Akibia

In a world of instant payments and high consumer expectations, businesses need to process and resolve payments as quickly as possible. That’s why Dojo, a UK-based payments technology provider that works with more than 50,000 businesses globally, sought to provide payments processing services to its business clients that would be faster than the existing industry average.

To do so, Dojo required a co-location and digital infrastructure platform partner that could provide the security and fast interconnection required for a scalable, high-performance, multi-cloud environment. This infrastructure would need to access services on Oracle Cloud, Amazon Web Services (AWS), and Google Cloud, and securely connect this physical infrastructure to Dojo’s cloud-based applications.

In this recently published case study, Dojo described the process of partnering with digital infrastructure company Equinix to connect with all these different platforms and create an infrastructure that enabled Dojo to deliver best-in-class payments processing speed to its business clients.

Creating a Multi-Cloud Strategy

In order to meet the increased demands of the businesses it works with, Dojo needed to create a multi-cloud strategy for its digital payments processing platform. This required both hosting physical, on-site entry points for various payment networks such as Visa and Mastercard, as well as point-to-point encryption devices and hardware security modules (HSM) for processing security operations based on digital payment regulations.

Dojo processes payments from a vast network of 70,000 card machines and, thus, required secure, instant communication between its hosted cloud providers and its on-site hardware. As such, the company contracted with Equinix to build a hybrid multicloud infrastructure. Dojo deployed systems in two Equinix data centers, where it could securely operate its physical devices and have speedy access to all the applications stored in the public cloud.

From there, Equinix’ Fabric software enabled Dojo to connect on-site applications to secure cloud on-ramps with high-speed, single-digit latency in order to accelerate customer payments processing. Equinix further provided direct, dedicated carrier-grade network links that connected the two data centers.

Dojo also used the Network Edge software service from Equinix so it could expedite the deployment of Cisco CSR 1000V virtual routers in both the London and Frankfurt data centers to speed and scale connectivity to the public clouds virtually and without additional hardware.

Dojo’s front-end credit card payment services then became accessible to customers via AWS and Google Cloud, which connect to the company’s payment network switch and clearing processes on Oracle Cloud via Equinix Fabric with Oracle Cloud Infrastructure (OCI) FastConnect.

Faster, More Reliable Payment Service Delivery

Dojo’s partnership with Equinix enabled the company to deliver faster, more reliable, and more secure payments processing capabilities to its customers. By creating a high-performance, scalable digital infrastructure, Dojo was able to attract larger business clients, including those that process tens of thousands of payments daily. Dojo was able to serve these new clients without any lag in speed or performance, providing them with a seamless payments processing experience. Such scalability is vital for Dojo to expand its client base.

Furthermore, Dojo can scale its services as needed due to the high-speed connection between the Equinix data centers in London and Frankfurt and Oracle Cloud, AWS, and Google Cloud. This enables Dojo to conceivably serve any business of any size – no matter how large – effectively with quick payment processing services. This infrastructure also can power Dojo’s expansion globally and serve businesses in any number of geographies, since Equinix operates data centers in more than 240 locations around the globe.

As an environmentally conscious company, Dojo also prioritizes sustainability and renewable energy sources. Equinix also shares the same commitment and uses 100% clean and renewable energy to power its global platform, making it not only an optimal strategic business partner to Dojo, but a partner that shares the same ideals as well.

“Equinix is the Rolls-Royce of data centers and digital infrastructure platforms. It provides our customers and us with the reliability, security, and performance we require to accelerate and scale our payment services internationally to stay ahead of the competition,” explained Nick Fryer, Chief Technology Officer at Dojo. ““The connectivity between Oracle Cloud, AWS, and Google Cloud is crazy fast.”

Equinix (Nasdaq: EQIX)  is the world’s digital infrastructure company™. Digital leaders harness Equinix’s trusted platform to bring together and interconnect foundational infrastructure at software speed. Equinix enables organizations to access all the right places, partners and possibilities to scale with agility, speed the launch of digital services, deliver world-class experiences and multiply their value, while supporting their sustainability goals.

