Though the recent correction may have axed the value of cryptocurrencies in half – they are not down for the count. The cryptocurrency market is still valued at more than $295 billion. And as Rostin Behnam, the chairman of the Commodity Futures Trading Commission (CFTC) recently stated: “These currencies are not going away, and they will proliferate to every economy and every part of the planet. We are witnessing a technological revolution. Perhaps we are witnessing a modern miracle.” Mentioned in today’s commentary includes: Shopify Inc (NYSE: SHOP), Intel Corporation (NASDAQ: INTC), Kodak (NYSE: KODK), IBM (NYSE: IBM), Snap Inc. (NYSE: SNAP).
And Benham is not alone in his view: the anticipated growth for the cryptocurrency market is simply staggering. Analysts from the Royal Bank of Canada have gone on record stating that the long-term value of the global cryptocurrency market could top $10 trillion in the years ahead. And one of the fastest growing “niches” within the global cryptocurrency market is crypto-ATMs.
Crypto-ATMs – where customers can simply walk up and trade cryptos, like a regular bank ATM – have exploded, doubling in 2017 alone. There are currently about 8,368 crypto-ATMs around the world.
Of those, Bitcoin ATMs make up 3,233 of the machines. And Bitcoin ATM sites are growing at a rate of 10 new machines a day. 76% of all the global crypto-ATMs are located in North America; the U.S. leads the way with 1,330 ATMs.
Forbes magazine called the Crypto-ATMs the “future of banking… an innovative solution to solve one of the world’s biggest problems – banking barriers.”
Crypto-currencies are being quickly adapted by folks historically shut out of traditional banking. And the rise of Crypto-ATMs is making access even faster and more convenient. And one company is making moves in an effort to dominate crypto-ATMs in the most underserved market in North America.
QPAGOS (QPAG) is a U.S. based payment systems company doing business in Mexico. They specialize in the creation, installation, maintenance, sales and rental of electronic payment kiosks. These kiosk locations allow customers to make transactions like paying bills or sending money – without having a bank account.
Here are 10 reasons why investors should consider looking more closely into shares of QPAGOS.
REASON 1: Mexico is a “Cryptocurrency Paradise”.
Overseas investing and travel site Escape Artist called Mexico a potential crypto-currency paradise, because: “No country on earth offers better access to Bitcoin and none offers the FIAT to crypto and crypto to FIAT exchange systems available in Mexico.”
Mexico boasts two major crypto-exchanges: Bitso and Volabit. And access to the crypto-exchanges is easy. Literally anyone can buy Bitcoin in Mexico – even if they don’t have a bank account. All transactions are handled within the crypto-universe.
Mexico averages about $6.52 million (MXN) of crypto transactions every single week. That’s $339,040,000 (MXN) worth of Bitcoin transactions per year. And that’s just the Bitcoin transactions – that doesn’t begin to count all the other crypto-currencies out there.
Combine the popularity of cryptos with the ability to go from crypto-to-cash or vice-versa – and Mexico would seem the ideal market for crypto-based ATM systems. Yet there are only 11 active ATM kiosks in the whole country. And this is where QPAGOS could have its biggest impact.
REASON 2: QPAGOS is adding 63 times more crypto ATMs to a Mexican market desperately in need of easy access
QPAGOS has the potential to completely transform the crypto ATM marketplace in Mexico. The company is already an established payment provider, with a network of 700 personal payment kiosks set up across Mexico. And now, every single one of these kiosks has the potential to become an approved Crypto ATM… multiplying the number of approved Crypto-ATMs by 63 times.
This one move could make QPAGOS one of the single largest providers of crypto-currency transactions, outside of the two big exchanges.
REASON 3: Mexico’s new crypto-regulations make it easy to use crypto-currencies to pay for every day goods and services
Mexico recently passed new rules regulating crypto-currencies. However, rather than reining in the use of cryptos, as South Korea did, the new regulations codify the use of cryptocurrencies into the law of the land.
According to Daniel Luévano, director of operations for the local Mexican crypto exchange ISBIT, thanks to the new regulations “The amount of money and transactions that can migrate to crypto and its technology is huge.”
And for QPAGOS, the law also establishes electronic payment companies as one of two “Financial Technology Institutions” sanctioned to conduct crypto transactions. Customers will be able to not only buy and sell Bitcoin and others, they’ll also be able to use its crypto-ATMs to pay for goods and services.
REASON 4: QPAGOS is in the business of filling major voids in traditional banking
Mexico is a mostly cash society. 65% of the population does not have a bank account. 80% of all retail payments are made in cash. One reason Mexico remains a cash-dominant society, as the rest of the world is moving away from cash, is that traditional banking in Mexico is highly inefficient.
