8 Big Stories Transforming The Payments Landscape

The payments market is emerging as the laboratory where some of the most innovative and disruptive developments in financial services are occurring. What can banks do to capitalize on this transformation?
September 05, 2013

Bryan Yurcan and Zarna Patel also contributed to this story.

1. Virtual Currency: Becoming Mainstream?

Virtual currencies have forced their way into the popular consciousness in 2013. But will governments seek to ban them?

Bitcoin and its fellow virtual currencies appear to be inching ever closer to the mainstream. Once the seemingly exclusive domain for off-the-grid libertarians, virtual currencies have forced their way into the popular consciousness in 2013.

First came news early in the year that a European Bitcoin exchange had secured a license to operate as a payments service provider. Bitcoin-Central was granted a license to operate as a payments service provider by the French government, which also declared that users' accounts will be protected by the Fonds de Garantie des Dépôts (the French equivalent of the American FDIC). Each account will get its own International Bank Account Number, thus allowing holders to use it as any other bank account, have their salaries and pensions sent there, and have them automatically converted to Bitcoin if they so wish.

In June, a chain of pubs in England, Individual Pubs Ltd., announced it would accept Bitcoins as payment at its establishments, conducting what's believed to be the first pub transaction using virtual currency in the U.K. Meanwhile, Amazon in May announced it was launching its own virtual currency for Kindle Fire users. The "Amazon Coins" can be used to purchase apps, games and in-app items.

Perhaps the most interesting development regarding virtual currency took place in August, when a U.S. federal judge ruled that Bitcoin is indeed real money, while presiding over a trial in which a man charged with running a Ponzi scheme using Bitcoin tried to get the case thrown out by claiming that Bitcoin isn't real money and therefore isn't subject to regulation by the U.S. government.

This ruling is interesting because it indicates potential efforts on the part of the U.S. -- and other governments -- to regulate, or possibly ban, virtual currencies in the future. — Bryan Yurcan

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