Layoffs abound in the crypto world, as they have since early May. The year switched anew on the calendar, yet the sector gets no “new year, new me” shift: More than 26,000 jobs were lost in crypto in 2022. By press time, the 2023 tally had numbered no less than 1,900.

It’s hard to predict when the layoff trend will subside, but one exchange is bucking it: Binance. After hiring 5,000 workers last year, CEO Changpeng Zhao told the Crypto Finance Conference in Switzerland on Jan. 11 that he hopes to increase Binance’s workforce by 15% to 30% this year.

“We will continue to build and hopefully we will ramp up again before the next bull market,” he said.

That could be a while. The average crypto winter lasts four years, according to Forbes. And given that mysterious Bitcoin inventor Satoshi Nakamoto only released it 14 years ago, that’s no small amount of time. The last crypto winter lasted for three — from late 2017 to late 2020 — before coin prices skyrocketed to historical highs by November 2021.

In traditional securities, bear markets occur when a market index drops by 20%. And although there’s no official definition for the industry’s analog crypto winter, 2022 was icy cold. In May, one of the most prominent stablecoins depegged from the U.S. dollar, causing market tumult. Throughout the year, many of the most prominent exchanges — Celsius, Voyager Digital, FTX and BlockFi — went belly up. The price of Bitcoin dropped, at least temporarily, by 77%.

But in recent weeks, Bitcoin has made a small recovery. As of Jan. 25, it sits above $23,000 for the first time since August.

Bradley Duke, co-CEO of ETC Group, said this month that the Bitcoin jump was driven mainly by “some macro fears … subsiding with positive economic data in the US, including lower inflation stats and strong job growth numbers.”

Indeed, the consumer price index posted its most significant drop since the early COVID era. However, bank CEOs have stuck to their recession predictions from the fall. Bank of America CEO Brian Moynihan told investors Jan. 13 that he’s preparing for a “mild recession,” and the bank is instituting a partial hiring freeze.

Goldman buy-in

Goldman Sachs, meanwhile, named Bitcoin the top performing asset of 2023 on Jan. 23, with 27% in total returns and a risk-adjusted ratio of 3:1. In December, it was revealed that the bank planned to spend tens of millions of dollars to purchase or invest in crypto companies following the collapse of FTX.

Mathew McDermott, Goldman’s head of digital assets, told Reuters the collapse “heightened the need for more trustworthy, regulated cryptocurrency players, and that big banks see an opportunity to pick up business.”

In his December Wall Street Journal op-ed, CEO David Solomon reflected the sentiment, at least for the technology that drives crypto. The benefit of having regulated financial institutions develop blockchain applications, he said, is that they’re “accustomed to high standards of regulatory oversight … [and] can work with regulators and policy makers to find the right balance between regulation and innovation.”

The downfall of FTX and its ensuing contagion “shouldn’t distract us from the opportunity at hand,” Solomon wrote. “Investors large and small stand to gain with blockchain innovations that are guided by established, experienced institutions.”

Other support?

Is Solomon’s support enough to keep other banks interested in crypto, despite the challenges of the past year? JPMorgan Chase CEO Jamie Dimon’s not sold. But then again, he never really was. (They do have that crypto wallet trademark, though.)

Metropolitan Community Bank announced its exit from the crypto space this month; and crypto-friendly Signature Bank is in the middle of offloading $8 to $10 billion in digital assets to significantly shrink its crypto portfolio.

Acting Comptroller of the Currency Michael Hsu told Bloomberg in December that most banks’ crypto curiosity “went away” in 2022 as the value of tokens took a tumble and that he’d be “astounded” if banks started expressing interest in the asset class now.

Yet BNY Mellon CEO Robin Vince said in an earnings call this month that since launching crypto custody services in October, digital assets have been and will remain a focus for the bank.

Almost every major tech company is experiencing a round of layoffs, even though most are making good profits. Many people have never seen vast layoffs like this, so the honest question is, why is this happening? Is it fashion, fatigue, or something more secular to blame? You can’t rule out fashion in a monkey-see, monkey-do way.

