Visa and MasterCard have formally thrown their weight behind Hosted Card Emulation (HCE), a technology for hosting m-payment and digital wallet capabilities in the cloud rather than on the Secure Element (SE) in a device, an approach that is highly disruptive to the SIM centric NFC model favoured by operators.
Eden Zoller, principal analyst at Ovum comments:
“MasterCard has announced that it will publish a specification for HCE NFC payments, while separately (but on the same day -19/02) Visa said it will incorporate support for HCE payments into the Visa Ready program.
“The build up to Mobile World Congress is also seeing technology providers announce their support for HCE based cloud payments, including a solution developed by m-commerce platform provider Proxama and security specialist Cryptomathic. We expect to see further HCE related announcements at main event next week.
“The backing of Visa and MasterCard is a significant endorsement for HCE that without the support of the major card schemes would not be able to flourish. The technology received another major boost last November when it Google revealed that HCE had been baked into the latest version of the Android OS (Android 4.4, or KitKat). This is highly significant for the future of cloud based digital payment implementations enabled by HCE, as Android based devices now dominate smartphone shipments. Both Visa and MasterCard have readily acknowledged that support integration of HCE into Android was a key motivation in their decision to embrace the technology. However, even the rise of HCE does not necessarily mean that the future of NFC is guaranteed, as there are wider issues for NFC related to consumer and merchant acceptance. For more details please see the Ovum report Mobile Proximity Payments and the Prospects for NFC.
“The prospect of a mobile proximity landscape dominated by cloud based deployments is not a scenario that operators relish. Mobile operators are driving NFC implementations based on the SE embedded in SIM cards, because this gives them maximum control over service provisioning, the m-commerce business model and revenue flows. The model and terms imposed by operators can be restrictive for third parties, notably the SIM rental model adopted by some operators. Under the SIM rental model third parties gain access to operator NFC SIMs in return for a “rental fee”, but have limited control over service provisioning, the user experience or the customer relationship. The lack of flexibility with models of this kind do not sit well with other m-commerce stakeholders such as banks, application developers, merchants and OTT players, which all want control over their own service destiny. It is a key reason why an increasing number of merchants are shunning operator controlled wallets and are seeking m-commerce solutions that bypass operators.
“This is where HCE come into play. HCE effectively severs the dependency of NFC payments on an SE embedded in an NFC device or SIM card, in preference for a virtual SE on remote servers in the cloud. This implementation supports a more open model for NFC deployments and makes service provisioning much easier for banks, issuers, developers and other third parties. This has the potential to open up the NFC market up to more innovation and competition, but at the expense of mobile operators.”
Banks, homebuilders shine as British shares rally on budget boost
By Devik Jain and Shivani Kumaresan
(Reuters) – British shares rose on Wednesday, buoyed by gains in financial, leisure and homebuilding stocks as investors cheered finance minister Rishi Sunak’s budget plan to steer the economy out of a coronavirus-inflicted shock.
The blue-chip FTSE 100 index closed 0.9% higher, with shares of top three British homebuilders Barratt Developments, Persimmon and Taylor Wimpey gaining between 6% and 7%.
The wider housebuilder index added 2.8%, while banking stocks were among the top boosters.
Delivering an annual budget speech on Wednesday, Sunak extended costly emergency programmes, including a five-month extension of Britain’s huge jobs rescue plan and more help for the self-employed, but also announced a future tax squeeze as he began to focus on the huge hole in the public finances.
“Sunakâ€™s budget signalled the UK economy is almost ready to leave crisis mode,” said Edward Moya, senior market analyst at OANDA in New York.
“The UK will have a great 2022, but the economy will return to trend in 2023. The withdrawal of stimulus and higher taxes will complicate the outlook after next year.”
The FTSE 100 has recovered more than 35% from a coronavirus-induced crash last year, helped by a raft of stimulus measures and faster vaccine rollouts. But investors are cautious about a rise in inflation and policy tightening as lockdowns start to ease.
The domestically focused mid-cap FTSE 250 index ended 1.2% higher, led by a 13.6% jump in Micro Focus International’s shares after the IT firm said it joined hands with Amazon.com Inc’s cloud computing division to help customers migrate their mainframe applications and workloads to the platform.
Travel and leisure stocks also supported the index, with pub operators Marston’s Plc, Mitchells & Butlers and J D Wetherspoon gaining between 3.1% and 6% after the UK extended a value-added tax (VAT) cut for cafes, restaurants and hotels by six months until Sept. 30.
(Reporting by Shivani Kumaresan and Devik Jain in Bengaluru; Editing by Rashmi Aich and Jonathan Oatis)
UK to hike corporation tax to 25% in first rise since 1970s
By Guy Faulconbridge and Paul Sandle
LONDON (Reuters) – Britain will raise its corporation tax on big companies to 25% from 19% from 2023, the first hike in nearly half a century, but will temper the burden with a two-year “super deduction” for investment to spur a fast recovery from the COVID-19 crisis.
Finance minister Rishi Sunak, a Conservative unveiling the first corporation tax rise since Labour raised it 1974, said the future tax hikes on companies were a fair way to start recouping the cost of vast state support to business during the pandemic.
