As the trading week gets under-way, once again it is the political world that has the attention of markets. Below David Jones, Chief Market Strategist at Capital.com, discusses his thoughts on this week’s markets.

The decision by the UK's Brexit Secretary David Davis to resign late on Sunday evening may have been expected to unsettle some - but that hasn't been the case so far. At mid-morning, the UK stock market was slightly higher and that Brexit-barometer - the pound - was trading at its best levels for almost a month. At first glance, this rise might seem somewhat illogical. But traders seem to be taking the weekend discussions and Davis's resignation as the sign that a soft Brexit could be on the cards - although the resignation does not exactly add much stability to Prime Minister May's government.

Politics is likely to be making the headlines for the rest of the week as US President Trump visits the UK. But it's another important week for the US markets as it is the start of earnings season. It kicks off on Tuesday with Pepsico but the main focus is likely to be Friday when the banks such as JP Morgan and Citigroup reveal how the last quarter was for their businesses. Expectations are running high that the last three months have been good ones - any misses here could well dent the near 105% recovery US stocks have enjoyed over the past three months.

In other markets, oil remains just below its recent three and a half year high. The last 12 months have seen the crude price rise by 70%, with little impact so far on the bigger economic picture. It does feel as if something needs to give here - $100 a barrel oil would surely start to slow down the world economy, but for now at least any dips in the price of crude just serve to fuel more buying.

(Source: Capital.com)

Today Rebecca O’Keeffe, Head of Investment at interactive investor, reports on the latest market updates, with expert insight into import/exports markets and investment.

“Equity markets are under significant pressure in early trading as the global trade war is expected to come into clearer focus this month.  In Europe, various leaders face acute political pressures of their own, with Angela Merkel struggling over immigration concerns and Theresa May facing another perilous month of Brexit negotiations.  Previously, investors have used significant market falls as a chance to buy the dips, however, with all these headwinds, it is difficult to view current market weakness as a buying opportunity.

“After spending weeks not fully pricing in the downside risks, as investors hoped that there would be a last-minute reprieve rather than a global trade war, investors are waking up to the potential reality of a trade war and what that means for the wider markets. Falling Chinese exports will subdue the commodity markets, individual tariffs will markedly affect sectors and their wider supply chain, and the prospect of a downward spiral is very real.

“After largely surviving the pressure during the first half of the year with markets broadly unchanged, investors may find that the second half of the year, including the unpredictable summer months, may prove even more volatile than usual, delivering some opportunities, but increasing the threats for investors.”

CNN's Jon Sarlin explains how Uber moved into the biggest market in the country and defeated the formidable yellow cab industry.

Last week, stock markets fell globally in the wake of US President Trump's latest tariffs threats to China. Donald Trump threatened to put tariffs on an extra $200bn (£141bn) of Chinese goods, further fueling the prospects and worries of a trade war.

This week Finance Monthly set out to hear Your Thoughts on the potential for an international trade war, gaging the opinions of experts and professionals around the world.

We asked them: What do you think about this? How will this change things internationally? What might be the short-term reactions and impacts? What about the long term? How will you be affected? How will small businesses be affected? Who will benefit from what's to come? Is this a good strategy? What are the political and social repercussions?

Miles Eakers, Chief Market Analyst, Centtrip:

Investors are right to be concerned as Wall Street futures dropped by almost 2% following Trump’s threats to impose more tariffs. Any retaliation by Beijing is likely to fuel the escalating trade war with Washington, which will in turn have a negative impact on equities and increase risk aversion.

Investors are not the only ones troubled by the current situation. The world’s largest superpowers’ shift towards protectionism has global ramifications. International companies may grow less competitive due to tariffs and the cost of raw materials purchased overseas could rise by 10–20%. It’s highly possible that any further action from the US or China could put an end to the current 10-year bull market run.

Kasim Zafar, Portfolio Manager, EQ Investors:

An all-out trade war is unlikely and we believe this will be avoided in favour of mutually agreeable changes on both sides.

