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iWallet from Apple

iWallet – Apples new iOS feature is on its way

This week, Apple AAPL -1.4% unveiled the first large-scale integration of iBeacon, a technology that, when coupled with their fingerprint identification system, may be another building block in building a revolutionary new payment system.

What is iBeacon?

Before we go into the details as to how this new frictionless approach to payment will work, let me explain what its component pieces are. In very simple terms, iBeacon is an indoor positioning system. While your GPS can identify where you are, its accuracy can be limited by a number of factors when you are indoors. So iBeacons are little radio transmitters that use very small amounts of electricity and can send information to a smartphone. The technology leverages improvements in the Bluetooth standards called Bluetooth Low Energy and is available on every iOS device since the iPhone 4S and every Android phone that supports Bluetooth 4.0 and Android OS 4.3 or later (that means that popular devices like the Samsung Galaxy S III and 4, the Nexus 4 or later, HTC One, and Droid DNA all support it).

When a consumer gets close to an iBeacon, information can be pushed to their device via push messages and the consumer’s location is made available to the retailer, which can allow for such uses as in-store specific promotions or payment capabilities.

This week, Apple rolled out the technology in all its stores. The iBeacon was incorporated into its Apple Store App, which allows consumers to skip the register lane and purchase items directly from their device when shopping for holiday items. With over half a billion users on iTunes, the company has a large trove of credit card numbers from most returning members, allowing it to optimize the payment process for existing customers.

How they rolled it out is an interesting case in widespread enablement of new technology. In order to understand how such a rollout can happen quickly and quietly, one needs to delve into the technical specification for what is happening. And that’s where things get interesting.

The following line was buried in the iBeacon specifications for developers:

“The Objective-C interfaces of this framework allow you to do the following:

•Scan for Bluetooth accessories and connect and disconnect to ones you find

•Vend services from your app, turning the iOS device into a peripheral for other Bluetooth devices

•Broadcast iBeacon information from the iOS device

Objective-C is the programming language used by iOS developers. Vending service from an app made it clear that the technology is not just about location. But the last line about broadcasting iBeacon information from the iOS device is the important clue here. With this, Apple has essentially declared that every iPhone, iPod Touch, or iPad sold since the iPhone 4S can turn into an iBeacon.

In a world where an increasing amount of point of sales systems are being replaced by iPads, this is a revolution in the making as Apple can now have local broadcasting in every store using an iPad. But how does that tie to payments?

Apple iWallet

In order to understand how Apple can do payments quickly, one has to take a step back and think of where Apple stores information: for most users, that information is stored in iTunes, gathered the first time they paid 99 cents for a music track, TV episode, movie, or app. That information has quietly added up to around half a billion different customer, a trove of data only match by Amazon in terms of sheer size.

Earlier this year, with the rollout of iCloud Keychain on mobile devices, Apple started taking information from iTunes and Mac computers down to their users’ devices. With loyalty cards increasingly being stored into Passbook and credit card information being stored in iCloud Keychain, Apple has been downloading the content of consumer wallets onto its devices, leaving only cash as the use case it does not directly compete with.

To secure all this, the company has been leveraging the one unique thing that customers will always have with them when they’re using their phone: their fingers. With the release of the iPhone 5S, the Cupertino giant unveiled the touchID system, which allows users to use their fingerprint to unlock a device. It is clear that Apple has found ways to uniquely tie that fingerprint to information on the device, creating a secure key based on a user’s unique pattern.

The net result is that, when combined with iCloud Keychain and Passbook, an iOS device sporting touchID is now more secure than a physical wallet.

And since any iOS phone can turn into a point of sale, the last thing remaining in your wallet can easily be replaced as Apple has turned your phone into both an outbound payment system and a system that could potentially receive money too, with no physical credit card being required.

Winning through reduced friction

With such a large opportunity, it’s obvious that competitors are bound to emerge and they have. Square, for example, was an early mover, offering a credit card scanner that attaches to smartphones and iPads. Meanwhile Google GOOG +1.16% has been trying to push the Google Wallet, a piece of software that was supposed to replace user’s wallets but has been increasingly moving away from the space; the large mobile companies (Verizon, AT&T T +0.82%, Sprint) have banded together to back ISIS, a solution that is supposed to allow users to pay with their phones.

While Square has focused on leveraging the existing payment systems (credit or debit cards), all the other players have had difficulties trying to enable a frictionless approach to mobile payment. Google wallet required widespread deployment of NFC on both registers and devices, a solution that was too expensive for more businesses; the ISIS conglomerate found its different stakeholders arguing over control, bringing its product to the market in a fashion that requires not only specialized hardware on the device but also a trip to the wireless carrier store to replace one’s SIM card in order to enable the capability.

The net result is that those previous efforts have largely failed because they required too much work on the part of the user. By building the components one by one and providing value around each of them, Apple may be close to assembling a complete payment revolution.

In the past few years, it has gotten user’s payment information by asking them to enter it into ITunes when they bought an app, a video, or some music. This allowed the company to build up a large database of payment details. Then it added iBeacon to every new device it rolled out without asking anything of its users. Later, it pushed users to share their payment information on the device through iCloud keychain by saying it would also synchronize passwords in the process; and finally, it unveiled fingerprinting as an easier way to unlock the iPhone.