“The government is providing businesses with over 100 billion pounds of support to get through this pandemic so it is fair and necessary to ask them to contribute to our recovery,” Sunak told parliament.
“Even after this change, the United Kingdom will still have the lowest corporation tax rate in the G7,” Sunak said.
The corporation tax rise – by far the biggest tax increase announced by Sunak in the budget – will take effect from 2023, when the economy is expected to regain its pre-pandemic size.
The measure is forecast to raise 11.9 billion pounds in the 2023-2024 tax year, rising to 17.2 billion pounds in 2025-26.
In the meantime, Sunak announced a measure to encourage businesses to invest their cash reserves in new machinery and plants, with a so-called “super deduction” that let businesses reduce their tax bills by 130% of the cost of investments. The measure is forecast to give businesses back around 12.3 billion pounds this coming year and 12.7 billion pounds in the next.
Still, the Confederation of British Industry, the lobby group for big British companies, said the hike in corporation tax was sending a worrying signal to investors.
“Moving corporation tax to 25% in one leap will cause a sharp intake of breath for many businesses and sends a worrying signal to those planning to invest in the UK,” CBI Director-General Tony Danker said.
TAX ON BUSINESS
The United Kingdom introduced corporation tax at a rate of 40% in 1965. It rose to a high of 52% in the early 1970s and has been cut ever since. It was trimmed to 19% from 2017 and plans to cut it further were scrapped.
Law firm Clifford Chance said the hike in corporation tax – which in Britain is particularly broad with fewer deductions than elsewhere – would make the effective rate higher than that of Germany or the United States and on a level with France.
Britain would pass Sweden, Denmark, Israel, Ireland and Portugal in corporation tax revenue as a share of national income.
Sunak said small businesses with profits of less than 50,000 pounds a year would be charged only 19%, meaning around 70% of businesses would be unaffected, and a taper would mean only those with profits above 250,000 pounds – around 10% of companies – would be taxed at the full 25% rate.
The super deduction, Sunak said, would let a construction firm cut its tax bills by 13 million pounds if it bought 10 million pounds of new equipment. He quoted the Office for Budget Responsibility as saying it would boost investment by 10%.
Martin Sorrell, executive chairman of advertising group S4 Capital and former CEO of WPP, said Sunak could have delayed the hike for longer, but it was sweetened by relief for smaller companies, the super deduction and other measures.
“On balance, I think it was okay,” he said, adding the super deduction would unlock investment. “Consumers are a bit of coiled spring at the moment and companies are too; companies have been preserving their resources in COVID.”
(Reporting by Guy Faulconbridge; Editing by Estelle Shirbon and Hugh Lawson)
The Equipment Financing Guide for Business Owners
When business owners hear the term equipment financing, they usually think of construction equipment. While that is indeed included, the term encompasses so much more. In reality, there is an equipment financing option for virtually any type of small business.
Read on if you want to find out what equipment financing actually entails, whether you are eligible for it, and how you can get it.
What Is Equipment Financing?
Put simply, equipment financing is a loan you get to buy the capital equipment you need for your business. The amount of money you qualify for depends on the value of the equipment, and the loan term depends on how long you plan on using the equipment.
So, if you plan on buying sewing machines that you’ll be using in the next six years, you should get a loan with a six-year term. That way, you will neither be scrambling to pay off the debt too early nor will you be paying for the equipment after you’ve stopped using it.
Who Can Offer Equipment Financing?
Various equipment financing companies can offer you these loans. While a bank can do the same, it often has stricter rules, and not everyone can apply for a loan.
An equipment financing company, on the other hand, is a lot more lenient. It gives a fair chance to most applicants, no matter how small or big their business is. It also offers fair and affordable business loan rates.
Who Qualifies for Equipment Financing?
To be able to apply for a loan, you need to fulfill certain requirements. Firstly, you have to be in business for at least a year. Then, you need to have annual revenue of $50,000 or more. Finally, you ought to have a credit score of 650 or higher.
However, these conditions are not always set in stone. For example, if your credit score is lower than 650, there is still a way for you to apply. You simply need to provide proof of solid cash revenue for the last three to six months. That will be enough for most lenders.
It is also important to mention that loan conditions vary with individual lenders. Some might allow applications by those with a much lower credit score. Conversely, others might require a much higher score to allow you to apply. Thus, research is key when it comes to finding the best lender option.
What About Collateral?
The great thing about this type of financing is the fact that the equipment itself can serve as the collateral for the loan. That way, you don’t have to risk your personal assets or drain your liquid cash. If you are unable to return the loan, the lender will simply take away the equipment. Everything else will stay intact.
More Pros of Equipment Financing
The collateral is pretty much a part of your loan. Thus, getting this type of loan is much easier than getting an ordinary one, as we mentioned above. Additionally, equipment loans often have the lowest interest rates you can find.
Finally, equipment financing can be quite useful at tax-time. Namely, the interest you’ve paid for the loan is deductible, and you’ll also get depreciation tax benefits.
A Few Parting Words
As you have read, equipment financing is not reserved for heavy equipment only. In fact, you can get this type of financing for almost any type of small business. You will get good interest rates, save up on tax-money and, most importantly, get the equipment you need.
So, don’t waste any more time. Contact an equipment financing company today, and start working on your loan plan. We hope our guide helps you take that first step.
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