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Retail Sales Have Plummeted In Hong Kong

Since March 2019, pro-democracy activists in Hong Kong have been staging massive rallies that often turn violent and destructive. Clashes between protesters and riot control police units have claimed more than 2,500 injuries and millions of dollars in damages. The lucrative tourism and retail industries of Hong Kong have also been deeply impacted; according to data compiled by regulators, sales transactions have plunged by more than $30 billion since November 2019, one of the worst plunges ever experienced by this autonomous region of China.

The worst month for retail sales in Hong Kong was October, which posted a 24.4% drop on an annual basis. Amazingly, market analysts expected an even more calamitous report for November when considering just how violent the protests have turned since October. The resolve of activists in Hong Kong has not shown any signs of abatement; on New Year’s Day, one of the most impressive rallies drew hundreds of thousands out onto the streets of the Kowloon district, and leaders who spoke to international journalists explained that they are not ready to stop until the Communist Party of China gets the message: People of Hong Kong do not want to abandon the democratic system.

For small business owners, particularly retailers, the protests have been disastrous to their bottom lines. Hong Kong is one of the most active markets in terms of digital payments, but this is not an advantage when storefront operators are forced to shut down their establishments, which are often damaged by vandalism during protests. Being a leader in digital payments means little when shoppers are too nervous about visiting stores because they fear protests will get unruly.

At a time when holiday sales in Asia are posting record annual increases, the situation in Hong Kong is dispiriting. Luxury brands such as Louis Vuitton, which rely on purchases by foreign visitors, are closing up stores in some of the busiest districts. As for foreign tourist arrivals, their volume has dropped by more than 55% on an annual basis.

Needless to say, representatives from the Hong Kong Retail Management Association are dismayed by the current situation. A recent survey among retailers revealed that 7,000 business owners are planning on closing up shop over the next six months unless things improve and the protests stop. Sensing that the worst is still to come, government regulators have urged commercial space landlords to put a moratorium on raising lease contracts. A deteriorating retail economy is the last thing Hong Kong would like to experience; thus far, the hardest-hit in this regard have been luxury retailers such as jewelry stores, but thereare fears about protest leaders calling for shopping boycotts in 2020.

Planned Fee Schedule Limits Access to Free ATM Cash Withdrawals in the UK

For many British consumers, using the ATM at their local convenience stores, which are colloquially known as corner shops, is the best way to access bank funds for free. The traditional arrangement consists of banks paying interchange fees to ATM operators; thus allowing account holders to enjoy free cash withdrawals they usually spend at the store, but this is changing to the detriment of consumers.

LINK, the business entity that controls the national network of cash machines located within corners shops across the United Kingdom, has sharply reduced the interchange fees, and it is planning even more cuts in the near future. ATM operators have taken swift action to cut their losses by removing machines from corner shops. The Association of Convenience Stores is now urging LINK to scrap the next fee reduction so that ATM operators do not end up removing all their cash machines, particularly in communities where residents do not have easy access to their banks.

The CEO of LINK has pointed out that the use of cash among British consumers has been falling in recent years thanks to the advent of mobile payments, thus doing away with the need of ATMs at corner shops. The ACS argues that mobile payments technology is not the only matter at hand; British banks have been shutting down branches across the country, thus leaving account holders with limited options such as making free withdrawals at local Royal Mail offices, which have also experienced rounds of closures.

There was a time when corner shop operators enjoyed direct profits from ATMs. Over the last few years, however, things have changed to the point of shop owners actually having to pay ATM operators to keep the cash machines in place. Consumer advocates estimate that at least two million individuals rely on cash withdrawals for various reasons, one of them being that not everyone can afford a smartphone with near-field communication features that would allow them to make contact-less payments.

For the payments industry, a strong transition to digital payments instead of cash transactions is good news, but market leaders agree that governments need to contribute with legislation conducive to inclusion, meaning that mobile payments should not be limited to NFC devices. In Commonwealth nations such as Kenya, the issues of ATM access and cashless transactions have been settled with M-Pesa, a mobile alternative to banking that works with just about any cell phone because it uses SMS technology.

One of the keys to ensuring easy access to digital payments is to take into consideration all consumers, even those who feel that they should be able to access cash at nearby locations and with reasonable fee schedules. Shifting all charges onto consumers, banks, or retailers is not the answer.

