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08

Aug

Starbucks CEO Just Joined Square's Board

Starbucks, the giant coffee seller, just invested $25 million in Square, the San Francisco-based payments startup.

Starbucks is taking a small piece of that round. Square authorized $200 million in new shares at a valuation of $3.2 billion. The company didn’t say who—if anyone—is buying the rest of the new shares, but the New York Times reported that Rizvi Traverse Management, an investor in Playboy and Twitter, was leading the round.

07

May

FSA warns banks on old tech, slow payments and failure to engage with customers

In a speech to the Chartered Institute of Bankers in Scotland, Wheatley says that the watchdog wrote to banks in January to “encourage a more proactive approach” to its conduct regime that covers ‘core’ payment activities.

Wheatley argues that some are “still not fully engaged” and seems to be just tackling what is pointed out to them, “rather than simply getting on with meeting all of our requirements and delivering what is fair for consumers”.

He singles out the requirement to ensure payments reach the payee’s account by the end of the following business day, which some banks simply failed to tackle early enough to ensure compliance. “I cannot understand why something as straightforward and helpful to the customer as this, is so hard to do.”

Another issue concerning the FSA is the difficulty customers have cancelling recurring payments. The watchdog is now looking at how firms deal with this and “will publicise our findings and our expectations in the summer and take any appropriate action with specific firms”.

Wheatley warned the banks that getting these basics right will be increasingly important for them, with his own organisation - and its imminent replacement, the Financial Conduct Authority - “getting more serious” and the EU taking a more active interest in the retail sector. In addition, new players are beginning to enter the market, poised to take advantage of customer disillusionment.

"Banks also need to recognise their customers’ increased expectations in a world where people can now, via faster payments, make payments 24 hours a day, seven days a week. Old systems, and the reluctance of some banks to change ways of doing things, are becoming increasingly unacceptable to consumers and to us. If banks do not provide what consumers want, the new entrants might," warns the FSA man.

04

Apr

US payments system failing to meet the needs of the digital economy

The Federal Reserve and US Congress urgently need to plug a public policy vacuum if the national payment infrastructure is to keep up with changes in the digital economy, according to a former senior Fed executive.

In a paper delivered late last week to a payments summit hosted by the Kansas City Fed, Bruce Summers - a career official with the Federal Reserve until his retirement in 2007 - lamented the lack of public interest governance in the US payments industry.

Taking the failure of the US to develop a mechanism for immediate funds transfer (IFT), such as the UK’s Faster Payments scheme, as a key theme, Summers pointed out that neither the Federal Reserve Board nor prominent private sector organisations have either “the interest or the ability” to lead payment system development into the digital age.

"The idea that money in transit is digital information which can be processed immediately has not been readily accepted by the banking industry," he says. "Most bank-sponsored payment schemes depend on clearing and settlement systems that are designed around batch processing and delayed settlement, and these clearing and settlement arrangements are being nurtured as opposed to being re-designed around continuous, real-time processing."

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