<ul class="summary-list"><li>Retail trader interest in Trump's new media company slipped Tuesday. </li><li>The retail crowd turned their attention to crypto exchange <keyword id="12394173" type="UNKNOWN" weightage="60" keywordseo="bakkt-holdings" source="Orion">Bakkt Holdings</keyword> and <keyword id="11900744" type="UNKNOWN" weightage="60" keywordseo="tesla" source="Orion">Tesla</keyword>.</li></ul><a href="https://markets.businessinsider.com/news/stocks/donald-trump-spac-digital-world-acquisition-truth-social-explained-2021-10?utm_source=markets&amp;utm_medium=ingestgest">Digital World Acquisition Corp.</a> sltock slumped for a second day in a row as <keyword id="11994572" type="UNKNOWN" weightage="60" keywordseo="retail-traders" source="Orion">retail traders</keyword> hyped about Donald Trump's new media company shift their attention up-and-coming crypto exchange Bakkt Holdings and EV-maker Tesla.<keyword id="12360024" type="UNKNOWN" weightage="60" keywordseo="digital-world-acquisition-corp-" source="Orion">Digital World Acquisition Corp.</keyword>, a blank-check company, turned into a retail-trader favorite last week as it soared to eye-watering heights after announcing it would take the former president's new media business public. After hitting triple digits last week, the stock has declined 30% in two days, trading at $67.41 at 1:35 a.m ET. The rally has garnered short-seller attention, with <a href="https://markets.businessinsider.com/news/stocks/digital-world-acquisition-corp-donald-trump-spac-iceberg-short-position-2021-10">Iceberg Research announcing</a> on Twitter Monday it was betting against the SPAC. <a href="https://eresearch.fidelity.com/eresearch/gotoBL/fidelityTopOrders.jhtml">Data from Fidelity</a> shows the number of retail sell orders for the stock is outweighing the number of buys. It has also been knocked from its perch at the top of the brokerage's most traded stocks among customers, with the top two spots on Tuesdy held by Bakkt Holdings and Tesla. Bakkt Holdings stock <a href="https://markets.businessinsider.com/news/currencies/bakkt-stock-price-soars-mastercard-fiserv-crypto-payments-bitcoin-deal-2021-10">has doubled in value</a>, after announcing a deal on Monday with Mastercard and payment processor Fiserv <a href="https://markets.businessinsider.com/news/currencies/mastercard-crypto-merchants-cryptocurrency-bitcoin-network-payments-bakkt-stock-2021-10?utm_source=markets&amp;utm_medium=ingestgest">to enable cryptocurrency</a> transactions for its merchants. The company, which went public with a SPAC earlier this month, describes itself as a "platform that enables consumers to buy, sell, send and spend a range of digital assets." Bakkt shares slumped Tuesday but remained at elevated levels. Tesla also got the attention of retail traders after hitting a <a href="https://markets.businessinsider.com/news/stocks/tesla-stock-price-record-hertz-orders-100000-model-3-rental-2021-10">$1 trillion market capitalization</a>. The EV-maker run by Elon Musk became the fastest company ever to hit the trillion-dollar mark after Hertz announced it acquired 100,000 Model 3 vehicles. It was the second-most traded stock Tuesday, Fidelity retail data showed. Discussions about the EV-maker surged on subreddit Wall Street Bets with more than 1,000 mentions, according to Quiver Quantitative data, making it the most discussed stock on Monday as Digital World Acquisition Corp. slipped to the No. 3 slot.On the Stocks subreddit, <a href="https://www.reddit.com/r/stocks/comments/qfmugy/tsla_hits_1000_makes_it_a_first_1t_auto_company/">one post</a> about Tesla hitting the valuation milestone received more than 5,000 upvotes. "It took tech companies decades and many many successful products to reach this milestone while TSLA just breezed through it," the post read.

The SPAC targeting Trump's media firm falls for a 2nd day as retail interest wanes and traders shift focus to Bakkt and Tesla

<ul><li>Former <keyword id="115108" type="ORGANIZATION" weightage="60" keywordseo="FDIC">FDIC</keyword> chair <keyword id="172789" type="PERSON" weightage="60" keywordseo="Sheila-Bair">Sheila Bair</keyword> said she does not have confidence in <keyword id="6354947" type="UNKNOWN" weightage="100" keywordseo="bitcoin">bitcoin</keyword> despite an increasing number of institutions embracing the cryptocurrency.</li><li>Bair was a key banking regulator during the height of the global financial crisis in 2008.</li><li>"Stay away from it," she said in an <a href="https://www.bloomberg.com/news/articles/2021-02-11/sheila-bair-says-don-t-buy-bitcoin-it-s-at-nosebleed-levels">interview with Bloomberg</a>. "It's volatile. It's at nosebleed levels now."</li><li><a href="https://newsletter.businessinsider.com/join/4np/10-things-opening-bell">Sign up here for our daily newsletter, 10 Things Before the Opening Bell.</a></li></ul>Former Federal Deposit Insurance Corporation chair Sheila Bair warned investors of getting into bitcoin at its current record-high price. Bair, a key banking regulator during the height of the global financial crisis in 2008, said she does not have confidence in the cryptocurrency."Stay away from it," she said on Wednesday in an <a href="https://www.bloomberg.com/news/articles/2021-02-11/sheila-bair-says-don-t-buy-bitcoin-it-s-at-nosebleed-levels">interview with Bloomberg</a>. "It's volatile. It's at nosebleed levels now. We don't know how sustainable that is."Bair's comments came before two big announcements on Thursday, as Mastercard announced <a href="https://markets.businessinsider.com/currencies/news/mastercard-allow-cryptocurrencies-use-payments-network-2021-2-1030071595?utm_source=markets&amp;utm_medium=ingestgest">it will allow merchants to accept select cryptocurrencies</a> on Thursday and Bank of New York Mellon said that <a href="https://markets.businessinsider.com/currencies/news/bitcoin-bny-mellon-transacting-cryptocurrency-market-btc-bank-investment-management-2021-2-1030073231?utm_source=markets&amp;utm_medium=ingestgest">it will issue, hold, and transfer bitcoin</a> for clients in the future.The news of further participation from large institutions send the price of bitcoin <a href="https://markets.businessinsider.com/currencies/news/bitcoin-price-surges-to-record-high-cryptocurrency-mastercard-2021-2-1030073794">soaring to an intraday record</a> of $48,364.06."If you're a very wealthy person with some money to risk, fine," she added. "The problem with bitcoin is it is so volatile. So its original premise as a method of payment really, its volatility gets in the way of its usefulness."Bair did add that what she is more interested in is the "technology that underpins Bitcoin." She is currently a board member of Paxos, a New York-based fintech company that specializes in blockchain, and Spring Labs, a tech company focused on building a blockchain-based network."Yes, [bitcoin] has risks but where there are risks, there are definitely also opportunities," Julius de Kempenaer, senior technical analyst at StockCharts told Insider. "But for those who know what they are doing, have proper risk management in place, can handle the stress, and can afford the potential losses - give it a go."Others voice concern about bitcoin's decentralized nature and lack of oversight. "The price of bitcoin is like a meme, it gets everyone excited," said Mike Venuto, co-portfolio manager of the Amplify Transformational Data Sharing ETF, an approximately $808 million ETF that focuses on blockchain technologies and companies dealing with cryptocurrencies. "This excitement obscures the reality of the original bitcoin thesis of decentralization, replacing the trusted third party and banking the unbanked," he said. "The focus now seems to be the store of value argument from the limited supply."The portfolio manager added that while the adoption of bitcoin as a store of value and as a means of the transaction has reignited interest in cryptocurrencies especially because of Elon Musk, he still doubts "we will ever buy coffee with bitcoin."

