. Michaels operates 1,000 stores throughout the United States. We'll keep following this story and let you know how it pans out. (New York Times)
MOBILE PAYMENTS COMPANY THINKS GROCERY LOCKERS MAY BE THE KEY TO MOBILE WALLETS. Mobile payments company AIRTAG offers a white-label, customizable mobile wallet for retailers. In the company's latest deal, they have partnered with Madrid-based grocer DIA, according to a press release. The plan is for DIA to offer customers a mobile wallet through AIRTAG that will allow those customers to order groceries online and then pick them up and pay in-store using the mobile wallet. Ordered groceries will be stored in refrigerated lockers in DIA stores. The idea is to give customers a reason to use mobile wallets by helping them to avoid shopping in-store and waiting in checkout lines. (AIRTAG)
FANCY.COM IS ACCEPTING BITCOIN. After seeing rumors that the crowd-curated retailer is now accepting Bitcoin for purchases, we reached out to confirm the news. Fancy is indeed joining the ranks of notable businesses that are now accepting Bitcoin, including the Sacramento Kings and Overstock.com.
MASTERCARD TEAMS UP WITH THE INTER-AMERICAN DEVELOPMENT BANK. At the World Economic Forum in Davos, Switzerland, MasterCard and the Inter-American Development Bank announced a joint agreement to "improve economic inclusion, transparency and financial formalization" in Latin American and the Caribbean. As part of the five-year public-private partnership, MasterCard will work with local banks in the regions to establish electronic payment infrastructure. The idea is that if cash-based economies transition to electronic systems, it will be easier to track the flow of money and improve efficiency, as well as prevent leakages from development projects. (MasterCard)
Correction: In our last newsletter we mistakenly wrote that electronics retailer TigerDirect claimed to be the first major retailer to accept Bitcoin. In fact, the company claimed to be the first electronics retailer to accept Bitcoin via Bitpay.
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