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U.S. Banks To Launch New Payments Network Zelle

June 13, 2017 by  
Filed under Around The Net

The U.S. banking industry is gearing up to launch its answer to the popular mobile payments app Venmo, in what is likely to be the biggest change in years in how individuals exchange funds digitally.

Over the next week, five of the largest U.S. banks will light up their segments of a new payments network called Zelle, executives said in interviews. They plan to announce details of the launch on Monday, and expect another two dozen banks and credit unions to join over the next year.

The long-awaited network will allow tens of millions of bank customers to send money to each other instantly – known as person-to-person payments – with a few taps on their smartphones. That is an improvement over Venmo, which immediately alerts users that a money transfer is in progress, but takes time to shift funds between bank accounts.

Customers who use existing bank payment apps may not notice much of a change beyond marketing. Transfers will simply happen faster because the banks are finally linking to each other, executives said.

“By coming together to offer Zelle, we are providing a large majority of Americans with a safe, fast and easy way to move money,” said Bill Wallace, head of digital at JPMorgan Chase & Co, the biggest U.S. bank by assets.

JPMorgan, Bank of America Corp, Wells Fargo & Co, U.S. Bancorp and Capital One Financial Corp will be the first to plug into Zelle. The network is the product of an industry consortium called Early Warning Services LLC, whose seven owners have more than 86 million U.S. mobile banking customers.

Zelle took years to establish because fierce rivals had to come together to make it work. In the interim, Silicon Valley has made inroads into digital payments, particularly with the young customers coveted by banks.

In addition to Venmo, which is owned by PayPal Holdings Inc, Facebook Inc, Alphabet Inc’s Google and Apple Inc all offer payment platforms that allow individuals to send money to each other. The banks want to leap over those sleek but scattered offerings by connecting their critical mass of account holders through a single network.

“Fragmentation has been frustrating for consumers,” said Paul Finch, chief executive of Early Warning. “Inconsistent experiences have made it difficult to send and receive money between banks.”

Despite losing some ground to technology companies, banks still have a big advantage: No matter what network is used to transfer money, banks hold the vast majority of funds.

And despite the popularity of apps like Venmo, they transfer far less money than banks. The value of digital payments processed through non-financial firms was one-fifth of what banks and credit unions processed last year, research firm Aite Group estimates.

“We are excited to bring the service to everybody and anybody, regardless of which brand of phone you have in your hand or which generation you belong to,” said Gareth Gaston, head of omnichannel banking at U.S. Bank.

Along with building customer loyalty, banks hope that Zelle will reduce their costs from handling checks and cash. Eventually, they would like to sell access to businesses that want to eliminate their own paper-related costs.

As more banks connect and more customers use the service, sending cash to another individual will simply involve knowing the person’s mobile phone number or email address. Later this year, individuals with accounts at banks not connected with Zelle will be able to use its real-time features by downloading an app and pairing it with a Visa Inc or Mastercard Inc debit account.

In launching Zelle, banks are being careful not to confuse customers by offering yet another payments app.

For instance, Chase will initially twin the brand with the QuickPay app its customers already use by showing “QuickPay with Zelle” on its mobile app and website. Eventually, the QuickPay name could fade away.

Banking App Alerts Customers With Traffic-like Lights Regarding Spending

December 13, 2016 by  
Filed under Mobile

td-myspend-app-150x150Traffic lights can apparently serve more than one purpose, at least one bank seems to think so.

A transaction-tracking app using red, yellow and green messages to warn account holders when they are paying out more or less than usual has resulted in some users spending less, a potentially powerful new weapon in the battle for customers.

Toronto-Dominion Bank  did not set out to change consumer habits when it offered its TD MySpend app in April. Canada’s second-largest bank just wanted to offer more information to customers who use their phones to check account balances.

But its ease of use has caught on. Customers don’t have to make up a budget to start using the app and it sends notices immediately with each purchase showing them whether they are spending more or less each month in categories such as dining out, entertainment and travel.

