By Christian Von Hammel-Bonten, CPO, PPRO Group
The Internet of Things (IoT) is not new. In fact, connected devices with a wide range of functionalities are already widely used in the home, a trend that shows no sign of abating. In fact, Gartner has predicted that there will be 20.8 billion connected ‘things’ by 2020, an increase from 6.4 billion in 2016[i]. However, with increasing demand for such technologies comes a shift in consumer expectation. Today as consumer awareness of IoT builds, there is the growing expectation that it should play a role at every touch point of the customer journey. In turn, such demand has encouraged payments to become the perfect ‘finishing touch’ and provide a pivotal role in the evolution of IoT.
Consumers with connected fridges can expect to see food automatically restocked, and owners of electronic assistants, such as Alexa and Siri, will be able to purchase the latest items on their wish lists with a simple voice command. IoT and payment technology are also making significant strides in wearable items. For example, rings are being developed into ‘tokens’, meaning that they can replace sensitive payment account information, such as a 16-digit account number or payment card, to enable consumers to pay for goods with just a tap of the ring. As more IoT technology incorporates payment capability, it signals an exponential rise in the Internet of Payments (IoP) ecosystem.
However, to ensure the IoT and IoP industries continue to flourish with the development of new innovations, it’s vital the industry maintains consumer trust and interest to ensure longevity. To do so, the IoT industry must address consumer demand with a focus on the overall customer experience. To maximise consumer buy-in, global technology companies should consider how they can continue to integrate payment capabilities into the development of new IoT products in order to create the most seamless experience for the end user.
An expanding ecosystem
Considering the current state of play in the market, Visa is leading the way with its Visa Ready Programme for IoT initiative[ii], which integrates the Visa Token Service into wearable items and mobile wallets. As part of this, it is partnering with companies such as Accenture, FitPay and Samsung. Visa are also working with Honda to develop technology that can detect when a car’s petrol is low and enables users to pay for a refill using an app that is connected to the in-car display. This is yet another example of how Visa are continuing to immerse payments into every touch point. It is this level of integration that holds the key to marrying the world of IoT and payments, and will encourage widespread consumer adoption.
Accessibility is king
Ultimately, it’s an exciting time for tech developers, retailers and manufacturers looking to maximise the surge in consumer adoption, but it’s important that the user experience is kept front of mind from the very beginning to ensure payment capability is not a bolted-on feature. Only then will these solutions be as seamless and fit-for-purpose as possible.
Accessibility is key and whilst connected appliances such as fridges, that automatically pay for depleted items, seem practical and useful in theory, in practice, developers and payment providers need to work together to also ensure that the payments’ ecosystem validates identity and addresses security risks. Trusting your fridge with your credit card seems a strange concept, but it is the role of those in financial services and payment providers to ensure that consumer data is protected, and a safe portal between merchant and consumer is created as a core part of the technology design.
Considering 38 million transactions were carried out on a mobile device in 2016, (a 247 per cent increase on 2015), it’s clear that consumers are receptive to using payment methods that promise the fastest, most convenient ways to pay. But, such growth can only be harnessed if user experience is prioritised. It’s important to consider that not all consumers will want their fridge aligned with their personal account, especially if there isn’t a certain level of security to ensure that they are the only ones who can initiate the payment. To address this, and ensure that the technology has mass-appeal, manufacturers must consider alternate payment preferences around the world. For example, Germany is predicted to become the second highest spender on IoT technology by 2020[iii], but its population’s preferred payment method is currently bank transfer. With that in mind, there needs to be some thought into how this technology can be altered to appeal to an international market.
It is fundamental that payment preferences are considered at the very beginning of a product life cycle. However, to cater to international markets with differing payment preferences, payment service providers must be involved early in the design phases to ensure that the IoP ecosystem can continue to flourish worldwide.
To make sure the future of the IoT and more specifically IoP, is a success, those manufacturing the technology need to work closely with third-party providers such as acquirers, issuers, merchants and processors to ensure that manufacturers can securely accept the deluge of new payment methods into their latest connected products. As long as functionality, user experience, security and alternative payment methods are considered from the very beginning of the design process, all parties involved will reap the rewards.