Since there’s reasonable overlap between many tech companies, especially those that harvest user data and sell it to advertisers, each will want to cut costs to remain competitive in the eyes of its shareholders. So you see companies lopping off roughly 10% of their workforces — about 200,000 in tech so far — presumably the least productive people.

But how did those people become so relatively unproductive? Two ways: gradually and all at once.

Many tech companies hired big during the pandemic, assuming we were headed for new workstyles. For the most part, those hires got inadequate onboarding and leadership from remote bosses, and many never got up to speed. That’s the gradual part.

The all-at-once part came when we decided the pandemic was over. Well, not really over, but we were out of patience for being patients — and we needed to come back to offices. We discovered that working from anywhere was not all it was cracked up to be.

So, although remote work is still ostensibly a possibility, management would like to see cubicles occupied in buildings they’re paying big bucks not to occupy. If you aren’t in the office for a good amount of time, you’re expendable.

Diffusion

However, I see a more secular explanation, and it goes like this. Every major invention has a couple of significant parts. The first is the obvious invention piece, and the second is everything else, which scholars call diffusion.

Diffusing a new idea into society is massively expensive because it requires lots of people to do the work. In the nineteenth century, new networks for transportation and communication needed lots of people to lay rails, string cables, build bridges, erect buildings, and make harbors accessible to big ships. It’s a long list, and this is just an example.

The tech revolution of the 20th century also required a sizeable infrastructure buildout. True, businesses were the ones stringing cables throughout their buildings, and other businesses were building computers, routers, server farms, and, eventually, cloud infrastructure. But that buildout was real, and it took decades.

The recent shift during the pandemic had marks of another diffusion, this time, diffusing people back to their home offices. The industry hired big time to support the buildout. But then, mid-way through, everyone said wait a minute. The current great layoff (to pair with the Great Resignation) is partly a symptom of a great never mind from management.

We’re not dealing with an inventory system, so those last in do not necessarily comprise all the layoffs. The vendors presumably look at people with the best fit for the job ahead in their layoff deliberations, and the result is what we see.

Recession

It’s an inexact science which you can see from the nice round numbers that vendors are announcing. Part of the thinking will, of course, relate to what a company sees happening in the months ahead, and many are thinking about a recession.

However, there are recessions, and there are recessions.

Classic recessions happen when inventories build up, and businesses need to clear warehouses at discount prices. At those times, business needs fewer people to make things to fill the warehouses.

But the tech world isn’t looking at a classic recession scenario. Many make things that don’t ordinarily get stored; they aren’t tangible; they’re services, so the concern is reduced demand where greater productive capacity means turning a dial

The reason this is secular is that companies need to reduce productive capacity. In one way or another, many have concluded that they’ve built out their infrastructures as much as they need to, at least for the moment.

Rent Seeking

Rather than growing exponentially, many are discovering what it means to grow organically — or at the same rate as the population. Look at Facebook or its parent Meta for an example.

Facebook is beginning to teeter; its robust growth in users is topping out even while it makes more money. In the U.S., it may be losing users who are over 25 years old. Its new augmented reality products have not caught the imagination of anyone not named Zuckerberg.

As I noted a few weeks ago, Apple has not introduced much that is genuinely new in several years. Now it is going into advertising a move that some economists call rent seeking in which a business tries to make more money on existing investments (its data) than on new products.

Market Saturation

Long story short, the secular slowdown is a big concern for tech and the economy. No, tech isn’t going away; it’s now woven into the fabric of our lives. But it has reached a saturation point where it faces severe commoditization and price pressure, and real growth is challenging.

Steel manufacturing was once in the same position that tech is today. Back in the 19th century, many products were made of steel, including railroads and steamships, but also modern high-rise buildings and the new-fangled automobile.

We still use steel, and more than back then by a considerable measure. But now everybody makes steel. It’s been commoditized, and the market is flooded with product, some of it selling at below-production costs.

Moreover, other products like aluminum, plastics, and carbon fiber weigh less and are just as strong or better suited to a purpose, so why not use them?

My Two Bits

I am certain that tech is headed in the same direction. It will take time, but also the newest innovations in AI that write passable prose and make strange but interesting pictures may be speeding up the process.

