BITCOIN SILK ROAD SHUTDOWN It’S a Case of Drug Deals, Blackmail, Assassinations, and at the Center of It All, Bitcoin

SEP 30-OCT 5, 2013 Go to www.paymentweek.com

BITCOIN SILK ROAD SHUTDOWN It’s a case of drug deals, blackmail, assassinations, and at the center of it all, bitcoin.

Occupy Money Credit Giants Propose Global Leaked Video Shows Cooperative’s Debit Card Payments Standard to Make Clinkle in Action Sees Some Resistance from Digital Shopping Safer the Resistance 2

SEP 30-OCT 5, 2013 CONTENTS Go to www.paymentweek.com

Felix Shipkevich Bitcoin Silk Road Shutdown and Founder Arrested 10 FOUNDER

Kevin Xu FEATURED ARTICLES CONTENT STRATEGIST

Jason Mongiello TECH DIRECTOR OF MARKETING Restaurant Mobile Payment App Cover Launches in NY 3 Laura Forero Leaked Video Shows Clinkle in Action 4 CREATIVE DIRECTOR

Daniel Pritchard EMERGING PAYMENTS GRAPHIC DESIGNER Occupy Money Cooperative’s Debit Card Sees Some Elan Mendel Resistance from the Resistance 5 ADVISOR

MARKETPLACE Address 65 Broadway Braintree Takes Venmo One Touch to See the Queen 8 Suite 508 To advertise with us Credit Giants Propose Global Payments Standard to [email protected] Make Digital Shopping Safer 9

Mobile News Restaurant Mobile Payment App Cover Launches in NY By: Kevin Xu Image Credit: Cover

etting the check and splitting it Cover may be appealing to restaurants COVER MAY BE between friends might be more since transaction fees paid by participating APPEALING TO awkward than your junior prom. restaurants would be less than that of tak- G RESTAURANTS ing traditional credit cards. Cover, a New York based startup, aims SINCE to change the way people pay for their As of the now, you can only split the TRANSACTION meals with a mobile payment app that just check evenly, a decision made by the Cov- FEES PAID BY launched on the Apple App Store (the An- er team after they realized that giving the PARTICIPATING droid version is in development). users “control would have them spend the RESTAURANTS last part of the evening with their phones The app has been in beta testing for a out, fine-tuning everything on the bill,” says WOULD BE year, and its New York launch brings Cover founder Andrew Cove. LESS THAN to more than 20 of the city’s restaurants. THAT OF It’s a usability decision, but support for So how does it work? TAKING different split amounts would solve the TRADITIONAL After creating an account, you must be need for multiple checks, and drastically cut dining at one of the restaurants that sup- down the workload for busy servers. CREDIT CARDS. port Cover. Tell your waiter that you’re pay- Cover faces competition from other ing with Cover. Open up the app to create or restaurant-focused payment apps which in- join a “table” which includes other Cover us- clude Dash and OpenTable which added a ers who you can split the check with. When payment feature in July. you’re done with your meal, the tip is auto- matically applied and you can walk away, or Regardless, if these companies have their you can adjust the tip amount as you see fit. way, you might never have to say “check please,” ever again. 3 4 TECH

Mobile News Leaked Video Shows Clinkle in Action By: Kevin Xu

Image Credit: CrunchBase

linkle, the new mobile-wallet that’s a direct bank transfer, or a credit card pay- THE CLINKLE garnered a ton of attention (due to ment, which carries a fee. WALLET SEEMS the company raising $25 million C Clinkle also has a messaging feature, TO BE ABLE along with the hype surrounding its secre- which will probably come in handy when TO STORE tive details), has leaked. you’re trying to get your friend to pay you DEBIT AND Sort of. back for last night’s bar tab. CREDIT CARDS,

