In this short video we take a look at a demo of Intuit's “GoPayment” mobile payment solution for Android. The device allows you to use your Android phone to accept credit cards anytime, anywhere.
Wednesday, 30 March 2011
Federal Reserve spells out mobile payments success path
The extent to which mobile payments will succeed in the US depends on an open, interoperable infrastructure based on near field communications technology (NFC), according to a paper published recently by both the Atlanta and Boston Federal Reserve banks.
The paper, which was drafted by the banks' research teams following the creation of a mobile payments industry workgroup, sets out what they call the "foundational components" for an m-payments environment defined as an "open mobile wallet".
The authors say this would likely be based on contactless technology in smartphones and payment terminals and tap existing channels such as the ACH network. They also stress that some form of dynamic data authentication will need to be at the heart of a security and fraud mitigation program.
Standards would be designed, adopted, and complied with through an industry certification program to ensure both domestic and global interoperability, including a standard to ensure that devices used for mobile payments do not create any electronic interference problems.
The paper suggest that a "better understanding of a regulatory oversight model should be developed in concert with bank and non-bank regulators early in the effort". Trusted Service Managers should oversee the provision of interoperable and shared security elements used in the phone.
However, the group stopped short of recommending a specific industry "roadmap", deciding complexity of the environment and diversity of participants could stifle innovation.
With banks, card firms, telcos, handset manufacturers, retailers, processors and technology providers all bidding to cash in on a potentially huge market, the issue of interoperability is key.
To read (or download) the paper visit the Atlanta Fed at
http://www.frbatlanta.org/documents/rprf/rprf_pubs/110325_wp.pdf
The paper, which was drafted by the banks' research teams following the creation of a mobile payments industry workgroup, sets out what they call the "foundational components" for an m-payments environment defined as an "open mobile wallet".
The authors say this would likely be based on contactless technology in smartphones and payment terminals and tap existing channels such as the ACH network. They also stress that some form of dynamic data authentication will need to be at the heart of a security and fraud mitigation program.
Standards would be designed, adopted, and complied with through an industry certification program to ensure both domestic and global interoperability, including a standard to ensure that devices used for mobile payments do not create any electronic interference problems.
The paper suggest that a "better understanding of a regulatory oversight model should be developed in concert with bank and non-bank regulators early in the effort". Trusted Service Managers should oversee the provision of interoperable and shared security elements used in the phone.
However, the group stopped short of recommending a specific industry "roadmap", deciding complexity of the environment and diversity of participants could stifle innovation.
With banks, card firms, telcos, handset manufacturers, retailers, processors and technology providers all bidding to cash in on a potentially huge market, the issue of interoperability is key.
To read (or download) the paper visit the Atlanta Fed at
http://www.frbatlanta.org/documents/rprf/rprf_pubs/110325_wp.pdf
Sunday, 27 March 2011
How global financial markets were almost destroyed by operational risk
The US Office of the Comptroller of the Currency has just published working paper by Douglas Robertson entitled "So That's Operational Risk!". The sub-title says it all when it proclaims “How operational risk in mortgage-backed securities almost destroyed the world's financial markets and what we can do about it”.
In his paper Douglas Robertson describe the economic crisis that began in the US mortgage market in late 2006 as a consequence of cascading operational failures linked to the securitization process. These operational risks, including mortgage fraud, negligent underwriting standards and failed due diligence combined with modern finance to initiate a nearly catastrophic crisis in financial markets and a painful recession.
To avoid a repetition of such a crisis, the paper proposes an asset inspection methodology that uses simple random sampling and direct verification of loan-level information.
Credit-rating agencies are urged to adopt the inspection methodology to address a fundamental flaw in their credit-rating process for structured finance, namely, a lack of due diligence regarding asset-backed security vintage verification.
This Working Paper is available from the US Office of the Comptroller of the Currency’s website. To go there – CLICK HERE
In his paper Douglas Robertson describe the economic crisis that began in the US mortgage market in late 2006 as a consequence of cascading operational failures linked to the securitization process. These operational risks, including mortgage fraud, negligent underwriting standards and failed due diligence combined with modern finance to initiate a nearly catastrophic crisis in financial markets and a painful recession.
