Tag Archives: innovation

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

 

Wal-Mart Dives Deeper in Banking

Wal-Mart Stores Inc. is taking another step deeper into banking, rolling out a new money-transfer service that undercuts rivals including Western Union Inc. and MoneyGram International Inc. with lower and simplified fees.

The giant retailer on Thursday unveiled the new service, Walmart-2-Walmart, which will allow customers to send and receive up to $900 at a time at more than 4,000 stores. The new service applies only to payments that are sent and received in the U.S.

It aims to take a bite of the roughly $900 billion in so-called person-to-person payments made each year in the U.S., often in the form of cash or checks.
“This is a relatively easy service for Wal-Mart to develop, because it fits with the customer base that they already have, and they don’t have to spend a lot of money to create, implement or market the service,” said Ron Shevlin, a senior analyst at Aite Group, a consulting firm that specializes in the payments industry.

The service launches April 24. Wal-Mart said the service fees – $4.50 for transfers up to $50 and $9.50 for transfers up to $900 – are 50% or more below the cost of existing offerings. For its new service, Wal-Mart is partnering with Euronet Worldwide Inc.’s Ria Money Transfer subsidiary.

The money-transfer business carries substantial regulatory burdens aimed at preventing money laundering. Wal-Mart has been registered with the Treasury Department’s Financial Crimes Enforcement Network as a money-services business since 2011, according to FinCen’s public database. The move also could place Wal-Mart under the scrutiny of the U.S. Consumer Financial Protection Bureau, which was set up after the financial crisis to police the lending industry for abusive practices involving consumers. The CFPB already has proposed supervising nonbank providers of international money transfers. The vast majority of U.S. money transfers involve sending money overseas, according to payments experts. The U.S. is the largest sender of such payments, accounting for nearly one-quarter of the $529 billion in remittances that international migrants sent to their home countries in 2012, according to the World Bank.

In addition to competing with Western Union and MoneyGram, Wal-Mart also is taking on banks that allow their customers to transfer money to other customers. In 2011, J.P. Morgan Chase & Co., Bank of America Corp. and Wells Fargo & Co. formed a joint venture to let people use their checking accounts to send each other money with an email address or cellphone number.

“The banks have failed miserably in capturing the person-to-person payments business,” said Mr. Shevlin, the payments analyst.

Walmart transfer pricing

via Wal-Mart Undercuts Rivals With New U.S. Money Transfer Service – WSJ.com – Article by Paul Ziobro & Robin Sidel.

Wal-Mart Dives Deeper in Banking – PDF

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

CSI’s SPIN P2P

With CSI’s SPIN, you can provides community banks customers with more direct person-to-person (P2P) payment functionality. The P2P offering delivers a more efficient payment process that allows consumers the quickest access to funds in the P2P industry.

5 Reasons why SPIN is the Best P2P Option for Community Banks

1. Requires only the 16-digit debit card number to send a payment to any Visa® cardholder, which improves adoption among bank customers looking for a faster transaction process
2. Enables funds to clear in a matter of minutes, eliminating the delay in availability for the receiver
3. Fully encrypts card information to ensure complete security and compliance, and can be reused to send additional payments without providing the full card number each time
4. Helps maintain customer satisfaction and improves the overall customer experience by providing a more immediate P2P payment process
5. Delivers an array of value-added tools that can drastically expand your bank’s mobile adoption, and increases transaction volumes by eliminating the need for customers to seek third-party P2P providers

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