Just as there was life after steel and post railroads and all that 19th-century stuff, there will be life after tech. Importantly, there are still many jobs in tech, so there is no need to panic. Still, the latest round of layoffs is a cautionary note.

What else can we do with what we know about tech? That is a question we should all have in mind.

Dive Brief:

• Visa President Ryan McInerney, who will become CEO of the card network company Wednesday, has tapped a pack of new executives to lead the business as part of an organizational restructuring, he said last week during an earnings call with analysts. 
• McInerney, who was named the next CEO in November, appointed Visa veteran Oliver Jenkyn to lead the company’s global markets unit and drive consumer payments growth worldwide, with oversight for five regional presidents. Jenkyn most recently was group president for North America and he has been at the company since 2009, according to his LinkedIn profile.
• McInerney tapped Chris Newkirk, who has been Visa’s chief strategy officer, to lead the company’s new payments flows business and appointed Antony Cahill, who had been Visa’s deputy CEO of Europe, to lead its value-added services business unit. Both Newkirk and Cahill will report directly to McInerney, the incoming CEO said.

Dive Insight:

San Francisco-based Visa’s current CEO, Al Kelly, will become a full-time executive chairman of the board when McInerney steps into the CEO job. McInerney, who has been at the company since 2013, will also join the board. Kelly is looking forward to working with the new leadership team, he said at the company’s annual shareholder meeting last week.

Jack Forestell, who had been Visa’s chief product officer, will now be chief strategy officer as well, and will work closely with the company’s president of technology, Rajat Taneja, McInerney said on the call. “The two of them are focused on delivering a robust product and innovation roadmap,” he said.

McInerney came to Visa from JPMorgan, where he had been CEO of consumer banking, among other roles, following the start of his career at the global consulting firm McKinsey, according to a Visa filing last year with the Securities and Exchange Commission regarding his appointment. McInerney was unanimously elected by the board to the new role, the filing said.

Kelly has been CEO since 2016 and chairman since 2019. He has led Visa through a tumultuous period in recent years, guiding it through the COVID-19 pandemic starting in early 2020, racing to evacuate employees amid Russia’s invasion of Ukraine last year and riding a roller-coaster with the company’s stock since 2020.

In recent months, Visa’s stock price has almost recovered to its peak reached in mid-2021 as the company benefited from revived consumer card spending and the return of cross-border travel.

Nonetheless, McInerney will have plenty of challenges to manage, including an ongoing Justice Department antitrust investigation of the company’s debit card practices and a European Commission probe of its incentives for clients. Visa disclosed in a regulatory filing on Friday that it’s cooperating in both cases. 

Samsung has revealed a sharp decline in profit for 2022, mainly due to the weak demand for its chips and smartphones, which are the company’s main moneymakers. The Korean tech giant has posted KRW 302.23 trillion (US$245.4 billion) in annual revenue, which is a new record high for the company, in its latest earnings report. But it has also reported an operating profit of KRW 43.38 trillion (US$35 billion) for all of 2022, down KRW 8.5 trillion (US$6.9 billion) from the year before. 

“The business environment deteriorated significantly in the fourth quarter due to weak demand amid a global economic slowdown,” the company explained. While the tech giant’s Foundry business posted an increase in profit due to customer and application diversification, its semiconductor business performed poorly as a whole. There was weak demand for its chips overall, as customers adjust and reduce their inventory in the face of economic uncertainties. Its chips’ prices also dropped, mostly likely due to a surplus in unsold inventory, contributing to the business’ decline in earnings for the year. 

In the fourth quarter of 2022, Samsung’s semiconductor business earned KRW 20.07 trillion (US$16.3 billion) in consolidated revenue but only KRW 0.27 trillion (US$219 million) in operating profit. For comparison, it posted a consolidated revenue of KRW 26.01 trillion (US$21.6 billion in early 2022’s conversion rates) and an operating profit of KRW 8.84 trillion (US$7.35 billion) for Q4 2021. Samsung is bracing for this downward trend to persist throughout the next few months, though it expects demand for its semiconductors to pick up in the second half of the year. 