Whilst it’s a market that is set for exponential growth over the coming years, it’s imperative that all stakeholders keep the end user front of mind. To do this it’s also vital that alternative payment methods are a key consideration throughout the development process to ensure that the technology is accessible on an international scale.
2020: the year mortgages went digital
By Francesca Carlesi, co-founder and CEO, Molo
It’s safe to say that the past year has changed everything. With restrictions in place that limited almost every aspect of our lives, from work to socialising, it’s no surprise that some industries were decimated and others were left severely shaken. The mortgage sector was no exception, as it also underwent a vast transformation which may have changed the course of mortgages forever.
The industry saw a paradigm shift, which was driven by consumers being forced online. This was the case for everything from mortgage applications to online house viewings and property valuations. As expected, this resulted in an increased demand for digital mortgage solutions with more flexibility.
While the industry was already slowly shifting, the pandemic has accelerated this and now the traditional process of getting a mortgage is increasingly coming under threat. We’ve seen a number of somewhat surprising trends over the last year that support this argument and suggest that consumers are embracing the change. For example, compared to March last year, we’ve seen the number of people aged over 45 applying for a mortgage loan increase by 70%. This indicates that consumers who may have previously resisted applying for a digital mortgage saw no alternative option in lockdown.
It seems that this paid off, as our data suggests that overall consumers were more satisfied with the simpler and quicker process.
A shift in behaviour
It’s clear that the pandemic did nothing to discourage those seeking a mortgage from doing so and the industry continued to grow. For example, in October last year, the UK mortgage industry saw a 13-year high, where over 97,500 loans were approved – the highest figure since September 2007, the month at the start of the financial crisis. But what led to this and why?
In a post-pandemic world of financial uncertainty and instability, the idea of purchasing property is now being perceived by many as a safer bet than investing in the stock market or other investment options.
As a result, buy-to-let properties are becoming an increasingly appealing option and Google has now coined it as ‘breaking out’. Not only did Google trends observe a 5000% increase in the search term ‘how to get a buy-to-let mortgage’ last year, but at Molo, our own data also supported this and found a significant rise in the number of first-time buyers who were mortgage hunting.
Despite being introduced twenty years prior to buy-to-let mortgages, let-to-buy mortgages also saw huge growth in 2020. The pandemic has led to increased numbers of remote workers and commuting has become a thing of the past. UK cities are seeing somewhat of a mass exodus as the priorities of city dwellers are changing and many are going in search of more space. Let-to-buy mortgages offer the flexibility to facilitate this. Investing in this kind of mortgage means that families, for example, can afford to rent out their property in the city and move to locations that are more rural.
We’ve also seen the industry pivot slightly in terms of regional demands. While there is continued demand from London and the South East, for example, we’ve also seen growth in areas such as the North West and we predict this won’t slow any time soon. One of the cities with especially high demand was Blackpool, where growth in demand was twice the national average.
Future gazing: 2021 and beyond
We’re expecting that the changes seen across the industry over the past will stick. After all, if even the sceptical customers were happy with the ease and simplicity of the online mortgage application and approval process, why on earth would they go back?
It’s important that we learn from these observations and use them to draw insight into the future of the mortgage sector. For instance, while Coronavirus has certainly caused disruption for lenders and consumers alike, it’s also highlighted the need for a more advanced, digital offering. It’s shown that digital mortgages really have become the best option for customers. The pandemic has been a test run for businesses and has proved that, even after restrictions are lifted, there is no good reason for mortgage providers to return to the traditional but slower business-as-usual.
At least in the property world, 2020 could well be remembered as the year that mortgages went digital. While it’s true that the pandemic was the catalyst for this shift, it’s now gone beyond the virus. The changes we’ve seen over the past year are likely to shape the mortgage industry for years to come.
EU finance chief says UK’s Northern Ireland move a breach of trust
DUBLIN (Reuters) – The European Union’s finance chief said Britain’s decision to make unilateral changes to Northern Irish Brexit arrangements raised questions over whether it can be trusted in future trade negotiations with any partner.
“It does open a question mark about global Britain, if this is how global Britain will negotiate with other partners. Our experience has been not an easy one to put it mildly,” Mairead McGuinness, who is negotiating post-Brexit financial services terms with Britain, told Irish broadcaster RTE on Thursday.
