Saturday, 31 December 2016

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Under-reporting of cash receipts also leads to under-reporting of self-employment tax: at US$39bn, this dwarfs the under-reporting of conventional wages and salaries of US$10bn, with an under-reporting rate of 52% compared to 4%. To put these numbers in context, Slemrod estimates large company corporation tax under-reporting, a topic that typically attracts much more attention, at US$25bn.

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Cashless society makes bank statements longer

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In October there were 1.27bn payment card transactions in the UK, a 10 per cent increase year-on-year, while online transactions rose 16 per cent to 160m, according to the UK Cards Association. Contactless card usage has risen even faster, more than doubling by number and trebling by value over the past year.

From Cashless society makes bank statements longer

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An unloved banknote: is the £50 in danger?

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Peter Sands, the former chief executive of Standard Chartered bank, suggested last February that the main use of the 50 was illicit

From An unloved banknote: is the £50 in danger?

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POST Retailers and cashlessness

British Airways have instituted a new policy of annoying customers like me by making them pay for coffee. Although, to be fair, it was Marks & Spencer coffee and it was much nicer than the usual BA coffee. Naturally they didn't take cash.

Avios are the New Money

They are not unusual in the respect. Lots of airlines don’t take cash. What a nightmare it would be to try and manage cash on board a plane.  Time-consuming and pointless. Of course, it’s time-consuming and pointless in other retailers too. Perry Kramer, vice president and practice lead at consultant Boston Retail Partners, contends that as many as four-fifths  of retailers today are already largely cashless.

“Retailers don’t really want to be banks. It’s not their sweet spot,” he says. “It is much less expensive to process credit and debit than it is cash, because cash has a lot of labor involved.”

From Cashing In or Cashing Out? | National Retail Federation

Indeed it does. And that labour might be more profitably redeployed doing something more useful to the business, such as serving customers.

The company says that employees can perform 5% to 15% more transactions every hour when they don’t have to handle money.

From Sweetgreen Is Going Fully Cashless In 2017 | Fast Company | Business + Innovation

Those are pretty substantial savings. I’ve often wondered why places like Pret, places that have multiple points-of-service, don’t already have cash-only lanes because it’s noticeably faster to “tap and go” (even if you have to stand around waiting for the checkout clerk to light up the terminal and for the super-slow printer to chunter out a receipt) than it is to hand over a fiver and wait for change. Of course, what would be faster still is to not use anything at all.

The move away from cash might also steer more people onto the Sweetgreen app. Over the last year, app use has grown 95%, says the company. Roughly a third of the business is run through the app

From Sweetgreen Is Going Fully Cashless In 2017 | Fast Company | Business + Innovation

The apps are getting smarter too. For a retailers, it must be much more attractive to have you buying things 

Domino’s Pizza, which launched a "zero-clicks" pizza ordering app earlier this year. In the past, the company has baked ordering into Facebook Messenger, Twitter, Siri, Amazon’s Echo, Google Home, smart televisions, and even Ford Sync. In the third quarter this year, Domino’s revenue grew 16.9% year-over-year.

From Sweetgreen Is Going Fully Cashless In 2017 | Fast Company | Business + Innovation

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Avios are the New Money  

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Sweetgreen Is Going Fully Cashless In 2017 | Fast Company | Business + Innovation

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The company says that employees can perform 5% to 15% more transactions every hour when they don’t have to handle money.

From Sweetgreen Is Going Fully Cashless In 2017 | Fast Company | Business + Innovation

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The move away from cash might also steer more people onto the Sweetgreen app. Over the last year, app use has grown 95%, says the company. Roughly a third of the business is run through the app

From Sweetgreen Is Going Fully Cashless In 2017 | Fast Company | Business + Innovation

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Thursday, 29 December 2016

U.S. accuses Chinese citizens of hacking law firms, insider trading | Reuters

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Prosecutors said that beginning in April 2014, the trio obtained inside information by hacking two U.S. law firms and targeting the email accounts of law firm partners working on mergers and acquisitions.