As the Financial Times pointed out, “With long queues, high fees and low cash machine coverage, Mexican banks have a reputation for poor customer service.”
There are only 14 bank branches for every 100,000 residents (the U.S. boasts 33). The Mexican government’s National Survey of Financial Inclusion found that the average travel time to a bank branch was 42 minutes in rural areas and 22 minutes in urban settings. And QPAGOS has jumped into the void created by Mexico’s banks, with cutting edge technology for payment services.
QPAGOS’ 700 state-of-the-art digital kiosks allow customers to pay bills, cell phone accounts, car payments, etc., without ever involving traditional banks. And now, these same familiar kiosks will let customers buy, sell, and trade cryptocurrencies.
REASON 5: QPAGOS (QPAG) is already becoming a trusted source for quick and easy payment processing
Offering digital payment services to over 140 service providers, cash-centric Mexican citizens seem to be accepting QPAGOS as an easy, convenient way to avoid long travel times and longer lines, by simply using one of the companies 700 kiosks. And because QPAGOS has agreements with 140 mainstream service providers, customers can easily make payments for most services, including utilities, cable TV companies, and municipalities.
REASON 6: Mobile Convenience
Mexico has over 107 million mobile phone users – the second largest in Latin America. And nearly 90% rely on some form of pre-payment plan to stay connected – requiring the user to make a payment up front for mobile usage. “Top-ups” are traditionally done at retail locations, like supermarkets or convenience stores. Arrangements with the top mobile providers, including Nextel and AT&T, allow QPAGOS customers to avoid the hassles, and make quick and easy payments.
REASON 7: Multiple Sources of Revenue
QPAGOS makes money through multiple income streams. It receives fixed transaction fees on all payments processed; commissions and fees for processing payments to utilities, mobile, and transportation companies; customized kiosks for sales and rentals, such as Movistar. And it plans to soon be cashing in on a piece of Mexico’s $6.52 million (MXN) of weekly Bitcoin transactions.
REASON 8: Customization
The company’s kiosks can be customized to meet many different needs of many different clients. For instance, kiosks can be installed in retail locations, to make customer purchases easier and more convenient, eliminating long lines and retail-floor bottle-necks.
Banks and other institutions, virtually inaccessible to most citizens, can set up remote kiosks to reach more customers – as well letting customers make payments inside branches, relieving congestion at teller windows.
The potential market for QPAGOS payment kiosks is virtually endless. Ease of access is a great reason for this company to be given the okay to begin processing crypto-currency transactions to virtually all 700 of their existing, and future kiosk locations.
REASON 9: the number of digital transactions in Mexico is only going up
Digital spending in Mexico is expected to double over the next 3 years – ramping up from 7.19 million users to an expected 14.88 million by 2021. And in 2019, revenue generated by e-commerce is expected to climb to more than $40 billion USD. And QPAGOS seems perfectly positioned to carve off a slice of that $40 billion industry for itself.
REASON 10: All roads lead to INCREASING revenue
QPAGOS’ (QPAG) business model and multiple streams of income are paying off. The company is having a great 2018 so far. For the first quarter of the year, revenues jumped 58% year-over-year. And are up 37% from the previous quarter.
And the company continues to expand its services and locations across the country. Three new kiosks were installed in Observatorio station, one of Mexico City’s busiest Metro stations, with an average 77,205 passengers passing through every day. And as the crypto-ATM transactions ramp up, analysts are expecting to see this kind of growth accelerating in the months and years ahead.
Lockdown 2.0 – Here’s how to be the best-looking person in the virtual room
suggests “the product you’re creating is not the camera, the lens or a webcam’s clever industrial design. It’s the subject, you, which is just on e part of the entire image they see. You want that image to convey quality, not convenience.”
Technology experts at Reincubate saw an opportunity in the rise of remote-working video calls and developed the app, Camo, to improve the video quality of our webcam calls. As part of this, they consulted the digital photography expert and author, Jeff Carlson, to reveal how we can look our best online.
It’s clear by now that COVID-19 has normalised remote working, but as part of this the importance of video calls has risen exponentially. While we’re all used to seeing the more casual sides of our colleagues (t-shirt and shorts, anyone?), poor webcam quality is slightly less forgivable.
But how can we improve how we look on video? We consulted Jeff Carlson for some top tips– here is what he had to say.
