Category Archives: Fintech

Morgan Stanley, JP Morgan Shift Media Teams as Brexit Looms

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There have been some big name moves from the UK to continental Europe ahead of a possible no-deal Brexit and now some companies are shifting the roles of London-based personnel to reflect those changes.

According to eFinancial Careers, American investment banking giant JP Morgan has named Kate Allegue-Haywood as Head of Communications for Germany, Austria and Switzerland.

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It is unclear as to whether or not Allegue-Haywood, who was previously an Executive Director in JP Morgan’s Media Relations team, will be moving to the investment bank’s Frankfurt office.

Also making changes to its German operations is Morgan Stanley. The American investment bank has managed to snag one of JP Morgan’s old media executives for its Frankfurt operations.

Andrea Amereller joins the firm after almost five years with JP Morgan. As she is already based in Frankfurt, she will not have to move from the rainy streets of London to the Mercedes covered Autobahns of Germany.

Material change

Such moves would generally illicit little interest amongst both us hacks and you readers.

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But in this instance, things are slightly different.

The two appointments indicate that major financial firms, which have previously made their home in the City of London, are making material changes to their businesses.

As all our readers will know, the reason for those changes is Brexit. With a no-deal scenario fast approaching, firms are no longer willing to wait around and see what happens. They’re acting now.

Having said this, there is reason to believe that things will be okay for the financial services industry in the UK post-Brexit, deal or no-deal.

This week, the European Securities and Markets Authority announced that three major firms in the UK would be able to continue providing clearing services to clients in the European Union – even if Britain does leave the political body without a deal.

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Mexico Sets Its Sights On FinTechs To End Poverty

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Mexico’s new government, led by President Andres Manuel Lopez Obrador, is setting its sights on financial technology to get the country out of poverty.

According to a report from Reuters, the Mexican government recently announced plans to make financial services more affordable in a country where more than half of the population does not have a banking account, otherwise known as the unbanked. The government is gearing up to roll out a digital payments system that will be operated by the central bank, enabling citizens of Mexico to make and receive payments via a smartphone without any fees. The payment system, called CoDi, is slated to launch in March.

To use the mobile app, consumers must have an account with an institution that is participating in Mexico’s existing interbank payments systems, which will power the payments platform. Jaime Cortina, director of operations and payments at the central bank in Mexico, told Reuters that the aim is to create a payment method that citizens can use to send money to one another and to make payments at stores and online.

“In the future, it will no longer be necessary to have a bank in the sense of a traditional, established bank,” said Arturo Herrera, Mexico’s deputy finance minister. “Mobile phones will become banks.”

The report noted that banking systems embedded on mobile phones are popular in emerging markets, including in China, India and Kenya, driven in part by private-sector FinTechs. It’s not clear whether a state system in Mexico will be easy to use. Reuters noted that initially, the system will require help from the same banks that kept the financial services market out of reach for low-income Mexicans for decades due to the associated fees. Less than reliable telecom service in the country could also hurt the efforts.

“Mexico has a lot of the key ingredients to succeed, but it’s not plug and play,” said Monica Brand Engel, a partner at Quona Capital, in an interview with the newswire.

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In December of 2018, the 2019 IRS Standard Mileage Rate increased to 58 cents per mile. Join PYMNTS CEO, Karen Webster, and Danielle Lackey, Chief Legal Officer at Motus to learn more about what this rate means for businesses and their mobile workforce.

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CySEC Pushes to Bring Crypto Assets Under EU AML Rules

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The Cyprus Securities and Exchange Commission (CySEC) has revealed new details about its efforts to regulate crypto assets, hinting more discussions might already be underway. The CySEC wants to increase oversight of cryptocurrencies and related assets by integrating EU anti-money-laundering rules into the Cypriot laws.