Hackers Steal Credit Card Data at Major Seafood Restaurant Chain

Individuals who have wined and dined at theme restaurants such as the Bubba Gump Shrimp Company and the Rainforest Cafe at least once since 2016 may want to review their credit and debit card statements. According to a notice posted by restaurant giant Landry’s shortly after New Year’s Day, hackers were able to inject malware into an internal system that operates separately from the point-of-sale (POS) network, but which nonetheless involved payment cards.

Before discussing details about this security incident, it should be noted that Landry’s POS system was not breached. In fact, the restaurant chain operates a system that not only encrypts data but also blocks all scripts it does not recognize which means that unrecognized malware would have no effect. There was another card-reader system affected, but not one used for payments. With this in mind, the scope of the incident is sharply reduced because the credit and debit cards that may have been intercepted were not supposed to be swiped in the targeted system anyway.

When you sit at table or at the bar of the Rainforest Cafe or Del Frisco’s Grill, you probably have noticed that servers interact with more than one card reader. There is the POS for payments, which is encrypted, but there is also an order-entry system that restaurant staff members access by means of swiping cards that often hang from lanyards around their necks for easy access. In some cases, servers carry a wireless tablet with from table to table; this portable card reader can be used to swipe Landry’s Select Club cards, a nice customer loyalty and rewards program.

Between payment cards, access cards, and customer loyalty cards, it would not be unusual to expect that busy Landry’s servers would, from time to time, get these cards mixed up, which is what happened in this case. Some debit and credit cards were inadvertently swiped to place an order from the table or from the bar to the kitchen; perhaps a MasterCard was swiped instead of a Landry’s Select Club card, thus depriving some customers of points that could have been redeemed for a frozen margarita or a free side order of Cajun shrimp.

Even though Landry’s operates more than 600 restaurants, only 60 locations were affected, and individual cases are limited because most servers employed by this chain are retained based on their ability to carry out their duties with precision. This does not mean that hackers are giving up on attacking point-of-sale systems; if anything, malware targeting card readers terminals is becoming more sophisticated. The intent to breach Landry’s was certainly there, but it did not work as hackers had hoped for.

What Is Synthetic Identity Fraud?

It feels like a never-ending race and a battle to one-up one another: the battle against fraudsters. While the equipment we have to detect and prevent these fraudsters has been improving substantially over the previous decade, fraudsters always seem to find a way to get through eventually.

One of the latest tactics is synthetic identity fraud, a unique type of fraud in which fraudsters combine fake and legitimate information to create brand-new identities rather than just stealing someone else’s identity.

We’re not talking about a lone wolf hiding in their basement trying to make a quick grab at what they can, either. These are the actions of large-scale criminal organizations that know exactly what they’re up to. They are sophisticated, methodical and patient, and right now as many as 85% to 95% of synthetic identity fraudsters are easily slipping through risk detection systems that are failing to notice them.

According to GIACT Chief Experience Officer David Barnhardt, “They are doing the same things we are: always evolving their tactics to meet the newest technology and offers out there. Whenever a new thing in security comes along, they come out and see if they can beat it.” He went on to say, “When I was working in banking, we knew for certain that with any new initiative we rolled out, we would be attacked for six months and would have to tweak our approach every day. What they’ve learned is that they don’t have to rob a bank in person – they can do it with malware, make more money and get away with it.”

Synthetic Identity Fraud Is Rising

When looking into GIACT’s analysis, as much as $6 billion was stolen by synthetic fraudsters taking legitimate, personally-identifying information in 2016 alone, and that amount has been rising in the years since.

By establishing synthetic identities, fraudsters can open bank accounts and cards and act as if they’re legitimate customers, allowing them to make purchases slowly and quietly at first, sometimes for as long as a year while they build strong credit scores, before then going all out.

How to Defeat Synthetic Identity Fraud

It’s unfortunate, but there aren’t really any special ways to get rid of identity fraudsters. It would seem like, for now at least, they’re here to stay. What we do have, though, are tips and tricks for fighting fraud. Always remember though – the fraudsters are always thinking outside the box and always trying to get a step ahead. Therefore the industry has had to keep on its toes and come up with many creative ways of keeping ahead of the fraudsters.

Bernhardt also commented upon the advantages that fraudsters have. Should the levels of data breaches someday get down to 0, there’s always going to be data that fraudsters will find useful on social media. With this data, it’s possible that fraudsters could put together a functional profile from which they could commit synthetic identity fraud.

Ultimately, there’s no special answer to making this problem go away. We just need to remain vigilant and do all we can and continue to evolve to keep the fraudsters at bay while protecting the security of sensitive information.

