Digital payment technologies are a reality. Have you ever imagined that the world would become 100% digital?

Well, it’s high time you did!

Today’s reality is that business and social activities are becoming digital, but what about how we pay for things? Is that becoming digital too?

Digital Payments

How to define digital payments? Digital payments are not one instrument but rather an umbrella term applied to a range of different instruments used in different ways.

Well, the answer is a hell YES!. Technology has transformed the way customers purchase. The reason being the increasing number of e-commerce businesses, as well as, the increasing penetration of mobile devices in the U.S.

All predictions indicate that online sales will keep growing in the next 5 years faster than offline sales. This is a worldwide trend and confirmed in countries such as China, USA, and UK that are leaders in retail online sales. More about digital payments in our blog

These factors imply changes in the user experience demanded by customers. They now want an intuitive and seamless experience which also needs to be fast, safe and convenient in all ways possible. Therefore, digital payment credentials must work in that way.

These changes are mostly promoted by the Millennials in comparison with Baby Boomers.

In the previous chart you can appreciate that not only Millennials prefer using a smartphone as a digital payment option, but also Baby Boomers do.

Smart Phones and tablets are very popular among Millennials for mobile baking like checking their account balance. Moreover, digital payment methods such as peer to peer payments through apps, like Apple Pay and Android Pay are becoming more popular every day.

However, the willingness of each generation to use wearables, digital currencies such as Bitcoins, e-wallets or other digital payment options are clearly different. Needless to say, Millennials are transforming the way we purchase.

All in all, digital payment methods are rapidly evolving in order to meet the instant gratification Millennials expect.s do.

Stay tuned to learn about trending digital payment methods! Hope you have enjoyed it ? Any feedback is welcome!

Three ways to structure your marketplace payments, platform or “sharing economy” startup that requires a many-to-many payment solution

These days, it is common to build a platform where multiple customers are charged for a product or service and those funds need to be distributed among multiple recipients (vendors or service providers). Below are three different approaches to build a marketplace payments solution that will satisfy those requirements.

Approach 1 — Use existing platforms

Using existing platforms is the easiest approach and probably the first one that someone should consider, especially if building an MVP. Examples of “marketplace payments platforms” are:

– Stripe Connect: The payments platform for platforms

– WePay: Integrated Payments For Platforms

– Braintree Payments

In this case, you’ll be paying about 2.9% + $0.30 per transaction to the platform to receive those payments from consumers. Then, via the API you’ll send the money you received, minus the marketplace payments platform fee and your own platform fee (if applies) to the vendor or service provider.

Vendors or service providers should have an account on the marketplace payments platform you operate on. Usually, you create those accounts automatically (via API) for each vendor or provider you onboard so that the money can be forwarded to their account. Also, this process is usually transparent to the vendor or provider and they never know they are dealing with a marketplace payments platform since they always operate within your user interface. One of the reasons you’ll programmatically create accounts for your vendors is to prevent you from having to build all the logic to handle multiple accounts, balances and so on. More about digital payments

Approach 2 — Marketplace Payments Facilitator partnering with a Bank

A payment facilitator (PayFac) is a merchant service provider that simplifies the sub-merchant account enrollment process and all sub-merchant accounts are boarded under the PayFac’s Merchant account.

In this case, you and your platform would become the PayFac. A bank, (with which you have to make an agreement), provides your platform with the same rates that Stripe Connect, WePay, and Braintree pay to Visa and Mastercard. In this case, you are bypassing the middleman and accessing to much better rates which are complicated to explain but in many cases around 2% + around $0.15 per transaction. They vary if the consumer uses a debit or credit card, if it’s swiped or typed online and has tons of other conditions. Search online for “interchange fees” for more info. In this approach, you can instruct your bank (via its API) to ACH the money to the vendor’s bank account.

This solution is great to use when you start getting traction and you want to minimize transaction fees cost. The downside is that the integration with the bank will probably not be as smooth or as easy as with the first approach due to banks inherent bureaucracy, but it’s definitely the way to go after you reach a certain point. Uber and Lyft still use this approach.