The world last entered trade wars on this scale early during the Great Depression. The Smoot-Hawley Tariff was entered into US law in June 1930, about 8 months after the “great crash”. There are mixed opinions on whether the tariffs added to the economic depression or only slowed down the ensuing recovery. But it is generally agreed the tariffs themselves were not the main cause of the Great Depression

Today there are few, if any, of the conditions that presaged the Great Depression. But the world is a different place today compared to the 1930’s. The most significant difference is the interconnected nature of global supply chains that have been built by companies in the post-War era. Abrupt changes along the supply chain in terms of physical supply or associated cost will have immediate impacts on the total costs of production. Companies are not charities, so if the cost of production goes up, so too will product prices on the shelf.

The impacts will differ between companies and across nations dependent upon:

• the specific tariffs enforced;
• the speed with which reciprocal tariffs are imposed, if at all; versus
• the speed with which companies can redirect their supply chains and adjust their customer demand bases; and
• the proportion of tariffs absorbed by companies within their profit margins to remain competitive against local and international peers

The UK runs a goods deficit of over £130 billion per annum of which about 10% is with the US directly. So for the average UK consumer, the direct implication of US originated tariffs on items we buy is fairly limited in scope. The impact of tariffs on things we sell is limited also with only about 10% of UK exports heading for the US directly. The bigger risk we face is the secondary impacts from companies and countries that are impacted to a higher degree:

• The tariffs would see a fall in global trade and excess production capacity around the world.
• This would undoubtedly be deflationary for the rest of the world and inflationary for the US.
• So in the short term, it could actually mean lower prices for UK consumers as companies try to boost demand for the excess capacity and high inventories by lowering prices.
• However, with the US representing about 20% of developed market trade, any significant drop in sales to this region will create severe negative economic effects elsewhere.
• This means companies would likely downsize in the face of lowered current and expected future demand. The interconnected nature of global trade means the impact of downsizing will ripple across countries.
• Jobs will be at risk and the UK will not be immune.
• Specific items that are the subject of reciprocal tariffs by the UK or EU towards the US would see price increases. Currently this appears to be focused on jewellery, whiskey and rear view mirrors, although orange juice, denim and motorcycles and are also in the firing line!

Carlo Alberto De Casa, Chief Analyst, ActivTrades: 

The trade war escalation is unsurprisingly scaring the markets. The main reason for this is actually the belief that this is only the beginning of the escalation, as China has already clarified that it will reply to US tariffs with its own. Of course, this could have many impacts. In the short term, US companies which are importing will have to pay more, while advantages for US producers will be positive, even if that’s a much smaller proportion overall. But what is scaring markets is definitely the long-term scenario, that the trade war will grow to affect more economical sectors.

This won’t only affect the big companies, it could also have a serious impact on smaller ones and retail consumers. A typical example to explain this is something like the beer can, the cost of which will rise due to the aluminum tariffs. The implications can be far wider than what you might originally think.

It is difficult to say whether this is a good strategy; we can surely affirm that this is a risky strategy as you can’t completely predict or control the effects it will have, especially in the long term. The ball is now firmly in the court of those who trade with America.

There’s little certainty that this will help drive the US economy. If this is the effect wanted by Donald Trump, then you have to consider that the tariffs which will be decided by other countries are what will drive the results. It could at best create jobs in one sector, but the additional jobs generated will likely result in a loss in other sectors. Overall, it’s hard to see this policy accomplishing its goals.