- Improve the picture quality of your call
The better your camera, the higher quality your webcam calls will be. Most webcams (as well as currently being hard to get hold of and expensive), are subpar. A DSLR setup will give you the best picture, but will cost $1,500+. You can also use your iPhone’s amazing camera as a webcam, using the new app from Reincubate, Camo.
Jeff’s comments “The iPhone’s camera system features dedicated coprocessors for evaluating and adjusting the image in real time. Apple has put a tremendous amount of work into its imaging software as a way to compensate for the necessarily small camera sensors. Although it all works in service of creating stills and video, you get the same benefits when using the iPhone as a webcam.”
Aidan Fitzpatrick, CEO of Reincubate explains why the team created Camo, “Earlier this year our team moved to working remotely, and in video calls everyone looked pretty bad, irrespective of whether they were on built-in Mac webcams or third-party ones. Thus began my journey to build Camo: an iPhone has one of the world’s best cameras in it, so could we make it work as a webcam? Category-leading webcams are noticeably worse than an iPhone 7. This makes sense: six weeks of Apple’s R&D spend tops Logitech’s annual gross revenue.”
- Place your camera at eye level
A video call will never quite be the same as a face-to-face conversation, but bringing your camera up to eye level is a good place to start. That can involve putting your laptop on a stand or pile of books, mounting a webcam to the top of your display screen, or even using a tripod to get the perfect position.
Jeff points out, “If the camera is looking down on you, you’ll appear minimized in the frame; if it’s looking up, you’re inviting people to focus on your chin, neck, or nostrils. Most important, positioning the camera off your eye level is a distraction. Look them in the eye, even if they’re miles or continents away.”
Low camera placement from a MacBook
- Make the most of natural lighting
Be aware of the lighting in the room and move yourself to face natural lighting if you can. Positioning the camera so any natural light is behind you takes the light away from your face, which can make it harder to see and read expressions on a call.
Jeff Carlson’s top tip: “If the light from outside is too harsh, diffuse it and create softer shadows by tacking up a white sheet or a stand-alone diffuser over the window.”
Backlit against a window Facing natural light
- Use supplementary lighting like ring lights
The downside to natural lighting is that you’re at the mercy of the elements: if it’s too bright you’ll have the sun in your eyes, if it’s too dark you won’t be well lit.
Jeff recommends adding supplementary lighting if you’re looking to really enhance your video calls. After all, it looks like remote working will be carrying on for quite some time.
“The light can be just as easy as a household or inexpensive work light. Angle the light so it’s bouncing off a wall or the ceiling, depending on your work area, which, again, diffuses the light and makes it more flattering.
Or, for a little money, use a softbox or a shoot-through umbrella with daylight bulbs (5500K temperature), or if space is tight, LED panels. Larger lights are better for distributing illumination– don’t be afraid to get them in close to you. Placement depends on the look you’re going after; start by positioning one at a 45-degree angle in front and to the side of you, which lights most of your face while retaining nice shadow detail.”
In some cases, a ring light may work best. LEDs are arranged in a circle, with space in the middle to put the camera’s lens and get direct illumination from the direction of the camera.
- Centre yourself in the frame
Make sure you’re getting the right angle and that you’re using the frame effectively.
“You should aim for people to see your head and part of your torso, not all the space between your hair and the ceiling. Leave a little space above your head so it’s not cut off, but not enough that someone’s eyes are going to drift there.”
- Be mindful of your backdrop
It’s not always easy to get the quiet space needed for video calls when working from home, but try as best you can to remove anything too distracting from your background.
“Get rid of clutter or anything that’s distracting or unprofessional, because you can bet that will be the second thing the viewers notice after they see you. (The Twitter account @RateMySkypeRoom is an amusing ongoing commentary on the environments people on television are connecting from.)”
A busy background as seen by a webcam
- Make the most of virtual backgrounds
If you’re really struggling with finding a background that looks professional, try using a virtual background.
Jeff suggests: “Some apps can identify your presence in the scene and create a live mask that enables you to use an entirely different image to cover the background. While it’s a fun feature, the quality of the masking is still rudimentary, even with a green screen background that makes this sort of keying more accurate.”
- Be aware of your audio settings
Our laptop webcams, cameras, and mobile phones all include microphones, but if it’s at all possible, use a separate microphone instead.
“That can be an inexpensive lavalier mic, a USB microphone, or a set of iPhone earbuds. You can also get wireless lavalier models if you’re moving around during a call, such as presenting at a whiteboard in the camera’s field of view.
The idea is to get the microphone closer to your mouth so it’s recording what you say, not other sounds or echoes in the room. If you type during meetings, mount the mic on an arm instead of resting it on the same surface as your keyboard.”