Approach 3 — Marketplace Payments Facilitator partnering with a credit card processor

The last option is to become a PayFac partnering with a traditional credit card processor such as First Data. I couldn’t find details such as rates and fees in this case but it’s definitely an option to consider as an alternative to the second approach. Again, it doesn’t seem a good solution for an early stage startup but should be considered for a stage where a difference of 1% in fees would start to make an impact in the startup financials.

Between this approach and the previous one, it’s not clear which one is better as the bank may offer other add-ons such as 1099’s and other services that may make the offer more attractive. If you’re deciding between approaches 2 and 3, you’re probably already big enough that you wouldn’t be reading this article anyway ?

Are you totally out of this new tendency in the market? Do you have an entrepreneurial mindset, ambition, and curiosity about what a Bitcoin Wallet means?

Well, l will make it simple to you.

Bitcoin is a form of virtual currency, known as “cryptocurrency”. The difference is that they can be divided into minuscule fractions of a single coin. They can be exchanged for real money. You can buy and sell digital currency through Coinbase for example, and earn some extra money (or lose) just taking advantage of the market ups and downs.

Bitcoin wallet is not like a traditional wallet but digital. It’s composed of a Bitcoin Address (also known as Public Key) and a Private Key (known as the Secret). The Bitcoin Address is what you give others to send you bitcoins and the secret is the thing that enables you to spend the bitcoins because it’s needed to sign an outgoing transaction which verifies that you are the owner of those bitcoins.

Since bitcoins are stored in the network and only you own the signature (Secret) that allows you to spend those bitcoins, a couple of important things are true:

If you ever lose the secret, your bitcoins are gone, there’s no way to get them back.

If someone gets access or can see a copy of your secret, they can steal all your bitcoins and there’s no way to get them back

Bitcoin Theft: 5 Common Threats, Hacks, and Scams

Bitcoin wallet types

There are many types of bitcoin wallets, they can be desktop, mobile, online, hardware and paper wallets.

• Desktop: Most secure but not so practical
• Mobile: Most practical.
• Online: Easier and quicker to make transactions. Some argue that they are not very secure. Coinbase is an example.
• Hardware: They are portable, be careful not to lose it!
• Paper: Offline. Easy to become damaged or forgotten but a good way to store a backup of your wallet. Many people have a backup of their wallet stored in paper in a bank vault.

Now that you know what a Bitcoin Wallet is, make sure you never reveal the Private Key to anyone and that you store multiple backups of it in very secure places.

Contactless payments

With contactless payment increasingly trending over the past few years and cash becoming the exception, you’ve probably heard about Apple’s new mobile payment method Apple Pay, that initially rolled out in late 2014. But if you haven´t or if you just want to know more about it, this article is definitely for you.

What is Apple Pay?

Apple Pay is a mobile payment solution developed by Apple to make payments at point-of-sales (POS) terminals. It works with Apple devices such as iPhone 6, iPhone 7, Apple Watch, and more recent models.

Apple Pay replaces credit and debit cards with near field communication (NFC) and a two-factor authentication solution. It works with any POS terminal that accepts contactless payment. It’s very simple to use and safer than a credit card.

How does it work?

No extra apps are necessary to use Apple Pay, it is all accessible from your Wallet and you can make both point-of-sale and in-app purchases.

1. Point-of-sale purchases

In order to pay at a point of sale, just hold your authenticated Apple device to the POS system. If you are an iPhone user, you can get authentication by holding your fingerprint to the phone’s Touch ID sensor or facial recognition via Face ID. Meanwhile, for your Apple Watch, authentication takes place by double-clicking a button on the device.

2. In-app purchases

If you want to make a purchase for any of these items in a supported iOS app, you can choose Apple Pay as your payment method and use Touch ID to authenticate, or you can simply ask Siri to do it for you.

3. Person to person and Apple Pay Cash

Unfortunately, at the moment, these two options are only available in the US and on selected Apple products. They allow you to send and receive money and pay for just about anything, going from splitting a bill, sending money to a family member, or paying the babysitter. You can do it directly with iMessage or by just asking Siri. When the other person gets the payment, that money is added to their Apple Pay Cash card in their Wallet app. They can then decide if they wish to use the money instantly to pay someone else or make a purchase (in-app, in stores or on the web) or transfer it to their bank account.

