Apple's iBeacon Is Gaining Momentum

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iBEACON GAINS TRACTION, WITH POTENTIAL TO DISRUPT. Slowly but surely, Apple's iBeacon appears to be gaining traction, a development with disruptive potential for the payments ecosystem. The technology, which uses battery-friendly Bluetooth Low Energy (BLE) and geofencing to detect nearby devices and exchange data with them, got a major boost with iOS 7.1, which quietly upgraded iBeacon to allow it to communicate with apps even when they're closed. Last week, chip maker Texas Instruments announced that it would integrate iBeacon compatibility across its BLE product line, "enabling manufacturers to quickly add micro-locationing capabilities to their products." By the end of 2014, over 30,000 retailers will have beacons installed, one study predicts.

Beacons have the potential to disrupt on several fronts, and iBeacon is in pole position. We've estimated that there are over 200 million currently deployed iPhones and iPads capable of acting as or receiving signals from iBeacons. That kind of infrastructure could pave the way for a much-anticipated mobile payment app from Apple, which as we reported last week, could be based on a combination of near-field communication (NFC) and BLE. But PayPal is also racing to get its own beacons in the field. As PayPal CEO David Marcus noted on the company's blog last week: "The proliferation of BLE chips in devices will enable the industry to create very precise, fast, and secure shopping and payment experiences." (BI Intelligence)

SQUARE COULD BE LOOKING FOR A BUYER: Square, the company whose mobile card reader is used by over one million merchants, could be up for sale after incurring mounting losses of $100 million last year, according to a report in the Wall Street Journal. Google has apparently discussed a possible acquisition, as have PayPal and Apple, though all companies deny the talks have taken place. The report notes that while Square has been highly successful getting merchants to adopt its hardware, the company operates on razor-thin margins, taking a 2.75% cut of all transactions, and then paying back about 80% of that to the major payments networks. (Wall Street Journal)

FORMER MONEYGRAM EXEC FACES 'UNPRECEDENTED' $5M FINE. Thomas Haider, former chief compliance officer at MoneyGram, has been ordered to meet with U.S. Treasury Department officials early next month to face a potential $5 million fine, Reuters reports. Treasury's Financial Crimes Enforcement Network wants to hold Haider personally liable for compliance lapses at MoneyGram that it says occurred under his watch.

In 2012, MoneyGram admitted it aided in wire fraud and failed to maintain an effective anti-money laundering program, forfeiting $100 million in a settlement agreement. "A multi-million dollar penalty against a person accused of playing a role in an institution's anti-laundering failures would be unprecedented," writes Reuters' Brett Wolf. Such a move could cause an exodus from the compliance industry, insiders told Wolf. (Reuters)

BITCOIN'S STATUS IN CHINA REMAINS UNCERTAIN. At around $460 a bitcoin, the price of the digital currency has dropped almost a third since its peak in December. One reason for the massive swing is increasing speculation that China will ban Bitcoin. Those fears have been partially allayed after the the governor of China's central bank said that China would not ban Bitcoin. But it's still uncertain whether or not banks in China will be allowed to process transactions for the all-important Bitcoin exchanges, which allow people to transfer local currency in and out of Bitcoin. Last week, a number of Chinese exchanges received word from partner banks saying that they would no long handle Bitcoin-related transactions - but BTC China, the largest Bitcoin exchange in China, says that so far it has received no such letters from its 10 partner banks. (Wall Street Journal)

QUOTE OF THE DAY: "Alternative currency will gain momentum with the stretching of financial, political and social institutions, as well as the rise of inequality…[it] will lose momentum with the stabilization of financial, political, and social institutions," says a deck from boutique ad agency Sparks & Honey. (Sparks & Honey via Slideshare)

MOBILE BANKING KEY FOR YOUNGER CUSTOMERS: A new study finds that mobile banking and rewards programs are particularly important to adults under 34. Seventy-eight percent of respondents in that age group, sometimes called "Generation Y," said that mobile banking was at least somewhat important when choosing a bank, compared to 66% in the 35-to-54 age group and 44% for those 55 and up. On customizable rewards programs, 86% of Gen Y respondents indicated it was at least somewhat important. (Bank Systems & Technology)

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