To avoid a repetition of such a crisis, the paper proposes an asset inspection methodology that uses simple random sampling and direct verification of loan-level information.
Credit-rating agencies are urged to adopt the inspection methodology to address a fundamental flaw in their credit-rating process for structured finance, namely, a lack of due diligence regarding asset-backed security vintage verification.
This Working Paper is available from the US Office of the Comptroller of the Currency’s website. To go there – CLICK HERE
FSA publishes its plans for 2011/12
The Financial Services Authority (FSA) has published its business plan setting out its priorities for 2011/12. In it the FSAoutlines its priorities and specific initiatives for the year ahead, which reflect the continuing challenges facing the financial services industry.
This year’s business plan has been created against a backdrop of considerable change, with the UK government last year announcing plans for changes to the structure of financial services regulation in the UK. The FSA will restructure into the Prudential Regulation Authority (PRA) and the existing FSA legal entity will become the Financial Conduct Authority (FCA). This change will occur at the end of 2012 or early 2013. Until then the FSA will continue to deliver on its statutory objectives and implement the major initiatives that are already underway. The key areas will include:
The majority of the FSA’s resources are utilized providing ongoing supervision. The two biggest policy initiatives are Solvency II and influencing the substantial international prudential reform agenda, especially in respect of Basel III.
This year’s business plan has been created against a backdrop of considerable change, with the UK government last year announcing plans for changes to the structure of financial services regulation in the UK. The FSA will restructure into the Prudential Regulation Authority (PRA) and the existing FSA legal entity will become the Financial Conduct Authority (FCA). This change will occur at the end of 2012 or early 2013. Until then the FSA will continue to deliver on its statutory objectives and implement the major initiatives that are already underway. The key areas will include:
- Maintaining ongoing supervision in a period of continued fragility in markets
- Continuing to influence the international and European policy forums, delivering, in particular, the new prudential regulatory agenda
- Implementing the current EU major policy initiatives, including Solvency II
- Delivering on the principal national sector initiatives to improve consumer protection - the Retail Distribution Review (RDR) and Mortgage Market Review (MMR)
- Continuing to improve the FSA’s operating systems and the quality of its staff
- Implementing the government’s regulatory reform agenda.
The majority of the FSA’s resources are utilized providing ongoing supervision. The two biggest policy initiatives are Solvency II and influencing the substantial international prudential reform agenda, especially in respect of Basel III.
Wednesday, 23 March 2011
Foreign exchange settlement risk - Guidance being updated
The Basel Committee on Banking Supervision (BCBS) and the Committee on Payment and Settlement Systems (CPSS) are establishing a joint working group to revise the BCBS's “Supervisory Guidance for Managing Settlement Risk in Foreign Exchange Transactions” (2000), with the goal of ensuring that financial institutions adequately control their foreign exchange settlement exposures. The group will be chaired by Ms Jeanmarie Davis, Senior Vice President at the Federal Reserve Bank of New York.
Foreign exchange settlement risk is the risk that one party to an FX trade pays out the currency it sold but does not receive the currency it bought. It consists of both liquidity risk (the risk that the purchased currency is not received when due) and credit risk (the risk that the purchased currency is not received when due or at any time thereafter). In this situation, a party's foreign exchange settlement exposure equals the full amount of the purchased currency.
Foreign exchange settlement risk was identified as a significant risk to market participants in a 1996 CPSS report “Settlement Risk in Foreign Exchange Transactions”. An update to that report, “Progress in Reducing Foreign Exchange Settlement Risk”, published in May 2008, found that, through mechanisms such as CLS Bank, the financial services industry has made substantial progress in reducing FX settlement risk. The report notes, however, that part of the market still settles in a manner that does not mitigate FX settlement risk and that some bilateral settlement exposures are large in relation to capital.
CLS Bank provides a means of settling foreign exchange transactions on a "payment versus payment" basis. Established in 2002, CLS Bank currently settles FX-related payment obligations in 17 currencies. CLS Bank is owned by private sector banking and other financial institutions.