How safe is it?

The main concern regarding any cashless payment method is whether or not it is safe. So let’s take a look at the security features for Apple Pay.

1. Secure Element

You can add payment cards to the service in any of three ways: through your iTunes accounts, by taking a photo of the card, or by entering the card information manually.

When you add a card (whether credit, debit, prepaid, or transit -where available-) to Apple Pay, the information is encrypted and sent to Apple servers. If you choose to use your device’s camera, rest assured that it is never saved on it or in your photo library.

So, how does the Secure Element -an industry-standard, certified chip that can run secure apps and store sensitive data such as for, in this case, payment- come into play? Well, as Apple explains on their support website, “After your card is approved, your bank, your bank’s authorized service provider, or your card issuer creates a device-specific Device Account Number, encrypts it, and sends it along with other data (such as the key used to generate dynamic security codes that are unique to each transaction) to Apple. The Device Account Number can’t be decrypted by Apple but is stored in the Secure Element […] on your device. Unlike with usual credit or debit card numbers, the card issuer can prevent its use on a magnetic stripe card, over the phone, or on websites. The Device Account Number in the Secure Element is isolated from iOS, watchOS, and macOS, is never stored on Apple servers, and is never backed up to iCloud.”

2. Tokenization

When referring to data security, tokenization is the process through which a sensitive data element is replaced with a non-sensitive one, which is called “token”, and has no exploitable meaning or value. It is merely a reference that maps back to the sensitive data through a tokenization system. Tokens cannot be reversed unless there is a tokenization system.

In our current context, the PAN (Primary Account Number) is replaced with a token through this method. How does this help? Well, instead of using the original card number in your transactions, the token is used, which may look like a regular card number but it is definitely not the original PAN. Tokens by themselves are of no use and it is impossible for criminals to reverse engineer the PAN from them.

You can learn more about Apple Pay’s security features here.

How can I add it in my app?

We have seen Apple Pay from the user’s perspective, but how does it work for the seller, specifically regarding in-app purchases?

In-app purchases fall under four categories all of which can be sold and promoted by Apple Pay: consumables (such as lives or gems in a game), non-consumables (which are purchased once and don’t expire), auto-renewable subscriptions, and non-renewing subscriptions.

According to Apple’s site, in order to add Apple Pay to your app, you will first have to “sign the Paid Applications Agreement and set up your banking and tax information”, then you’ll need to set up Xcode configurations to enable the service and finally configure the purchases in App Store Connect, including all the apps info (name, price, and description). After that, and once you’ve designed and implemented your in-app purchases and validated receipts, you can test transactions by using Apple sandbox testing environment and the full user experience by using TestFlight. Once testing is completed, you can submit your in-app purchases for review using App Store Connect once again, and you’re good to go.

An extra feature if you have iOS 11 is that you have the possibility to promote up to 20 in-app purchases at a time on your product package; this increases discoverability of content that could originally only be seen once inside your app. What is more, you can also issue promo codes to press and influencers to help you with marketing.

What else should I know?

If Apple Pay has caught your eye and you’re thinking it might be of use for you or your business, you’d be interested to know it is available in almost thirty countries and regions as of August, 2018, including the United States, the UK, China, Switzerland and, Brazil, with Germany in the works to join in the upcoming months. Moreover, over a dozen networks support it, including heavyweights such as Visa, Mastercard, and American Express, it’s been reported that it had 127M users as of February, 2018 and a study by Juniper Research also states the service will reach 200M users by 2020.

For further information, you can refer to Apple’s website.

Many technological strides have been made over the last couple of decades. Advancement in technology is becoming faster and faster as each year passes by and many technologies to improve work efficiency, communication, and even financial services are being discovered and used every day. Technology has made the world smaller in a good way; we are now able to talk to family and friends from across the globe without having to spend too much money or wait too long for a reply. International financial transactions have also become more straightforward and hassle-free.

One of the significant technological strides in the financial sector is the invention of bitcoin. Bitcoin is a new type of currency which can be used in financial transactions without the need for a middleman (usually banks). Bitcoin was invented back in 2009 and has been gaining popularity since then, reaching an all-time high worth $ 17,900 on December 15, 2017.