“The real-time nature encourages customers to change their behavior toward their financial goals,” Rizwan Khalfan, chief digital officer at TD Bank, told Reuters in his first interview about customers using the app. “We were not expecting this.”

About 750,000, or 20 percent, of TD’s 3.5 million mobile banking customers in Canada have downloaded the TD MySpend app since April, Khalfan said. Of those, 30 percent were using it at least twice a month and, on average, reducing their spending by 4 percent to 8 percent.

Overall, that means about 6 percent of TD’s mobile banking customers have been using TD MySpend and spending less.

Rizwan said the bank plans to put more marketing muscle behind the app as it learns how initial customers are using it.

It is too early to know, Rizwan said, whether TD MySpend could improve TD’s ability to hold onto deposits, a key consideration as interest rates rise and banks compete more aggressively for customers.

Consumer deposits are a relatively stable source of funds for lending, which is more important in light of new global regulations. They tend to be cheaper than deposits from businesses, especially when interest rates rise.

The success of new apps is also vital to bankers who fear technology companies will offer better tools to win customers and snag more of the fees and marketing information that come with handling payments.

Smartphone-based Bank Number26 Expanding

December 7, 2016 by  
Filed under Mobile

number26-bank-150x150Mobile phone only bank Number26 is now offering its services in 17 countries in the euro zone, expanding from a smaller core of European markets it entered a year ago, it said on Tuesday.

The Berlin-based company is backed by Li Ka-shing, one of Asia’s richest men and Peter Thiel, a co-founder of PayPal and an early investor in Facebook, along with other investors including Berlin’s Earlybird Ventures and Zurich-based Red Alpine.

The company, which received its own banking license from German financial regulator Bafin this year, offers online accounts for cash withdrawals, savings and insurance services that users manage on their mobile phones.

 It currently counts 200,000 customers in 8 countries.

Without the expense of branches or legacy computer infrastructure and by relying on selective outsourcing, mobile-first banks can challenge established banks by promising lower lending rates and higher rates on savings.

Established banks have responded by plowing more money into upgrading their own computer systems, rolling out mobile apps of their own, closing retail bank branches and investing in fintech startups.

N26, which first launched in 2015 in Germany and Austria, then moved into Spain, France, Italy, Greece, Ireland and Slovakia, is now adding the Benelux countries, the Baltics, Finland, Portugal and Slovenia.

“We have built Europe’s most modern mobile bank,” Number26 Chief Executive and co-founder Valentin Stalf said in a presentation at the TechCrunch Disrupt London conference.

“We are getting closer to building a truly European bank.”

Android Malware Using Twitter To Communicate With Infected Phones

August 26, 2016 by  
Filed under Mobile

Twitter-on-smartphones-150x150Twitter users aren’t the only ones getting updates from the micro-blogging social media site. One maker of Android malware is also using Twitter to communicate with infected smartphones, according to security firm ESET.

The company uncovered the feature in a malicious app called Android/Twitoor. It runs as a backdoor virus that can secretly install other malware on a phone.

Typically, the makers of Android malware control their infected smartphones from servers. Commands sent from those servers can create a botnet of compromised phones and tell the malware on all the phones what to do.

The makers of Android/Twitoor decided to use Twitter instead of servers to communicate with the infected phones. The malware routinely checks certain Twitter accounts and reads the encrypted posts to get its operating commands.

Lukas Stefanko, an ESET researcher, said in a blog post that this was an innovative approach.  It removes the need to maintain a command and control server, and the communications with the Twitter accounts can be hard to discover.

“It’s extremely easy for the crooks to re-direct communications to another freshly created account,” he said.

ESET said this was first Twitter-controlled Android botnet it had ever found. Windows-based botnets using Twitter have been around since at least 2009.

ESET said Android/Twitoor hasn’t been detected in any app stores, so it probably spreads through malicious links sent to the victim. The malware pretends to be a porn player or multimedia messaging app, and it’s only been active for about a month.

So far, Android/Twitoor has been found downloading versions of mobile banking malware to users’ phones.