Key financial-crisis regulator Sheila Bair says 'stay away' from bitcoin while it is at 'nosebleed' levels

Thibault Camus/AP ImagesFacebook COO Sheryl Sandberg.Good morning! This is the tech news you need to know this Tuesday.<ol><li><a href="https://www.businessinsider.com/alphabet-google-q4-2019-earnings-search-ads-youtube-google-cloud-2020-2?r=US&amp;IR=T">Google's parent company Alphabet reported its Q4 financials</a>. The company broke out its YouTube and Cloud financials for the first time, but missed analysts' revenue forecasts.</li><li><a href="https://www.businessinsider.com/jeff-bezos-court-filing-lauren-sanchez-brother-extortion-2020-2?r=US&amp;IR=T">Jeff Bezos accused his girlfriend's brother of "</a><a href="https://www.businessinsider.com/jeff-bezos-court-filing-lauren-sanchez-brother-extortion-2020-2?r=US&amp;IR=T">extortion" in an escalating legal battle over nude photos leaked to the National Enquirer</a>. According to the Daily Beast, which reviewed a filing made in California, Bezos and his legal team claim Michael Sanchez is "leveraging the current media environment to harass" Bezos and his own sister Lauren Sanchez for financial gain. </li><li><a href="https://www.businessinsider.com/facebook-sheryl-sandberg-engaged-tom-bernthal-report-2020-2?r=US&amp;IR=T">Facebook executive Sheryl Sandberg announced she is engaged to Tom Bernthal, CEO of the consulting firm Kelton</a>. According to People, Sandberg and Bernthal were introduced in 2019 by the brother of Sandberg's late husband, Dave Goldberg.</li><li><a href="https://www.businessinsider.com/zoom-coronavirus-microsoft-teams-outage-stock-soars-2020-2?r=US&amp;IR=T">Video-conferencing company Zoom had its best trading day in eight months, as coronavirus fears mean that more people work from home</a>. Shares of Zoom soared over 15 percent on Monday.</li><li><a href="https://www.businessinsider.com/amazon-testing-loan-marketplace-goldman-sachs-other-banks-2020-2?r=US&amp;IR=T">Leaked screenshots show Amazon is testing an online lending marketplace where sellers can choose loans from Goldman Sachs and other banks</a>. It's Amazon's latest move to expand its lending service, which first launched in 2011 but was limited to Amazon offering loans directly to certain merchants.</li><li><a href="https://www.ft.com/content/16bec8aa-42e8-11ea-a43a-c4b328d9061c">The CEO of Mastercard Ajay Banga talked to the Financial Times about why the company pulled out of Facebook's cryptocurrency Libra</a>. Banga said Facebook was vague on issues like anti-money laundering and data management, and that the company didn't explain fully how Libra would make money.</li><li><a href="https://www.businessinsider.com/dropbox-ceo-drew-houston-joins-facebook-board-directors-2020-2?r=US&amp;IR=T">Mark Zuckerberg's friend and Dropbox CEO Drew Houston is joining Facebook's board of directors</a>. "Drew brings valuable perspective to our board as a leader of a technology company with services used by millions of people and businesses," Zuckerberg said in a statement.</li><li><a href="https://www.businessinsider.com/jeff-bezos-washington-dc-house-construction-parking-tickets-report-2020-2?r=US&amp;IR=T">Construction on Jeff Bezos' $23 million DC mansion reportedly resulted in $16,800 in parking tickets over the last three years</a>. Over 560 citations were issued in total for violations like ignoring no-parking signs or blocking pedestrian pathways.</li><li><a href="https://www.businessinsider.com/cards-against-humanity-clickhole-go-media-2020-2?r=US&amp;IR=T">Cards Against Humanity bought humor site ClickHole and turned over ownership to its employees</a>. The card game company will support ClickHole financially, but will let it operate independently.</li><li><a href="https://www.businessinsider.com/nsa-hacking-risk-iran-china-climate-change-2020-2?r=US&amp;IR=T">The NSA's outgoing legal chief Glenn Gerstell said hacking threats from Russia, China, and Iran are as dangerous to the US as climate change</a>. Gerstell described tech advancements as a mounting "tsunami" that US defense agencies might not be prepared for.</li></ol>Have an Amazon Alexa device? Now you can hear 10 Things in Tech each morning. Just search for "Business Insider" in your Alexa's flash briefing settings.You can also <a href="https://newsletter.businessinsider.com/join/free">subscribe to this newsletter</a> here - just tick "10 Things in Tech You Need to Know. <h3>NOW WATCH: <a href="https://www.businessinsider.com/why-spacex-blew-up-rocket-on-purpose-2020-1">SpaceX and NASA just blew up a Falcon 9 rocket on purpose, and it has something to do with Apollo 1</a></h3>