From U.S. accuses Chinese citizens of hacking law firms, insider trading | Reuters

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It's not a f**king blockchain

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It's not a fucking blockchain

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The Bank of England | British History Online

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n 1822 Turner, a Bank clerk, stole £10,000 by altering the transfer book. The rascal, however, was too clever for the Bank, and escaped.

From The Bank of England | British History Online

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How black cab drivers and passengers collude to cheat the taxman

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A regular occurrence in London, when asking for a fare receipt, is an offer of a couple of unsigned receipts or an offer to put any figure down. The taxi driver keeps no duplicate record of the transaction. This deprives the taxman of the cab driver’s tax and encourages the customer to cheat their employer and HM Revenue & Customs. This conspiracy to defraud has been going on for decades.

An Uber receipt clearly states the origin and destination of a journey and the price paid. This eliminates fraud. As an employer I trust an Uber receipt, but view a licensed taxi receipt with suspicion.

From How black cab drivers and passengers collude to cheat the taxman

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Wednesday, 28 December 2016

POST Money and markets

As my colleague Neil McEvoy and I wrote in the DEMOS Quarterly way back in 1996

Endogenous money is money created within a market whereas exogenous money is money created by some outside authority and imposed on a market. We’re used to the second – where the outside authority is the government – and have forgotten about the first, but pressures on the monetary system may have reached the point where a change is inevitable.

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POST We want change

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Developed by Carsten van Berkel and Stefan Leendertse of N = 5, an Amsterdam-based advertising agency, the contactless payment jacket allows people to donate 1€ to the wearer using their contactless smart card.

From Amsterdam Introduces Contactless Payment Jackets for Beggars | Oddity Central - Collecting Oddities

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Busk it  

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China bank calls documents fake after bond default on Alibaba-linked platform | Reuters

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The fate of a defaulted $45 million Chinese corporate bond sold through an Alibaba-backed online wealth management platform was thrown into doubt on Monday… China Guangfa Bank Co Ltd (CGB) said guarantee documents, official seals and personal seals presented by the insurer of the bonds "are all fake" and that it has reported the matter to the police.

From China bank calls documents fake after bond default on Alibaba-linked platform | Reuters

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Tuesday, 27 December 2016

Enigma technology to make new ultra-secure bank card

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In a similar vein, Barclays customers will tap their PIN into a keypad mounted on the card which will create a range of security ciphers.

The codes will be generated at a timed interval by a tiny clock and appear next to the signature strip.

From Enigma technology to make new ultra-secure bank card

This is pretty much what the card will look like I think.

 Visa SuperSmartCard

Actually, I’m being a little naughty here. That picture is actually of the Visa SuperSmartCard, produced by Toshiba back in 1986, but I imagine the Barclays one will work in pretty much the same way.

Digital payment: Post demonetisation, which digital payment method to use? Here’s how to choose - The Economic Times

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Unified Payment Interface, or UPI, provided by various banks could be considered safer than other modes in this respect. In case of UPI, one needs to enter only the Virtual Payment Address, or VPA, of the recipient, which is more secure and easy than sharing credentials such as account numbers and IFSC codes.

From Digital payment: Post demonetisation, which digital payment method to use? Here’s how to choose - The Economic Times

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The Truth About Blockchain

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Financial services companies, for example, are finding that the private blockchain networks they’ve set up with a limited number of trusted counterparties can significantly reduce transaction costs.

From The Truth About Blockchain

This is not at all clear to me. If anyone has any actual figures about this I would be genuinely interested in looking at them.

Monday, 26 December 2016

Credit card providers fight to stay top of your wallet

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“Miles and points are cash, that’s what we teach people, and it’s certainly nice when the credit card companies are giving you $1,000, $1,500, $2,000 for getting a single credit card"

From Credit card providers fight to stay top of your wallet

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Monday, 19 December 2016

POST Reputation means transactions

There was interesting discussion on Twitter the other day (as there often is) about the relationship between identity and reputation. The discussion was in the context of “fake news” but it raised a number of general points about reputation and the reputation economy that are worth reflecting on. One particular point was whether a reputation must link one-to-one with a confirmed identity in order for the reputation to be useful. I think it doesn’t, and I can point to a particular case study which I think triggered a lot of this kind of thinking in my own mind.

