August 30, 2022
Photo: David Paul Morris/Bloomberg via Getty Images
Good morning, and welcome to Protocol Fintech. This Tuesday: FedNow gets a timeline, restaurants discover the blockchain, and “buy now, pay later” finds new markets.
Want a dinner reservation? Buy an NFT. That’s the answer for hard-to-get tables like one at New York City’s Dame, according to the Infatuation. NFT-based membership costs $1,000. At San Francisco’s Sho, a restaurant atop Salesforce Park, NFT memberships start at $7,500 and offer “priority” reservations. Since NFTs can be readily sold and transferred, it seems like this is a recipe for hyper-financialized table scalping: Just rent the NFT for the night and get the table you want. It seems like it’s only a matter of time before restaurants discover the holes in this business model.— Owen Thomas (email | twitter)
Get ready for a 2023 summer blockbuster for payments tech: The FedNow system will launch between May and July next year, the Federal Reserve announced Monday. The new system promises to modernize the way thousands of institutions move money and allow for greater use of instant payments, a category where the U.S. lags behind much of the world.
The shift to real-time payments is "inevitable," Fed vice chair Lael Brainard said Monday. Brainard's speech to a group of FedNow early adopters gave the most specific timeline yet from the Federal Reserve on FedNow’s launch.
The system could mark the biggest upgrade to U.S. payments tech in decades. Payments company Modern Treasury noted it's the "first new payment rail in the United States since the introduction of the Automated Clearing House (ACH) in the early 1970s."
The U.S. is way behind on rapid payments. Less than 1% of payments in the country were settled in real time last year, according to a report from payments processor ACI Worldwide.
FedNow's launch could also influence the debate around a central bank digital currency. Fed Gov. Michelle Bowman said recently that FedNow could address many of the same issues as a digital dollar, and Neel Kashkari, the president of the Minneapolis Fed, has been a loud critic of CBDCs. Brainard avoided that topic in her remarks Monday, focusing instead on the ability of rapid payments to help families avoid costly fees for late bill payments or overdrawn accounts. "During the pandemic, we witnessed how essential rapid access to funds can be," Brainard said, "as many households started spending emergency relief payments on the day they were received."
— Ryan Deffenbaugh (email | twitter)Interested in payments? Don’t miss Protocol’s Tomio Geron upcoming panel. On Sept. 8 at 10 a.m. PT/1 p.m. ET, tune in to hear from him and industry experts about the big changes in America’s payments infrastructure and the challenge of catching up with innovation overseas. Reserve a spot now.
How cybercrime is going small time: Cybercrime is often thought of on a relatively large scale. Massive breaches lead to painful financial losses, bankrupting companies and causing untold embarrassment, splashed across the front pages of news websites worldwide.
“Buy now, pay later” users are using the services to buy groceries. There were $45.9 billion in “buy now, pay later” transactions made online in 2021 in the U.S., up from $15.3 billion the year before — with food a small but important growth area for that spending.
Lawmakers have some questions about a “shoot now, pay later” fintech that helps people buy guns. A group of 18 Democrats in Congress want Credova Financial to detail how it ensures guns purchased with “buy now, pay later” financing are not being quickly resold to other buyers, among other concerns.
OpenSea's NFT trading volume has sunk. Trading volume on the leading NFT marketplace is down 99% in just under four months, Fortune reports.
Sam Bankman-Fried says FTX is not buying Huobi. He took to Twitter to shoot down rumors aired a couple of weeks ago that FTX would buy the rival crypto exchange.
Credit scores are still at an all-time high. The national average credit score is 716, unchanged from a high point reached a year ago, according to a new report from FICO.
A DeFi protocol lost $661,000 because of a programming blunder. OptiFi accidentally used the "solana program close" command while designing an upgrade, resulting in the permanent closure of the platform, the developer said (the platform promised to return customer funds through another method).
Limited partners are taking a closer look at crypto VC funds, which CoinFund’s David Pakman says are “an immature asset class where the risks are hard to fully quantify.” Hacks have some investors getting nervous: “So far it hasn’t been a serious issue, but definitely something to discuss further with managers going forward,” Accolade Partners’ Atul Rustgi told the Wall Street Journal.
How cybercrime is going small time: People have been swindled since before man created monetary systems. These aren’t new crimes; just new ways to commit them. But as cybercrime increasingly goes small-time, those on the front lines will need new and more effective ways to fight it.
Thanks for reading — see you tomorrow!