10 things in tech you need to know today

<div class="KonaFilter image-container display-table"><div><div class="image"></div></div></div><ul class="summary-list"><li>Emerging markets, led by Latin America, powered 6% growth in global payments revenue last year, according to a brand new report from McKinsey. </li><li>Additional M&amp;A is expected as companies buy their way to more product offerings, capabilities and scale, with deals like PayPal's 2018 acquisition of iZettle.</li><li> Payments-as-a-service can open up new ways to rake in revenue, like Square adding payroll services and lending.</li><li>Banks need to embrace the changes that their customers want, the report said. </li><li><a href="https://www.businessinsider.com/prime?module=article&amp;area=summary" target="_blank" rel="noopener">Click here for more BI Prime stories</a></li></ul>The payments industry has seen revenue steadily growing and new entrants muscling into more areas of the space. That has banks and other long-time players rethinking their approach and scrambling to keep up. And more change is expected as cash and paper checks increasingly become replaced by digital payments around the world. Consulting firm McKinsey &amp; Company published its 2019 Global Payments Map report on Monday at the Sibos conference in London. In this year's report, McKinsey explored those disruptive trends and forecast shifts to come in the payments ecosystem. It flagged strong growth in areas of global payments revenue, and drilled down into changes that legacy financial institutions may need to make to capture some of the broader space. Companies will need to position themselves to capture pockets of growth, and to cater to the various types of money exchanges that need to happen between people, companies selling products and services, and financial institutions, particularly as more and more transaction happen online. It's an area that Business Insider has been busy covering in recent weeks, given new fundraisings and product launches. For one, earlier this month we attended a <a href="https://www.businessinsider.com/mastercard-blockchain-b2b-technology-showcase-2019-9">tech showcase</a> put on by Mastercard, where it highlighted applications of biometrics for digital payments as well as blockchain uses for tracking where things people buy come from. Mastercard early this year ditched the word "card" from its logo as part of a rebranding push to reflect more forms of payments. Here are the key takeaways we got from reading the new report.Read more: <a href="https://www.businessinsider.com/mastercard-blockchain-b2b-technology-showcase-2019-9">We went to Mastercard's tech showcase, which featured biometric sensors and shrimp-tracking blockchain. It's part of a push to embrace a future without cards.</a><h2>1. Emerging markets driving revenue growth</h2>McKinsey expects payments revenues to top $2.7 trillion by 2023. One key factor of growth here is the increase in electronic payments, especially in emerging markets, the report said. Global revenues of the payments industry reached $1.9 trillion in 2018, led by an uptick in Latin America. That total figure was up 6% from the year before, but growth retreated somewhat from an 11% surge in 2017, per the report.Globally, revenues were split almost equally between retail and commercial segments. However, the report shows that Latin America skews toward retail, while EMEA grew more in commercial payments.Electronic payments transactions have surged at a rate of 22% in emerging markets over the last five years. And while the report sees that slowing to a still-robust compound annual growth rate of 14% over the next five years, there still appears to be plenty of opportunity as those areas keep switching over from cash to digital payments.Cross-border payments revenue grew in 2018, largely driven by volume, per the report. Players like TransferWise and Worldlink by Citigroup are competing with traditional banks to offer cheaper and faster cross-border payments for businesses and consumers. Still, margins for payments sent across borders are compressing somewhat thanks to heavy competition in the space, the report said. TransferWise, one of the UK's hottest fintechs, just reported a third straight year of profit. The company, valued at $3.5 billion, facilitate cheap and fast cross-border payments, and offer borderless accounts and a multi-currency debit card. In 2018, TransferWise <a href="https://www.businessinsider.com/transferwise-launches-borderless-accounts-and-debit-cards-2018-1">debuted</a> a borderless account and multi-currency debit card by teaming up with Mastercard. That was originally tested out in the UK, and then the account and debit card was made available to US customers in June.MoneyGram, which has long known for its global cash-to-cash transfers and saw revenues fall in 2017 and 2018, has also been making a digital push. We spoke with MoneyGram execs recently about how the company is continuing those efforts after a website rebrand and launching its own app - for one, <a href="https://www.businessinsider.com/moneygram-and-visa-launch-direct-to-debit-card-payments-2019-9">it's now partnering with Visa</a> to offer peer-to-peer direct deposits via debit card in the US. Read more: <a href="https://www.businessinsider.com/transferwise-reports-third-straight-year-of-profits-2019-9">TransferWise, a fast-growing money transfer startup valued at $3.5 billion, just turned in a third straight year of profit</a><h2>2. More M&amp;A to come as companies buy their way to growth</h2>With more than $100 billion in payments M&amp;A activity since January 2018, the payments industry continues to disintermediate. $35 billion of that total came from just one acquisition this July, when financial technology company FIS bought Worldpay. Deals have brought different parts of the payments system together across borders, and also added scale. Other M&amp;A activity has included PayPal's $2.2 billion acquisition of Swedish payments company <a href="https://www.businessinsider.com/former-izettle-cfo-readly-maria-hedengren-paypal-acquisition-2019-5">iZettle</a> in May 2018, which was PayPal's largest-ever buy and handed it a way into physical points of sale. And in June 2018, PayPal announced a $400 million deal to snap up <a href="https://www.businessinsider.com/paypal-acquiring-hyperwallet-2018-6">HyperWallet,</a> which handles payouts for online sellers.Read more: <a href="https://www.businessinsider.com/former-izettle-cfo-readly-maria-hedengren-paypal-acquisition-2019-5">A tech exec explains how it feels to spend 1.5 years preparing for a $226 million IPO, only to sell to PayPal for $2.2 billion</a>This August, Mastercard's agreed to <a href="https://newsroom.mastercard.com/press-releases/mastercard-advances-its-leadership-position-as-a-multi-rail-payments-company-with-the-acquisition-of-nets-account-to-account-payment-business/">pay nearly $3.2 billion</a> to buy a huge chunk of the corporate services arm of payment platform Net, which added so called account-to-account (A2A) capabilities.And the newest wave of consolidation will likely result in a relatively small number of players with large reach and a wide variety of services, the report predicted. "Traditional B2B payments with high scale and high level of fragmentation might be next," the report said, though it also noted that any economic downturn would likely limit M&amp;A activity.Legacy banks and challenger fintechs are continuing to look for ways to reach customers in several ways. <div class="KonaFilter image-container display-table"><div><div class="image"></div></div></div> <h2>3. Payments as a service (PaaS) opens new revenue streams</h2>Payments as a service (PaaS) companies are growing in prominence. They offer their customers cloud-native payment platforms that can be integrated into an existing bank's website or app."In the past, 85 percent of payments revenues have been earned by players at the endpoints of the value chain," the report said. For example, credit card issuers, who accept the transaction and the associated credit risk, earn 91% of the revenues generated in the payment value chain.PaaS is challenging this concentration of revenue with the emergence of "platform integrators," meaning players who sell and integrate payments software into a business platform.McKinsey suggested that to take advantage of the PaaS opportunity, firms need to get comfortable with outsourcing, attract engineers that can integrate PaaS solutions, and ensure strong governance over PaaS providers.The report highlighted Square as an example of a company doing just that. Though Square started as a payments processing fintech, the firm has expanded its offerings to include payroll services, PoS, and lending. And Square is also now testing a <a href="https://www.businessinsider.com/square-tests-stock-trading-feature-for-peer-to-peer-platform-2019-9">free stock-trading service</a> for its P2p Square Cash platform, Bloomberg reported earlier this month. Read more: <a href="https://www.businessinsider.com/square-makes-updates-across-segments-2019-3">Square is making a slew of updates across its product offering</a><h2>4. Banks need to embrace changes customers want</h2>It's not news that <a href="https://www.businessinsider.com/ai-in-finance-enables-better-customer-service-reduced-fraud-and-cost-savings-2019-7">technology is disrupting global banking</a>. McKinsey's report focused on disruption in the customer experience. Banks are now running the risk of being relegated to "balance sheet providers," the report said, unless they embrace the changing customer needs. New and existing companies need to offer customers a seamless means of connecting to the global financial system. This means a shift to digital, and McKinsey expects digital transactions to increase as much as five times current volumes.Meanwhile, payments processors are making moves into lending. San Francisco-based Stripe earlier this month launched <a href="https://www.businessinsider.com/stripe-capital-small-business-loans-2019-9">small business lending</a> and now also offers a corporate card. And the payments startup also recently <a href="https://www.businessinsider.com/stripe-raises-250-million-35-billion-valuation-2019-9">nabbed a fresh $250 million</a> in funding that valued it at $35 billion. Wells Fargo last week announced data-share agreement with Plaid, a software fintech that powers other fintechs like Venmo and Betterment. Wells Fargo's agreement with Plaid is similar to the one <a href="https://www.businessinsider.com/jpmorgan-announces-partnership-with-plaid-2018-10">JPMorgan signed last year.</a> Wells also announced plans to launch a cash settlement service run with its own distributed-ledger tech, which will allow it to internally transfer cash between locations in near-real time for corporate clients. That comes after JPMorgan earlier this year <a href="https://www.businessinsider.com/jpmorgan-launching-jpm-coin-cryptocurrency-2019-2">announced</a> plans to launch its own cryptocurrency. Read more: <a href="https://www.businessinsider.com/wells-fargo-execs-talk-plaid-and-blockchain-2019-9">We talked to Wells Fargo execs about its blockchain and Plaid data-sharing push. The bank has been balancing new tech investments against spending on cleaning up risk controls.</a><h2><div class="KonaFilter image-container display-table"><div><div class="image"></div></div></div></h2><h2>5. Consumer credit can be reimagined</h2>Retail payments have been a steady source of revenue for financial firms since the financial crisis, the report explains. That means there is an opportunity for banks to reimagine the credit they would typically issue via cards. Non-bank companies like Affirm, launched by Paypal cofounder Max Levchink, have partnered with merchants to offer real-time credit decisions and loans at the points-of-sale. McKinsey highlighted that banks already have the consumer relationships and data they need to explore this space. "This holistic approach to relationship management provides additional customer value, deepens the relationship, and leverages a strategic angle that an early-stage disruptor would find difficult to match," it said. Read more: <a href="https://www.businessinsider.com/stores-that-accept-affirm">Affirm lets you pay off a large online purchase over time - here are 35 stores across home, fashion, and travel that accept it</a><a href="https://www.businessinsider.com/intelligence/payments-and-commerce-pro?IR=T&amp;itm_source=businessinsider&amp;itm_medium=ctgr_bii&amp;itm_term=ctgr_subscription&amp;itm_content=paypal&amp;itm_campaign=payments-and-commerce-pro"></a>