Bodhi Ganguli, Chief Economist, Dun & Bradstreet:

Rising protectionist measures from the US government are creating significant uncertainty for global businesses and adding to cross-border risks. After some optimism that the US hardline stance on tariffs was softening a bit, new announcements from the administration have re-ignited fears that the ongoing skirmishes could blow up into a full-fledged trade war, particularly between the US and China. The latest announcement came from President Trump on 22^nd June when he threatened to impose new tariffs of 20% on auto imports from the EU unless the EU removed tariffs on US goods. It should be noted that, some of these EU tariffs on US exports went into effect earlier the same day; these were retaliatory tariffs in response to US tariffs already implemented on steel and aluminum (most trading partners were exempted, except the EU, Canada and Mexico). Equity prices of major European automakers dropped immediately following the announcement, highlighting the intricacies of global supply chains and their dependence on smooth trade flows between nations. In fact, all major global stock markets have seen episodes of selloffs in the past few weeks in reaction to worries that trade restrictions are rising.

The latest round of proposed US barriers to free trade have come with a pronounced inclination by the US to move away from traditional norms of multilateralism based on the WTO principles, including measures specifically directed at longtime allies like the EU and Canada. This has the potential to spill over into other areas of geopolitical risk, and pose added headwinds to the global economy. While the extent of the EU retaliation is modest so far, other countries are stepping up or planning ‘tit-for-tat’ tariffs against the US. India just hiked tariffs on a selection of US goods, while similar Canadian tariffs are scheduled to come into effect on 1^st July. Of course, the biggest risk of disruption comes from the US-China spat; earlier the same week, China threatened to hit back with a combination of quantitative and qualitative measures after President Trump ordered his team to identify USD200b in Chinese imports for additional tariffs of 10% with provision for another USD200b after that if China retaliates. The global economy is still expanding; although divergences in policy are signaling desynchronization in the near term, it can still withstand some fluctuations in equity indexes. But the bigger underlying risk is that if the trade rhetoric does not die down, or if it becomes a significant headwind, stock markets will face sustained downward trends as investor confidence is impaired, eventually leading to a spillover into the real economy.

We would also love to hear more of Your Thoughts on this, so feel free to comment below and tell us what you think!

It is becoming clear that trade digitisation has huge potential to unlock access to world trade for small-to-medium-sized enterprises (SMEs). The move away from laborious, manual, paper-based processes will lever simpler access to trade finance, now that it is being provided by more agile, technology-friendly alternative funding providers. Here Simon Streat, VP of Product Strategy at Bolero International, discusses the new wave of digital change and the drive it’s providing for SMEs worldwide.

Regulatory burden has meant that SMEs often don’t fulfil certain criteria for banks to justify lending to. The demands of anti-money laundering (AML), Know Your Customer (KYC) rules, sanctions and other banking stipulations have been deemed too time-consuming and too costly to be worth the trouble where smaller exporters and importers are concerned. This is a significant blow, since by some estimates, more than 80% of world trade is funded by one form of credit or another. Until now, if your business was deemed too small to be worth considering for finance, there was hardly anywhere else to go.

The result has been deleterious to the prosperity of SMEs and detrimental to international trade. In 2016, the ICC Banking Commission’s report found that 58% of trade finance applications by SMEs were refused. This, as the authors pointed out, hampered growth, since as many as two out of every three jobs around the world are created by smaller businesses.

This rather depressing view was supported by a survey of more than 1000 decision-makers at UK SMEs which was conducted in February this year by international payments company WorldFirst. It found that the number of SMEs conducting international trade dropped to 26% in Q4 2017, compared with 52% at the end of 2016. Economic conditions and confidence have much to do with this, but so does access to trade finance.

There is a growing realisation, however, that if digitisation makes sense for corporates seeking big gains in speed of execution, transaction-visibility and faster access to finance and payment, it definitely will for SMEs. The ICC Banking Commission report of 2017 estimated that the elimination of paper from trade transactions could reduce compliance costs by 30%.

Over the past few years, for example a number of trade digitisation platforms have emerged offering innovative business models for supplying trade finance and liquidity, while optimising working capital, and enhancing processes for faster handling and cost savings. Progress is under way, but it requires expertise.