A user by the name of “Clinkle Hopper” Clinkle users are required to enter person- REWARD has posted a video on YouTube with the al identifying information including name, CARDS, Clinkle app running in demonstration mode address, and their social security numbers AND BANK to use some features. This is because, as the ACCOUNT The Clinkle wallet seems to be able to linked tumblr claims, is because Clinkle is store debit and credit cards, reward cards, INFORMATION. creating a bank account at Zion Bank that and bank account information. You can YOU CAN will hold funds for their users. transfer to and from your bank account on TRANSFER TO to the wallet app. The interface is very slick, and offers AND FROM some amount of customization. Thought it Users at stores that support Clinkle can YOUR BANK hasn’t even been released, if the video is any pay through Aerolink, which was reported to ACCOUNT indication, Clinkle will definitely be one of be a sound-based NFC alternative. ON TO THE the most attractive mobile wallets WALLET APP. The video also demonstrates social pay- released to date. ments through funds linked to the wallet, 4 EMERGING Payments

Card Solutions Occupy Money Cooperative’s Debit Card Sees Some Resistance from the Resistance By: David Mindich ccupy Wall Street has been mak- The Coop states that its mission is “to “THE OCCUPY ing the headlines again with what provide fairly-priced, member-managed, MONEY may be its most baffling incarna- and non-predatory financial products to the O COOPERATIVE tion yet: the Occupy Prepaid Debit Card. The 99%” and to offer “alternative products and idea seems almost like an oxymoron; how is services based on the principles of democ- IS LIKE A BANK, a group whose beginnings stemmed from the racy, inclusion, and fairness.” Because it’s a BUT BETTER.” desire to stand up against shady bank deal- coop, the company is run by its members, so ings and Wall Street trading going to put its it won’t have to “answer to Wall Street or to name on a bank card? profit-hungry directors.”

The simplest answer, it seems, is by not However, the degree in which The Occupy calling it a bank card. Money Cooperative actually distances itself from these institutions seems questionable The card is being offered by the Occupy when they tell you that they work through a Money Cooperative: a financial institution bank and are backed by Visa. with all the bells and whistles of your neigh- borhood bank but better. – so they claim. As it turns out, in order to ensure the money people put on the card, the Occupy Money The first line of their about us page reads, Cooperative has to work with a bank. “The Occupy Money Cooperative is like a bank, but better.” 5 6 EMERGING PAYMENTS

And in order to get anyone to accept the of the “neo-liberal language” Ebrahimian BECAUSE IT’S thing, they need to work with a credit com- talks about on their website, it seems un- A COOP, THE pany like VISA. Under normal circumstanc- likely that that they’re planning to corner COMPANY IS es, these would be rather mundane details. the market on prepaid debit cards. They’re But this is Occupy Wall Street we’re talking merely offering an alternative to big banks RUN BY ITS about here, isn’t it? Where’s the resistance and other financial institutions. And, by MEMBERS, SO from two years ago? Where’s the passion? many accounts, it’s a good one. It has the IT WON’T HAVE The Coop markets the card with the slogan lowest fees out there and could very well TO “ANSWER TO “a protest with ever purchase.” But at best, be useful to someone who can’t afford WALL STREET this seems like begrudging compliance. At bank fees or who can’t open a checking OR TO PROFIT- worst: just plain compliance. Is this what account. HUNGRY the movement has come to? So then why all these mixed feelings? DIRECTORS.” Not everyone seems to think so. It seems it’s all about principle. In many Seeing the use of “Occupy” as merely a ways, the Occupy Card can be a huge step marketing ploy by the Coop, Suzahn Ebra- forward for the movement. OMC is doing himian, writer for the social movement the best that they can to provide people publication Tidal, accuses The Occupy with a solid alternative to big banks. But Money Cooperative of using the “neo-liber- after all the fighting, after all the demands al language” that’s readily available when for large-scale, radical change, to market a talking about Occupy Wall Street to pull card that still has such strong ties to these people away from normal card issuers, giant financial institutions as a solution and its lack of exclusivity to “get the upper just feels like a copout. It’s like sitting hand on their credit union competitors.” through all of Rocky IV just to watch the And she’s not alone in her cynicism. Italian Stallion give Drago a stern talking to. It’s like cooking a pound of turkey ba- But how much malicious intent can a con. The payout just doesn’t seem worthy not-for-profit have? of the effort. While there’s certainly an abundance