Emerging markets, M&A, and new services: here are they key trends to watch in the fast-changing payments space

Welcome to our new Payments Insights newsletter, a morning email with the top news and analysis on the digital payments industry, produced by <a href="https://intelligence.businessinsider.com/welcome?utm_source=House&amp;utm_medium=Edit&amp;utm_term=PINSIGHTSutm_content=link&amp;utm_campaign=BIIMobile" target="_blank">BI Intelligence</a>. 
<a href="http://e.businessinsider.com/join/biipaymentsform" target="_blank">Click here to sign up for Payment Insights today, and receive it every morning in your inbox</a>.

<div class="KonaFilter image-container float_right click-to-enlarge" style="width:400px"><div class="image"><a title_source="BII" title_caption="Gerri Kodres, senior vice president at Fortumo" class="zoomin" href="http://static5.businessinsider.com/image/52cc0889eab8ea334b4b6825-960/fortumo.jpg"></a>BIIGerri Kodres, senior vice president at Fortumo</div></div>
FORTUMO PARTNERS WITH PAYELP. Today, U.S.-based carrier billing company Fortumo announced a partnership with global merchant services provider, Payelp. Fortumo offers carrier billing in over 70 countries, but its focus is on emerging markets. The company currently works with over 100,000 app developers including big names like Rovio, Electronic Arts, and Gameloft.
Payelp offers merchant services, - i.e., payments technology and credit card processing help - in 74 countries and specializes in working with merchants who offer digital goods. (<a href="http://press.fortumo.com/e-commerce-platform-payelp-expands-mobile-coverage-for-merchants-by-partnering-with-fortumo/" target="_blank">Fortumo</a>)
WHAT THE DEAL MEANS FOR CARRIER BILLING. Carrier billing allows mobile users to purchase goods and services by adding the cost of the items to their mobile bills. This payments option is especially attractive in emerging markets where credit cards are not widely used. To date, carrier billing is mostly used by app developers who want to sell in-app virtual goods, like tokens and stickers, in markets with little credit access. Carrier billing platforms need more access to merchants if they're going to become more widely used for payments. Payelp will provide Fortumo with those relationships. 
MASTERCARD ACQUIRES A LEADING TURKISH PAYMENTS PROCESSOR. MasterCard announced that it has acquired Turkey's leading independent credit card processor, Provus. 
"The acquisition of Provus ... increases our processing presence in Europe." says Javier Perez, President MasterCard Europe. (<a href="http://newsroom.mastercard.com/press-releases/mastercard-completes-acquisition-of-provus-the-leading-independent-turkish-payment-solutions-provider/" target="_blank">MasterCard</a>) 
NEW BI INTELLIGENCE REPORT: <a href="https://intelligence.businessinsider.com/how-tech-and-mobile-centric-players-are-transforming-the-credit-card-processing-industry-2014-1" target="_blank">In our most recent payments report</a> we look at each piece of the complex credit card-based payments system.
In other news...
RETAIL BANKS HAVE A COMMUNICATION PROBLEM. Retail banks are doing a good job of offering digital features to enhance their consumer-facing services. They could do a better job communicating what those feature are, and how to use them. One way to do this is to follow Amazon and offer on-demand video customer service as opposed to lengthy, dry user manuals. (<a href="http://www.americanbanker.com/issues/179_4/first-look-why-banks-should-copy-amazons-mayday-video-support-1064686-1.html" target="_blank">American Banker</a>) 
THE FALSE FACEBOOK-BITCOIN RUMOR. There is a rumor circulating on the web that Facebook is testing out a new feature on its advertising platform that will allow users to pay in Bitcoin. We confirmed with Facebook that this rumor is false. 
QUOTE OF THE DAY. "The U.S. payments system is too slow, too expensive, and too opaque," says Founding Director Dave Birch of Consult Hyperion. Birch argues that an overlooked value behind Bitcoin is its public ledger which allows for greater transparency than the legacy system. (<a href="http://www.americanbanker.com/video/the-unsung-virtue-of-bitcoin1064692-1.html" target="_blank">American banker</a>)
WELCOME TO PAYMENTS INSIGHTS. We hope you are enjoying this newsletter. Don't forget to <a href="http://e.businessinsider.com/join/biipaymentsform" target="_blank">sign up</a> and get it every morning in your inbox. Please email <a href="mailto:johnh@businessinsider.com">johnh@businessinsider.com</a> or BI Intelligence director <a href="mailto:mballve@businessinsider.com" target="_blank">mballve@businessinsider.com</a> with news and tips.
SQUARE DESIGNS A NEW CASE FOR SQUARE READER. In partnership with Square, Griffin Technology has designed a new accessory, a protective case for smartphones using Square's credit card reader. The case secures the Square dongle, protects mobile devices, and guides credit cards for easy swipes. (<a href="https://squareup.com/press/ces2014" target="_blank">Square</a>) 
LADIES AND GENTLEMAN, COINYE WEST. On January 11, an anonymous group is launching a Bitcoin rival named, Coinye West. No word from the cryptocurrencies namesake, Kanye West. (<a href="http://www.paymentsjournal.com/Content/Featured_Stories/18941/?utm_medium=rss" target="_blank">Payments Journal</a>) 
A LOOK BACK AT 2013. From PayPal's acquisition of Braintree to the announcement of Coin, PYMNTS reviews the biggest events that took place in the payments world in 2013. (<a href="http://www.pymnts.com/briefing-room/commerce-3-0/playmakers/2014/2013-the-year-of-all-or-nothing-at-all?utm_source=January+6%2C+2014&amp;utm_campaign=January+3+NL&amp;utm_medium=email" target="_blank">PYMNTS</a>)
What subscribers are reading on BI Intelligence ...
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Payments Companies Team Up To Strengthen Carrier Billing As A Credit Card Alternative 