The 2008 report therefore recommended further action by individual institutions, industry groups and central banks:
The guidance issued by the BCBS in 2000 was before CLS Bank and other payment versus payment (PVP) settlement systems were operational and does not fully reflect advances in the market and key differences between trades that settle through sound PVP arrangements and those that settle bilaterally through correspondent banking relationships. The revised guidance will address these and other developments with respect to FX settlement risk management.
The two committees plan to issue revised guidance by the end of 2011 for public comment.
Foreign exchange settlement risk is the risk that one party to an FX trade pays out the currency it sold but does not receive the currency it bought. It consists of both liquidity risk (the risk that the purchased currency is not received when due) and credit risk (the risk that the purchased currency is not received when due or at any time thereafter). In this situation, a party's foreign exchange settlement exposure equals the full amount of the purchased currency.
Foreign exchange settlement risk was identified as a significant risk to market participants in a 1996 CPSS report “Settlement Risk in Foreign Exchange Transactions”. An update to that report, “Progress in Reducing Foreign Exchange Settlement Risk”, published in May 2008, found that, through mechanisms such as CLS Bank, the financial services industry has made substantial progress in reducing FX settlement risk. The report notes, however, that part of the market still settles in a manner that does not mitigate FX settlement risk and that some bilateral settlement exposures are large in relation to capital.
CLS Bank provides a means of settling foreign exchange transactions on a "payment versus payment" basis. Established in 2002, CLS Bank currently settles FX-related payment obligations in 17 currencies. CLS Bank is owned by private sector banking and other financial institutions.
The 2008 report therefore recommended further action by individual institutions, industry groups and central banks:
- Individual institutions need to ensure that the risk controls and incentives they have in place favour the use of risk-reducing FX settlement methods.
- Industry groups should continue to develop services for settling FX trades that will help to reduce remaining risks, particularly services for settling same day and certain next day trades and trades involving additional currencies and counterparties.
- Central banks will work with supervisors to encourage continued progress by the financial industry.
The guidance issued by the BCBS in 2000 was before CLS Bank and other payment versus payment (PVP) settlement systems were operational and does not fully reflect advances in the market and key differences between trades that settle through sound PVP arrangements and those that settle bilaterally through correspondent banking relationships. The revised guidance will address these and other developments with respect to FX settlement risk management.
The two committees plan to issue revised guidance by the end of 2011 for public comment.
Monday, 21 March 2011
The future is almost here
Watch "A Day Made of Glass" and take a look at Corning's vision for the future with specialty glass at the heart of it.
More than just glass, this is a vision of where technology is taking us. Many of the concepts shown are already with us or on the drawing board.
Fantastic as it may look, the future is almost here.
More than just glass, this is a vision of where technology is taking us. Many of the concepts shown are already with us or on the drawing board.
Fantastic as it may look, the future is almost here.
Tel Aviv – Venue for our International Payments Course in May
Join us for a quick tour of Tel Aviv, the venue for our May International Payments Course.
For more details about our International Payments course on 10 & 11 May 2011 in Tel Aviv please CLICK HERE
For more details about our International Payments course on 10 & 11 May 2011 in Tel Aviv please CLICK HERE
Sunday, 20 March 2011
Mobile Payments: Are Retailers Ready?
Doug Bergeron, CEO of Verifone on when you will be able to use your smartphone in most stores.
Thursday, 17 March 2011
Augmented Reality – Where tablet computing may be taking us
The iPad 2 is here. Apart from all the praise being heaped on it, something interesting is emerging: Is the iPad2’s light weight, large screen and twin cameras perfectly positioned to make the iPad an “Augmented Reality” giant?
Augmented Reality apps have slowly propagated on smartphones, bringing a potential genuine usefulness to some data streams that are overlaid on reality through the device's rear cameras. Now there are tablet computers with rear cameras, too - and already some AR apps have surfaced for it.
Just look at what the future may hold. Its mindboggling.
.... and ....
Augmented Reality apps have slowly propagated on smartphones, bringing a potential genuine usefulness to some data streams that are overlaid on reality through the device's rear cameras. Now there are tablet computers with rear cameras, too - and already some AR apps have surfaced for it.
Just look at what the future may hold. Its mindboggling.
.... and ....
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