Many many years ago in the early days of electronic commerce and digital money and online payments and all those good things, I came across a mailing list (I’m not sure what it was called it at the beginning but it later became known as the e$ list) that I found very useful. The list had links to interesting stories, discussions and very well-informed debate on the then very new topics of money and transactions in an interconnected world. One day, there was a message on the mailing list saying that it was going to be discontinued because the person or people running it couldn’t continue to do it as voluntary effort, so without some form of sponsorship they would have to stop.

Since my colleagues and I found a list very useful we stepped up to the plate and agreed to provide some sponsorship money. The list operator asked us to send the money to an ISP to cover their charges for the next six months or the next year or something. This we did and thus we became sponsors.

mailing lists (sponsored by Hyperion & C2Net Software)

From Welcome to the e$ Web Site

Now, it was only afterwards that I realised that we had just been through a commercial transaction with an entirely unknown counterparty. I didn’t know whether the mailing list was run by a person, a group of students, a rival company or agents of a foreign power trying to collect contact details of key players in the electronic money field. I didn’t know, and I didn’t care. The quality of the list established over a period of months (in other words, the reputation of the list) was the necessary ingredient for the transaction to take place. Of course, I later discovered that the list was curated by “Robert Hettinga” but that meant nothing to me and I had no clue whether he was a real personal not (he is: I've met him!).

My point is that reputation is sufficient. I did not know who or what was providing the news, but the news and the discussions were of sufficient quality to merit our money.

Man steals $1m, spends it on Game of War in-app purchases

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One sticky-fingered thief managed to embezzle over $4.8 million from his employer, and then went on to spend $1 million of it on Game of War in-app purchases.

From Man steals $1m, spends it on Game of War in-app purchases

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At UBS we are looking at ways to make it easier to share identities within financial services, so that if you have been successfully on-boarded at our bank, you can use your UBS credentials to quickly open a relationship with another. 

From

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Why Central Banks Should Offer Bank Accounts to Everyone - Evonomics

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Rather, it would provide the internet resources for retail users to access utility central banking as banks already can rather as internet giants like Facebook and Google syndicate their services through application programming interfaces.

From Why Central Banks Should Offer Bank Accounts to Everyone - Evonomics

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Why Central Banks Should Offer Bank Accounts to Everyone - Evonomics

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The result would produce ‘narrow banking’ most efficiently delivered and guaranteed by the central bank, alongside a commercial banking system that was far more focused on taking and managing risk and managing with far less government support and the consequent regulation.

From Why Central Banks Should Offer Bank Accounts to Everyone - Evonomics

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Sunday, 18 December 2016

The Hidden Costs of Cards

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On 23 December 2013, just before Christmas, Belgian merchants faced an outage of the domestic debit card scheme Bancontact for two and a half hours, costing them €51 million in sales. 

From The Hidden Costs of Cards

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POST The cost of policing payments

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regulators have imposed all kinds of measures upon the payments industry that can be grouped under the header of compliance, and that have been introduced to make life of criminals and terrorists more difficult: CDD, KYC, FATF, AML... All this comes at a price. Anti-Money Laundering (AML) efforts cost an estimated $7 billion annually in the U.S. alone.

From The Hidden Costs of Cards

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We erect (expensive) KYC barriers and the force institutions to conduct (expensive) AML operations. But suppose the KYC barriers were a lot lower so that more transactions entered the financial system. And the suppose the transaction data was fed, perhaps in a pseudonymised form, to a central AML factory, where AI and big data, rather than clerks and STR forms, formed the front line.

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Therefore detection requires behavioral pattern analysis of transactions occurring over time and involving a set of (not obviously) related real-world entities.