<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><a href="http://www.flickr.com/photos/9731367@N02/7113235069/">Philip Taylor PT</a></div></div></div>Bitcoin continues to persevere through anything and everything thrown at it: fraud schemes, thefts, rulings from the People's Bank of China, etc.
Prices have now recovered to more than $800 on the <a href="https://www.mtgox.com/">Mt. Gox exchange</a> after falling below $500 late last year.
So we are not totally surprised to see increasing coverage of the cryptocurrency by Wall Street analysts.
In a new note to clients, Wedbush analyst Gil Luria lays out which companies Bitcoin and/or cryptocurrencies in general could boost, and destroy.
"We believe Bitcoin and its associated technology represent a potential disruption to our covered companies," wrote Lauria. "Furthermore, we believe Bitcoin's potential lies beyond the 'coin' as the underlying blockchain protocol can be used to replace traditional intermediaries by acting as an exchange mechanism for a multitude of transactions." 
And now, the companies he's referring to:
<h2>POTENTIAL WINNERS</h2>
Overstock (ticker OSTK)
The online retailer recently announced it would start accepting Bitcoin sometime this summer. Like most retailers who accept Bitcoin, it will immediately swap the currency for dollars to avoid price volatility. "We believe OSTK will benefit from lower transaction charges as it starts accepting Bitcoin in 2014 (as well as related publicity push within the bitcoin community)," Luria writes. 
ebay (ticker EBAY)
Luria thinks its inevitable PayPal, which is owned by the, online merchant giant will start taking Bitcoin. "We see EBAY's PayPal benefiting from lower funding costs when it allows Bitcoin in its digital wallet," he writes. 
IBM (ticker IBM)
IBM quietly released a <a href="http://www.youtube.com/watch?v=VDO7TDMlxsY&amp;feature=youtu.be">video</a> in November in which its executive architect for banking and finance said cryptocurrencies like Bitcoin "would change the world." "We believe IBM has become an early adopter of bitcoin technology (link), but other technology companies may benefit from the buildup of the crypto currency network almost unwittingly," Luria writes.
Taiwan Semiconductor (ticker TSM) and Advanced Micro Devices (AMD)
Only a small handful of chipmakers have the ability to manufacture the advanced processors needed to mine Bitcoin. TSM and AMD are the two largest. "We estimate &gt;$200 million has already been spent on Bitcoin network (mining) equipment this year, most meaningfully on chip fabricators TSM and AMD," Luria says.
<h2>POTENTIAL LOSERS</h2>
Western Union (ticker WU) and MoneyGram (ticker MGI)
Bitcoin's value as a medium for transferring funds is the thing most often cited to justify its valuation. We've written about this previously <a href="http://www.businessinsider.com/bitcoin-versus-paypal-comparison-2013-12">here</a> and <a href="http://www.businessinsider.com/bitcoin-can-be-the-new-western-union-2013-12">here</a> among other places. "We see some risk to money transfer companies such as WU and MGI as bitcoin technology makes it possible to perform remittance at a radically lower price," Luria writes.
Visa (ticker V) and MasterCard (ticker MA)
Another source of value for Bitcoin is the much lower fees needed to process payments, compared with those charged by the mega card companies. "We also see some longer-term threat to V and MA, especially in cross border and micro payments," Luria writes.
CME (ticker CME), NASDAQ (ticker NDAQ), NYMEX (ticker NYX)
There've yet to be any major breakdowns on this subject, and Luria doesn't provide much insight, though it seems possible Bitcoin trading could siphon away flows from precious metals. "Although this may be even further out, we see a potential for the technology to encroach on exchange companies such as CME, NYX, NDAQ," he writes. 
Luria is actually pretty negative on Bitcoin itself. But he is impressed by the technology underlying it, and cryptocurrencies in general.
"We continue to believe there is a meaningful probability Bitcoin (the specific currency/conduit) may not succeed, but this will most likely be a result of the emergence of a better crypto currency," he wrote. "We believe alternative currencies will continue to emerge, though none of the current batch appears to be superior enough to overcome the substantial head start for Bitcoin. 
"As with any new disruptive technology, we would expect the new powerful technology to continue to be utilized for nefarious purposes. We also believe that given the early stages of development and revolutionary technology, weaknesses will continue to be identified and at times exploited."

A Wall Street Analyst Has Identified The Winners And Losers In The Rise Of Bitcoin

Payments Insider is delivered first thing every morning exclusively to <a href="https://intelligence.businessinsider.com/?utm_source=House&amp;utm_medium=Edit&amp;utm_term=BII-PNewsletters&amp;utm_content=link&amp;utm_campaign=BIIMobile" onclick="this.href = this.href + '-' + window.location.search.substr(1).replace(/\&amp;|\=/g, '-');">BI Intelligence</a> members.

RETAILERS SCRAMBLE TO AVOID BECOMING THE NEXT TARGET: The latest fallout from Target's data breach underscores how high the stakes are in payments security for big retail. Gregg Steinhafel, a nearly 35-year-veteran of Target, <a href="http://pressroom.target.com/internal_redirect/cms.ipressroom.com.s3.amazonaws.com/18/files/20144/image2014-05-05-051917.pdf" target="_blank">resigned</a> yesterday in the wake of the late 2013 data breach that compromised the credit card and personal information of tens of millions of Target customers. CIO Beth Jacob also resigned earlier this year, but this is the first CEO resignation to follow a major data breach. "The Target CEO getting let go was kind of unprecedented," says David Kennedy, CEO of TrustedSec, a security consulting firm that works with national retailers. "It's started to jolt folks." 
Payments security, once a second-tier issue, has become a top priority in retail executive suites and boardrooms. "Since the breach there's been a huge uptick in companies trying to gather risk assessments," says TrustedSec's Kennedy. "It's a new era for boards to take a proactive role in understanding what the risks are," security expert Cynthia Larose was quoted as saying in the <a href="http://hosted.ap.org/dynamic/stories/U/US_TARGET_CEO" target="_blank">Associated Press</a>. Steinhafel had reportedly been meeting monthly with the Target board following the breach, rather than quarterly, as was customary. 
See a copy of Gregg Steinhafel's resignation letter <a href="http://pressroom.target.com/internal_redirect/cms.ipressroom.com.s3.amazonaws.com/18/files/20144/image2014-05-05-051917.pdf" target="_blank">here</a>. 
REPORT - ISSUERS TO BEAR THE BRUNT OF EMV TRANSITION COSTS: A new report from Javelin Strategy and Research, scheduled for release later today, estimates that credit card-issuing banks will bear a hefty 62% of the total hardware cost (cards and point-of-sale terminals) for the U.S. migration to EMV, the chip card security standard common in Europe and Asia. Merchants will bear 38% of the cost, which the report author Nick Holland pegs at $6.8 billion. 
Whoever ends up paying, the migration may be a windfall for point-of-sale hardware and software makers. Our own report, which also includes the cost of POS software updates, pegs the POS conversion cost at $7 billion, annualized in the chart below. In the wake of the Target breach, major retailers will almost certainly take the lead in the conversion. Target last week <a href="http://pressroom.target.com/news/target-appoints-new-chief-information-officer-outlines-updates-on-security-enhancements" target="_blank">announced</a> that it would accelerate a plan to convert all branded store cards and payment terminals in its 1,797 U.S. stores to EMV, at a cost of at least $100 million. 
<div class="KonaFilter image-container click-to-enlarge"><div class="image"><a title_source="BII" title_caption="" class="zoomin" href="http://static1.businessinsider.com/image/532361216bb3f770501ad616-960/chip%20card%20terminal%20forecast.png"></a>BII</div></div> 
MASTERCARD TOUTS MOBILE POINT-OF-SALE GROWTH, LED BY EMV: A <a href="http://www.mastercard.com/corporate/_assets/img/features/MasterCard-Mobile-POS-May-2014.pdf">new report</a> from MasterCard shows a sharp uptick in the number of mobile point-of-sale systems registered with the payment network. The number has grown from just six in September 2012 to 72 in March 2014. These systems typically either accept payments remotely through custom-built mobile terminals, or use a combination of attachable card readers and software to transform tablets and smartphones into mobile registers. 
EMV, the new credit card security standard, is already accepted on a majority of systems. Of the 72 different mobile card readers built to accept MasterCard, 46 were geared for EMV, with chip-and-PIN readers leading chip-only 2-to-1.
BITCOIN GETS VENTURE CAPITAL BUMP WITH NEW $30M FUND: Australian venture capital fund Future Capital yesterday <a href="http://www.prweb.com/releases/2014/05/prweb11823720.htm">announced</a> a new $30 million fund devoted to "companies that are leveraging services based on Bitcoin and other crypto-currencies." Dominic Carosa will lead the fund, which is <a href="http://futurecapital.com.au/bitcoinfund/">actively soliciting</a> investors and start-ups online. The new fund sits at the nexus of two trends: a rising tide of payments industry venture funding, which hit <a href="https://intelligence.businessinsider.com/payments-insider-payments-funding-high--amex-earnings--a-bitcoin-documentary-2014-4">a new high last quarter</a>, and increasing interest in the business cases for Bitcoin - which got an official blessing of sorts last week when quotes on the digital currency's price began <a href="http://blogs.marketwatch.com/thetell/2014/04/30/could-bitcoin-prices-on-bloomberg-terminals-spur-investments/">appearing on Bloomberg data terminals</a>. In the U.S., prominent venture capitalists like Union Square Ventures' Fred Wilson and a16z's Marc Andreessen have invested in Bitcoin, and have been outspoken in describing its potential. Andreessen has <a href="http://www.businessinsider.com/andreessen-horowitz-doubling-down-on-bitcoin-2014-3">told the Wall Street Journal</a> he planned to invest "hundreds of millions" more dollars in Bitcoin products. 
AMAZON ADDS CIRCUITOUS CART-ADDS ON TWITTER: Amazon is asking its customers to use the hashtag #AmazonCart on Twitter so that products mentioned in tweets will be added to that person's shopping cart, according to <a href="http://pando.com/2014/05/05/amazon-now-lets-users-add-items-to-their-shopping-cart-with-a-hashtag-but-will-anybody-use-it/" target="_blank">Pando</a>. To participate, shoppers must first connect their Twitter account to Amazon. Then they can reply with #AmazonCart to tweets containing an Amazon product link. This seems like an awful lot of steps just to add an item to a shopping cart - and shoppers will still have to go to Amazon.com to make a purchase. Past efforts at a similar Tweet-to-purchase feature, <a href="http://allthingsd.com/20130211/now-american-express-cardholders-can-tweet-to-buy/" target="_blank">like one by Amex</a>, have not seen wide adoption. The one case where it might be helpful to use #AmazonCart is when a shopper sees a product mentioned on Twitter and wants to make a spontaneous purchase. But even then, most people will probably want to see photos of the product and do some research before making a purchase.
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 Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.

