Tag Archives: entrepreneurs

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


Regulatory Cost Calculator – The Federal Reserve Bank of Minneapolis

Economic Policy Papers

Regulatory Cost Calculator
Instructions: This calculator allows users to conduct analysis similar to that presented in the Federal Reserve Bank of Minneapolis Economic Policy Paper (13-3), “Quantifying the Costs of Additional Regulation on Community Banks,” by Ron Feldman, Ken Heinecke and Jason Schmidt. Please review that paper for additional details on the analysis allowed by this calculator.

The underlying data in the calculator come from the quarterly statements of condition and income that commercial banks are required to file with federal regulators (known as “Call Reports”). This calculator contains data on “community” banks, which are defined to have assets less than $1 billion. In the calculator, the user can specify four input parameters:

1. Bank asset size cutoffs. 2. Number of full-time equivalent employees (FTEs). 3. Compensation of FTEs. 4. Year on which the analysis is performed.

Updated Calculator

This version of the regulatory cost calculator contains updated data through Q4 2013. Note that results for the 2001-2012 period are slightly different due to revisions to the call report data and seasonal adjustment of the CPI.

Download updated calculator (.xlsm, 13MB)

Note: Click the Enable Content or Enable Macros button when the file opens to allow the calculator to appear.

via Regulatory Cost Calculator – The Federal Reserve Bank of Minneapolis.

Regulatory Cost Calculator 2013 – Excel Spreadsheet


Banks Still Not High on Pot

Banks still not high on pot r1DENVER—Two months after the U.S. government tried to smooth the way for sellers of legalized marijuana to get banking services, many pot entrepreneurs still can’t open a basic checking account.

The Treasury Department and Justice Department in February issued guidance that was meant to reassure banks that they wouldn’t run afoul of federal law—under which marijuana remains illegal—by working with pot businesses in states that have legalized the drug.

But lenders have taken little comfort in the guidelines, saying they don’t go far enough to guarantee that banks won’t face legal repercussions, and add burdensome new requirements that they screen customers for marijuana ties.

As a result, banks have become even more uneasy about accepting marijuana money, pushing state-licensed pot businesses deeper into a financial netherworld.”

Most banks are trying to avoid this and mitigate it if they inadvertently find a customer with a marijuana-related business,” said Chuck Johnston, president of North Valley Bank in Thornton, Colo., which won’t accept customers with marijuana ties.

Pot stores increasingly find themselves in situations other businesses couldn’t fathom, such as hiring armed escorts to help deliver sales taxes to government offices in wads of cash. “What I find most frustrating is that I pay an enormous amount of taxes and licensing and other fees,” said Morgan Carr, co-owner of the Wellspring Collective pot shop in Denver. Mr. Carr said he recently lost his bank account for the seventh time because the bank he was using became uncomfortable with his cash deposits.

With most banking options still closed, Colorado store owners are scrambling for new ways to secure their cash. One Denver-area company operated by military and law-enforcement veterans, Blue Line Protection Group, now specializes in shipping cash from pot stores to several vaults around Colorado by armored trucks. The company also transports marijuana.

via For Marijuana Sellers, Finding a Bank Is Still a Pipe Dream – WSJ.com – Article by Dan Frosch & Robin Sidel.

For Marijuana Sellers, Finding a Bank Is Still a Pipe Dream – PDF

Banks Mostly Avoid Providing Bitcoin Services

Companies trying to cash in on the newfangled bitcoin craze are having trouble getting old-fashioned bank accounts.

Lenders are leery of dealing with virtual-currency companies because of concerns that the businesses could run afoul of anti-money-laundering laws or be involved in illegal activities, banking executives say. Regulators and central bankers around the world have raised similar concerns in recent months.

The problem has grown so acute that some owners of fledgling virtual-currency businesses are trying to elude bank scrutiny by avoiding the words “bitcoin” or “bit” in their names, according to entrepreneurs and investors who actively track the industry.

via Banks Mostly Avoid Providing Bitcoin Services – WSJ.com – Article by Robin Sidel.

High-Class Pawnshops Fill Lending Void

When Heather Robinson needed money to start a sports-apparel line, she turned to an unusual lender, offering a prized possession as collateral: a bronze nude torso sculpture.

Ms. Robinson, who directs a Washington nonprofit, brought the 16-inch statue last month to a New York firm called Borro Inc., which immediately wired her $15,000. The interest rate: 3.99% a month, or as much as 23.9% for the six-month loan term.

Borro and other collateral lenders—essentially high-end pawnshops—are a small but fast-expanding part of the shadow-lending system. Since 2008, as commercial banks have cut lending to small businesses, such alternative lenders have helped fill the void.

In some states, collateral lenders can charge interest rates exceeding 200% annually because the business isn’t bound by traditional banking laws. On the upside for borrowers, there isn’t a credit check and little paperwork.

Borro is the largest of this new breed of collateral lenders, having lent nearly $100 million since opening in England in 2009. Competitors such as iPawn Inc. and Pawngo collectively have lent tens of millions of dollars.

via High-Class Pawnshops Fill Lending Void – WSJ.com – Article by Ianthe Jeanne Dugan.