Fintechs in trade hubs such as Singapore, where there is huge emphasis on innovation, are taking the lead, transforming the availability and access to finance for SMEs. By making the necessary checks so much faster and easier and opening up direct contact with a greater range of banks, digital platforms enable customers to gain approval for financing of transactions that would otherwise be almost impossible. Not only that, they enjoy shorter transaction times and enhanced connectivity with their supply chain partners.

If we scan the horizon a little further we can also expect to see SMEs benefit from the influence of the open banking regulations, which require institutions to exchange data with authorised and trusted third parties in order to create new services that benefit customers.

Although the focus of these new regulations is primarily the retail banking sector, the tide of change will extend to trade finance, creating a far more sympathetic environment for the fintech companies and alternative funders. Yet the fintechs cannot do it alone, they need to be part of a network of networks that operates on the basis of established trust and digital efficiency.

No technology can work unless it is capable of satisfying the raw business need of bringing together buyers, sellers, the banks into transaction communities. That requires the building of confidence and the establishment of relationships, along with – very importantly – a real understanding of trade transactions and the processes of all involved. It also requires on-boarding and you can only achieve that once everyone knows a solution will deliver the efficiency gains it promises, as well as being totally reliable, secure and based on an enforceable legal framework. All this requires a level of expertise and insight that cannot simply be downloaded in a couple of clicks.

Nonetheless, it seems pretty obvious that thanks to digitisation, the market for SME financing in international trade is set for real expansion.

In light of Donald Trump’s dramatic withdrawal from the Iran Nuclear Deal, Katina Hristova examines how the pullout can affect the global economy.

As with anything that he isn’t fond of, US President Donald Trump hasn’t been hiding his feelings towards the Joint Comprehensive Plan of Action between Iran and the five permanent members of The United Nations Security Council plus Germany. Pulling the US out of the agreement on the nuclear programme of Iran, which was signed during Obama's time in office, is something that Trump has been threatening to do since his 2016 election campaign. And he’s only gone and done it. Earlier this month, he announced America’s immediate withdrawal, saying that the US will reimpose sweeping sanctions on Iran’s oil sector and that “Any nation that helps Iran in its quest for nuclear weapons could also be strongly sanctioned by the United States”. And as if this isn’t alarming enough, President Trump has also said that the US will require companies to ‘wind down’ existing contracts with Iran, which currently ranks second in the world in natural gas reserves and fourth in proven crude oil reserve, in either 90 days or 180 days. This would hinder new contracts with Iran, as well as any business operations in the country.

Since Washington’s announcement, signatories of the Iran Nuclear Deal, still committed to the agreement, have embarked on a diplomatic marathon to keep the deal alive. On 25 May, Iran, France, Britain, Germany, China and Russia met in Vienna in a bid to save the agreement.

So how will this hurt the global economy?

Deals worth billions of dollars signed by international companies with Iran are currently hanging by a thread. The main concern on a global scale is that the US’ decision threatens to cut off a proportion of the world’s crude oil supply, which has already resulted in an increase in oil prices, with crude topping $70 a barrel for the first time in four years.

Additionally, European companies like Airbus, Total, Renault and Siemens could face fines if they continue doing business with Iran. Royal Dutch Shell, who is investing in the Iranian energy sector, is potentially one of the biggest companies to be affected by Trump’s withdrawal which could put billions of dollars’ worth of trade in jeopardy. As The Guardian points out: “In December 2016, Royal Dutch Shell signed a provisional agreement to develop the Iranian oil and gas fields in South Azadegan, Yadavaran and Kish. While drilling is still a long way off, sanctions are likely to put any preparations already being made on ice.”

French company Total, who’s involved in developing the South Pars field, the world’s largest gas field in Iran, is in a similar situation.

Airbus and Boeing, two of the key players in the international aviation industry, have signed contracts worth $39 billion to sell aircraft to Iran. As The Guardian reports, the most significant deal is an agreement by IranAir to buy 100 aircraft from Airbus.

