9.12.17: Your morning briefing

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

Welcome to the PaymentsSource Morning Briefing, delivered daily. The information you need to start your day, including top headlines from PaymentsSource and around the Web:

Venmo's card: Venmo is following Square by inviting users to sign up for an old school payment card. TechCrunch reports the Venmo card will work similar to a debit card, with cash debited from the user's Venmo balance, similar to how Square's card draws from Square Cash. Both cards are free though limited to invited users as part of beta tests. Qualified Venmo users will receive an invite and receive the card by verifying their identity and a backup reload method such as a bank account to cover overdrafts. TechCrunch criticized Venmo's design, which includes pizza dough (to denote a product "under construction"), as opposed to Square's black design, though Venmo contends this design will change over time. The Venmo cards are Visa debit cards issued by Metropolitan Commercial Bank through Shift Financial, which provides physical and virtual cards. While it may seem counterintuitive for digital payment companies to offer plastic cards, there is potential upside for Venmo and Square. It's relatively inexpensive to offer a card, which provides an opportunity to capture more of a consumer's business.

Andrew Harrer/Bloomberg

Equifax gets stuck on PIN security: The fallout from Equifax's massive data breach will linger for a long time, but its immediate response leaves much to be desired. Ars Technica reports a protective measure for breach victims may itself contain a security glitch. As some consumers tried to lock their credit reports — a proactive move to guard against identity theft — the consumers found Equifax was generating security codes in a predictable manner. The PINs generated were not only non-random and sequential, but were actually timestamps of the time of enrollment that can be brute-forced by a crook trying to unlock a credit report to use for ID theft, according to Ars Technica. The technology site also reports Equifax has seemingly attempted to block lawsuits from people who are checking to see if their data was exposed. Equifax told Ars Technica the arbitration clause in TrustedID Premier applied to the credit monitoring service and not the breach. Equifax also told Ars Technica it would update its PIN process within a day to produce randomly generated PINs.

Path to the underbanked: Santander Innoventures, the bank's VC arm, is part of a $6 million funding round in PayJoy, a startup that uses mobile payments to enable financial inclusion by helping people buy smartphones. The startup uses working mobile numbers, Facebook accounts and government IDs and turns the phone into collateral for broader financial relationships. PayJoy provides credit to purchase smartphones, which can then be used to make payments, access prepaid accounts and perform other financial transactions to build traditional credit. At the same time, the user pays off the credit for the phone through PayJoy, which has developed a "locking" feature for non-payment. The San Francisco-based PayJoy offers this service at thousands of locations in the U.S. and Mexico. "PayJoy's mission is to help the less privileged join the digital economy and climb the economic ladder," said Manuel Silva, head of investments for Santander InnoVentures, in a release. "PayJoy rethinks a basic financial service through the lens of innovation, technology and data, and brings a simple and fair new offering to those who need it the most."

Not tied to virtual currencies: While distributed ledgers and blockchains are normally associated with bitcoin and other alternative currencies, old-school government currency is also moving into blockchain. Tether Ltd. has partnered with Ethfinex to launch Tether ERC20 tokens on the Ethereum blockchain. The collaboration will allow tokenized U.S. dollars to be exchanged on the Ethereum network. Tether is one of the first blockchain platforms to allow established currencies to be tokenized, a process that permits users to deploy a hedge or an alternative against the more volatile virtual currencies. Tether also hopes to avoid interbank delays associated with currency exchange by placing dollar conversions on the blockchain. Tether users can deposit U.S. dollars, Yen and soon Euros. These currencies are converted to a digital currency called a tether. Each tether has a name and symbol for the underlying asset, can be transferred and traded. Tether is also integrated with a smart-contract debit card.

From the Web

Why Sweden is close to becoming a cashless economy
BBC | Mon Sep 11, 2017 - Sweden is the most cashless society on the planet, with barely 1% of the value of all payments made using coins or notes last year. So how did the Nordic nation get so far ahead of the rest of us? Amongst the other typically Scandinavian touches - minimalist white tiles and exposed filament light bulbs - is another increasingly common sight in the Swedish capital: a "We don't accept cash" sign. "We wanted to minimise the risk of robberies and it's quicker with the customers when they pay by card," says Victoria Nilsson, who manages two of the bakery chain's 16 stores across the city. "It's been mainly positive reactions. We love to use our cards here in Stockholm." Across the country, cash is now used in less than 20% of transactions in stores - half the number five years ago, according to the Riksbank, Sweden's central bank.

Singapore’s Red Dot Payment closes $5.2M Series B round
TechCrunch | Mon Sep 11, 2017 - Singapore’s Red Dot Payment, a payment gateway startup founded by a team of ex Visa and MasterCard executives, has closed a $5.2 million Series B round to grow its business. Existing backers GMO Venture Partners from Japan, Wavemaker Partners, Skype co-founder Toivo Annus and MDI Ventures put into the round. New investor DORR Group also took part. The startup previously raised an undisclosed Series A and took investment from Indonesia-based operator Telkomsel. Beyond enabling online payments via a gateway, Red Dot offers services such as online invoicing, recurring payments, alternative payments and more. It also works directly with clients for specialist requirements, and has dedicated products for hotels and the hospitality industry.

Big Data Needs Bigger Security
U.S. News & World Report | Mon Sep 11, 2017 - The Equifax breach shows why data companies must be held accountable. The age of "big data" is here, along with a growing list of big data breaches and the big mess created for millions of affected consumers. The only thing missing is big consequences for companies that are causing these big losses. Last week, Equifax lost highly confidential personal and financial data on as many as 143 million people. The worst part? You didn't even give them permission to obtain this information. They can legally collect, store and share it regardless. Although banks have a self-serving track record of their own, at least as a client, you have a direct relationship that permits you to use the law to hold them accountable. Imagine if you woke up one morning to find your bank lost all your money in a cybersecurity hack. Would you just accept that? Unlikely.

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Citi's problem with late card payments lingers
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