8 MARKETPLACE

Image Credit: Venmo Global & Local Braintree Takes Venmo One Touch to See the Queen By: Kevin Xu

n a partnership between Braintree and and digital campaigns, along with newslet- IN A REPORT American Express, Venmo Touch is now ters and Cardmember outreach. RELEASED BY available to consumers in the UK as a I In a report released by Econsultancy’s one-touch mobile payment option across a ECONSULTANCY’S Multichannel Retail Survey, it was found host of integrated services. MULTICHANNEL that 25% of UK smartphone users made a RETAIL SURVEY, Braintree is a leading payment proces- purchase on their devices, nearly double IT WAS FOUND sor, with $4 billion of its $12 billion in pay- from the 13% in 2011. ments processed annually coming from mo- THAT 25% OF UK Braintree hopes to capture UK’s grow- bile transactions. SMARTPHONE ing mobile market, along with laying down USERS MADE A It acquired Venmo Touch, a per- the framework of increasing its presence in PURCHASE ON son-to-person payment platform that ex- other European countries. THEIR DEVICES, panded into integrating into popular apps Keeping in mind that Braintree is owned including Uber, AirBnB, and HotelTonight. NEARLY DOUBLE by eBay now (pending regulatory approval), The app stores a user’s payment details and FROM THE 13% IN the purchase seems like an increasingly allows for one-touch payments and check- 2011. shrewd move given PayPal’s global reach, out through mobile devices. and Braintree’s reputation in the payments On American Express’ part, it will handle and mobile space. marketing duties including social media

8 9 MARKETPLACE

Industry Leaders Credit Giants Propose Global Payments Standard to Make Digital Shopping Safer By: Jenn Roberts

Image Credit: Images Money

isa, MasterCard and American Ex- The tokens-based standard, which will be press are joining forces in an ef- presented to independent industry bodies Vfort to overhaul digital payment and other key stakeholders in the coming INTUIT’S processing. The credit leaders have called weeks, offers tokens as a digital counterpart HIGHLY for new technology that would replace tra- to bank cards containing customer informa- REGARDED ditional account numbers with “tokens” used tion. This eliminates the need for merchants, ACCOUNTING in online and mobile transactions. Their pro- digital wallet operators or others to collect SOFTWARE, posal aims to enhance payment protection account numbers. The new proposal recom- MAKING THE and simplify the digital purchasing process. mends consistent methods for identifying POS SOLUTION and verifying consumers before tokens are Both consumers and merchants stand issued. MORE to benefit from a global digital payments ATTRACTIVE standard. The number of digital transac- Mike Matan, head of global network busi- TO POTENTIAL tions is continuing to increase, with roughly ness at American Express, praised the three- CUSTOMERS six percent of all retail sales occurring on- way collaboration for its potential impact. WHILE line, according to the U.S. Census Bureau. At “By working together to form a common the same time, global card fraud losses for global standard for online and mobile shop- IMPROVING THE banks, merchants and processors climbed 15 ping, we will be able to provide enhanced se- FEATURE SET percent last year to $11.3 billion from 2011, curity, interoperability and consistency for all FOR CURRENT according to the Nilson Report. participants within the digital payments eco- ONES. system,” he said. “In addition, we will be able “Mobile is the future,” Jim McCarthy, glob- to drive the rapid adoption and expansion of al head of innovation and strategic partner- digital payments, delivering innovative new ships at Visa, said. “We haven’t evolved to products and services that will allow con- create a standard. For the first time, we are sumers to realize the full potential of digital laying down the foundation.” commerce in today’s world.” 9 10 Regulation

Electronic Payment Law Bitcoin Silk Road Shutdown and Founder Arrested By: Kevin Xu

t’s a case of drug deals, blackmail, as- found after a few missteps involving posting PRIVACY, sassinations, and at the center of it all, on traceable Internet forums, and perhaps ONE OF bitcoin. the largest mistake of all, having a package I THE MAIN seized by U.S. Customs at the Canadian bor- The FBI has shut down Silk Road, a mar- der which included fake I.D.s that matched his IDEALS OF ketplace hidden in the obscure and dark cor- face, and also included his real address in San BITCOIN, ners of the Internet, where people around the Francisco. WILL globe could trade bitcoins for goods and ser- LIKELY BE vices – usually illegal. It’s estimated that more than 80% of all bitcoins flowed through Silk Road at some A CONCERN The founder of Silk Road, Ross William point. But greater than the ramifications of FOR BITCOIN Ulbricht, who was arrested yesterday in San the shuttering of the estimated $1.2 billion ADVOCATES. Francisco, is charged with money laundering, marketplace and the seizure of some 4 mil- conspiracy to traffic drugs, computer hacking, lion bitcoins, lies the future of the digital cur- and with arranging the murders of two would rency. be extortionists with assassins (with one being an undercover agent and another a likely On his LinkedIn page, Ulbricht, the scam artist) over Silk Road. self-identified libertarian, was focusing on a means to “abolish the use of coercion and ag- Ulbricht, or Dread Pirate Roberts, as he gression against mankind.” was known in the Internet community, was