A spokesman from Airbus said that jobs would not be affected. “Our [order] backlog stands at more than 7,100 aircraft, this translates into some nine years of production at current rates. We’re carefully analysing the announcement and will be evaluating next steps consistent with our internal policies and in full compliance with sanctions and export control regulations. This will take some time”. Rolls Royce is also expected to be indirectly affected if Airbus loses its IranAir order, as the company is the key engines provider to many of those aircraft models.

Another European company that will be hurt by the sanctions announcement is French Renault and PSA, who owns Peugeot, Citroën and Vauxhall. When sanctions were lifted back in 2016, Renault signed a joint venture agreement with the Industrial Development & Renovation Organization of Iran (IDRO) and local vehicle importer Parto Negin Naseh, worth $778 million, to make up to 150,000 cars in Iran every year. This is one of the largest non-oil deals in Iran since sanctions on the country were lifted. Last year, local firm Iran Khodro also signed a deal with the trucks division of Mercedes-Benz, with car production scheduled for this year.

Iranian firm HiWEB has been working alongside Vodafone to modernise the country’s internet infrastructure, but it looks like the partnership will have to be reconsidered.

The consequences

The White House and President Trump appear aware of the danger that a rise in oil prices on an international level pose to the economic growth of the Trump era, however, they also seem ready to embrace the economic and geopolitical challenges that are to follow. Although the consequences of US’ Iran Deal pullout are not perfectly clear in the short term, they will undoubtedly become more visible as sanctions take effect. The deal has its flaws, however, completely withdrawing from it and threatening the US’ closest allies can only compound those issues and create new ones. It is hard to predict what will unfold from here and where Trump’s strategy will take us. The one thing that is certain though is that the world doesn’t need more hostility.

Determined CFOs need to stay ahead of the game if they are to make an impact in an ever-changing market landscape, says Philippe Henriette, SVP of Finance, Processes and IT for Volvo Construction Equipment. Below Phillippe discusses the drive that’s needed to push finance into the digital age.

The finance function has expanded from a laser beam focus on reporting, budgeting and control to include a more overarching strategic role. At Volvo CE we are no different to any other organization in our ambitions to allocate more funds to IT development and innovation. The market is changing and finance should have a clear view on how the digital spend turns into value for our customers. And to operate at its high-performing best, finance needs to have an overview of the 'big picture' and be prepared to invest in new technologies even without the promise of an immediate payback. The use of big data and predictive analytics to identify these new trends is a vital tool in this future focused approach.

We live in a fast-moving environment where digitalization is disrupting industries the world over, yet construction is a relatively conservative sector. At Volvo CE we have to think about how our industry might look further down the line and how we can adopt new technologies and new ways of working to shake up our traditional business model. After all, the demands of a customer today might be radically different tomorrow. And finance has a vital role to play.

Interpreting changing customer needs

We looked to the wider economy for inspiration to see how companies like Uber redefined

the way people buy and access services – a way of spending that is beginning to filter through into other industries. Owning an asset is becoming less important to customers who are shifting to a value-buying spending model. So if our business is to sell a construction machine, and its relevant parts and services, how can we adapt for the future? With the emergence of electrification and other technologies, shouldn’t rental services be generalized? Should we be selling our services by the hour? And it is already happening. This was the impetus behind us introducing a ‘power by the hour’ scheme for one of our key accounts. Our customer demanded to get the construction job done, but instead of purchasing our machines, they only pay the hours and value machines create. If this is the future construction business model, then finance cannot stand still. We need to be ready to support the business transformation from generating revenue on machine and parts to selling services.

Data-driven culture shift

Our aim is always to simplify things for our customers, and to do this we have to have a deep understanding of their needs and stay steps ahead of those demands. Shifting from a product centric to a data driven culture plays a key role. By putting data analytics at the heart of our research and development and turning customer and product information into insight we can be confident we are staying ahead of the game.

