Snippings

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The way the big three cloud providers each price data transfer is remarkably similar: Inbound to a cloud provider the transfer is free, while outbound to the internet (say, to a competing provider) is extraordinarily expensive. This inevitably leads to centralization around a single provider. Bad idea though it might be at the level of an individual business, for the collective good of society a multicloud strategy may be the only way to ensure that enough server capacity remains online to support the global economy through a given provider’s disruption.

Despite constant needling and pleas for help from its competition, its customers and its customers’ customers, AWS in particular has declined to make outgoing data transfers more affordable.

From AWS Is Too Big to Fail — The Information:

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Russia and China will develop shared financial structures to enable them to deepen economic ties in a way that foreign states will be unable to influence, the Kremlin has announced following talks between the countries’ leaders.
The move appears to be a response to a series of warnings that Western nations could push to disconnect Russia from the Brussels-based SWIFT financial system as a form of sanctions.

Yuri Ushakov, Putin’s foreign policy advisor said “particular attention was paid to the need to intensify efforts to form an independent financial infrastructure to service trade operations between Russia and China.”

“We mean creating an infrastructure that cannot be influenced by third countries,” the Kremlin aide added.

From Kremlin reveals new independent Russian-Chinese financial systems — RT Russia & Former Soviet Union:

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Chinese digital currency has begun its integration with the aviation industry in recent months, including tickets and airports, with more scenarios expected to be added as the Beijing 2022 Winter Olympics approaches.

Digital yuan is particularly well suited for in-flight payment situations in which in-cabin WiFi is not provided or available, meeting the needs of passengers paying for goods or services during flights, Xiamen Airlines said in the note.

From From terminal to take off, China’s digital yuan changes payment methods across aviation sector – Global Times.

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The rise in revenues came because Holvi stopped allowing customers to open bank accounts for free. You now have to pay €6 to €12 a month for the Holvi service.

60% of people closed their accounts. But the ones that remained were 20x more valuable

From Holvi plans credit card launch, fundraise and IPO after split with BBVA | Sifted.

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NatWest has become the first UK bank to conduct a live transaction using Open Banking-initiated Variable Recurring Payments.

Working with Open Banking infrastrucutre provider TrueLayer, NatWest has delivered its VRP API ahead of schedule and tested the transactions in a live environment.

From NatWest initiates first live Variable Recurring Payment transaction.

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Backed by some of the world’s largest banks, blockchain for payments consortium Fnality says it expects to reduce banks’ intraday liquidity requirements by 70% when it goes live next year.

From Fnality preps go live with pledge to slash intraday liquidity costs.

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Nearly 40% of the e-payment sector in the United Kingdom, which made more than £500 billion (US$660.2 billion) worth of transactions in 2020/21, have been flagged red — a warning of money laundering risk, a Transparency International UK research published on Tuesday found.

From TI: Nearly Half of UK’s E-Money Firms Red Flagged for Money Laundering Risk:

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“We found 100 EMIs (38%) with potential money laundering red flags including: being named as having poor anti-money laundering controls or processing criminal wealth; having owners, directors or senior members of staff named in money laundering investigations; or owners, directors or senior members of staff having worked previously for institutions alleged or proven to have anti-money laundering failings,” read the report.

There’s plenty of talk of super apps around at the moment as a variety of players attempt to become the western equivalent of the Asian app giants such as Alipay, Gojek and Kakao.  But how do you get from a digital wallet to a super app? And, more to the point, are wallets or super apps the best way to manage the interface between people and their economic avatars? Do you really want one app to do everything? I’m not so sure, to be honest.

The starting point is mobile payment, and here the trends are pretty clear. As Christine Wagner, Head of Global Payments Products for FIS said in a podcast with Mercator Advisory Group earlier this year, “even in the U.S., we’ve seen that checkout at point-of-sale using mobile wallets has grown a staggering 60%”. People seem to be very comfortable with using their phones to pay, and wallets are a pretty good way of organising things. When I got to my local supermarket, both my retailer co-brand credit card and my retailer loyalty card are conveniently stored in my Apple Wallet.

(Why they are separate, by the way, when I should be able to pay using my authenticated loyalty card is a different story.)

A wallet is a way of storing things. My Apple Wallet, just like my real wallet, doesn’t have any money it. It has credit cards, debit cards, loyalty cards, vaccination records, boarding passes, train tickets and soon driving licences as well (although Apple’s plans for driving licences in their wallet have recently been set back a little). These things are all held independently in the wallet: they don’t talk to each other and they don’t share data with each other. They are also, as you will have noticed, mostly about identity, not money.