“CySEC has been contacted by entities engaging in crypto-asset activities; a number of which do not appear to fall within the existing regulatory framework. As a consequence, CySEC considers the transposition of the parts of the AMLD5 concerning crypto asset activities, into national law, as appropriate,” the watchdog said in a regulatory circular.

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Derivatives referencing cryptoassets would not fall under this suggestion, but we understand they remain subject to ESMA’s current restriction and any future proposals by the CySEC regarding the sale of these instruments to retail investors.

Published in June 2018, the AMLD5 is a pan-European anti-money laundering directive that member states will have until January 2020 to implement it into their national laws. The legislation is notable because it represents the EU’s first attempt to expressly regulate cryptocurrency activities at EU-level.

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Under AMLD5, crypto exchanges and custodian wallet providers will be brought within the scope of EU anti-money laundering rules for the first time. The law imposes registration and customer due diligence requirements that force operators to disclose their traders’ identities and report suspicious activity.

Crypto platforms face tighter AML rules

Meanwhile, the CySEC intends to go beyond the requirements set out in the fifth directive as it wants to bring new activities, which are not included in AMLD5, under the AML/CFT obligations. According to the regulator, these activities include:

  1. a) exchange between crypto assets,
  2. b) transfer of virtual assets and
  3. c) participation in and provision of financial services related to an issuer’s offer and/or sale of a crypto asset.

As it stands, the current shifting regulatory landscape for cryptocurrencies across the globe is still very confusing as local regulators are struggling to keep pace with the innovations in the space.

Extending AML regulations to cryptocurrency activities is being considered in several countries around the world such as Australia and the UK, and already tracks the EU’s recent push to regulate Bitcoin.

But the really big challenge is the absence of coherent direction on cryptocurrency regulation as each country has its own approach. Some countries are welcoming, including Japan, while others are cautious, such as the US and Europe. And some nations like China are downright antagonistic.

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trueDigital Appoints Bridgewater’s Thomas Kim as CEO

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Financial technology provider trueDigital, a subsidiary of swap execution facility operator TrueEX, announced on Tuesday that Thomas Kim has joined the firm as Chief Executive Officer (CEO). Kim will also join the company’s board of directors.

“Thomas brings the expertise and the boldness to carry forward our vision of bringing blockchain-based financial technologies to life,” said Sunil Hirani, trueDigital’s Founder and Member of the Board of Directors. “His accomplishments at some of the world’s most technologically-driven and demanding institutions speak to his ability to think creatively and lead effectively. This will be instrumental as we double down on our ambitions to innovate, grow and scale.”

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Kim joins the financial technology company from Bridgewater Associates, an American investment management company, where he spent seven years. Before joining trueDigital, Kim was working as Chief Operating Officer for Bridgewater’s Investment Engine Group.

Prior to that, Kim also spent time at a number of major financial institutions, including Lehman Brothers and UNX.

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Kim to lead the trueDigital blockchain charge

According to a statement released by trueDigital on Tuesday, Kim will be responsible for developing the company’s business in the world of digital assets and blockchain technology.

In December of last year, the technology company confirmed that it was launching a blockchain-based payments system with Signature Bank, a commercial bank based in New York that has a number of branches throughout the US.

A couple of months prior to that announcement, in October of 2018, trueDigital also got approval from the Commodity Futures Trading Commission to list margined, physically-delivered bitcoin swaps on TrueEX’s swap execution facility.

“Transforming financial market infrastructure is an ambitious goal, yet the progress to date shows the potential of trueDigital’s technologies to modernize markets and bring digital assets forward,” said Thomas Kim, CEO, trueDigital. “The team, the thinking and the technology at trueDigital are all attuned for significant growth, and I look forward to leading the way.”

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Walmart US eCommerce Sales Surge 43 Pct

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Retail giant Walmart posted fiscal 2019 fourth quarter results that topped expectations amid strong holiday spending and U.S. eCommerce sales that logged 43 percent growth year over year.

