IRS Takes a Stand: Bitcoin is Anything But ‘Currency’

The Internal Revenue Service sounded a loud warning shot today for all you Bitcoin users: Stop calling it a virtual “currency.” In the eyes of the taxman, it’s anything but – and that means taxpayers now must confront a raft of ways in which Bitcoin must be reported and taxed.Bitcoin Uncle Sam.2014.3.25

In a wide-ranging Q&A, the IRS laid out a number of other ways that Bitcoin can be taxed – as an asset, as income, as payment in property, as a transaction, even as self-employment income by all those “miners.” No matter which approach applies, every one puts the onus on some player to report Bitcoin activities to the IRS — creating a paper trail that enables the taxman to perform the simplest of computerized matching to generate letter “audits” asking taxpayers to explain why they failed to report a taxable event.

The IRS stance builds on the assumption that Bitcoin is not a currency for a simple reason: “It does not have legal tender status in any jurisdiction.” That then sets of a cascade of practical questions Read the rest of this entry »

Amazon Tests the Loyalty of Its Prime Members With a 25% Price Hike

After 9 years, Amazon has finally decided to increase the price of its Prime membership – and it’s not an insignificant amount. The cost of Amazon Prime will increase on April 17, 2014 by a hefty $20 (from $79 to $99), and the Prime membership will continue to include free two-day shipping, access to Prime Instant Video, and the Kindle Owner’s Lending Library. The Amazon Prime membership is undoubtedly one of the best online loyalty programs available today, and so this significant price change will likely be a true test of just how much consumers are willing to pay for the perks of free shipping and digital perks. Will consumers stick with Prime? Most probably will suffer the price increase; however, there will definitely be a few who drag their heels when faced with a $99 bill. Only time will tell, but perhaps a gradual increase of $5 or $10 would be received by current customers. Read the rest of this entry »

Bank Wars Underscore the Relationship between Data Breaches and Fraud

I was quoted using unusually provocative language (for the conservative banking industry) in the New York Times on Saturday , in which I referred to First American Bank’s public calling out of Bank of America as “hot bank on bank action”.  Reporter Ron Lieber used the words “punk rock fashion” to precede my quote, as he went on to describe the jarring public dispute on Read the rest of this entry »

Why Bitcoin is Lindsay Lohan, For Now…

It’s been an “interesting” week to follow the fortunes of Bitcoin and Mt. Gox, with rumors abounding of the death of both the exchange and the fledgling currency itself. It certainly looks like the wheels have fallen off Mt. Gox, with today’s announcement of filing for bankruptcy protection and $63.6 million of outstanding debt. But, the demise of Bitcoin itself is less certain. The faith that investors have placed in Bitcoin has clearly been a ‘buyer beware’ situation – even the most cursory look at the value of the currency over the last year is a textbook rollercoaster ride…

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Capital One Ups the Punching Power of ClearXchange

Person to person (P2P) payments are quickly becoming a regular feature of today’s banking industry. ClearXchange, the P2P payment platform that developed as a partnership between Bank of America, Chase, and Wells Fargo, has announced that it has added Capital One to its list of owners. Capital One is the second FI to join clearXchange (the first institution was the regional FI FirstBank) and is scheduled to go live with the service later in 2014. According to Javelin data, the addition of Capital One now gives clearXchange the capacity to reach 40% of all U.S. banking adults and 53% of all adult credit cardholders. Read the rest of this entry »

Time for Shady Pines Retirement Home, Mag Stripe

Not surprisingly, the Javelin Research Team have had quite a lot of media requests since the start of the year relating to the Target data breach and why the US hadn’t moved to this new fangled chip card technology called EMV (no, not a record label with a dog sticking it’s head into a gramophone). I’m not going to get into the many, many conversations we had about whether the Target breach could have been prevented with EMV, or the relative benefits of chip and signature compared to chip and PIN. What I am going to discuss is the topic that didn’t come up – when will the payments industry finally ditch the magnetic stripe?

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