This dynamic is recognised in, for example, the European Digital Identity Wallet initiative. Under this initiative countries will offer citizens and businesses digital wallets that will be able to link their national digital identities with proof of other personal attributes (e.g., driving licence, diplomas, bank account, COVID-19 vaccination details and so on). These wallets may be provided by public authorities or by certified private entities (presumably banks will be one category of wallet provider). Simiarly

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The NSW government has earmarked $8.9 million to begin work on a personalised digital wallet that will allow citizens to prove their identity and share decentralised credentials.

The funding, which will be sourced from the state’s $2.1 billion digital restart fund, was revealed in the NSW half-yearly budget update [pdf] yesterday.

The Department of Customer Service first revealed plans for the digital wallet or “credential vault”, last month, when it issued an expression of interest to find the necessary underpinning platforms.

From Service NSW gets funding to begin work on digital ID wallet – Strategy – Software – iTnews.

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If you have a successful and widely-used mobile payment scheme then there must be a great temptation to evolve it into a super app rather than remain content with being either a standalone payment app or one among many options in someone else’s wallet. PayPal, to choose an obvious case study, is steadily adding features to turn it from a payment scheme into a Home Screen Super App (or HomeApp, as I like to think of them).  PayPal savings, shopping, bill payments, reward, gift cards, by now pay later (BNPL) and cryptocurrency are coming together in a PayPal app that you need only log in to once to have access to a spectrum of services.

This not unique to western markets. M-Pesa, the most successful fintech in Africa, recently introduced its own super app across all its markets. It gives consumers access to another spectrum of services from e-commerce to e-government as well as a network of partners that them to send and receive money from more than 200 countries and territories. The M-Pesa open API is already being used by more than 45,000 developers and 200,000 SMEs and the company is expanding its ecosystem to reach large-scale and micro-enterprises.

PayPal and M-PESA and Alipay are examples of super apps growing out of payments and it is entirely possible that successful super apps in the USA and Europe will come from that direction.

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Over the next three years, Lydia wants to become the primary account for 10m users. It will also use the funds to spin out new credit and investment products (having recently launched crypto trading), as well as expanding into at least two new European geographies, including Portugal and Spain.

Perhaps Lydia’s most ambitious target is to become a financial “superapp” for millennials and Gen Z, following in the footsteps of China’s WeChat and even Revolut.

From France’s Lydia bags $1bn+ valuation after pivoting into ‘superapp’ | Sifted.

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Alternatively, they might come from the world of commerce. Klarna and Shopify, to name two obvious candidate super apps, have been steadily expanding their range of services.

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Klarna, one of the world’s largest private fintech companies, unveiled its new super app today, consolidating its installment payment technology with shopping, product support, delivery and returns, according to a press release.

The new application will turn the company from a payment provider into the end-to-end retail space, allowing consumers to purchase and use their interest-free shopping feature across all online shops, connected to Klarna or not.

From Klarna launches new super app, reduces reliance on partnerships – FinLedger.

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Klarna announced today that it acquired the Swedish comparison site Pricerunner for €930m in a move designed to broaden its shopping experience. The purchase gives a glimpse of the kind of one-stop-shopping company the Swedish fintech has an eye on becoming.

From Klarna acquires comparison site Pricerunner for €930m | Sifted.

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Super Starts

The Financial Times summarises the landscape succinctly. We have super apps for physical things (transport, food delivery and so on) in the form of Uber, Bolt, Grab and Gojek. Coming from the payment space we have the financial porto-super apps such as PayPal, Klarna and Revolut. In media, Spotify is on its way to becoming a super app for audio with podcasts and chat rooms as well its music library.

What’s the difference between a digital or mobile wallet and a super app then? I suppose the boundary is a little fractal, but I tend to see it terms of identity. A super app shares an identity across its ecosystem of services whereas in a wallet each of the services has its own identity.

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As of today, there are exactly three regulated dollar-backed stablecoins in the world: Paxos Standard (“PAX”) and Binance Dollar (“BUSD”), both issued by Paxos Trust Company, and the Gemini Dollar (“GUSD”), issued by Gemini Trust Company. Paxos and Gemini are both Trust companies regulated by the New York State Department of Financial Services (“NYDFS”). Trusts are required to have their products and services approved and supervised by NYDFS. PAX, BUSD and GUSD are expressly approved by the NYDFS and supervised by the regulator on an ongoing basis

From A Regulated Stablecoin Means Having a Regulator – Paxos:

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“If wrongly implemented, it gives a hostile state the ability to surveil transactions,” he said. “It gives them the ability . . . to be able to exercise control over what is conducted on those digital currencies.”

From UK spy chief raises fears over China’s digital renminbi | Financial Times.

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