Venture Funding For Payments Startups Hits A New High

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PAYMENTS FUNDING HITS NEW HIGH: Committed capital to payments companies has hit a five-year high with 59 startups raising $492 million during the first quarter of 2014, according to TechCrunch. The influx of capital would be cause for concern in many industries in which more money equals more competition, but payments is somewhat of an exception. While there is constant, intense competition in the space, there are also tons of partnerships. For example, payments processor Heartland Payments Systems has agreed to sell LevelUp's mobile loyalty and point-of-sale technology to its merchant clients. (TechCrunch)

Boston-based LevelUp is hoping to make big inroads with retailers, announcing yesterday that it is reducing its processing fee from 2% to 1.95%, with the ultimate goal of eliminating processing fees entirely. Instead, the company intends to make its money by driving new business to merchants through targeted promotions, taking a 25% cut on every successful conversion. For retailers weary of swipe fees, it may be a welcome proposition. But with widespread adoption, LevelUp could take on the lucrative - and frequently reviled - role of gatekeeper between businesses and new customers. (Business Insider)

FEDS TARGET BANKS OVER TIES TO PAYDAY LENDERS: Regulators are tightening the noose on major banks for servicing payday lenders that offer high-interest, small-dollar loans, reports WaPo's Danielle A. Douglas: "Federal regulators deny waging a concerted campaign to force banks to sever ties with [payday] lenders. … But the FDIC and the Office of the Comptroller of the Currency both recently warned banks against offering a payday-like loan known as a 'direct-deposit advance,' … the $7.4 billion payday lending industry has come under increasing scrutiny as more companies move their operations online, allowing some to skirt state regulations. … [the U.S. Department of] Justice has issued dozens of subpoenas to banks and third-party processors as part of 'Operation Choke Point,' an effort to block scammers' access to the financial system … Advocacy groups - and many Democrats - have questioned whether banks should be doing business at all with short-term, high-cost lenders." (Washington Post)

PAYPAL FINGERPRINT HACK: The new Galaxy 5S fingerprint authentication feature, which PayPal touts as its first biometric authentication for mobile, can be tricked using a simple wood-glue model, German security researchers claim in a YouTube video. "This is a known challenge to fingerprint-sensing technology," PayPal's head of ecosystem security, Brett McDowell, told the Journal. "But this is not a scalable exploit. It's not something most people should worry about." (WSJ)

GROWTH SLOWS FOR AMEX CARD SPENDING: Yesterday, American Express reported first quarter earnings. U.S. spending on AmEx cards grew by 6% year-over-year, a moderate decrease from 9% year-over-year growth in the fourth quarter of 2013. The decrease was more evident in the company's small business and corporate segments. One explanation for the decrease could be the exceptionally cold winter, says Jeffrey Campbell, CFO. (AmEx)

UPDATE TO NFC SPECS ALLOWS DISTANCE PAIRING: New industry standards will allow for near-field communications (NFC) devices that are out of normal range "to bridge communication between two other devices by using another NFC-enabled device as a handover mediator," the NFC Forum announced yesterday in an update to the specifications. "For example, a smartphone can serve as a mediator to securely connect the living room TV to the Wi-Fi router." The announcement comes amid renewed interest in NFC and rumors of an NFC-capable iPhone. (NFC Forum)

MICROSOFT WALLET QUIETLY SCRAPES APPLE PASSBOOK: Apple Insider's Sam Oliver details a surprising feature of Microsoft Wallet, a digital wallet only a few may have even known existed: Passbook files can be viewed in Microsoft Wallet with the new 8.1 software update. Passbook is the iOS feature that allows users to store coupons, digital tickets, and other forms of mobile payment in one place. Apple Insider notes that "Passbook was developed as an Apple-only platform for iPhone … up until now it has not been officially available on other platforms." Apple could ultimately try to block Microsoft from reading Passbook files on Windows Phone, according to the article. The feature is certainly not something Microsoft has tauted. When Windows Phone 8.1 was unveiled earlier this month, there was no mention of Passbook support. (Apple Insider)

JAPANESE COURT NIXES MT. GOX RECOVERY, LIQUIDATION IMMINENT: The Tokyo District Court on Wednesday dismissed Mt. Gox's bid to resume operations. Once the world's largest Bitcoin exchange, Mt. Gox hoped to reconstitute following the Exchange's February collapse, when the company announced that half a billion dollars worth of bitcoins were missing from customer accounts. The Tokyo court indicated in a statement that Mt. Gox CEO Mark Karpeles will likely face investigation as part of any Japanese bankruptcy proceedings. Karpeles had previously been ordered by a U.S. bankruptcy court to appear in person today. His lawyers have said he does not intend to comply. (Reuters)

FIRST DATA EXPANDS PARTNERSHIP WITH BANK OF THE WEST: Payments processor First Data announced that it would extend and expand a seventeen-year partnership with Bank Of The West, a subsidiary of BNP Paribas with $65 billion in assets and 600 retail and commercial banking locations in the Midwest and Western U.S. As part of the five-year agreement, First Data will process credit transactions for the bank in addition to continuing to providing debit and ATM network processing services. (First Data)

A BITCOIN DOCUMENTARY. Yesterday, the trailer for a new documentary on Bitcoin entitled "The Rise And Rise Of Bitcoin" was released on YouTube. The film, which tells the story of the emergence of the nascent payments technology through the eyes of industry pioneers, debuts next week at the Tribeca Film Festival. (Mashable via YouTube)

HEARTBLEED ARREST IN CANADIAN TAX-HACK. Canadian authorities have arrested a 19-year-old Ontario man in connection with an attack that used the Heartbleed bug to get into the country's national tax authority and steal people's information. (The Hill)

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