- Be wary of video app add-ons
Video apps like Zoom include a ‘Touch up your appearance’ option in the Video settings. This applies a skin-smoothing filter to your face, but more often than not, the end result looks artificially blurry instead of smooth.
“Zoom also includes settings for suppressing persistent and intermittent background noise, and echo cancellation. They’re all set to Auto by default, but you can choose how aggressive or not the feature is.”
- Be the best looking person in the virtual room
What’s important to remember about video calls at this point in time is that most people are new to what is, really, personal broadcasting. That means you can easily get an edge, just by adopting a few suggestions in this article. When your video and audio quality improves, people will take notice.
Bringing finance into the 21st Century – How COVID and collaboration are catalysing digital transformation
By Keith Phillips, CEO of TISATech
If just six or seven months ago someone had told you that in a matter of weeks people around the world would be locked down in their homes, trying to navigate modern work systems from a prehistoric laptop, bickering with family over who’s hogging the Wi-Fi, migrating online to manage all financial services digitally, all while washing their hands every five minutes in fear of a global pandemic… You’d think they had lost their mind. But this very quickly became the reality for huge swathes of the world and we’re about to go through that all over again as the UK government has asked that those who can work from home should.
Unsurprisingly, statistics show that lockdown restrictions introduced by the UK government in March, led to a sharp increase in people adopting digital services. Banks encouraged its customers to log onto online banking, as they limited (and eventually halted) services at branches. This forced many customers online as their primary means of managing personal finances for the first time.
If anyone had doubts before, the Covid-19 pandemic proved to us the importance of well-functioning, effective digital financial services platforms, for both financial institutions and the people using them.
But with this sudden mass online migration, it’s become clear that traditional banks have struggled to keep up with servicing clients virtually. Legacy banking systems have always stilted the digitisation of financial services, but the pandemic thrust this issue into the limelight. Fintech firms, which focus intently on digital and mobile services, knew it was only a matter of time before financial institutions’ reliance was to increase at an unprecedented rate.
For years, fintechs have been called upon by traditional players to find solutions to problems borne from those clunky legacy systems, like manual completion of account changes and money transfers. Now it is the demand for these services to be online coupled with the need for financial services firms to cut costs, since Covid-19 hit the economy.
Covid-19 has catalysed the urgent need to bring digital transformation to a wider pool of financial services businesses. Customers now have even higher expectations of larger institutions, demanding that they keep up with what the younger and more nimble challengers have to offer. Industry leaders realise that they must transform their businesses as soon as possible, by streamlining and digitising operations to compete and, ultimately, improve services for their customers.
The race for digital acceleration began far before the recent pandemic – in fact, following the 2008 financial crisis is likely more accurate. Since the credit crunch, there has been a wave of new fintech firms, full of young, bright techies looking to be the next big thing. Fintechs have marketed themselves hard at big conferences and expos or by hosting ‘hackathons’, trying to prove themselves as the fastest, most innovative or the most vital to the future of the industry.
However, even during this period where accelerating innovation in online financial services and legacy systems is crucial, the conditions brought about by the pandemic have not been conducive to this much-needed transformation.
The second issue, which again was clear far before the pandemic, is that fact that no matter how nimble or clever the fintechs’ solutions are, it is still hard to implement the solutions seamlessly, as the sector is highly fragmented with banks using extremely outdated systems populated with vast amounts of data.
With the significance of the pandemic becoming more and more clear, and the need for better digital products and services becoming more crucial to financial services firms and consumers by the day, the industry has finally come together to provide a solution.
The TISAtech project was launched last month by The Investing and Saving Alliance (TISA), a membership organisation in the UK with more than 200 leading financial institutions as members. TISA asked The Disruption House, a specialist benchmarking and data analytics business, to create a clearing house platform for the industry to help it more effectively integrate new financial technology. The project aims to enhance products and services while reducing friction and ultimately lowering costs which are passed on to the customers.
With nearly 4,000 fintechs from around the world participating, it will be the world’s largest marketplace dedicated to Open Finance, Savings, and Investment.
Not only will it provide a ‘matchmaking’ service between financial institutions an fintechs, it will also host a sandbox environment. Financial institutions can pose real problems with real data and the fintechs are given the space to race to the bottom – to find the most constructive, cost-effective solution.
Yes, there are other marketplaces, but they all seem to struggle to achieve a return on investment. There is a genuine need for the ‘Trivago’ of financial technology – a one stop shop, run by an independent body, which can do more than just matchmaking. It needs to go above and beyond to encompass the sandboxing, assessments, profiling of fintechs to separate the wheat from the chaff, and provide a space for true collaboration.
