Category Archives: Technology

Square Pulls Failed Wallet App as Troubles Mount

Square is shuttering its Square Wallet app for smartphones, a sign the mobile-payment startup is struggling to expand beyond its low-margin business of credit-card readers. Square Wallet was recently pulled from Apple’s App Store and Google Play because the app “didn’t have a lot of the utility value” for consumers, Square director Ajit Varma said in an interview with technology blog Recode.

The company will continue to support the service for customers who have already downloaded the app.In its place, Square unveiled a new mobile app called Order, designed to let customers place take-out orders from local businesses and skip the line when they arrive. “We learned from Wallet that people loved paying with their name and we knew there was more value we could add to the customer experience,” a Square spokeswoman said in an email. “We moved fast on this strategy and decided that the most efficient way to add this value was to build a new technology on a more agile platform, hence we built Square Order.”

Square is trying to appeal to more consumers and create new lines of revenue as losses in its core business of credit-card readers mount. The company charges merchants 2.75% to swipe cards through the readers, but pays about four-fifths of that money out in fees to payment networks like Visa and MasterCard.

Square recorded a loss of roughly $100 million in 2013, broader than its loss in 2012, two people familiar with the matter said last month. The closely held San Francisco company has suspended plans for a possible initial public offering and held talks about a potential sale to Google Inc. and others has losses mount.

The new Order app will eventually charge merchants a higher rate of 8% to take orders and process transactions. The service competes with a growing field of food-ordering apps that includes Grubhub and Eat24.

Square has been adding services that could eventually be more profitable than its main payments business. In the past 12 months it began Square Cash, which helps people send money to friends via email, and Square Market, a digital marketplace for small businesses. It also offers Square Register to help stores track customer data and is testing a lending program for merchants who have difficulty getting a bank loan.

via Square Pulls Failed Wallet App as Troubles Mount – Digits – WSJ Article by Douglas Macmillan.

Square Pulls Failed Wallet App as Troubles Mount – WSJ Article by Douglas Macmillian – PDF

 

Boards Race to Bolster Cybersecurity

Even before hackers stole 40 million credit- and debit-card numbers from Target Corp. stores last year, Wal-Mart directors received frequent rundowns from outside consultants on cyberthreats, including gangs of Russian-speaking hackers who target payment-card data, a person familiar with the meetings said.

A Wal-Mart spokesman didn’t dispute that account.

So far this year, 1,517 companies traded on the New York Stock Exchange or Nasdaq Stock Market listed some version of the words cybersecurity, hacking, hackers, cyberattacks or data breach as a business risk in securities filings, according to a Wall Street Journal analysis. That is up from 1,288 in all of 2013 and 879 in 2012.

Still, federal officials and others say many companies remain ignorant of, and unprepared for, Internet intruders.

“There may be a gap that exists between the magnitude of the exposure presented by cyber-risks and the steps, or lack thereof, that many corporate boards have taken to address these risks,” Securities and Exchange Commissioner Luis Aguilar told directors earlier this month at a cybersecurity conference at the New York Stock Exchange.

via Boards Race to Bolster Cybersecurity – WSJ Article by Danny Yadron.

Lenders Place Their Bets on Mobile Banking

How customers rate mobile app's importance in switching banks
How customers rate mobile app’s importance in switching banks “green” – extremely important

At a time when banks are struggling with revenue and profit growth, mobile banking is emerging as a critical weapon in the battle to retain customers and cut expenses. The average cost to a lender for a mobile transaction is 10 cents, about half that of a desktop-computer transaction and far less than the $1.25 average cost of an ATM transaction, according to data from Javelin Strategy & Research.

But the spread of smartphones and tablets also presents risks for banks. Customers today expect their lenders to offer a range of mobile services, from simple functions such as balance inquires and transfers to trickier maneuvers like paying bills through photo imaging. When banks don’t deliver, some customers are walking.

All told, about 60% of smartphone or tablet users who switched banks in the fourth quarter said mobile banking was an important factor in the decision, up from 7% in the second quarter of 2010, according to data from New York-based consulting firm AlixPartners.

