of knowing which direction Russia will choose to go in whether it will change its strategy or continue to rely on its oil and gas industries.
Looking again from a macroeconomic point of view, Russian equity investments are relatively inexpensive, and the government provides favorable statistics concerning its ratio of debt to GDP and the levels of consumer debt. As a result, long-term prospects for Russia are extremely positive from certain perspectives. But the present day uncertainty discourages large-scale investments.
Now, they are trying to simply diversify their portfolios on the market. When investors compare Russian securities in this region with assets in East Asia, China, and Latin America, they discover that Russia offers a very good investment opportunity which, when combined with specific macroeconomic and local factors, can yield substantial benefits in the future. In comparison to other emerging markets, the opportunities Russia presents may be less risky.
Fill the gaps using the words:
Macroeconomic, investors, demand, prices, discourages
1.But the present day uncertainty … large-scale investments.
2.They discover that Russia offers a very good investment opportunity which, when combined with specific … and local factors, can yield substantial benefits in the future.
3.The European economy could reduce the … for US products.
4.And to add to that, … today have no way of knowing which direction Russia will choose to go in whether it will change its strategy or continue to rely on its oil and gas industries.
5.Oil … have the greatest impact on investment decisions in Russia.
Write down all words connected with economy
Make up your plan to this article
Reproduce the text using your list of the words and your plan
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Unit 3
Warming up activities
What do you know about PayPal? What is it?
Vocabulary:
digital wallets – электронный [цифровой] бумажник transfers of money – денежные переводы cross-border payments – трансграничные платежи flows of money – денежные потоки
taxman – сборщик налогов
Look through the following text and answer the following questions:
1.What problems threaten bank payments?
2.Why do most of banks don’t take seriously alternatives to bank payments?
3.How do Square and Intuit enriched?
4.Why do mobile payments are so popular?
Mobile payments
A wealth of wallets
Digital payments pose a serious threat to banks
May 19th 2012 | THE ECONOMIST
TURN LEFT OFF the main reception to PayPal's offices in San Jose, open a nondescript door and you step into a garish living room dominated by a flat screen television. This is a laboratory for what PayPal calls “couch commerce”: people sit in front of the television buying things with their mobile phones or tablet computers. Next door is a make believe shopping mall complete with a mock hardware store, grocery and coffee shop. In each, consumers can order, buy and pay for things using their phones, or even just their phone numbers.
The virtual mall and living room are exercise grounds for the next big battle in banking: over who will control the new digital wallets that
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will change the way in which people shop and spend and, by implication, the way they save and borrow.
On the face of it, the business of facilitating payments seems a particularly unpromising one for start-up to enter. Most transfers of money run down a few main highways that link banks to one another. They carry huge volumes of traffic and are generally strictly regulated.
“They move quadrillions a day and take just a few crumbs,” says Simon Bailey, a payments expert at Logica, a consulting firm. To consumers, most payments appear to be free because they are given away by banks as part of a bundle of banking services that some customers subsidise through low interest rates on deposits.
Yet payments turn out to be a battleground between banks and a slew of innovators trying to disrupt the market. Many of these firms have relatively humble ambitions. Some are trying to grab thimblefuls of the huge flows of money that wash around the world by concentrating on particular areas, such as cross-border payments. Yet they find themselves getting ever closer to offering bank like services without having to be banks themselves.
There has been massive growth in supplying payments services to tradesmen such as plumbers or flea-market stallholders, which until recently could accept payment only in cash or by cheque. Yet cheques are bouncy, and although cash has its attractions foremost of which is that it is easily hidden from the taxman carrying large amounts of it is risky, and customers can spend only as much of it as they have in their wallets.
In America two firms, Square and Intuit, lead this market with small devices that attach to smartphones and allow even the smallest business or tradesman to accept credit-card payments. Both firms offer free cardreaders to users and then charge them a fee of about 2.7% of the amount that changes hands. Both are growing at a rapid clip. Square has signed up more than 1m customers since its launch in 2010. Among them is the Salvation Army, which last Christmas started testing the device to accept digital donations alongside its traditional red kettles. Intuit's GoPayments, which also launched three years ago, says the number of its clients increased by 1,200% last year, though it will not give an actual number. “Before this, small businesses would have had to take cheques or lose sales,” says Chris Hylen, the head of Intuit's payments division.
In little over a year. Square alone has increased the number of creditcard readers in America by about a sixth. The growth of both firms high-
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lights the huge pent up demand for mobile payments. Both reckon that some 26m small businesses and self-employed people in America had wanted to accept card payments but were put off by the cost and the paperwork. A traditional card-reader sells for hundreds of dollars, with fixed monthly fees on top, and applicants have to submit to credit checks and provide accounts for the previous year impossible for a start-up.
Some big banks sneer at these newcomers, arguing that the technology involved in adding a card reader to a phone can be easily replicated. In fact, the innovation has less to do with the device reader than with a business model that has made a huge difference to costs involved in accepting credit-card payments. It is rapidly overturning a lucrative industry of “merchant acquisition” that allowed banks to earn wide margins for agreeing to provide credit card readers to shops. The first Square device was built by Jack Dorsey, one of the founders of Twitter, who found it so simple that he wondered why no one had done it before, says Keith Rabois, Square's chief operating officer. “They literally made this thing work in a month,” he explains. “It took another year plus to navigate the financial services industry.”
The success of mobile payments would not have been possible without the massive growth in the number of smartphones and the falling cost of computing power, both of which are lowering the barriers to new entrants in parts of finance. Smartphones are vital to this, because by providing consumers with powerful computing devices and internet connections that are always on, they open the way to all sorts of other innovations. Square and Intuit can give away their card readers free in part because all the processing power to run them is already on the phones they are plugged into. “It is a device that can link the online and offline worlds,” says Zilvinas Bareisis, an analyst at Celent, a consultancy. “The smartphone gives such a rich experience that we are playing games on it, we are tracking stars, so it is a natural extension to check your bank account or even make a payment.” Its use is also spreading fast. Nielsen, a research firm, reckons that by the end of last year almost half of American mobile phone subscribers had smartphones, compared with under a fifth two years earlier.
The two companies whose online-payments experiments are being watched most closely are Google and PayPal. PayPal initially set itself up as a mobile wallet that would allow people to beam money from one Palm Pilot (an early handheld device) to another. That idea died pretty
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quickly when PayPal realised that people were not particularly interested in being able to beam money to someone standing in front of them, but that they did want a safe way to send money over the internet to people who might be complete strangers. It is now arguably the world's biggest bank, with more than 100m account holders. It provides a virtual wallet that can be used to pay for online purchases on a computer at home as well as for things bought in bricks-and-mortar stores on a smartphone. The wallet can even be completely dematerialised. In shop trials in America, customers were happy to pay at the till by typing in their phone numbers and secret code.
Fill the gaps using the words:
Banks, purchases, flows of money, credit-card, payment
1.The innovation has less to do with the device reader than with a business model that has made a huge difference to costs involved in accepting … payments.
2.The smartphone gives such a rich experience that we are playing games on it, we are tracking stars, so it is a natural extension to check your bank account or even make a …
3.Some big … sneer at these newcomers, arguing that the technology involved in adding a card reader to a phone can be easily replicated.
4.It provides a virtual wallet that can be used to pay for online … on a computer at home as well as for things bought in bricks-and-mortar stores on a smartphone.
5.Some are trying to grab thimblefuls of the huge … that wash around the world by concentrating on particular areas, such as crossborder payments.
Write down all words connected with economy
Make up your plan to this article
Reproduce the text using your list of the words and your plan
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