From Detecting Money Laundering — Startup.ML Conf

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Wednesday, 14 December 2016

How to spot a half-baked blockchain | MultiChain

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if blockchains (in the sense of useful peer-to-peer databases) are ever going to emerge as a coherent product category, it’s important to distinguish between half-baked and real solutions

From How to spot a half-baked blockchain | MultiChain

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Venezuela pulls highest-value banknote 'to strike against mafia' - BBC News

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President Maduro said there were "entire warehouses full of 100-bolivar notes in the [Colombian cities of] Cucuta, Cartagena, Maicao and Buaramanga".

From Venezuela pulls highest-value banknote 'to strike against mafia' - BBC News

I was quite surprised to read this, given that the 100-bolivar note is worth about 10p, but whatever.

Cashing In or Cashing Out? | National Retail Federation

Perry Kramer, vice president and practice lead at consultant Boston Retail Partners, contends that as many as 80 percent of retailers today are already largely cashless

“Retailers don’t really want to be banks. It’s not their sweet spot,” he says. “It is much less expensive to process credit and debit than it is cash, because cash has a lot of labor involved.”

From Cashing In or Cashing Out? | National Retail Federation

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Tuesday, 13 December 2016

Lloyds fails on fee-free in no-frills bank accounts market | Reuters

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Banks have said that providing such accounts to the financially vulnerable is a loss-making business for them

From Lloyds fails on fee-free in no-frills bank accounts market | Reuters

They are. Of course. What almost all of these finally vulnerable people need is a payment account, not a bank account. A simple, pre-paid account with a decent app able to nudge them to help them. And it needs to have a low regulatory overhead so that it works for all of the stakeholders.

Sunday, 11 December 2016

 

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Modi’s surprise announcement wiped out 86% of the nation’s currency overnight, leaving the vendors at Panjim’s fish market to suffer heavy losses. “Nobody has cash, so they’re not buying fish.”

From ‘Who buys fish with a credit card here?’ Traders scoff at Goa’s bid to ditch cash | World news | The Guardian

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From January, Goa’s government has announced that the city will go “cashless”, meaning every street vendor, rickshaw driver and shopkeeper must offer their customers the option to pay using a debit card or mobile phone.

From ‘Who buys fish with a credit card here?’ Traders scoff at Goa’s bid to ditch cash | World news | The Guardian

Is it possible to imagine Goans buying fish without cash? Well, yes. Look at Kenya, where there are now more than 33 million mobile money users and 174,000 mobile agent locations. The most recent figures from the Central Bank of Kenya (CBA) show an astonishing trend. From February 2013 until September 2016, the number of monthly M-PESA transactions almost tripled, going from 53 million to 131 million, while the number of card transactions fell from 34 million down to 18 million. Yes, you heard that correctly. While mobile money using was tripling, card use was halving. I am told by reliable sources that one of the key reasons for this, apart from M-PESA being accepted  at some 150,000 retail outlets now in a country with only around 10,000 cards terminals, is that when it came time to re-issue EMV cards for Kenyan bank customers, the customers had to go their local branch, with identification, and stand in line to get their new card. Many of them just didn’t bother, especially since they had already started to use mobile money instead of cards.

Central Bank of Kenya statistics show a decline in the use of credit and debit cards, despite the number of Kenyans holding them rising.

From Which payment system is best for when you are drunk? M-PESA! | Consult Hyperion

Anyway, the point is that an astonishing 96% of Kenya household now have at least one M-PESA users. That means, to all intents and purposes, that mobile money is an alternative to cash. That’s not to say that the cards guys are taking it laying down. They can read the papers just as well as I can, and so they have begun to look at alternatives to the dip, tap or swipe at point of sale and are investigating more mobile-centric alternatives.