The Sand Dollar is a New Caribbean Digital Currency

Of all regions in the world, the Caribbean may seem one of the least likely to officially adopt digital currencies, but that is exactly what has been taking place this year. In October 2019, the Eastern Caribbean Currency Union launched a pilot program to turn the EC dollar into an electronic form of cash, which residents of eight island nations can now use through the DXCDCaribe mobile app. Not to be outdone by this technology advancement, the Bahamas has launched its own pilot program to go cashless before the end of 2019.

Project Sand Dollar went live just two days after people across the Bahamas celebrated Christmas with a traditional dinner of baked ham, rice and peas, and potato salad. Central bank officials explained that although there is a blockchain enabling the circulation of the sand dollar, which is pegged to the value of the Bahamian dollar, this is not a true cryptocurrency since it is centralized and does not allow mining.

There are certain initial restrictions in place for Project Sand Dollar. Individuals can only hold $500 sand dollars in their accounts, which are can be managed by means of a mobile app similar to the aforementioned DXCDCaribe. Business entities are limited to holding no more than $1 million, and the sum of monthly transactions may not exceed 1/8 of capital. Central bank officials see the sand dollar as being a natural progression in the sense that residents of the islands are not as enthusiastic about using banks as they used to.

Equal access to the banking system is something that the Bahamas and many other nations have curtailed through the enactment of anti-money laundering and “know your customer” legislation and regulations. In many jurisdictions, it is simply too late to reverse the effects of AML and KYC, which is why initiatives such as Project Sand Dollar are welcome since they can empower individuals who have been left out of the banking system, but who wish to make digital payments and money transfers.

As for the government of the Bahamas, financial regulators actually prefer to see digital payments taking place since they reduce the burden of physical currency controls and management. The goal is to get people used to holding sand dollars and generating quick response (QR) codes on their smartphones when they settle retail POS transactions or pay utility bills. The project will begin on the Exuma island and will later roll out to the Abaco islands. On the day the pilot program started the value of one sand dollar was equal to the United States dollar.

Plenty of Cheer During the 2019 U.S. Holiday Shopping Season

The numbers are in for the 2019 holiday shopping season, the final one of the decade, and retailers were pleased to learn that overall sales increased by nearly 3.5% compared to last year. Starting on Black Friday and culminating with last-minute shopping on Christmas Eve, retailers were definitely in the black this season, and this is despite the period being shorter than last year by six calendar days. E-commerce was the biggest winner with an increase of 18.8%, and the payments industry was pleased to see a greater volume of credit and debit card transactions along with digital payments.

Even though online shopping accounted for a little less than 15% of the overall sales volume, it should be noted that the Cyber Monday shopping event continued to grow, particularly in the consumer electronics segment, which experienced a boost of 10.7% on a year-over-yer basis. Specialty apparel was the segment that shoppers expressed greater interest in compared to 2018, but even department stores posted a nice growth of 6.9% despite industry analysts warning that the heyday of American shopping malls is behind us.

According to the MasterCard Spending Pulse survey of retail activity during the holiday season, stores were prepared for the shorter shopping period this year; many retailers stepped up their omni-channel marketing efforts starting in early November. It should be noted that department stores actually saw a decline in their brick-and-mortar transactions, but they posted a 6.9% increase of their online sales.

Now that Christmas has come and gone, retailers are gearing up for the post-holiday blues, which tend to feature many gift returns or exchanges; a typical example is footwear, which tends to see a lot of exchanges because of size issues. Clearance and special discount situations will likely see a migration towards e-commerce channels, but brick-and-mortar retailers are ready to welcome more store traffic that should last through the first week of the New Year. Physical storefronts located within shopping districts have an advantage in this regard when merchants get together to organize entertainment and family events; the idea is to increase foot traffic at a time when many shoppers have time off work.

Wall Street Investors Also Enjoyed Holiday Cheer

The Santa Claus rally on Wall Street was delayed by just one day this year. According to market analysts at Nasdaq.com, exchange-traded funds that focus on the banking sector soared when traders returned to work after Christmas Day. This is good news for the payments industry, which does not exclusively rely on banks to stay busy. Consumers are warming up to alternatives to the traditional banking system; increased regulation and oversight along with a lack of flexibility by banks are driving consumers towards payment systems that they can manage from PCs and smartphones. Since providers of alternative banking services work closely with payments processors and clearinghouses, the future looks good for the payments industry.