Target CEO's Resignation Cranks Up Pressure On Retailers To Improve Payment Security 

Check out the more than 50 pitch decks fintechs used to raise millions in funding from top investors

Welcome to our new Payments Insights newsletter, a morning email with the top news and analysis on the digital payments industry, produced by <a href="https://intelligence.businessinsider.com/welcome?utm_source=House&amp;utm_medium=Edit&amp;utm_term=PINSIGHTSutm_content=link&amp;utm_campaign=BIIMobile" target="_blank">BI Intelligence</a>. 
<a href="http://e.businessinsider.com/join/biipaymentsform" target="_blank">Click here to sign up for Payment Insights today, and receive it every morning in your inbox</a>.

<div class="KonaFilter image-container float_right click-to-enlarge" style="width:400px"><div class="image"><a title_source="Matt Rosoff Business Insider" title_caption="PayPal President David A. Marcus" class="zoomin" href="http://static1.businessinsider.com/image/52b0c637ecad04d52649d774-960/paypal-card-reader.jpg"></a>Matt Rosoff Business InsiderPayPal President David A. Marcus</div></div>PAYPAL MAKES ANOTHER MOBILE PLAY: PayPal's acquisition of StackMob, a company that helps software developers build and maintain apps, is a concrete sign that the company is attempting to become more developer- and mobile-friendly. The news broke yesterday, and PayPal posted a note to a company blog. 
With Stackmob, the post said, "we'll move even faster in creating, testing and deploying products that aim to transform payments for customers around the world."
Just a week ago, PayPal President David Marcus had signaled in press interviews that the company was going to double-down on mobile.
WHERE STACKMOB COMES IN: One result of the Stackmob acquisition is that eBay's PayPal could persuade app developers to use PayPal as their platform to take payments for users, for in-app purchases or commerce. PayPal has historically not been good at providing outside developers with the tools that might help them easily integrate PayPal-powered features into their apps. (<a href="https://www.paypal-forward.com/leadership/paypal-welcomes-the-stackmob-team/">PayPal</a>)
OTHER SIGNS OF PAYPAL'S ONLINE AND OFFLINE EXPANSION: News of the StackMob deal comes on the heels of PayPal's Sept. 26 announcement of the acquisition of Braintree, a payments company that specializes in providing transaction-processing technology for the likes of Uber and Airbnb. PayPal has reportedly canned its archaic mobile payments software and adopted Braintree's superior mobile-first platform. 
PayPal has likewise stepped up its game in the world of offline payments. The company recently announced a service called PayPal Beacon which will allow consumers to pay for merchandise before they enter bricks-and-mortar locations, allowing them to bypass long retail lines. PayPal has also gotten into large retailers like Home Depot, which allow customers to pay with a PayPal PIN and their phone number at registers. <a href="https://www.paypal-forward.com/leadership/paypal-welcomes-the-stackmob-team/" target="_blank">(PayPal)</a>
WITH REPORTED DEAL FOR GOPAGO, AMAZON IS GUNNING FOR PAYPAL: The founders of San Francisco-based GoPago are telling Italian media that they have sold their payments app GoPago to Amazon. GoPago includes a consumer-side mobile wallet app, and cloud-based point-of-sale software for merchants. Business Insider's <a href="http://www.businessinsider.com/amazon-gopago-acquisition-2013-12" target="_blank">Julie Bort spoke to a GoPago merchant</a> who told her the deal had indeed happened and the GoPago development team was let go. 
If the reports are true, then it's becoming increasingly clear that Amazon's goal is to challenge eBay's PayPal and put its imprint on the payments ecosystem.
The first indicator came back back in October when Amazon launched "Log In and Pay with Amazon." The service allows consumers to make purchases from other e-commerce websites using their Amazon accounts, just like they can with their PayPal account. We expect more payments news from Amazon soon. (<a href="http://www.businessinsider.com/report-amazon-has-bought-square-competitor-gopago-2013-12" target="_blank">Business Insider</a>)
In other news ...
Starbucks is expecting record breaking gift card sales this Thursday. On the Thursday before Christmas last year, the company sold more than 2 million cards in North America or 1500 cards per minute. The announcement may mean a surge in Starbucks mobile app payments as well since gift cards can be and often are loaded onto the mobile app. <a href="http://news.starbucks.com/news/starbucks-anticipates-busiest-day-of-the-year-for-starbucks-card-purchases" target="_blank">(Starbucks)</a>
Londoners love contactless card payments: Since the service was announced in December of last year, Londoners have used their credit and debit cards to make contactless payments for 6.5 million journeys on London's public bus system. Prior to the service, people who wanted to ride the bus had to buy an Oyster transport card or pay a higher fare in cash. The service will be rolled out for London's overground and underground transport as well next year. <a href="http://www.tfl.gov.uk/corporate/media/newscentre/29179.aspx" target="_blank">(Transport For London)</a>
WELCOME TO PAYMENTS INSIGHTS. This is the first edition of our newsletter covering all things payments. Don't forget to <a href="http://e.businessinsider.com/join/biipaymentsform" target="_blank">sign up</a> and get it every morning in your inbox. Please email johnh@businessinsider.com or BI Intelligence director mballve@businessinsider.com with news and tips.
Sage announced that it is providing mobile card readers to 180 Cub Scout and Boy Scout troops. The card readers enable scouts to accept credit and debit card payments when selling merchandise like popcorn or wreaths for fundraisers. <a href="http://na.sage.com/sage-na/newsroom/details/SNA_Corporate/2013/12/sps-boy-scouts" target="_blank">(Sage)</a>
Mobile Embrace has signed a deal with Singaporean telecom Singtel to offer direct carrier billing, according to the Australian. The deal will allow Mobile Embrace to provide direct carrier billing services to Singtels customers in Singapore, but the company hopes to expand into Singtel's Asian markets in the future. <a href="http://www.theaustralian.com.au/business/latest/aussie-mobile-firm-partners-withsingtel/story-e6frg90f-1226784865366">(The Australian)</a>
Facebook's charity: The newly announced "Donate Now" button aims to help people donate to nonprofits. The company is also partnering with PayPal, Braintree, and Stripe to offer an autocomplete billing solution called "Autofill With Facebook," according to AllThingsD. Autofill with Facebook will need people to enter their credit cards in order to catch on. <a href="http://newsroom.fb.com/News/773/Donate-to-Nonprofits-Through-Facebook" target="_blank">(Facebook)</a>
Thought QR codes were dead? WeChat is using them so effectively for mobile payments that Alibaba, the Chinese equivalent of Amazon, is taking measures to thwart the company's success. <a href="http://pando.com/2013/12/13/there-will-be-blood-wechats-payments-prowess-makes-it-a-target-for-alibaba/" target="_blank">(PandoDaily)</a>
Commonwealth Bank of Australia customers who own a Samsung Galaxy Gear S4 can now use their devices to make smartphone-powered payments wherever MasterCard PayPass points-of-sale are available. Commonwealth Bank is the largest bank in Australia. <a href="https://www.commbank.com.au/about-us/news/media-releases/2013/samsungandmastercard.html" target="_blank">(Commonwealth Bank Of Australia)</a>
The government of Norway has defined Bitcoin as a taxable asset, rather than a conventional currency. The news comes in wake of China banning financial institutions from using the currency, the Thai government making the use of the cryptocurrency illegal. <a href="http://www.theverge.com/2013/12/15/5214772/bitcoin-not-real-money-says-norway-government" target="_blank">(The Verge)</a>
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PayPal And Amazon Each Gun For The Future Of Payments With New Acquisitions