Every step of the way, the company focused on reducing friction and providing increased value for the user when its competitors asked the users to do more work. The net result is that users have voluntarily provided all the components Apple now needs to enable a payment revolution. And we’re about to witness the rise of the iWallet, maybe not this year but pretty soon.

Crowd Funding – So what is it all about?

Which are the best ‘crowdfunding’ websites?

You can fund anything from a Happy Days production backed by the Fonz to a pizza delivery company. We show you where to go.

s the phenomenon of “crowdfunding” – where entrepreneurs or more or less anyone asks the public to put cash into their proposed venture – getting out of control?

Numerous websites have sprung up offering one version of crowdfunding or another. The websites allow those seeking finance to publish details of their project including how much cash they need, how they will use it and how investors stand to profit (if at all) in future.

Some of the sites vet the fund-raisers – others don’t. In most cases the investors, who can usually subscribe as little as £10 per venture, are offered shares in the business.

But the craze has grown so fast that one high-profile figure who successfully used a crowdfunding website to raise money for a business venture now wants to set up a site of her own. Nicola Horlick, the controversial fund manager who was dubbed “superwoman” in the Nineties for juggling a career and family, announced plans to launch Money&Co, a crowdfunding website, early next year. Ms Horlick has set up the company on the back of her own crowdfunding success, as earlier this year she raised £150,000 for film finance company Glentham Capital in only 22 hours.

According to Ms Horlick, it is a “no-brainer” that crowdfunding has become so mainstream, given that banks are not lending to small business and savers are fed up with receiving paltry interest rates in bank and building society accounts. “Crowdfunding is all about cutting out the middle man and allowing small businesses to get the funding they need without banks taking a slice of their margins in fees from when firms take out business loans,” she said. “For savers, these ventures offer the potential for much greater returns.”

The websites make money too, of course. This is usually in the form of a percentage – typically 7pc – of money raised. And sometimes the site also takes a slice of returns paid to investors, too.

But what about risk? The watchdog, the Financial Conduct Authority, is taking a close interest in crowdfunding – and wants to ensure private investors fully understand the risks they are taking. Ms Horlick said of her proposed website that each venture seeking to raise capital would have guidance ratings, from one to five stars. And even then, only businesses that pass her vetting will be allowed onto the site. Ms Horlick said this would help savers understand the level of risk they were undertaking for the business ventures they were backing.

Apart from the potential returns, some of the business proposals listed on crowdfunding sites qualify for special tax reliefs under the Enterprise Investment Scheme (EIS) or Seed Enterprise Investment Scheme (SEIS) rules. This gives investors generous tax breaks, such as being able to claim back income tax on the money they invest. Here, as a guide to potential investors, Your Money looks at the best-known crowdfunding sites, the types of business they seek to support – and their success to date. is one of the longest-established sites providing a variety of firms, from motor companies to pizza delivery firms, the opportunity to pitch for funding. Many of these businesses are already successfully operating and are seeking investment to expand their footprint in a particular market. Investors can view a business plan and a video, which details why the company is seeking funding and the potential rewards on offer.

All businesses are vetted by Crowdcube and must present business plans with at least three years of financial projections.

Number of businesses hosted: 429

Total money raised: £15.3m

Percentage of businesses withdrawn due to not raising enough money:80pc is another well-known site, but has a greater focus on listing entrepreneurial firms that focuses on helping entrepreneurs gain their first seed capital

Investors can back a start-up firm by providing seed capital, for as little as £10, in exchange for equity.

Seedrs is currently seeking to raise £250,000 for a production of Happy Days, a stage production due to tour Britain, based on the Seventies American sitcom of the same name and featuring the “Fonz”.

The company carries out full due diligence with all of the enterprises that list. But the firm also argues it is best “left to the crowd” to decide if the business is worthy enough to invest in.

Number of businesses listed: 300

Total money raised: £2.3m

Percentage of businesses withdrawn due to not raising enough money:80pc

A newer entrant to the crowdfunding space is, whose model differs. Here, small investors are sought to “top up” substantial stakes in a business that has already been bought by established “dragons” or lead investors. The lead investors must contribute at least 25pc of a firm’s funding.

Because small businesses need to procure funding from angel investors ahead of being listed on the website, arguably these businesses have a greater chance of reaching their full fundraising targets.

Number of businesses listed: Seven

Total money raised: £950,000

Percentage of businesses withdrawn without raising enough money:None to date

An even newer player is InvestingZone, which launched in May 2013. Like other crowdfunding websites, the firm gives investors access to some potentially great early-stage companies. The firm only allows people to invest if they understand the risks they are taking on. Those that want to invest must pass a test on the crowdfunding market.

Number of businesses listed: Nine

Total money raised: £966,000

Percentage of businesses withdrawn without raising enough money:None

Best of the rest

There are plenty of other crowdfunding websites out there, the majority of which operate in niche areas. For instance, Unbound is both a crowdfunding website and a publisher. Another niche player isMoolaHoop, which exclusively lists business ventures from female entrepreneurs.

There are also a number of sites that solely target green-energy crowdfunding. Some of the leaders in this field include Abundance Generation and Trillion Fund, which both specialise in renewable-energy start-ups.

Telegraph 13/11/2013

For help on Crowd Funding please check out Digital Business Consultants at