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A Thing A Bigger Thing

Friday, February 15, 2019

NRF reports modest sales gains for 2018 holiday season

R etail sales during the year-end 2018 holiday season grew at a lower than expected 2.9 percent over the same period in 2017 to total $707.5 billion, according to the National Retail Federation. That fell short of the 4.3 percent to 4.8 percent gains the NRF predicted at the start of the year-end holiday season.

"Today's numbers are truly a surprise and in contradiction to the consumer spending trends we were seeing, especially after such strong October and November spending," NRF Chief Economist Jack Kleinhenz said. "The combination of financial market volatility, the government shutdown and trade tensions created a trifecta of anxiety and uncertainty impacting spending," Kleinhenz added.

Klenhenz cautioned, however, that the NRF's analysis, which is based on data provided by the U.S. Department of Commerce, may be subject to change once the government revises 2018 data in the coming months.

Generally, the Commerce Department publishes preliminary year-end spending data within two weeks of the New Year, but this year it got delayed because of the partial federal government shutdown.

If data published by Mastercard late last year is an indication, the NRF may wind up adjusting its retail sales figures upward. According to the Mastercard SpendingPulse – which provides insights into overall retail spending trends across all payment types, including cash and checks – 2018 holiday spending rose 5.1 percent over 2017 to total $850 billion, making it the best holiday season for retailers in six years, Mastercard said.

Online sales surge, sporting goods sales plummet

Both NRF and Mastercard reported the largest gains in retail sales were recorded through the online channel. MasterCard said online sales were up 19.1 percent over the 2017 year-end holiday shopping season. NRF said online and other non-store sales were up 11.5 percent and totaled $146.8 billion.

Here's a rundown of year-over-year sales changes in other key retailing sectors, based on the NRF's report:

Elavon, Womply launch SMB technology suite
Wednesday, February 13, 2019

W omply, a provider of business analytics via software-as-a-service (SaaS), partnered with leading global payments acquirer Elvaon to help small and midsize businesses (SMBs) attract, retain and engage their customers. The technology suite, launched Feb. 13, 2019, addresses growing demand by SMBs for value-added services, the partners stated.

Guy Harris, president, North America and Global Revenue at Elavon, observed the rapidly changing SMB marketplace has become increasingly competitive in recent years. “Today, even sole brick-and-mortar businesses need an online presence to attract, retain and engage customers,” he said. “Our partnership with Womply further shows our commitment to digital commerce and will help our merchants quickly and easily adapt to changes in the marketplace.”

Cory Capoccia, president of Womply, agreed, adding, “Until recently, small businesses were completely forgotten as Silicon Valley spent decades helping large companies get a competitive edge through technology. We’re thrilled to partner with Elavon, one of the industry’s top payment processors, to help level the playing field for small businesses.”

SMBs embrace SaaS

Competitive pressures have driven software-as-a-service (SaaS) adoption by SMB merchants, according to a recent study by Techaisle. Researchers found adoption of cloud-based services reached 73 percent among U.S. SMBs in 2016; they expect these numbers to reach 96 percent by the end of 2019. According to the study, op-listed solutions included “CRM, supply chain management, inventory management, marketing automation, customer service, ERP and vertical applications.” Techaisle researchers additionally noted that cloud-based platforms enable businesses to react quickly to changing market conditions while automating routine business tasks, improving efficiencies and response times. However, not all SaaS platforms are created equal, Capoccia noted. Some require business owners to do more work.

“The last thing a ‘solo-preneur’ wants to do after putting in a 12-hour day is to manage another piece of software,” Capoccia said. “We give them software that does the work for them, giving them time to attract new customers. It’s a win-win-win across the board.”

Adding value to transactions

Capoccia further noted that Elavon merchants who use Elavon’s Payments Insider portal to view transaction activities, security alerts and compliance information will find additional tools and resources to engage and communicate with customers. These resources can be adapted and configured according to individual merchant requirements, he stated.