<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image">Business Insider IGNITION 2015Matthew Bishop of The Economist interviews PayPal CEO Dan Shulman at Business Insider's IGNITION 2015 conference.</div></div></div>Dan Schulman became PayPal's CEO in 2014. He started his career at AT&amp;T and held executive positions at Virgin Mobile as well as American Express. The Economist's Matthew Bishop sits down with Schulman at Business Insider's <a href="http://www.businessinsider.com/event/ignition-2015">IGNITION 2015 </a>conference to discuss mobile payments, transactions, and how PayPal's recently acquired <a href="https://venmo.com/">Venmo</a> is the trendy new payment platform for millenials. Matthew Bishop: At the moment there's tremendous excitement about FinTech, a phrase that wasn't even mentioned back in the days when PayPal was invented 10 or so years ago. What do you make of this excitement? Why is it now that, all these years after your company was created, people are suddenly getting excited about digital finance and startups being created all over the place. Is it a threat to you, PayPal? Or is this a great opportunity for you.Dan Schulman: It's a great opportunity because there's so much secular tailwinds moving into digital and mobile payments. I think it's really interesting that on Black Friday for the first time ever more people shopped online than went in-store. I've spoken to a lot of my colleagues and good friends at a number of different of retailers, post the long weekend, and every one of them are basically saying that this is the year of the so-called "omni channel" around the mobile phone being used online, in-app, and in-store. And I think that secular shift is sort of a penetration of mobile into some part of the shopping journey, it's not just affecting financial services because I do think there'll be more change in financial services over the next five years than we've seen in the past 30 years.But this idea of using mobile for retailers to get closer and more intimate with their customers and digital forms of that, and digital payments, and rewards, and couponing, and offers, being a part of that holistic system is really putting a tremendous amount of focus and attention by both consumers and retailers on digital payments.MB: But there is a sense that if there is this great disruption coming, and certainly at The Economist we've argued that there is going to be a significant disruption of financial services, which side of the fence is PayPal? Is PayPal part of the establishment that's going to be disrupted or are you actually going to be a disruptor? Because some of the newer products like Square and so forth in a sense look like they caught the company maybe back on its heels when it should have been leading that revolution.DS: I think that sometimes people talk about disruption and I've seen tons of startups come in as disruptors and then disappear. And I think what we need to do as an industry is think about a world that is dominated by mobile and software and not extrapolate from what was. And I think a lot of big companies tend to want to do that. They basically look at what was, they kind of think about the future, and then they extrapolate from where they are. I think what we really need to think about is how do we reimagine the management and movement of money in an era where everyone will have a smartphone. The bill of materials for a smartphone is dropping down to $30, connectivity costs are coming down dramatically. Everyone has all the power of a bank branch in the palm of their hand. And so in that world of software at scale, theoretically the incremental unit cost of something at scale approaches zero. So that should provide a tremendous opportunity for us to think in new innovative ways to provide just different ways of thinking about the democratization of money. And I think that's a tremendous opportunity for us and also a very important thing for the world. And we'll hopefully talk about financial inclusion and what's happening with that and financial health.MB: In a sense you've benefited from the early days of the internet where basically the entire mainstream finance industry seemed not to notice it and gave PayPal a free run to get established. In a sense you've benefited from that for awhile, but now we're in this reimagining environment. The question is how do you get your culture as a company to be in the lead of that re-imagination when to some extent you've been growing in that incremental world of seeing the internet build out and gradually take share away from the traditional players?DS: Yes. I'd argue with that premise, but I can understand why you'd bring that up. But I'd still argue with the premise. PayPal is one of the original Silicon Valley companies. And there aren't many Silicon Valley companies that have grown to the size that we have right now where we've got 175 million or so customers using our platform on an active basis. We're putting on four to five million new active customers every single quarter onto our platform. We have moved dramatically from being an online company to being a mobile company. We did over a billion transactions on mobile last year. Last quarter our mobile processing volume grew by 40% plus. So we're really a leader in not just online but mobile payments going forward. I was talking to Mark Andreessen a couple weeks ago and he said, "'You're one of the few companies that I see that has as big a runway in front of you and maybe more than you've had in the past given where everything is going.'" And to me this is about harnessing the engineering talent that we have, and we're one of the very few companies in the world whose sole focus is digital and mobile payments. We're not doing it to sell more hardware, we're not doing it to sell advertising. That is the platform that we are building out. And it gives us a tremendous advantage to have that focus.MB: Well, payments is obviously an incredibly crowded battle ground with some incredible large companies whether they're from traditional finance like Citigroup, or Amex, or Mastercard, or Visa. Then you've got startups like Square, you've got companies like Apple. There are lots of people really fighting over payments. Given that payments is essentially a utility, it's a business that you could imagine all the revenues from it basically being competed away, why is that so important? And why are there so many big players trying to win that particular battle?<div class="KonaFilter image-container display-table"><div><div class="image on-image">Samantha Lee</div></div></div>DS: Just think about the central role that payments plays. And it's all digitizing right now. And so customers manage and move their money on a daily basis. It is essential to what we all do. You look at one of our services Venmo, Venmo is fascinating in terms of how millenials move their money from one person to another person. The typical Venmo user opens their app four or five times a week. It's at the center of how they move their money. There are now, last quarter, over $2.1 billion in volume that was transacted through Venmo, up 200% year over year. And so when institutions see that the data and information that comes from transactions are so valuable in being able to extend other services to those customers. We do a thing called PayPal Working Capital where we don't look at the credit score or the FICO score of a small business customer. We just look at their history with us. And we extend working capital to them. And what's really interesting, and one step that I'm very proud of, is that 3% of the counties in the US have had 10 or more banks close branches in them. So they're under-meeting income levels. 