Similarly, the demand for smartphones remained weak in the fourth quarter of 2022. Sales for Samsung’s more affordable phones went down, and while flagship sales held up to market expectations, they’re still lower than previous quarters’. The company expects demand for mass market smartphones to weaken even further in 2023 “due to persistent macroeconomic conditions.” But since it also expects demand for premium devices to stay solid, it vows to strengthen “the competitiveness of its premium flagship products.” To note, Samsung will hold its first Unpacked event of 2023 on February 1st where it will most likely unveil its next flagship phone, the Galaxy S23. 

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Credit card tumbling (CCT) is a subset of credit card fraud in which a hacker has some, but not all, of a customer’s information and attempts to guess the rest. The word tumbling is a reference to the tumblers, or knobs, on an old-fashioned safe, which a robber would open by listening carefully to the moving tumblers to detect a click, an indication that a code number had been reached. Today’s hackers aren’t listening to moving tumblers until they hear that click, but they are leveraging partial credit numbers or expiration dates and continuing to guess the missing information until a purchase goes through. 

It’s no surprise that CCT is top of mind for merchants, who are continually looking to offer more security and prevent such fraud from accelerating.

In a recent PaymentsJournal podcast, Alok Kumar, chief information security officer, NCR Retail & Payments; and Brian Riley, head of credit and co-head of payments at Mercator Advisory Group, discussed the threat CCT poses and offered best practices for merchants who are tackling this issue.

Preventing CCT Fraud

Detecting CCT fraud is relatively simple. It shows up when a bill is disputed by a customer who’s unaware that information has been stolen. Preventing CCT fraud before it happens is more challenging, but can be done if the appropriate precautions are taken.

“The passive way is to sit there and wait for a bill to tell you of an attack,” Riley said. “The proactive way involves a process that pre-identifies where that risk is and allows you to catch things way before the problem turns into a real big problem.”

According to Kumar, the most important aspect of a proper information security control system is to prevent CCT fraud. “Today, with many of the vendors [out there], if I go to their website, they don’t ask for a CVV,” Kumar said. “The CVV is the card verification value, which is on the back of the card. That number is not saved in any database. So even if the hacker takes the credit card info online, they never have the CVV. That’s something we need to verify every time.”  

Velocity checking, also referred to as rate limiting, is another key factor to watch out for. “You need to check and see how many attempts at a payment you’re getting per minute from the same session,” Kumar said. “Sometimes people do up to 30 tries, and there’s no reason for someone to do that many per minute.”

Other security checks involve corroborating customer information. For example, it’s important to make sure the card number matches the address presented by the customer and that the IP address is legitimate. There are IP reputation lists published by different vendors—a merchant can subscribe to that service and verify that a customer is not coming from an IP that has already been blacklisted.

Companies can leverage these strategies in-house or outsource them. “There are a lot of third-party vendors that you can outsource the traffic to,” Kumar said. “Those companies have security services, where you can route your [customer] traffic through them. They also offer customizable solutions, blocking certain cards under custom rules, and only send the proper traffic to your website.”

Preventing CCT fraud also involves focusing on data storage. Merchants should make sure to have intrusion detection prevention services, such a firewall and antivirus file integrity monitoring. Databases should be encrypted, along with credit card information.

“When you’re sending credit card information to a processor for any reason, you should not leave any of the plain text of the credit card in any file, whether it’s a database or a flat file,” Kumar said. “Many people do manual processing at the end of the day. They sometimes leave log files on their computers with credit card text in them, which can be stolen.”

Another common mistake that can be easily avoided is the sending of sensitive log files to the trash folder. When malware gets into a computer, it looks in the trash folder first. People who handle credit card information daily can be trained to not leave sensitive files in the trash folder.

Overall, avoiding CCT fraud is possible with the right steps. Checking for a CVV, checking card submission frequency, and corroborating customer information are important to sniffing out fraudsters. Securing customer information via encryption and disposing of data properly are also important. Companies can implement much of this in-house or partner with organizations that specialize in these tasks. With the right plan, companies can improve their bottom line significantly by working to reduce fraud before it happens.