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As contactless menu ordering becomes the norm amid COVID, China pushes back

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Digital ordering and paying at restaurants was already gaining much ground in China before the COVID-19 pandemic hit. The tap-to-order method on a smartphone is part of the greater development in China where cash and physical documentation is increasingly being phased out. Many restaurants across large cities go as far as making digital menus mandatory, cutting staff costs.

Meanwhile, there has been pushback from the public and the authorities over aggressive digitization. An article published this week by People’s Daily, an official paper of the Chinese Communist Party, was titled: “Scan-to-order shouldn’t be the only option.”

Aside from harming consumers’ freedom of choice and removing the human interaction that diners might appreciate, mandatory smartphone use also raises concerns over data privacy. Ordering on a phone often requires access to a person’s profile on WeChat, Alipay, Meituan or other internet platforms enabling restaurants’ digital services. With that trove of data, businesses will go on to span users with ads.

“These approaches harm consumers’ data protection rights,” the People’s Daily quotes a senior personnel at the consumer rights unit of China Law Society, China’s official organization of legal academic professionals, as saying.

China has similarly targeted the ubiquity of cashless payments. In 2018, China’s central bank called rejecting cash as a form of payment “illegal” and “unfair” to those not accustomed to electronic payments, such as senior citizens.

The elderly also face a dilemma as digital health codes, which are normally generated by tracking people’s movement history using location data from SIM cards, becomes a norm amid the pandemic. Without a smartphone-enabled health pass, senior citizens could be turned away by bus drivers, subway station guards, restaurant staff and gatekeepers at other public venues.

To bridge the digital divide, the southern province of Guangdong recently began allowing citizens to check their health status by tapping their physical ID cards on designated scanners.

Cashless payment is an irreversible trend though. Between 2015 and 2020, the digital payments penetration rate amongst China’s mobile internet users went from less than 60% to over 85%, according to official data. Moreover, the government is hastening the pace to roll out digital yuan, which, unlike third-party payments methods, is issued and managed by the central bank and serves as the statutory, digital version of China’s physical currency.

Lyron Foster is a Hawaii based African American Musician, Author, Actor, Blogger, Filmmaker, Philanthropist and Multinational Serial Tech Entrepreneur.

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Donald Trump is one of 15,000 Gab users whose account just got hacked

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Promotional image for social media site Gab says

Enlarge (credit: Gab.com)

The founder of the far-right social media platform Gab said that the private account of former President Donald Trump was among the data stolen and publicly released by hackers who recently breached the site.

In a statement on Sunday, founder Andrew Torba used a transphobic slur to refer to Emma Best, the co-founder of Distributed Denial of Secrets. The statement confirmed claims the WikiLeaks-style group made on Monday that it obtained 70GB of passwords, private posts, and more from Gab and was making them available to select researchers and journalists. The data, Best said, was provided by an unidentified hacker who breached Gab by exploiting a SQL-injection vulnerability in its code.

“My account and Trump’s account were compromised, of course as Trump is about to go on stage and speak,” Torba wrote on Sunday as Trump was about to speak at the CPAC conference in Florida. “The entire company is all hands investigating what happened and working to trace and patch the problem.”

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Kaltura files to go public on the back of accelerating revenue growth, rising losses

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Kaltura, a software company focused on providing video technology to other concerns, has filed to go public.

The Kaltura S-1 filing only partially surprised. TechCrunch previously covered the company as part of our ongoing $100 million ARR series focusing on private companies that have reached material scale. (TechCrunch has also covered its product life to a moderate degree.)

The company’s IPO documentation details a business that did more than merely accelerate its growth in 2020, and more specifically, during the COVID-19 era. Seeing a company that powers video tooling do well when much of the world has transitioned to remote work and education is not a bolt from the blue. What is notable, however, is that the company’s revenue growth has accelerated yearly since at least 2018 and its final quarter of 2020 placed the company at a new growth rate maximum.

Public investors, hungry for growth, may find such a progression compelling.

Kaltura also has an interesting profitability profile: As its GAAP net losses scaled in the last year, its adjusted profitability improved. Depending on your stance regarding adjusted metrics, Kaltura’s bottom line will either irk or delight you.

This afternoon, let’s rip into the company’s S-1 and yank out what we need to know. It is IPO season, with SPACs galore and other private companies taking more traditional routes to the public markets, including Coupang announcing a price range for its traditional debut today and Coinbase’s impending direct listing.

For now we’ll focus on Kaltura. Let’s get into it.

Inside Kaltura’s IPO filing

When TechCrunch last covered Kaltura’s financial results, we noted that the company founded in 2006 had raised just north of $166 million, crossed the $100 million ARR mark, and was, per its own reporting, “profitable on an EBITDA.” Kaltura also told TechCrunch that it had margins in the 60% range and was growing at around 25% year over year. That was just over a year ago.

Do those figures hold up? In the Q1 2020 period Kaltura recorded $25.9 million in revenue, software margins of around 78% and blended gross margins of 59.8%. And the company had grown 16.6% from the year-ago quarter. In Kaltura’s defense, the company’s growth accelerated to 24% in the year, so its self-reported numbers were mostly fair. Better than, I think, most numbers we get from private companies.

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Square’s bank arm launches as fintech aims ‘to operate more nimbly’

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Known for its innovations in the payments sector, Square is now officially a bank.

Nearly one year after receiving conditional approval, Square said Monday afternoon that its industrial bank, Square Financial Services, has begun operationsSquare Financial Services completed the charter approval process with the FDIC and Utah Department of Financial Institutions, meaning its ready for business.

The bank, which is headquartered in Salt Lake City, Utah, will offer business loan and deposit products, starting with underwriting, and originating business loans for Square Capital’s existing lending product.

Historically, Square has been known for its card reader and point-of-sale payment system, used largely by small businesses – but it has also begun facilitating credit for the entrepreneurs and smalls businesses who use its products in recent years.

Moving forward, Square said its bank will be the “primary provider of financing for Square sellers across the U.S.”

In a statement, Square CFO and executive chairman for Square Financial Services, Amrita Ahuja said that bringing banking capability in house will allow the fintech to “operate more nimbly.”

Square Financial Services will continue to sell loans to third-party investors and limit balance sheet exposure. The company said it does not expect the bank to have a material impact on its consolidated balance sheet, total net revenue, gross profit, or adjusted EBITDA in 2021.

Opening the bank “deepens Square’s unique ability to expand access to loans and banking tools to underserved populations,” the company said.

Lewis Goodwin had been tapped to serve as the bank’s CEO, and Brandon Soto its CFO. With today’s announcement, Square also announced the following new appointments:

  • Sharad Bhasker, Chief Risk Officer
  • Samantha Ku, Chief Operating Officer
  • Homam Maalouf, Chief Credit Officer
  • David Grodsky, Chief Compliance Officer
  • Jessica Jiang, Capital Markets and Investor Relations Lead

The trend of fintechs becoming bank continues. In February, TechCrunch reported on the fact that Brex had applied for a bank charter.

The fast-growing company, which sells a credit card tailored for startups with Emigrant Bank currently acting as the issuer, said that it had submitted an application with the Federal Deposit Insurance Corporation (FDIC) and the Utah Department of Financial Institutions (UDFI) to establish Brex Bank.

A number of fintech companies, or those with fintech services, have spun up products typically offered by banks, including deposit and chequings accounts as well as credit offerings. Often, these are designed to provide capital to customers who might not be able to get funding on favorable terms from traditional banking institutions, but who might qualify for business-building loans from a provider who knows their company, like Square, inside and out.

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