Equally, if we are going to provide the flexibility our customers require, we need to be brave when it comes to fixing a price point for our new services. I have learnt that we cannot test the waters by bringing new services to market without understanding how much it is worth. By doing this we would make it impossible to set a price when it proves a success. Instead we do our due diligence through data analytics so that we can be confident we are setting the right price from the very start. With this data-driven culture comes a huge responsibility on the part of the CFO to handle this information appropriately. We do this by ensuring we have proper systems in place to protect the data we use – an issue that is becoming increasingly important as digital technology leaps into the future.

ROI for a new digital era

Having an eye for future trends – and the risks and rewards that go with them – is one thing, but how can CFOs be assured of a profitable return on investment on these new innovations in the years to come? Developing the right set of measurements to monitor the progress of new digital offerings may not lend themselves to standard ROI calculations. It is essential therefore to adopt non-financial metrics alongside the usual measurements of cash generation and profit so that we have the big picture we need to drive the company through this new digital era.

We are working in a vastly different corporate landscape today than we were 20, 10, even 5 years ago. The finance function has navigated choppy waters during the economic downturn and is now learning to adapt to customer demand and increased innovation. This puts us in a unique position to act as a driving force for the digital revolution. The world is changing and it’s up to every CFO in every industry to stay ahead of the curve.

Berkshire Hathaway CEO Warren Buffett speaks to CNBC's Becky Quick about what he thinks about the state of the markets today.

Current market activity indicates that cryptocurrencies are set for “another considerable surge in prices gains” in the near future and Ethereum’s price could reach $2,500 by the end of the year - but investors should exercise caution.

This forecast from Nigel Green, the founder and CEO of deVere Group, comes after a strong few days ithe cryptocurrency markets.

Mr Green, whose firm launched the cryptocurrency exchange app, deVere Crypto, comments: “Most major cryptocurrencies Current market activity indicates that cryptocurrencies are set for “another considerable surge in prices gains” in the near future and Ethereum’s price could reach $2,500 by the ehave been posting big gains over the last few days.

“Current market activity indicates that the major cryptocurrencies just like the mcdvoice has done so far that are set for another considerable surge in prices gains in the near future.”

He continues: “What’s fuelling this current rally in crypto prices? There are several key motivators.

“These include the growing integration with and adoption by major banks and other financial institutions.

“Indeed, 20 per cent of all financial firms, ranging from hedge funds to banking giants, are now considering trading digital currencies in the 12 months, according to a new Thomson Reuters survey published this week.

“Another key reason for the rally is that there’s a growing awareness of the need and demand for digital, global currencies in a digitalised, globalised world.

“The upward trend is also being triggered by regulation, which most experts now believe is inevitable. This will give investors even more protection and long-term confidence in the market.”

The deVere CEO believes that despite Bitcoin taking the headlines, Ethereum could be the real story here.

He notes: “It’s interesting to note that even with an impressive one-week jump of 11.3 per cent, Bitcoin - the world’s largest by market capitalisation – is the worst performer amongst the biggest cryptocurrencies.

“The price of Ethereum is predicted to increase significantly this year, and could hit $2,500 by the end of 2018 with a further increase by 2019 and 2020.

“This general upswing will be fuelled by three mains drivers. First, more and more platforms are using Ethereum as a means of trading. Second, the increased use of smart contracts by Ethereum. And third, the decentralisation of cloud computing.”

Mr Green goes on to say: “Ethereum can be expected to solidify its position as the second most valuable and used cryptocurrency token in the world. This consistency of the Ethereum token will appreciate well into the future. As entrepreneurs, venture capitalists, bankers and financial houses are looking for stability and safer trading conditions, and Ethereum is offering that security.”

Mr Green concludes: “We’re certainly entering crypto bull territory, with many retail and institutional investors now finding that cryptocurrencies can no longer ignore the opportunities.

“However, cryptocurrency markets remain volatile. Caution should be exercised and professional advice sought.”