10 11 Regulation

ON THE BITCOIN EXCHANGE MT. GOX ON WEDNESDAY; ONE BITCOIN WAS WORTH $140. AFTER THE STORY OF SILK ROAD AND ULBRICHT BROKE, THE PRICE DROPPED TO $122, BUT REBOUNDED AND CURRENTLY SITS AT $129.

Ross William Ulbricht - Founder of Silk Road

Silk Road was based on the Tor network, a have to be compromised for law enforcement network that provided anonymity from track- purposes. This is good for the Bitcoin econo- ing and surveillance. Ulbricht’s story will like- my in general and the reputation in specif- ly fuel the debate on bitcoin and emergent ic because it proves that Bitcoin is a neutral (disruptive) technologies, such as Tor. store of value or medium of exchange.”

Can bitcoin survive the negative publicity The digital currency will likely be all the and pressure from government agencies? better for Silk Road’s demise.

On the bitcoin exchange Mt. Gox on As for the FBI and the drug war in general, Wednesday; one bitcoin was worth $140. Af- more digital black markets will likely pop up ter the story of Silk Road and Ulbricht broke, to fill the void that Silk Road has left, and the the price dropped to $122, but rebounded and people who run them will not all be bumbling currently sits at $129. idealistic libertarians.

Privacy, one of the main ideals of bitcoin, will likely be a concern for bitcoin advocates.

The Bitcoin Foundation’s Director of Public Affairs, Jinyoung Lee Englund, states “Bitcoin addresses were not used to solve the case, proving that privacy does not necessarily

11 12 INDUSTRY VOICES

Rentalutions’ Ryan Coon – Limiting Payment Options Limits Your Bottom Line By: Ryan Coon

magine if a restaurant in your neighbor- We heard from tenants that they wanted to ALLOWING hood were to hang a sign over its counter pay with this innovative new currency, so we CUSTOMERS that read, “brunette customers only.” This allowed them to do so. I TO PAY FOR would make absolutely no sense. What about the costs about accepting a GOODS AND So many businesses, though, unnecessar- new currency? SERVICES ily limit their potential revenue by limiting Well those costs associated with accepting HOWEVER how customers can pay for goods or services. different payment methods have plummeted THEY WANT I think about this every time I am on a plane in recent years. For example, any merchant can (WITHIN and I hear the crew say, “this plane is a cash- now accept credit cards with a solution like less cabin”. Inevitably there is an older man or REASON) IS Square. Merchants can quickly set up accounts woman who wishes to purchase an overpriced NOT ONLY to accept bitcoin with Coinbase. There are no snack box or pair of headphones, but only has GOOD FOR longer any good, reasonable excuses for limit- crisp $20 bills. CUSTOMERS, ing customers’ ability to pay with the currency Or what about the customer who walks into of their choice. BUT IT’S a coffee shop and sees a large “CASH ONLY” GOOD and promptly walks out because she only has BUSINESS her debit card? I can’t imagine why any busi- About the Author SENSE. ness would turn away customers solely based Ryan Coon is a co-founder of Chicago-based on how they want to pay. startup Rentalutions. The Company provides do-it-yourself landlords with tools that make Allowing customers to pay for goods and it easy to manage their rental properties. With services however they want (within reason) Rentalutions, landlords can find and screen ten- is not only good for customers, but it’s good ants, create electronic lease agreements and business sense. This is why the company that I collect rent online. You can follow Rentalutions helped found, Rentalutions, recently began al- on Twitter at @Rentalutions. lowing tenants to pay rent online with bitcoin. 12 www.shipkevich.com