“In the future, we can expect that the bad guys will try to make use of Facebook statuses or deploy LinkedIn and other social networks,” Stefanko added.

Paypal set to Release Check Depositing iPhone App Soon

September 30, 2010 by  
Filed under Mobile

Online banking is about to get even more convenient for PayPal users who will soon be able to deposit checks via their iPhone. Simply sign the back of your check, take a picture of the front and back of the check, and hit send on the PayPal iPhone App. The only drawback? No lollypops at the teller window to grab when you’re done,which for the sake of convenience, most people would gladly concede such a loss.

PayPal’s Laura Chambers announced Wednesday that a new version of the PayPal iPhone app will be released in “the next day or so,”. PayPal’s updated app will also allow you to donate directly to charitable organizations (PayPal has partnered with over 20,000 charities).

Although not widely known, mobile check depositing via phone cameras isn’t new. PayPal joins a growing list of financial institutions. Private bank and insurance company USAA introduced the function on its iPhone app over a year ago. Chase has just recently jumped on the bandwagon. Similarly,USAA also allows its members to deposit checks from home using a scanner.

The process is a relatively simple one. First, endorse your check (with your account number, or perhaps PayPal email address). Then, enter in the check amount into the app, take a picture of the front and back of your check, and upload it to the app.

Not only is mobile deposits convenient, it’s safer than other desktop-based methods that uses a flatbed scanner. Additionally,cell phones are more secure than computers when it comes to malware  which is one of the biggest risks of online PC-based banking. One caveat, with mobile banking: you need to take the appropriate precautions such as using a PIN number to lock your phone so your mobile phone and access to your bank account isn’t an identity-theft waiting to happen.

Moving Your Money While You’re on the Move

September 22, 2010 by  
Filed under Mobile

Mobile Banking-Just that phrase along invokes glee for those of us who do not savor the idea of spending any of our precious time inside one of those notoriously lethargic brick and mortar throwbacks known as branch banking.

But what exactly is mobile banking? Depending on who you ask, you’ll get different answers. For some it’s the ability to perform banking transactions remotely, from a pc for example. Others even consider ATM’s as remote banking since they technically exist in locations different from the actual branch. Both definitions would be correct. However, what we are talking about is far more convenient. That is Mobile Banking using your cell phone. Most financial institutions are still in the infancy stage of developing their mobile banking applications, but a few non bank vendors have taken the lead.  We’ve listed some of the most noteworthy ones below.

 Mocapay, Inc. Is an interesting app you can download for free from app stores for both Android and Apple devices.  This application’s stand out feature is that it allows you to purchase gift cards then send them via SMS to intended recipient. The downside of this product is it has very limited gift card retailers at this point.  We recommend checking their website frequently to see if they’ve added more.

 For those of you who engage in selling merchandise or services of any sort, there’s no need to lug around bulky mobile POS devices. Thanks to VeriFone’s Payware Mobile Productyou can attach a credit card reader to your iPhones and immediately begin taking payments from your customers.  The drawback is, you first must establish a merchant account and of course, give a percentage of your sales for the privilege of accepting credit cards.

 And there’s ZashPay. We saved the best for last. We think this one offers the most promise as it’s the simplest to use. This product is offered by Fiserv, a financial services vendor. It allows every day consumer to turn their cell phones into a mini money transfer agent, without the normally outrageous fees. If you want to pay a friend for money you’ve borrowed, simply enter their mobile phone number and the amount and ZashPay does the rest.  Before we get you too excited, there are several drawbacks to this product. The first being all mobile carriers aren’t supported. The second drawback is that both the sender and receiver must sign up and provide banking information in order for this transaction to work. An additional drawback would be the amount of time it takes for the receiver to gain access to their funds. ZashPay is indicating that it usually takes one business day, which doesn’t seem to be too bad.

 The bottom line is we are in for exponential growth in expanding our mobile devices to support banking or banking like transactions. Consumers are demanding greater flexibility and convenience. While financial institutions must meet those demands, they must also find ways to eliminate overhead. Mobile financial applications will easily satisfy both requirements.