“Business owners who don’t have the time to decide on messaging can choose ‘autopilot’ and let the software do the messaging for them,” Capoccia said. “Tech-savvy do-it-yourselfers can use the software to communicate directly with customers and bridge that gap.”

The partners described the portal’s additional value-added solutions, as follows:

“Larger businesses can invest in people, but small and midsize merchants don’t have a vice president of customer success or a chief marketing officer,” Capoccia said. “SMBs are leveraging cloud-based solutions to compete with online-only businesses and attract, retain and engage with their customers.”

CFPB keeps name, aims to tamp down protections
Tuesday, February 12, 2019

C onsumer advocacy groups are criticizing plans by the Consumer Financial Protection Bureau to tone down Obama-era protections against predatory lending practices. The mandated protections, which became law in 2017 as part of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, required lenders to confirm borrowers' ability to repay loan products. An additional provision called for a cooling off period before "re-upping" serial borrowers with three back-to-back short-term loans.

Kathleen Kraninger, the new director of the CFPB, suggested eliminating payday lending restrictions, choosing instead to side with payday lenders, who called the practices unfair and ill-conceived. Kraninger citing "insufficient evidence and legal support" for the protections as her rationale.

Opponents noted that Kraninger, whose former background is with the Department of Homeland Security, has scant experience in consumer protection and may be susceptible to special interests and initiatives designed to soften the structure and enforcement of the CFPB's regulatory framework.


Despite her mixed reception on Capitol Hill, Kraninger earned praise for striking down former CFPB director Mick Mulvaney's proposed name change of the bureau, from CFPB to the Bureau of Consumer Financial Protection (BCFP). Critics pointed out that the name change would have been costly for the agency and its stakeholders.

In a Dec. 3, 2018, post in The Hill, titled "Exclusive: consumer bureau name change could cost firms $300 million," journalist Sylvan Lane reported that banks, lenders and other agencies subject to CFPB oversight "would be required to spend millions of dollars if the agency goes through with a rebranding proposal from acting director Mick Mulvaney."

Kraninger promptly dismissed Mulvaney's name change proposal, stating, "I care much more about what we do than what we are called," in an email to CFPB employees. She officially terminated related efforts to rebrand existing products and services. To further underscore her point, she tweeted a photo of two side-by-side coffee mugs bearing the CFPB and BCFP brands, stating, "Both can do the job. It's what we put inside that matters."

What's in a name?

Kraninger's strong position on the proposed name change did not deter speculation about the CFPB's future, particularly with regard to stopping payday lenders from transacting with consumers who clearly have no way to repay their debts. In a Feb. 6, 2019, post in Consumer Reports, Toby Stanger wrote that payday loans can impose interest rates of up to 400 percent and urged consumers to seek alternative funding sources.

"Regardless of whether and how the Payday Lending Rule changes, if you need money, there are other options," Stanger wrote. Options include credit counseling, volunteer income tax assistance, lending circles and installment loans. Also, credit card cash advances can have more favorable terms than payday loans and offer open-ended repayment periods, which prevent borrowers from repeatedly borrowing to repay loans on time and getting further into debt.

Stanger additionally noted that a payday loan customer who borrows $500 would typically owe about $575 two weeks later. The pressure to repay loans on time increases debt and is a hard cycle to break, she stated. For example, CFPB data found that approximately 50 percent of all payday loans involve approximately 10 consecutive loans.

Critics say opportunistic lending practices unfairly target vulnerable consumers. Stanger and other consumer advocates question if CFPB protections will continue to thwart bad business practices or if the entity will become a consumer financial protection bureau in name only.