Headline numbers show that within the United States, same store comparable sales for the quarter that ended in January, excluding fuel purchases, were up 4.2 percent. Expectations, including those of the company itself, had seen roughly 3 percent for the period. The company pointed toward particular strength in grocery and spending on toys during the holiday season.

Management also said on the post-earnings call with analysts that same store sales were buoyed by the SNAP activity — short for the Supplemental Nutrition Assistance Program — where checks had been sent out in January, amid the government shutdown. SNAP-related activity helped boot comp results by several basis points.

With a nod to the current economic climate, management, including CEO Doug McMillon and CFO Brett Biggs, said that the U.S. consumer spending remains strong, where unemployment and gas prices are low and wage growth has continued. Additionally, management stated that the firm has taken market share in categories including grocery, health, wellness and toys. Biggs said the company’s business model “works well” across most economic environments.

Getting a bit more granular, the company said that eCommerce sales were up 43 percent year on year.

The company said that eCommerce has seen tailwinds from online grocery and pickup offerings that now span more than 2,100 stores, and the company now has online grocery offerings spanning 800 stores.

Total Walmart sales in the U.S. were $90.5 billion, up 4.6 percent, with comp sales up 4.2 percent, traffic up 90 basis points and the comparable ticket up 3.3 percent. The company said that eCommerce offered up 180 basis points to that comp sales growth in the U.S. Breaking down segment performance, grocery sales were up mid single digit percentages, health and wellness was up low single digits and general merchandise up mid single digits.

The company said that Walmart International sales were $32.3 billion, up 2.7 percent, with positive comps in three of its four largest markets, spanning Mexico, the U.K. and Canada. China was down slightly due in part to a calendar shift in the Mid-Autumn Festival, and a slower economic environment in that country.  Walmex was the fastest growing segment at 3.8 percent growth year over year.

Walmart also said that Sam’s Club comp sales were up 3.3 percent, and comp traffic was 6.4 percent. eCommerce sales attributable to Sam’s Club were up 21 percent and private brand sales reached a 26 penetration rate, the company said in its materials.

Earnings per share were $1.41, where $1.33 was expected. Revenues of $138.8 billion topped $138.7 billion projected by the Street.

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Danske Bank Ordered To Shut Down Estonian Branch

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Danske Bank was ordered by Estonia to shutter its local branch at the center of a money-laundering scandal, and has been given only a few months to do so.

According to a report in Reuters, the financial regulator in Estonia caught the world off-guard with the move, demanding that Danske Bank close the branch and pay back customers within eight months. That contrasts with the bank’s plan to scale back operations in the country but still maintain a presence in Estonia. Danske Bank had been aiming to serve its Nordic customers, including in Estonia, noted the report.

If the bank doesn’t comply with the ruling, it could face a fine of as much as 10 percent of its turnover.

“We have every right to put an end, once and for all, to this … as … large-scale violations of the local rules have been committed … and this has dealt a serious blow to the … reputation of the Estonian financial market,” said Kilvar Kessler, head of Estonia’s banking regulator Finantsinspektsioon, reported Reuters. The regulator went on to say that his office was the only institution in Estonia or Denmark that reacted to what occurred at Danske Bank, which he said has resulted in rising tensions between the two countries.

The ruling was made public after Estonian and Danish regulators learned that the European Union’s banking regulator is looking into Danske Bank to see if there was a breach of any EU laws related to money laundering. That investigation is expected to last two months. If the bank is found to have breached EU rules, the European Banking Authority (EBA) could make recommendations to the local regulators in Denmark and Estonia.

The money laundering scandal is focused on money that moved through the Estonian branch between 2007 and 2015, with little oversight or questions on the part of Danske Bank.

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In December of 2018, the 2019 IRS Standard Mileage Rate increased to 58 cents per mile. Join PYMNTS CEO, Karen Webster, and Danielle Lackey, Chief Legal Officer at Motus to learn more about what this rate means for businesses and their mobile workforce.