Visa, has entered into partnership with Ecobank,  to roll out “mVisa,” an innovative mobile payment service in 33 African markets by year-end. Mvisa enables consumers to pay for goods and services for their everyday expenses from  groceries to  taxi services by simply scanning a QR code on a smart phone or entering a merchant identification number into their feature phones

From Mobile Money Africa

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These figures are fascinating and they show just how effective a mobile solution can be. Hence my thinking that it may have been better for India to have waiting until the more flexible regulatory had begun bear fruit before. I’m going to blog in more detail about the Indian experiment as more data comes in, 

Mobile Money Africa

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The surge in use, however, comes as the Treasury cautioned that the entrenched use of mobile money in the country posed fiscal risks to the economy if the service collapses.

From Mobile Money Africa

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Saturday, 10 December 2016

Cash circulation: from robotization to countering “black box” attacks against ATMs. First summary of PLUS-Forum 2016

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Cybercriminals can already read information from the card chip  Artyom Sychev, Deputy Director, General Directorate of Security and Information Protection, Bank of Russia 

From Cash circulation: from robotization to countering “black box” attacks against ATMs. First summary of PLUS-Forum 2016

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Blockchain: An Answer to Identity? - NASDAQ.com

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With the blockchain, you gain access to two things. On one hand, you could select only the pertinent information required for that transaction-and entering a bar through a bouncer is a transaction. In this case: name, picture, and age. On the other hand, the bouncer can rest easy knowing that once something is hashed into the blockchain, it can't be changed; new information can only be appended and there is a transparent record of all changes.

From Blockchain: An Answer to Identity? - NASDAQ.com

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Thursday, 8 December 2016

Starbucks Unveils Five-Year Growth Plan, Introduces Voice Payment Feature | Bank Innovation

Starbucks has announced its new MyBarista service that will allow people to order (and pay, of course) using chat and voice interfaces.

Starbucks Mobile App customers will be able to place their orders via voice command or messaging interface,

From Starbucks Unveils Five-Year Growth Plan, Introduces Voice Payment Feature | Bank Innovation

Wednesday, 7 December 2016

POST Venmo vs. banks vs. GAFAM

I noticed an e-mail from Business Intelligence that says

Mobile Peer-to-Peer payments in the U.S. are forecast to grow from $5.6 billion in 2014 to nearly $175 billion by 2019 as consumers increasingly skip the hassle of writing a check or going to an ATM. But smartphone vendors like Apple could cripple the dominant player of 2016 (Venmo) if they make a serious push to own the space.

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Volumes and value

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Frictionless Payments: Will they become a Mirage | David Parker | Pulse | LinkedIn

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One result of this could be is that we see consumers starting to more and more use the Direct Debit system

From Frictionless Payments: Will they become a Mirage | David Parker | Pulse | LinkedIn

David is completely right to point out that SCA just doesn’t fly - it just doesn’t work in the modern world. But as it stands it means that you will have to re-authenticate when you get out of an Uber. There’s no concept in the legislation of the “cardholder was present” token-in-device options for payments. What the Commission wants, of course, is for you to opt out of the “proprietary” (i.e., American) card options and use the direct-to-account options instead.

Sunday, 4 December 2016

Terror suspect dodges deportation by refusing to reveal his real identity for 23 years

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The man, despite being twice ruled a threat to national security, has defeated repeated attempts to deport him by illegally keeping his true identity secret.

From Terror suspect dodges deportation by refusing to reveal his real identity for 23 years

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Government plans mandatory biometric ID | The Times of Israel

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Interior Minister Aryeh Deri published a memorandum on Thursday recommending that all Israeli citizens be required to obtain a biometric identity card, with personal details stored on a digital database.

From Government plans mandatory biometric ID | The Times of Israel

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Govt plans Aadhaar-based app to replace debit, credit cards, PIN numbers - Livemint

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The government is concurrently working on developing a common mobile phone app that can be used by shopkeepers and merchants for receiving Aadhaar-enabled payments bypassing credit and debit cards, PIN and password.

From Govt plans Aadhaar-based app to replace debit, credit cards, PIN numbers - Livemint

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