Tide may be turning for contactless payments
Monday, February 11, 2019

C ontactless payments may be tough to sell consumers, but that hasn't stopped Visa from trying. The official payments services partner of the National Football League, Visa enabled half of the concession stands at this year's Super Bowl to accept tap-and-go payments. And as previously reported in "Visa, NFL team up for payments at Super Bowl LIII," under The Green Sheet's Breaking Industry News, Visa is promising to expand the capability throughout NFL stadiums under terms of a new agreement extending its NFL partnership through the 2025 football season.

Visa has been promoting contactless payments for more than 20 years. Some of the earliest tests of contactless payments occurred in sports stadiums. They relied on payment fobs that employed near-field communications technologies to support tap-and-go payments in much the same way that Apple Pay and similar smartphone-based payment apps work today.

A notable share of merchants are positioned to accept contactless payments. A survey of small and mid-sized businesses last year by Paysafe found 37 percent have technology in place to accept contactless payments, and another 20 percent plan to be in a positon to accept contactless payments within the next two years.

Consumer adoption lagging

But consumer adoption to date has been lackluster. An October 2018 survey by RootMetrics, which tracks mobile trends, revealed that while many consumers were using their mobile devices to search for purchases, nearly two in four consumers (37 percent) don't use mobile payment apps because they feel using cash or cards is easier. The survey – The Lifestyles of Mobile Consumers – revealed that nearly as many consumers (36 percent) had security concerns that deterred their use of Apple Pay and similar mobile payment options.

Sarah Grotto, director of the debit advisory service at Mercator Advisory Group, is optimistic the tide will turn for contactless payments. Half of consumers recently surveyed by Mercator reported using smartphone-based payments in the past year, she said. And she predicted more will take the plunge with a little encouragement from card issuers. Seventy percent of surveyed consumers said they would use mobile payments more often if they automatically received rewards or discounts for doing so.

"Card issuers cannot afford to leave changing consumer payment preferences unaddressed – banks face a choice between introducing touch-and-go or being seen as completely out of touch," Grotto recently wrote.

Visa appears to be on board. In describing its work with the NFL Visa said it would expand its contactless program across NFL events domestically, and will provide "added benefits specifically for Visa cardholders" making contactless payments when purchasing tickets for or items while attending those events.

Investors locked out after death of QuadrigaCX exchange owner
Friday, February 8, 2019

C anadian cryptocurrency exchange QuadrigaCX is in a tailspin following the apparent death of its owner, 30-year-old Gerry Cotton. Thousands of investors in the exchange have been locked out of more than C$180 million, or approximately US$136 million, since Cotton's demise was reported in December 2018. He left no password to the software wallets containing investors' funds, which he maintained on his laptop computer.

Canada's Nova Scotia Supreme Court granted QuadringaCX an order of creditor protection to stop lawsuits from proceeding against the company while it searches for the lost cryptocurrency. This order was granted amid speculation that Cotton had faked his death in India, despite a death certificate having been produced. Meanwhile, questions about how such an event could occur raised alarm bells internationally about regulatory gaps.

Lack of regulatory oversight

According to Michael Stephens, a partner at Canadian law firm Fasken, the Canadian securities regulatory framework is not always applicable to crypto exchanges, and in the cases where it is, the regulatory oversight does not specifically address business methods such as safekeeping of passwords and wallet recovery.

"Securities regulators could not have prevented QuadrigaCX from apparently being run in a risky manner, with no security measures in place if the wallet passwords went missing," Stephens said. "The next QuadrigaCX-type event is a matter of 'when not 'if' – and securities regulators are relatively powerless to prevent it at this point."

Stephens additionally pointed out that, by analogy, there is also relatively little regulatory oversight of the foreign exchange market.

"It would seem to make sense that any business that is handling transactions involving vast sums of cryptocurrency on behalf of customers, and occupying a fiduciary-type relationship in connection with those sums, should be required to adhere to some codes or standards," he said. "But password recovery measures are really, at this point, just part of 'best practice' in the crypto world rather than part of any legislative imperative."

At this time, Cotton's laptop remains locked, and questions abound about its contents.

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