Facebook Users’ Phone Numbers Exposed Online

Earlier this month, a huge database containing Facebook user IDs and phone numbers of 267 million members was breached and exposed, where it was then left on the web for almost two weeks before finally being removed.

According to security reasearcher Bob Diachenko, who discovered the unsecured Elasticsearch dabatase along with Comparitech, it may not have belonged to Facebook, rather a cybercriminal organization.

According to the report released December 19th, “A database this big is likely to be used for phishing and spam, particularly via SMS. Facebook users should be on the lookout for suspicious text messages. Even if the sender knows your name or some basic information about you, be skeptical of any unsolicited messages.”

First annexed on the 4th of December and not noticed until 10 days later on December the 14th, the database is now thankfully unavailable. According to Diachenko, however, the data was also posted on December 12th to a hacker forum, where it was then available to download.

It’s still not clear exactly how the information was collected, although Diachenko suggests that it could have been stolen from the developer API that Facebook provides to app developers in order for them to access user data and profiles prior to it becoming restricted last year. Another possibility could be that it was all due to a glitch, which enabled the criminals to access the information despite the restrictions. Or, it could simply have just been scraped from profile pages that are publically visible.

According to the published report, “’Scraping’ is a term used to describe a process in which automated bots quickly sift through large number of web pages, copying data from each one into a database. It’s difficult for Facebook and other social media sites to prevent scraping because they often cannot tell the difference between a legitimate user and a bot. Scraping is against Facebook’s – and most other social networks’ – terms of service.”

Regardless of how it actually happened, Facebook users have been warned by the researchers to make sure that their security and privacy settings are set to private rather than public, which can help to decrease any chances of their profiles being scraped. Especially since the stolen data has also been posted to the aforementioned hacker forum and is still being held by the cybercriminals, so it could very well still be used for targeted phishing attacks or spam.

This isn’t the first time that Facebook user data has been found around the web, and unfortunately it probably also won’t be the last. As recently as September, hundreds of millions of Facebook user phone numbers was again found leaked on an open server, and just a few months prior in April two different datasets held by two app developers were found by researchers. In both of these instances, Facebook was the data source for the records.

And one last thing to consider if you are a merchant and you are worried about data breaches affecting your bottom line: Host Merchant Services Data Breach Security Program. Click that link to download a PDF explaining the value-added service HMS provides its merchants that goes above and beyond just simple PCI Compliance and helps ensure a merchant’s peace of mind.

Google Comes Under Scrutiny for Acquisition of Cloud Data Science Firm

Just one week before Christmas, the Competition and Markets Authority of the United Kingdom made an announcement that may have played a part on shares of Alphabet, the parent company of Google, losing nearly 3% on the Nasdaq. Usually, announcements related to information security issues tend to have an immediate effect on company stock, but such is not the case with the British CMA; the problem is related to Google’s acquisition of Looker Data Sciences, a data visualization platform headquartered in California.

According to a news report by the Associated Press, the CMA became interested in the aforementioned acquisition in early December with an enforcement notice. The concern was that the merger would make consumers think of Google UK and Looker as indistinct business entities; in other words, there are valid concerns that integrating Looker would unfairly make Google the most attractive choice for business owners and individuals looking for cloud computing services, particularly with regard to website and application hosting.

Let’s say an e-commerce fashion entrepreneur in London is looking for a platform where she can set up her online boutique. She wants bandwidth, security, a shopping cart, a digital payment solution, and visual reports of website traffic as well as transactions. After acquiring Looker, Google will probably be the most attractive cloud hosting option for this e-commerce entrepreneur because she thinks Google is providing everything all the way down to data visualization. In this example, it is easy to see the CMA concern because third-party data visualization companies would not stand a chance to compete against Google.

The CMA will have from now until February 2020 to update the public on this matter. Google began taking over Looker in June 2019 and has thus far obtained regulatory approval in the United States and Austria. It should be noted that the UK is still part of the European Union, so other nations could very well start looking at this acquisition deal for signs of anti-competitiveness. In the U.S., Google is one of various technology giants being investigated for what state and federal regulators may consider antitrust activity; interestingly, one of the aspects of these investigations focuses on digital payments, particularly popular platforms such as Apple Pay and Google Pay.

Former PayPal COO is New Google Commerce Chief

Back in June of this year, PayPal made the announcement that COO Bill Ready would be stepping away from his long tenure at the online giant, and we now know precisely why. This coming January, Ready will be stepping into a new role with Google as their new commerce chief, a position from which he will be reporting directly to Prabhakar Raghavan, Google’s Senior Vice President of Engineering.

