12.27.17 Your morning briefing

Enjoy complimentary access to top ideas and insights — selected by our editors.

The information you need to start your day, from PaymentsSource and around the Web:

Big fees for bad guys: Bitcoin has a reputation for enabling illegal activity, since its cash-like qualities make the digital coins pseudonymous. But the surge in mainstream attention to bitcoin has made it less appealing to the criminal element, according to security researcher Brian Krebs. The reason is that as bitcoin's price rises, so do the fees for bitcoin transactions, and at least one dark web marketplace has started urging its users to transact in alternative cryptocurrencies, Krebs writes. The marketplace, called Carders Paradise, explains that this is to keep its fees low (it passes on transaction costs to users), but many bitcoin devotees pushed back; as a compromise, Carders Paradise lowered the price of stolen card credentials to offset the higher fees, Krebs reports.

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Israel's plan for digital currency: To speed up payments, The Bank of Israel may decide to issue digital currency, Reuters reports. If the plan is approved, the currency would be centralized and regulated the same as cash, the article states; this puts Israel's possible cryptocurrency at odds with bitcoin and other digital coins, which were envisioned to operate outside the trappings of the traditional financial ecosystem. In addition to speeding up payments, the Israeli digital currency would also be designed to suppress the use of physical cash, according to Reuters.

Dollars in the dashboard: Autonomous vehicles are a big deal to the payments industry; if a car's occupant doesn't need to focus on the road, he or she can be spending money on trip-related expenses, food or general e-commerce. Thus, it's a big deal that the age of the driverless car has finally arrived — even though most people haven't realized it yet, Ars Technica reports. Waymo has a driverless fleet operating in Phoenix; though this is a fairly restricted deployment, it is reality, and has been since early November, the article states. And the Phoenix area itself doesn't challenge driverless cars with hazardous conditions like snow and ice. Nevertheless, driverless cars are here, and this is no doubt welcome news to the likes of Visa and other companies that have already been experimenting with in-car payments.

China's data-driven loans: China's online lenders don't necessarily use a traditional credit scoring system to guide their decisions. Instead, they use AI and behaviors such as typing speed to determine whether borrowers without a credit history will be able to repay their loans, The New York Times reports. This system has resulted in more than $100 billion in loans to people who keep borrowing without being able to pay back the nation's 8,600 small lenders, according to the article. One estimate puts that figure as high as $392 billion, but the underlying issue is the same: In place of conventional credit scoring, lenders are looking for patterns in any data they have access to, including how much charge the applicant's smartphone has while applying for a loan, the Times reports. And even repeat borrowers who don't repay their loans offer something of value: Their behavioral data, which can be used to refine the process and improve the accuracy of lending decisions.

From the Web

Iran, Russia in test process to integrate bank card systems
Xinhua | Tue Dec 26, 2017 - Iran and Russia are in the testing process to integrate their banking payment systems, IRAN Daily reported Tuesday. Both sides are negotiating over a formal accord between their central banks to remove legal issues, Davood Mohammad Beigi, director of the Payment System Department of the Central Bank of Iran (CBI), was quoted as saying.

Cash is dead as small businesses opt for e-payment in China’s digitalisation drive
South China Morning Post | Wed Dec 27, 2017 - Cash, alas, is no longer king as operators of mainland China’s small businesses will tell you. In major Chinese cities, paying by paper money is all but dead thanks to the convenience of mobile payment, which has now surged to US$5 trillion in the mainland. Ask Lin Nianbao, owner of Ruyi Restaurant that sells noodles, dumplings and rice dishes on Shanghai’s Lancun Road. Lin is now a firm supporter of the country’s rapid pace of digitalisation, where e-payment and online food delivery services have helped his business grow and thrive.

Smartphone facial recognition tech developed for Japan banks
Nikkei Asian Review | Wed Dec 27, 2017- Dai Nippon Printing and the Bank of Yokohama have jointly developed a facial recognition technology for smartphone banking and transactions. Dai Nippon offers technological solutions that extend beyond printing. The Bank of Yokohama belongs to Concordia Financial Group. The regional bank will start testing the system with its smartphone payment service next spring. According to the plan, the system will be offered to about 10 banks and brokerage houses in 2018. Customers will take a picture of their face using a smartphone's front camera. The data will be encrypted and checked against previously registered images.

More from PaymentsSource

Where fintech dollars will go in 2018
Banks plan to spend more on blockchain and AI in the coming year, and appear willing to explore new technology partnerships.

Third and fourth parties pressure common cybersecurity risk strategies
With the increased demand for heightened security and the increased costs, there will also be a growth in attacks from nation-state actors, writes Antwayne Ford, president and CEO of Enlightened.

As integrated payments advance, Verifone adds outside tech to Carbon
Verifone's integrated payments strategy is focused around its mobile Carbon POS, and the San Jose-based terminal manufacturer has now added cloud-based POS software from talech to the Carbon platform.