(Source: deVere Group)

With the growing expansion of cryptocurrencies and cryptomarkets, the prospects of regulation are on the horizon. But how will the economy of crypto change in turn? Finance Monthly gains top insight from expert David Sapper, COO at Blockbid.

In recent days, Ripple – one of the world’s biggest cryptocurrencies – has urged UK regulators to take control of the crypto market in the same way Japan have, to put an end to ‘wild west’ days of crypto regulation.

Ripple, amongst many others, are calling for more control in the space to ensure risks are minimized for consumers, whilst still allowing the asset class to innovate and grow.

There is little doubt that such calls will be answered – and that increased control will be introduced in the very near future. Just last month, Chancellor Philip Hammond announced a new taskforce, whose specific role was to safeguard crypto consumers. Whilst even more recently, the FCA announced that they will publish a review in to cryptocurrencies later this year which will ‘outline policy thinking on cryptocurrencies.’

Japan has, as of yet, been at the forefront of crypto regulation – and so provides a good indication of how we can expect it to play out in the UK. There are 3.5M crypto traders active in the country, and $97BN of Bitcoin was traded in 2017 alone¹. Part of the reason regulation is so active and advanced in the country is a $500M crypto theft that took place early in 2018. This sparked a selection of sixteen cryptocurrency exchanges to form a self-regulatory organization to work towards developing standards for activities around ICOs.

The re-occurring issue with heightened regulation is the potential for suffocating innovation. ICOs and alt tokens have created a fresh and straight-forward means of raising capital for budding entrepreneurs to use when building their business ideas. Therefore, it is important that regulators practice walking the line between protecting consumers and potential investors, whilst not stifling innovative and creative prospects.

For example, a country that looks to be walking said line with good success is Australia. Already there have been very direct and positive moves with regards to crypto regulation in the country, some of which are already in place. All whilst managing not to stifle or suffocate the innovators at the centre. The biggest move so far is the introduction of the need to register with AUSTRAC before being allowed to function as a crypto exchange, something we at Blockbid successfully did earlier this month. Australia were also second only to Japan in accepting Bitcoin and other cryptocurrencies as legal tender.?

ICOs specifically require their own set of rules and guidelines. They are heavily regulated in the US and banned completely in China. Australia have set guidelines that depend on whether tokens are utility or security based. These guidelines are fairly strong, but allow companies to decide for themselves on which to go down, depending on the type of tokens they have produced.

Such an array of regulatory introductions are likely to have a real impact on companies working within the crypto-space, particularly for those that have been in action from the start, who will have to contend with rules that weren’t in place when they were starting out. However, for the most part responses from companies have been positive as the one thing everyone agrees on, is the protection of consumers is essential.

Precise details of how everything will work out remain unclear and will be revealed in time. Whilst the affects of regulation may appear as hurdles for those working in the crypto space, improved regulation will increase trust and engagement in crypto as a result. Therefore improved regulation is a step in the right direction not only for investors – but the companies behind cryptos as well.

¹https://www.ccn.com/japan-leads-the-way-on-crypto-as-trading-soars/

Cryptocurrency has been arguably the big financial breakthrough of the past few years and in 2017 it really took off, led of course by bitcoin. The potential of such digital currencies and the technology which powers them has created the Internet of Value. But when does control lie within these spheres?

While both have created a lot of buzz and interest, the future of cryptocurrency remains unclear. Changes introduced buy them both have offered many fresh opportunities for businesses as RSM reports, with the middle market especially holding  a lot of power to take advantage of these developments and improve their futures.

Introducing the Internet of Value

The Internet of Value essentially refers to the allowance of value transactions (such as sending a foreign currency overseas) to be made almost instantly over the internet. It aims for value to be transferred across the internet at the same rate as information and such a goal is being worked towards and slowly met thanks to the development of blockchain technology.