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Today In Data: Digital Disbursements In Unexpected Markets

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Digital disbursements are appearing in unexpected markets, such as sports betting platforms and boatsharing sites. Uber’s and Lyft’s initial public offerings (IPOs) are expected to take place this year, which bring more light to their respective financials, and North American retailers are adopting Alipay in brick-and-mortar stores and online. At the same time, the share of households with subscription video on demand/over-the-top (SVOD/OTT) services is growing in the U.K. All this, Today In Data.

Data:

700 million: The number of active annual Alipay users exceeded this figure in 2018.

85.3 million: The number of U.S. taxpayers who received federal tax refunds via direct deposit as of May 2018.

84 percent: The share of consumers who prefer to provide debit cards as identifiers to receive instant funds.

22 percent: The increase in the share of U.K. households with SVOD/OTT services reported in Q3 2018 over the same period a year earlier.

$14.2 billion: The gross bookings of Uber in the fourth quarter of 2018.

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Why QSRs Are Upping Their Digital Game

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In the digital age, quick service restaurants (QSRs) have a host of technologies at their disposal to remove friction in the ordering process and drive repeat visits, such as self-service kiosks and mobile apps.

Consumers have generally had strong positive experiences with digital technology. The PYMNTS Restaurant Readiness Index found that 62 percent of them said such features would make them more likely to visit QSRs in the future.

But the report noted that “the most common reason managers don’t like features like self-service kiosks and online ordering is that they believe customers don’t like them.” However, many QSRs, from Dunkin’ Brands to Taco Bell, are tuning to these digital innovations. These are just some of the ways that these companies are bringing innovative ordering and payment options to consumers in the digital age.

More than eight in 10 – or 84.1 percent – of QSR customers see fast in-store pickup as key to a QSR’s future success. Some startups are enabling pickup for these restaurants with devices called pods. Through a company called Minnow, diners can place their orders through the website or app of a restaurant. The establishment then prepares the food and puts it in the company’s pods. Diners are sent notifications when their orders are ready, and then retrieve them using the company’s locker-like storage device. “It’s all done through a wireless locking mechanism that is controlled by a smartphone app,” Minnow Co-Founder and CEO Steven Sperry told PYMNTS in an interview in November.

Roughly 83.6 percent of QSR customers see online/app ordering as key to a QSR’s future success. Dunkin’ Brands, for instance, is teaming up with Grubhub for a delivery pilot to help bring coffee quickly and conveniently to consumers. Dunkin’ Brands CEO David Hoffmann said of the partnership during an earnings conference call in February, “Grubhub is No. 1 in the delivery space, and we’re excited to add them to our list of high-quality partners.” He added that the company was beginning with a small pilot before looking toward a bigger market test. For Baskin’ Robins, he noted that the brand continues to expand its DoorDash partnership. The brand now has delivery in more than 70 percent of its Baskin’ U.S. stores, which represents a 40 percent increase in coverage year over year, Hoffmann noted.

Slightly under 80 percent  – or 79.5 percent – of QSR customers see loyalty programs as key to a QSR’s future success. Domino’s, for instance, was offering members of its Points for Pies rewards program a chance to earn points without having to buy pizza from the chain, in an attempt to earn customer loyalty heading into the Super Bowl pizza rush. President and Chief Brand Officer Art D’Elia said in an announcement for the offering, “Instead of advertising during Sunday’s game, we decided to invest in a breakthrough program.” Diners downloaded the company’s app and signed up for its rewards program to receive the promotion. They could then tap into a “newly embedded pizza identification feature to scan their pizza” and earn 10 points. With 60 points, they could receive a medium two-topping pizza at the restaurant chain.

