Snippings

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ayments consultant Richard Crone predicts that banks will be tempted to create their own digital wallets, whether individually or collaboratively through platforms like Paze, a multi-bank wallet managed by Early Warning Services.
However, history has shown that banks often struggle in this space.
Past efforts to launch proprietary wallets have frequently faltered, and Crone believes the same fate awaits future attempts.
“It will be a fatal distraction for most banks, thinking they can create a wallet,” he warns.

From: Can banks succeed with their own digital wallets?.

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Jeremy Light’s analysis on the “atomisation” of payments in the UK shows very clearly the transformation of the payments sector and the impending explosion in volumes. The UK’s Faster Payments System (FPS) has volumes growing more than a fifth per annum (to more than four billion payments last year) while the inflation-adjusted average value has approximately halved in the same person. Narrowing payment values down to below £20 and including cards, shows that these low value payments are already made in colossal volume and are currently gorwing by a third annum. He thinks that these trends are about to be accelerated, and I’m pretty sure that he is right.

There are two (I think related) drivers that Jeremy identifies. The first is the impending new payments frontier of agent-to-agent payments, or robot-to-robot (R2R) payments as I like to call them (since A2A means account-to-account). In a new paper for the Journal of Payment Strategy & System on “Payments and Agentic Commerce: Exploring the business of robots paying robots”, Debbie Gamble (the Chief Strategy Officer at Interac in Canada) and I take a structured view of this new frontier to look at where new businesses (and new business models might arise). We distinguish between “via-agent payments” (VAPs) which are those where making the payment on behalf of someone else is the end-goal of the agent and inter-agent payments (IAPs) which are those where agents are making payments themselves in order to complete a task, either buying in external resources or paying other agents to perform subtasks.

One particular example of via-agent payments that Jeremy uses is that of a bot that finds the cheapest electricity to buy continuously 24/7. Instead of me paying a bill to one electricity supplier once per month, my agent might pay many different suppliers over the course of a month. potentially pay each of them a few cents or a few dollars at time. The moves us on to the second driver for atomisation: the resurgence of interest in micropayments. It may well be that it is agents, rather than consumers, who drive up the demand for new micropayment solutions.

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Google’s early-stage AI fund has led a $3 million seed round for Arva AI, a startup that helps banks and fintechs automate AML and KYB compliance.

From: Google fund invests in KYB verification startup Arva AI.

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Narrowing payment values down to below £20 ($24) and including cards, statistical analysis shows low value payments are made in very high volumes in the UK and have been growing at a CAGR of 31% since 2020.

From: Got a Lot o’ Payin’ to Do – by Jeremy Light.

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This is atomisation in action – increasing payment volumes and decreasing payment values.

From: Got a Lot o’ Payin’ to Do – by Jeremy Light.

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These include open banking, photo ID matching, facial age estimation, mobile network operator age checks, credit card checks, digital identity services and email-based age estimation.

From: UK media watchdog imposes robust age checks on porn sites.

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Nubank is expanding the feature that rewards holders of the digital dollar USDC to all users of Nubank Cripto in Brazil. This expansion allows daily returns on a minimum balance of 10 USDC in their wallets at a fixed rate of 4% per year. The decision came after a pilot program that tested variable rates with a small group of users throughout the past year.
To start receiving rewards, customers must access their crypto wallet in the Nubank app and click on “I Want to Participate.” The feature can be deactivated or reactivated whenever the user wishes. Returns are credited automatically every day, and liquidity is immediate.
USDC is a stablecoin backed by the US dollar, supported by highly liquid assets, and can be redeemed at a 1:1 ratio for US dollars. The reserves are publicly verifiable. This feature makes this digital currency less volatile compared to other cryptocurrencies.
In 2024, the amount of USDC held by Nubank customers increased tenfold and now around 30% of them have this asset in their portfolios. More than 50% of new Nubank Cripto users chose USDC as their first digital asset.

From: Nubank expands USDC rewards program to all customers – Nu International.

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The interest is paid in USDC, presumably. This means that NuBank must be buying the USDC from somewhere, which is great news for USDC. But as per the point made on Twitter, USDC invest the money in treasuries and take a a cut so why doesn’t the Fed tokenise the treasuries and cut out the middleman?

 

In fact – another point that has been made before and I was thinking about today when one of my Consult Hyperion colleagues showed me the new Visa piece about tokenisation, why don’t funds tokenise directly. I can see why Brazilian customers might want dollars in the their savings accounts but other people might want electricity or water or Banksy paintings. Actually, if we could stack up a few Banksy paintings and then persuade the government that it is in the vital national interest to have a strategic reserve of Banksy paintings… 

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A French woman who was conned out of €830,000 (£700,000; $850,000) by scammers posing as actor Brad Pitt has faced a huge wave of mockery, leading French broadcaster TF1 to withdraw a programme about her.
The primetime programme, which aired on Sunday, attracted national attention on interior designer Anne, 53, who thought she was in a relationship with Pitt for a year and a half.

From: French woman duped by AI Brad Pitt faces mockery online – BBC News.

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When images appeared in gossip magazines showing the real Brad Pitt with his new girlfriend Ines de Ramon, awakening suspicions in Anne, the scammers sent her an fake news report in which the AI-generated anchor talked about Pitt’s “exclusive relationship with one special individual… who goes by the name of Anne.”

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I do genuinely think we will all have our own AI agents, and companies will have armies of them. And they will be worth trillions, since eventually (no time soon) they will do a huge fraction of all human knowledge work, and maybe physical labor too.

But not this year (or next, or the one after that, and probably not this decade, except in narrow use cases).

From: AI Agents: Hype versus Reality, redux – by Gary Marcus.

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Today, it is not gold or silver content that determines the intrinsic value of money, but laws and institutions that underpin it. At the same time, payments utility is determined by technological advances that can outpace changes to these laws and institutions. As a result, bad money often gets bundled with good payments. People are offered cheaper, faster, more convenient, more secure, and more accessible ways to send and receive money at the expense of the underlying money being less sound. In times of relative stability, bad money may offer a comparative advantage.

Awrey calls this Gresham’s New Law and lays out a blueprint to address it.

From: Gresham’s New Law – by Marc Rubinstein – Net Interest.

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There has been an interesting change to the rules (well, not rules, more like a code of conducr) around private car parks in this United Kingdom. It is all to do with the use of mobiel phones to pay for parking (which is how I pay for parking almost all of the time in almost all of the plaxces where I park). It comes about because people are being fined for non-payments after walking away from their cars in order to find phone reception to use the relevant parking app.

This is a perfect example of why a central bank digital currnecy, to be useful and to add to the happiness of the nation, must work offline. You should be able to pay to park your car, or to buy some milk or to get into national park or whatever else when there is no mobile signal and no internet connection.