Most cryptocurrencies use blockchain to power their transactions. This is the first technology which allows one asset to be transferred from person to person directly, without having to use a middleman such as a bank, marketplace or third-party service. Therefore, nothing is standing in the way to slow the process down or disrupt such financial transactions.

It’s not just cryptocurrencies that are adopting blockchain technology, Nasdaq are using it to enable firms to manage shares, the Estonian government has used it for looking after healthcare records and more. These all help support the Internet of Value’s mission though there is still work to do. Few blockchains are connected which means not all information can be exchanged, let alone instantly, so greater adoption is required which the middle market could provide.

The Middle Market’s Influence

Referring to those growing businesses that occupy the space between start-ups, small firms and SMEs and giant global corporations, it is the middle market which needs to innovate to take that next step up. Already some ecommerce companies are beginning to integrate cryptocurrencies within their model as they help with fraud prevention, are quick and secure.

There are many start-ups using such technology and involved in the Internet of Value. While this does provide some uptake and investment in cryptocurrency, in order for it to really take off much more is needed. Middle market companies can offer this, using the benefits of the Internet of Value to speed up their payment processes and increasing the security through cryptocurrency acceptance and usage.

Given there is no middleman required, this can help cut the budgets for many, allowing this money saved to benefit these businesses while providing investment in cryptocurrency and its technologies. If there is no uptake from the middle or upper market then the Internet of Value and cryptocurrencies may just remain an interesting concept, used only by smaller investors and businesses.

Unless there is great investment from another source then the middle market does look like it could control the future for the Internet of Value and cryptocurrency as a whole.

Intrapay, a recently launched payments company within the Sappaya ecosystem, has announced the results of its new consumer survey into the consumer ecommerce experience and the demand for different payment methods provided through online retailers.

The results suggest that consumer demand for cryptocurrency, both now and in the future, falls well short of hype within the Bitcoin bubble. Consumers are currently more than seven times more likely to buy something online with a prepaid card than via cryptocurrency, and more than twice as many would like to use prepaid cards in the future, rather than the volatile digital currency.

Less than 2% of consumers have used cryptocurrencies and only 6.5% wish to use it to buy items online in the future. Meanwhile, as consumers become increasingly security-savvy, demand for prepaid cards almost doubles, from 9% currently to 17% who wish to use them online in the future.

Koen Vanpraet, CEO of Intrapay, commented: “Cryptocurrencies may have enjoyed plenty of hype over the last year, but are just not viable as a mass payment method in the current market. Retailers looking to grow must understand consumers and offer the payment options that will drive loyalty, engagement and conversion.

“This cannot come from forcing unwanted payment methods on them: it must come from listening to retailers and their consumers, meeting their needs with payment methods that truly engage the consumer and add value to the business.”

The survey of over 650 consumers also revealed:

• Consumers want payments to give them more control of their money: spreading the payments across the year; receiving real-time updates on the payment status; and receiving help with budgeting.
• Hidden delivery charges are the second-largest reason for abandoning a transaction – over 50% of respondents failed to complete a purchase when faced with unexpected extra charges.
• 50% of consumers have abandoned a transaction after being required to enter too many details into an online checkout.
• Direct debit, debit cards and credit cards remain the most popular method of purchasing goods online but demand is falling, in favour of alternative payments, including prepaid cards, bank transfers and mobile payments.

Almost 90% of respondents reported that security is one of the most important aspects of their online payment experience, while four in ten demand greater convenience, with an equal number highlighting speed of payment as one of the most significant factors.

Paul Winslow, Chief Marketing Officer at Intrapay, added, “Security versus convenience is still a significant driver in consumer behaviour online, but what our research shows is a shift to new, innovative alternatives, and greater transparency from merchants and their payment partners. At Intrapay, our ethos centres around the customer experience: if they demand it, we will build it. The consumer is in control of the payment and future ecommerce success will depending on listening to these voices, building the adaptive technology based on what consumers want, rather than what businesses tell them they want.”

(Source: Intrapay)