More than eight in 10 – or 83 percent – of QSR customers see wallet acceptance as a feature important to a QSR’s future success. The statistic comes as Apple announced in January that Taco Bell, among other merchants such as Target,  Hy-Vee and Speedway, was now supporting Apple Pay. In a press release, the technology company said that with the addition of the national retailers, 74 of the leading 100 merchants in the U.S. now support Apple Pay. Apple’s Vice President of Internet Services Jennifer Bailey said in the press release, “Whether customers are buying everyday household items, groceries, snacks for a road trip or grabbing a quick meal, Apple Pay is the easiest way to pay in stores, while also being secure and faster than using a credit or debit card at the register.”

And approximately three quarters – or 73.9 percent – of QSR customers see self-service kiosks as key to a QSR’s future success. Taco Bell, for instance, is bringing new technology into its brick-and-mortar restaurants across the country to help offer diners new ordering experiences and modernize its brick-and-mortar stores. To further that aim, the quick-service restaurant (QSR) chain is deploying self-service kiosks. The devices let customers swap out beef for beans to make a dish vegetarian, or bring spice to a menu item by adding jalapenos. Diners can then pay with their credit card or a restaurant gift cards at the kiosks. Alternatively, the company allows diners to place their orders on the devices and then pay with cash at the counter.

Even with the digital efforts of QSRs such as Chipotle Mexican Grill and Domino’s, new technologies do come with their share of challenges and resistance. But with younger generations looking more options, QSR customers have a greater appetite for innovation than restaurant owners might have previously thought.

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In December of 2018, the 2019 IRS Standard Mileage Rate increased to 58 cents per mile. Join PYMNTS CEO, Karen Webster, and Danielle Lackey, Chief Legal Officer at Motus to learn more about what this rate means for businesses and their mobile workforce.

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Lloyds, Visa Pilot New Cash Scheme To Boost Access

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Lloyds Banking Group, the U.K. bank, announced Tuesday (Feb. 19) a partnership with Visa in which the two have launched a new pilot scheme aimed at boosting access to cash.

In a press release, Lloyds Banking said the new pilot scheme will result in local retailers getting paid to offer cash back to customers in their stores. As it stands now, business owners do not receive a fee when providing cash back to customers. The new fee will provide more support to retailers and at the same time increase the number of places that people can withdraw money, Lloyds said. The pilot is not supposed to be a substitute for ATMs or bank branches but is focused on creating more availability where access to cash is hard to come by and still provide customers with the option to pay with cards and mobile devices. The cash-back incentives will be targeted at areas in the U.K. that have been identified as places where it is hard to access cash, such as rural and less affluent areas with only a small number of ATMs.

The hope is that the new pilot scheme will also give customers additional reasons to visit shops in the U.K., which have been facing challenges recently.

“Our new cashback pilot, in partnership with Visa, aims to increase the number of places where people can withdraw their money, particularly in those areas which are currently under-served by free-to-use ATMs where a customer’s access to cash may be more vulnerable,” said Vim Maru, Group Director, Retail, Lloyds Banking Group, in the press release. “The unlocked potential of cashback is obvious, as there are literally tens of thousands of local shops up and down our high streets that already have all the infrastructure in place to offer this service. We need to make it more viable for them to offer cashback to all customers, whether making a purchase or not.”

According to Lloyds, while the use of notes and coins in the U.K. has been on the decline in the past few years, millions of people in the country still rely on cash, particularly certain groups such as the elderly. While ATMs are readily available for most of the U.K. population, there are those who live in more remote and isolated locations and can’t access cash so easily. At the same time, there are tens of thousands of local shops that have the infrastructure in place to offer cash back, noted Lloyds.

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In December of 2018, the 2019 IRS Standard Mileage Rate increased to 58 cents per mile. Join PYMNTS CEO, Karen Webster, and Danielle Lackey, Chief Legal Officer at Motus to learn more about what this rate means for businesses and their mobile workforce.

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Why Big Brands Can’t Create Loyalty Without A Clear Vision Of Their Customers

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The problem with customer retention in an era when consumers are easily distracted and pulled away isn’t that brands aren’t trying, or even that they are using the wrong tools. The problem, Thanx Founder and CEO Zach Goldstein told PYMNTS, is that they are using too many different tools separately without any unified vision in sight.