25% of the billion-plus dollars we've loaned in working capital have come from those 3% of counties. So we're actually replacing what used to be mainstream type of banking, looking at things in new ways. And one other fact that's really important is those companies that have gotten working capital their average revenues have grown between 21-22% while similar companies are going at 1-2%.MB: So you've really fixed a hole in the banking system.DS: Well we've made a difference to merchants for sure.MB: Do you think I'm right in expecting that all the current revenues that the financial services industry is making from payments are going to be largely erased by competition? Thus it'll need to be the data and using that data in intelligent ways that generate our profit of the future, certainly in consumer finance.DS: When I first went into financial services people told me not to be too over-optimistic about change. You did an article about the death of cash, and cash has been around in some form for thousands of years. And I wouldn't predict the death of cash at any point. Eighty-five percent of the world's transactions are still in cash right now. But what I do think is that we are going to re-imagine how money is managed and moved. It is ridiculous that for so many people the things that all of us in this room take for granted, like cashing a check, paying a bill, sending money to somebody that you love, forces over 70 million people in the US and 2.5 billion people around the world to stand in line for like 40 minutes at times to do a transaction. And in the US those who are not well served by the US, 10% of their disposable income is spent on unnecessary fees and interest. That's as much as a family spends on food. That's ridiculous. Technology should fundamentally redefine that. We should make things a lot easier to do, faster to do, and less expensive. We should figure out a way to create a system that busts the paradigm that it's expensive to be poor. And software and mobile should be able to go do that.MB: Is your bet that as digital finance gets better it actually expands the market? Or do you think we essentially get all the wasted interest payments and fees that people are coughing up? Do they basically get that money given back to them, and therefore there's a much smaller financial services industry? Or is the fact that the services will become so much cheaper and better going to make for bigger -DS: I think it's going to tremendously expand the pie. There are 2.5 billion people outside the financial system right now, so you have huge leakage for government pay or benefits that go to citizens right now. In some countries that leakage can be as much as 30%. And when you do electronic distribution of those benefits people in those countries think that they've gotten this huge raise. They haven't gotten a raise. You've just taken out the middle man or multiple middle men in the middle there. What financial health typically does is it tends to start to reduce income inequality, it starts to drive some more financial health, and when you have better financial health people will start small businesses, they invest in education for their kids, and that drives economic growth. To me, re-imagining money with a technology bent can be tremendously beneficial from an economic and social perspective throughout the world.MB: You mentioned Venmo earlier and I think that that's something you acquired not so long ago. And it's an app that's regarded as very cool and state-of-the-art and so forth, with lots of growth. And I think people are often surprised to think that it's owned by PayPal and PayPal doesn't seem so cool and trendy and state-of-the-art compared to Venmo. What do you think it is about PayPal that's going to allow you to win these battles against so many other big, powerful, financial companies but also startups as well?DS: So first of all PayPal is one of the top 100 global brands in the world. And it is imbued with attributes that a lot of brands would go for which are security, trust, and service. And when you talk about financial transactions that's incredibly important especially as you move into a digital world where when you're doing everything through software and through mobile the number of bad guys who want to come in after accounts you have to have tremendous security and safety. And for that you need gigantic amounts of data and information because our risk algorithms are fed by, this year, some five billion transactions that will go through our platform. And the way that I think about it you know if algorithms are the weapon that you use, data and the amount of data that you have is the ammunition for that. So having that scale is incredibly important.What we are doing is looking at different segments of the market. PayPal has always been known as an online piece of this. Braintree, which we acquired and is a 100% mobile payments full-stack processor. Most of the leading edge apps these days - Uber, Airbnb, Pinterest - all use Braintree for 100% of their payment processing.And a company we just bought, Paydiant, is the leading in-app in-store platform.We're taking all of these things together to create a platform that allows merchants and consumers to look across their whole shopping experience and not just make it a payment but make it an experience.Venmo is a perfect example of that. Venmo users open their app four or fives times a week, but they only do transactions a couple times a week. But they're always looking at the feed to see what did you buy, what icons did you put on your feed, why did you go and buy that? So the secret sauce of Venmo is that one, it made it simple and easy, but two, it tied into your social network so that sharing payments became an experience and a sharing of part of what your life is. It's very different. You probably wouldn't do that. And we joke inside the company that there's a Venmo line. That line is about 30 years old or so. Below that pretty much everybody is using Venmo. And above that people are using other forms, likely PayPal and other ways.But you may not want to share all of your information and so we need to have a service that's tailored for one demographic that can be very different than a different demographic. But what we do want to do is tie Venmo into all of the merchant networks we have so that we can afford more optionality for more Venmo users to do transactions, and that also monetizes the Venmo asset for us.MB: Is your way ahead going to be more as an acquirer than as a green field developer of new innovations? Because you've done a lot of acquisitions, you've got a lot of capital, and the value of your shares is quite high.DS: We've spent the last three years kind of re-architecting the software stack inside PayPal, which makes it a lot easier for us to do innovation on our platform right now. We do releases every two weeks. We're a fully agile shop. We have 5,000 engineers internally only focused on the payments piece of this digital payments. So we're doing a tremendous amount of innovation internally. But to your point, we do have a pretty pristine balance sheet right now: we have some six billion plus of cash, we have no debt on that, and we've acquired four companies in the last year. We acquire companies where it makes sense for us to acquire, where there's a capability that isn't on our product road map or a geography that we'd like to enter, and where we think this could catapult us into that space. We will look, if it makes sense, to acquire.MB: There is a lot of excitement in the FinTech world about the blockchain, which is the technology underlying Bitcoin. Is that something that you're looking at that you're excited by?DS: Yes. So I think you separate out blockchain the technology and the protocol from things like Bitcoin, even though a lot of people conflate the two. I think there are a lot of interesting things about the blockchain technology and the promise of what it could be. The problem right now is that you have a lot of so-called currencies tied to this technology. And these currencies fluctuate quite wildly. So Bitcoin can be up and down. And therefore the promise of sort of a friction -ree low-cost mechanism, what you have to do is you have to actually turn that virtual currency or crypto-currency into a fiat currency. Because if you're a retailer and you have a 5% margin and that changing currency value is 10% and one day you immediately need to change it into fiat currency. And those fees take away any of the advantages of that. So we integrate bitcoin through Coinbase into our Braintree platform. So we support it in that way. But right now there's still a lot of questions before I think that will be widely used. <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/instagram-model-before-pictures-2015-12">The model who quit Instagram says she felt pressure to flaunt her sexuality at age 14</a></h3> <div> <div> <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="dnd2FmeTpa_QMylJUDisvJHUAOdWeqhx" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div> </div> </div> </div>

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