The pandemic has taught us that we are more effective if we work together. We need mass support and collaboration to find solutions to problems. Businesses and industries are no different. If fintechs and financial institutions can work together, there is a real chance that we can start to lessen the economic hit for many businesses and consumers by lowering costs and streamlining better services and products. And even if it is just making it that little bit easier to manage personal finances from home when fighting with your children for the Wi-Fi, we are making a difference.
What to Know Before You Expand Across Borders
By Sean King, Director of International Tax at McGuire Sponsel
The American retail giant, Target Corporation, has a market cap of $64 billion and access to seemingly limitless resources and advisors. So, when the company engaged in its first global expansion, how could anything possibly go wrong?
Less than two years after opening its first Canadian store in 2013, Target shut down all133 Canadian locations and terminated more than 17,000 Canadian employees.
Expansion of an operation to another country can create unique challenges that may impact the financial viability of the entire enterprise. If Target Corporation can colossally fail in its expansion to Canada, how might Mom ‘N’ Pop LLC fare when expanding into Switzerland, Singapore, or Australia?
Successful global expansion requires an understanding of multilayered taxes, regulatory hurdles, employment laws, and cultural nuances. Fortunately, with the right guidance, global expansion can be both possible and profitable for businesses of any size.
Any company with global ambitions must first consider whether the company’s expansion outside of the U.S. will give rise to a taxable presence in the local country. In the cross-border context, a “permanent establishment” can be created in a local country when the enterprise reaches a certain level of activity, which is problematic because it exposes the U.S. multinational to taxation in the foreign country.
Foreign entity incorporation
To avoid permanent establishment risk, many U.S. multinationals choose to operate overseas through a formal corporate subsidiary, which reduces the company’s foreign income tax exposure, though it may result in an additional level of foreign income tax on the subsidiary’s earnings. In most jurisdictions, multinationals can operate their business in the foreign country as a branch, a pass through (e.g., partnership,) or a corporation.
As a branch, the U.S. multinational does not create a subsidiary in the foreign country. It holds assets, employees, and bank accounts under its own name. With a pass through, the U.S. multinational creates a separate entity in the foreign country that is treated as a partnership under the tax law of the foreign country but not necessarily as a partnership under U.S. tax law.
U.S. multinationals can also create corporate subsidiaries in the foreign country treated as corporations under the tax law of both the foreign country and the U.S., with possibly two levels of income taxation in the foreign country plus U.S. income taxation of earnings repatriated to the U.S. as dividends.
Under U.S. entity classification rules, certain types of entities can “check the box” to elect their classification to be taxed as a corporation with two levels of tax, a partnership with pass-through taxation, or even be disregarded for U.S. federal income tax purposes. The check the box election allows U.S. multinationals to engage in more effective global tax planning.
Toll charges, transfer pricing and treaties
When establishing a foreign corporate subsidiary, the U.S. multinational will likely need to transfer certain assets to the new entity to make it fully operational. However, in many cases, the U.S. multinational cannot perform the transfer without recognizing taxable income. In the international context, the IRS imposes certain outbound “toll charges” on the transfer of appreciated property to a foreign entity, which are usually provided for in IRC Section 367 and subject to various exceptions and nuances.
Instead, the U.S. multinational may prefer to license intellectual property to the foreign subsidiary for a fee rather than transfer the property outright. However, licensing requires the company and foreign subsidiary to adhere to transfer pricing rules, as dictated by IRC Section 482. The U.S. multinational and the foreign subsidiary must interact in an arms-length manner regarding pricing and economic terms. Furthermore, any such arrangement may attract withholding taxes when royalties are paid across a border.
Are you GILTI?
Certain U.S. multinationals opt to focus on deferring the income recognition at the U.S. level. In doing so, they simply leave overseas profits overseas and delay repatriating any of the earnings to the U.S.
Despite the general merits of this form of planning, U.S. multinationals will be subject to certain IRS anti-deferral mechanisms, commonly known as “Subpart F” and GILTI. Essentially, U.S. shareholders of certain foreign corporations are forced to recognize their pro rata share of certain types of income generated by these foreign entities at the time the income is earned instead of waiting until the foreign entity formally repatriates the income to the U.S.
The end goal
Essentially, all effective international tax planning boils down to treasury management. Effective and early tax planning can properly allow a company to better achieve its initial goal: profitability.
If global expansion is on the horizon for your company, consult a licensed professional for advice concerning your specific situation.
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