But as mobile-device use increases, more customers are giving it a try.”The world is quickly going mobile, and if banks aren’t there already, they’re way behind,” says Robert Meara, a senior analyst at financial-services research and consulting firm Celent.

Some mobile functions are especially appealing. While customers can view balances, transfer money and perform other functions using ordinary computers, they can deposit checks only in person or on a mobile device.”There are few things more inconvenient to banking consumers than carrying a check around and waiting to come to a branch or ATM,” Mr. Meara said.

For banks, mobile deposits are especially cost-efficient. J.P. Morgan Chase & Co. recently said mobile check deposits cost the bank three cents per transaction, versus 65 cents for deposits made with a teller.

“How come this bank with the kind of weather we have in NJ and NY doesn’t have mobile deposits! I’m just going to switch banks,” wrote one user on the Google Play app store page for Santander’s U.S. mobile-banking app.

Average Cost of Bank Transactions

  • In person at a branch: $4.25
  • By phone a call center: $1.30
  • ATM: $1.25
  • Online banking: $0.19
  • Mobile banking: $0.10

via Lenders Place Their Bets on Mobile Banking – WSJ.com – Article by Saabira Chaudhuri.

Lenders Place Their Bets on Mobile Banking – PDF

China Hacking Is Deep and Diverse

China’s Internet espionage capabilities are deeper and more widely dispersed than the U.S. indictment of five army officers last week suggests, former top government officials say, extending to a sprawling hacking-industrial complex that shields the Chinese government but also sometimes backfires on Beijing.

Some of the most sophisticated intruders observed by U.S. officials and private-sector security firms work as hackers for hire and at makeshift defense contractors, not the government, and aren’t among those named in the indictment. In recent years, engineers from this crowd have broken into servers at Google Inc., Lockheed Martin Corp. and top cybersecurity companies, former U.S. officials and security researchers alleged.

The Chinese have often told their U.S. counterparts they don’t condone hacking but also that they can’t police what they don’t control, according to former U.S. officials. While it is possible Beijing makes this claim simply as an excuse for inaction—given its strict control of domestic Internet traffic—experts in the field, including former U.S. officials, say the Chinese hacking landscape is chaotic and hard to follow.

This structure brings “a political gain to being able to say ‘we can’t control all attacks,’ ” said Adam Segal, a China and cybersecurity scholar at the Council on Foreign Relations in New York. “But I think there is a cost when hackers go after targets that are too sensitive or get involved in a crisis and the government can’t control the signaling.”

Sometimes freelancers appear to take orders from the military, at other times from state-owned firms seeking a competitive advantage, U.S. security firms say. It remains unclear how exactly those orders are given, security researchers said.

via China Hacking Is Deep and Diverse, Experts Say – WSJ Article by Danny Yadron, James T Areddy & Paul Mozur.

U.S. Banks Prune More Branches

Branch Closings

Bank branch closures in the U.S. last year hit the highest level on record so far, a sign that sweeping technological advances in mobile and electronic banking are paying off for lenders but leaving some customers behind.

U.S. banks cut a net 1,487 branch locations last year, according to SNL Financial, the most since the research firm began collecting the data in 2002.

Branch numbers have been on a steady decline since 2009 and reached a total of 96,339 at the middle of last year, the lowest since 2006, according to data from the Federal Deposit Insurance Corp.

Since the financial crisis, U.S. banks have been ramping up mobile and online services and moving away from physical locations to avoid overlap. “There’s less of a need to have branches now,” says Sandler O’Neill + Partners analyst Jeff Harte.

Culling branches, with their real-estate, labor and security costs, has become a popular way for banks to boost profits at a time of sluggish revenue and loan growth. No U.S. state or territory logged net bank-branch additions in the cumulative period running from 2010 to 2013, according to SNL.

via U.S. Banks Prune More Branches – WSJ.com – Article by Saabira Chaudhuri.

U.S. Banks Prune More Branches – PDF