Businesses are spending a lot of energy trying to build deeper connections with their customers and failing, he said — because they don’t have the right data in hand to offer the right outreach. Using one tool for email marketing, another for loyalty and another for feedback, what they get is three different views of the customer that don’t inform each other.

Thanx, he explained, wants to help enable brands by partnering with the card networks and so it can be easy and painless for brands to see their customers, offer them appropriate rewards when they shop and then reach back out to them via email channels to keep the relationship developing moving forward.

“That has been our focus,” Goldstein said. “We want to help brands move away from spray-and-pray generic email offerings to truly personalized campaigns.”

It is a challenge that Thanx embraces on behalf of a variety of retail and restaurant industry clients, as the interest in identifying and then targeting a brand’s best and most loyal customers has a certain broad appeal. This can be seen most recently in its expanded partnership with Tommy Bahama restaurants — a brand that suffers from being both too well known and too unknown at the same time.

Most people, of course, are familiar with Tommy Bahama clothing and fashion accessories, so familiar in fact that the news that there is also a dining component to the brand often comes as a surprise.

“A lot of business like Tommy Bahama with a massive retail presence have spent a lot of time and money investing on the retail side of the business, particularly in building data-driven relationships with their customers,” Goldstein said.

But for the restaurant side of the business that simply wasn’t the case. Tommy Bahama wasn’t able to build the same kinds of repeat customer engagement with its restaurant customer base for the good reason that it just didn’t know who those customers are. And while a brand may know it needs such knowledge, and may be  aware of the power of personalization, the challenge is technological. Like most big and diverse brands, Tommy Bahama restaurants are operating with a few different IT systems in place, which can make aggregating and understanding the data a challenge. And data one can’t see or can’t decode is essentially wasted material, Goldstein pointed out.

Customers who walk in and out of a restaurant with no way of making themselves known are essentially at the mercy of the store manager. That’s not a bad thing, and restaurant managers can do amazing things with their memories and remembering frequent customers, but the reality is busy nights happen (hopefully often) and finding and highlighting regulars is lot to hang on a single point of human interaction.

Technology provides a systematic approach to keeping customers interacting. The way to do that, Goldstein said, is to encourage the customer to enroll in an account with the Tommy Bahama restaurant brand. From that account, he said, the customer gets a channels to rewards and offerings, and the brand gains a tool with which it can actually get a view of the consumer, their preferences and their use habits.

And all of that happens, Goldstein said, through paying with whatever chosen card is linked to the account.

“There are no extra steps, there is no added friction. And that makes it really easy for consumers who sign up once to participate. It doesn’t have to be top of mind.”

Beyond the rewards, he notes, it creates a feedback channel so that if the consumer has an issue with their service they have a path to reach the company — and receive direct outreach back. That’s part of the standard toolbox on offer, he said, because the needs of the establishment can vary with time or by context. A customer who has been a regular diner and has suddenly stopped coming, he said, can be targeted for a “win back” campaign, or loyalty offerings can be geared around a certain time of day where the brand wants to see more business.

The point, he said, is that brands need to be able to reach out to customers, and make offerings to them, and find a way to tap into that effortlessly. On the consumer side, it means making a simple card swipe (or dip or tap) the entry point, and for brands it means making the integration simple, and the data accessible and actionable.

“Brands don’t have time to take on another burdensome technology,” Goldstein said. “They need to be able to drive value in the business with literally one or two clicks — and then measure what campaigns are working and which aren’t.”

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PYMNTS Webinar: Today at 1:00 PM (EST)

In December of 2018, the 2019 IRS Standard Mileage Rate increased to 58 cents per mile. Join PYMNTS CEO, Karen Webster, and Danielle Lackey, Chief Legal Officer at Motus to learn more about what this rate means for businesses and their mobile workforce.

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