Bitcoin group, US regulators discuss digital currency

WASHINGTON — U.S. regulators and law enforcement agencies met on Monday with an advocacy group for Bitcoin, a digital currency that has been under fire for its purported role in facilitating anonymous money transfers.

Jennifer Shasky-Calvery, director of the Financial Crimes Enforcement Network (FinCEN), said her unit hosted a presentation by members of the Bitcoin Foundation, an advocacy group of Bitcoin-related businesses.

“This is part of our ongoing dialogue aimed at enhancing communication with our regulated financial industries,” Shasky-Calvery said in a statement.

She also noted that virtual currency exchanges must register with regulators and face requirements similar to those imposed on other financial firms. FinCEN is the Treasury Department’s anti-money laundering unit.

Bitcoins, which have been around since 2008, are a form of electronic money that can be exchanged without using traditional banking or money transfer systems.

Bitcoins are the most prominent of these new currencies, which have come under scrutiny from regulators and law enforcement officials.

Representatives of the Bitcoin Foundation did not immediately respond to requests for comment. The group’s website says it aims to make the currency more respected and to improve and protect its integrity.

The currency first came under scrutiny by law enforcement officials in mid-2011 after media reports surfaced linking the digital currency to the Silk Road online marketplace where marijuana, heroin, LSD and other illicit drugs are sold.

In recent months, the U.S. government has taken steps to rein in the currency and more regulatory action is expected.

Tokyo-based Mt. Gox, the world’s largest exchanger of U.S. dollars with Bitcoins, had two accounts held by its U.S. subsidiary seized this year by agents from the Department of Homeland Security on the grounds that it was operating a money transmitting business without a license.

The Federal Bureau of Investigation reported last year that Bitcoin was used by criminals to move money around the world, and the U.S. Treasury said in March that digital currency firms are money transmitters and must comply with rules that combat money laundering.

The Senate Committee on Homeland Security and Government Affairs launched an inquiry into Bitcoin and other virtual currencies earlier this month, asking a range of regulators to list what safeguards are in place to prevent criminal activity.

source: interaksyon.com

Wall Street worries about PayPal’s real-world expansion

SAN FRANCISCO — Wall Street is having second thoughts about following PayPal from its online roots into the physical world.

PayPal, a leader online, launched a push in 2011 to become a payment option in brick-and-mortar stores. The move increases PayPal’s potential market by a factor of at least 10, and has been a big driver of the shares of owner eBay Inc, which surged 68 percent in 2012.

But ahead of an investor day meeting at eBay’s Silicon Valley headquarters on Thursday, some investors and analysts are beginning to worry that the initiative will sacrifice profit margins for growth.

“Profitability of on-site payment will be dramatically lower than it is online,” said Bill Smead of Smead Capital Management, an eBay shareholder who has been bullish on the company for several years. Smead’s Seattle-based firm has trimmed its eBay position twice in the past year.

“If it’s going to be a lot less profitable, PayPal may not expand there as much as previously thought,” he added. “I would look for eBay to address this at the investor day.”

An eBay spokesman declined to comment.

For the year, eBay’s stock is up 0.6 percent, lagging behind the Nasdaq Composite Index’s gain of 7.2 percent this year. Concern about lower profitability at PayPal has weighed on eBay’s stock.

“Margin expansion may take a back seat to growth,” Colin Sebastian, an analyst at R.W. Baird, wrote in a note previewing eBay’s investor day.

Beware of the digital wallet fee

This year, eBay has been trying to control Wall Street’s expectations for PayPal profitability. On January 16, the company said PayPal’s 2013 margin would be 24 percent, down from a previous forecast of 25 percent to 26 percent.

In a February 1 regulatory filing, eBay mentioned a new fee that MasterCard Inc plans to impose on “digital wallet” operators like PayPal, starting in June, and warned that such changes could increase PayPal’s costs and reduce profit margins.

“Any time you take a successful business and move it to other arenas, there’s great opportunity and risk,” said Richard Sichel, chief investment officer of Philadelphia Trust Co. “There’s lots of competition out there, and it’s too early to know what PayPal margins will settle down to be.”

If other payment networks follow MasterCard and impose a digital wallet fee on PayPal, that could shave 2 cents a share off eBay’s earnings each year, Sanjay Sakhrani, an analyst at Keefe, Bruyette & Woods, estimated recently.

Even without pressure from MasterCard and Visa, PayPal’s Point-of-Sale, or POS, business as it is known, will be less profitable than its online business, according to analysts.

PayPal has signed up several large retailers, including Home Depot, Toys ‘R’ Us and JC Penney, to accept PayPal in their stores. However, PayPal is taking a smaller cut of sales to persuade these retailers to test the service.

PayPal’s POS business is only 30 percent as profitable as its online business, Brian Nowak, an analyst at Nomura, estimated in a note previewing eBay’s investor day.

The bigger and potentially more expensive challenge will be to persuade consumers to drop their credit and debit cards in favor of PayPal when they shop in stores, Sebastian, Nowak and others say.

Nowak expects PayPal to develop a rewards program to give users some incentives, similar to the ones offered by big credit card companies like Capital One Financial, American Express and Discover Financial Services.

However, if PayPal offered something like that, its profit margin on offline transactions would go negative, Nowak estimated.

On Thursday, during eBay’s investor day, Nowak said he will be looking for the company to explain how PayPal can fund a rewards program and still turn a profit processing in-store payments.

Merchants could share in the cost of a PayPal rewards program, but this has its limits, Nowak said.

One of the reasons merchants are trying PayPal in the first place is that it is cheaper than what is currently offered by existing payment networks like Visa Inc and MasterCard, the analyst noted.

PayPal has not disclosed what it is charging brick-and-mortar retailers, but Nowak estimates that the company takes a cut of about 1.5 percent, compared with about 2 percent to 2.2 percent charged by Visa and MasterCard.

source: interaksyon.com

Xoom and Jollibee announce a special offer for Filipino remitters

SAN FRANCISCO – Xoom Corporation, a leading online consumer-to-consumer international money transfer company, has announced its partnership with Jollibee, the No. 1 fast food chain in the Philippines. First-time Xoom customers who send money to the Philippines between August 13-December 31, 2012 can receive a free $25 Jollibee gift card. The gift card can be used in any of Jollibee’s 27 stores in the US.

“Jollibee is a well-loved brand that is very much part of the Filipino culture,” said Julian King, Xoom’s Senior Vice President, Marketing and Corporate Development. “We are very excited to partner with Jollibee and offer customers this great incentive -- to discover how convenient, safe and fast it is to send money home with Xoom.”

Jollibee, with more than 750 stores in the Philippines, is one of the most recognized and highly preferred Filipino family brands. Jollibee has an additional 80 stores outside of the Philippines, with restaurants in the United States, Vietnam, Hong Kong, Saudi Arabia, Qatar and Brunei.

“We’re thrilled to be collaborating with Xoom, a leader in the international money transfer market,” said Jonx Jongko, Marketing Manager for Jollibee, USA. “Xoom and Jollibee are both companies who value customer satisfaction, and Jollibee is happy to provide an incentive to reward new Xoom users who send money to their friends and family in the Philippines.”

For more information on this special offer, please visit the Xoom website.

Terms and conditions apply.

Press release and photo from Xoom Corporation

source: gmanetwork.com