“We have to be very clear that when something happens that is not appropriate and indeed in our view breaches both trust and an international agreement, then we have to call it out. It wasn’t a good day yesterday but this morning we have to work for practical solutions, with the UK, not separately.”
(Reporting by Padraic Halpin; editing by John Stonestreet)
The Benefits of Starting A US Non-Profit: The Latest Tax Regulations
Starting a nonprofit organisation can be a very effective way of significantly improving your society’s welfare, and truly assisting those in need. Ultimately, however, understanding all the prerequisite steps mandated to start a nonprofit– as well as the legal obligations and privileges that can be associated with such a process, is crucial before fully committing to and moving forward with your business plan.
Growing a prolific, successful, and impactful non-profit can be a very tedious process and can commonly involve years of consistent effort, diligence, and determination. Consequently, this article will take a deep dive into the relative statutory and federal legislation and critically analyse the plethora of economic, monetary, and social benefits that starting a nonprofit can bring in for you.
Non-profit Organisations: A Quick Overview
Regardless of whether your goal is to address a particular societal issue, form a trade organisation or perhaps create a social club, if you are looking for the opportunity to earn a profit on top of accomplishing your stipulated goals, forming and operating a nonprofit organisation may be the way to go.
Contrary to most social clubs- which are formed to solely provide benefits for their specific members, nonprofits are generally created to provide benefits to the general public. These can include corporations created for educational, scientific and charitable purposes and- as we will further analyse below, are commonly exempt from paying corporate income taxation in accordance with Section 501(c)(3) of the Internal Revenue Code.
The Financial and Structural Benefits of Starting a Non-profit
As briefly touched on above, forming a nonprofit organisation can provide a plethora of benefits for you, these include:
- Tax Exemptions- companies that are categorized as ‘public charities’ in accordance with section 501(c) of the Internal Revenue Code are generally exempt from paying corporate income tax on a state and on a federal level. Additionally, after a company has obtained their aforementioned ‘tax exempt’ legal status, a person’s or company’s monetary donations to them is tax-deductible.
- Grant Opportunities- There’s a prolific amount of both public and private bodies that unilaterally limit their charitable donations and grants to public charities only. This is because nonprofits can- and commonly do, offer tax deductions to such individuals or corporate entities on an exclusive basis.
- Unique Corporate Structure- A nonprofit organisation operates as its own unique legal entity- completely separate from its owners and founders, and consequently is in a position to place its own interests and corporate ethos above the interests of the persons that may be associated with it.
- Limited Liability & Perpetual Existence- On top of having a statutory right to exist in perpetuity, nonprofits also have limited liability under the law. Therefore, any damages that may arise from potential legal disputes are limited to the real assets of the actual nonprofit, and not the assets of its founders and/or owners (subject to specific legal exemptions).
Final Overview: The Potential Disadvantages of Forming a Nonprofit
Despite all the advantages laid out above, it should be duly noted that there are a couple of potential disadvantages to forming a nonprofit that you may want to consider before moving forward with your plan.
Firstly, the process of forming a nonprofit can take a significantly long period of time and this is commonly associated with a great deal of both effort and capital. Moreover, in order to apply for some of the benefits listed above- including federal tax exemption, a monetary fee is required and the process also often needs a present attorney or corporate accountant to serve as a corporate consultant.
Furthermore, there are a couple of practical disadvantages to starting a non-profit organisation. These include: a) excessive paperwork- as all nonprofits are legally required to keep detailed analytical records of their practices and submit them to their relevant state de[artment and to the IRS, and b) limited personal control over the organisation- this is particularly the case in states that require nonprofit organisations to have more than one director.
Finally, nonprofits are commonly subject to prolific levels of public scrutiny- especially in relation to their finances, which may act as a disincentive for some private individuals.
Overall, starting a nonprofit can bring in a plethora of economic, monetary, and social privileges for the individuals involved, and- although the process can come with a few potential inconveniences, they are arguably a small price to pay. Companies like TRUiC advise on the varying benefits of different states when it comes to US formations. It is worth conducting thorough research before making your next move.
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