Having joined PayPal in 2013 after their purchase of his payment gateway startup Braintree for $800 million, Ready saw himself moving steadily up the ranks before becoming PayPal’s EVP and COO in 2016. While working in this role at PayPal, Ready was responsible for overseeing product, technology, and engineering, along with PayPal’s merchant, consumer, Venmo, Paydiant, Braintree and Xoom businesses’ end-to-end experiences. On top of this, he co-chaired PayPal’s revenue and profit-focused Operating Group. Today, businesses such as Uber, Facebook, Jet.com, and Airbnb rely on Braintree to power all of their payments.

Many of PayPal’s biggest moves as a company can be traced back to Ready’s tenure, such as the introduction of PayPal One Touch (their most rapidly adopted product of all time), PayPal Commerce, the expansion of Braintree’s global reach, Pay with Venmo, and the redesign of PayPal’s mobile app.

When speaking with regards to Ready recently, Raghavan said “Bill’s exceptional track record building great experiences for consumers and deeply strategic partnerships makes him a powerful addition to our team. I couldn’t be more excited for the future of commerce at Google.”

Ready himself followed this up, saying, “I’ve long admired how Google has enabled access to the digital economy for everyone/ Google has been making world-class commerce capabilities universally accessible to partners of all sizes, and I look forward to furthering that mission.”

Bill Ready’s role as Google’s new commerce chief won’t see him getting directly involved with anything to do with the payments side of the business, PayPal’s competitor Google Pay, but it will instead see him focusing on leading the vision, strategy and delivery of Google’s commerce products. While not directly involved in payments operations, he will, however, be working in close partnership with them, along with Google’s advertising operations.

Being in charge of commerce at Google will be no easy task for Ready, in part due to the nature of the close proximity to advertising, which is parent company Alphabet’s largest source of income. Out of a total revenue of $40.5 billion, Google’s ad revenue in Q3 of 2019 alone was $33.29 billion.

When making a statement with regards to Google’s hiring of Ready, CEO of Google and Alphabet Sundar Pichai stated, “I’m thrilled to welcome Bill to Google as we continue our work to create more helpful commerce experiences and build a thriving ecosystem for partners of all sizes.”

A Digital Version of the Dollar Will Take Longer Than Expected

In the world of cryptocurrencies, Bitcoin is the leading token in terms of circulation, but this has a lot to do with being the most valuable digital asset, which means that most transactions are related to speculative trading and investing. Ripple, a centralized digital currency that trades under the symbol XRP, gets more circulation than BTC, but mostly in the remittances and international money transfer arenas.

There are two emerging cryptocurrencies making a circulation splash, and they share one factor in common: their value is tied to the United States dollar. Tether (USDT) and U.S. Coin (USDC) are known as “stablecoins” which means that their currency exchange value will always be the same as the American dollar because this is the business plan of their respective development teams. In the case of USDC, which is backed by investment banking giant Goldman Sachs, its market capitalization has increased considerably this year because users of this digital currency enjoy its stability and trust in Goldman Sachs as the manager of the underlying blockchain.

With the profile of stablecoins rising, it stands to reason that the U.S. Treasury could soon develop a digital version of the greenback, but this is not likely to happen as long as Chairman Jerome Powell leads the Federal Reserve Bank. Powell recently sent a letter to Congress for the purpose of answering questions related to cryptocurrency use, and it was clear that Powell does envision a sovereign blockchain for the USD.

It should be noted that the Russian central bank has already developed a digital version of the ruble, and a similar approach has been taken with the Singapore dollar. As of October 2019, the Eastern Caribbean Dollar was undergoing a digital pilot program to test if going cashless is in the future of various island nations. These three digital currency projects are based on the open-source Ethereum blockchain, and they are being monitored by American financial regulators, but there does not seem to be an interest in emulating projects.

Powell’s letter to Congress included his opinion of the American banking and payments systems, which he thinks are advanced, secure, dynamic, inexpensive, and robust; this opinion was clearly meant to underscore why the Fed Reserve Chairman does not think a crypto-greenback is needed, but those who work in the U.S. payments industry know that this is not the case. Asia and Europe are the leading markets in the digital payments arena, and a major reason why the American market lags behind is because of inflexible financial and banking regulation. Refraining from testing the waters of digital currencies will only make the U.S. less competitive in the global payments arena.