This is a newsletter about regulatory hacking featuring (mostly) Canadian startups.
Every week, I contextualize a Canadian startup in the legislative landscape.
Because all start-ups need a policy strategy to succeed.
🏺 company: Quber
🤡 wildcard: regulating annual increases of digital subscriptions
☄️ space: The impacts of COVID-10 on the space industry (OECD)
💅 tune: bad girl - mall girl
Let’s get in the Atlantic bubble for a minute.
Quber is a New-Brunswick-based fintech (at least I *think* it is a fintech - we will get to that in a second). It is essentially with a gamified budgeting app to help low income people save money for emergencies and other short-term goals. An admirable intention, for sure.
I think that the firm has a great mission and is tackling a worthy problem. My guess is that they may face regulatory barriers related to their ability to hold funds on other people’s behalf.
Deposits made with QUBER are insured by a Canadian credit union (they don’t say which one) in an abstraction that QUBER refers to as a “vault.” And while you can essentially “hide” money from yourself, you don’t earn any interest (plus: current high-interest savings rates could be said to be a disincentive). So QUBER is basically a digital shoebox under your bed.
I scrolled through the firm’s FAQ in an effort to appreciate their design a bit better. I don’t think it is a very good program. Check this out:
Please note: When selecting a Saving Rule that only sends a small amount of money to your Saving Jar each time it fires (ex. rounding up to the nearest dollar on coffees), money will appear as if it’s in your Jar well before it actually leaves your Primary Bank Account. It is important to be mindful of your Primary Bank Account balance when your Saving Jar finally hits $20 to avoid incurring a non-sufficient funds (NSF) fee from your bank when QUBER tries to withdraw money.
So much for “set it and forget it 🤷
Perhaps the transaction costs on micro-transfers aren’t worth QUBER picking up the tab. So - your *actual* bank may charge you fees - the ultimate worst of which is an NSF fee.
Wouldn’t it be a more productive design for Quber to NOT “take” money from your account if you don’t have any there?
Further, I found some of Quber ‘s messaging problematic:
We know that most people have a difficult time reaching their goals due to poor financial planning and excessive impulse spending.
It can also be difficult to save because of the rising cost of living and stagnant wages(?). Geez.
I guess QUBER is a nice idea, but why not just set a savings goal with your *own* bank? QUBER is inventive, creative, and well intentioned but badly executed. I hope it can partner with one of the big 5 and waive any incidental NSF fees as they seek to support people and their efforts to save more.
On the fintech train - albeit not Canadian - is Greenwood. 🇺🇸
It is a banking platform for Black and Latinx communities. The banking platform redistributes wealth my donating to the UNCF and NAACP through spare change round ups. I was also trying to learn more about what a “public bank” is this week.
Here’s a 2018 article from the New Republic - Why Public Banks are Suddenly Popular. My Googling tells me that there was a movement of sorts to have an Ontario Public Bank back in 2011 (big thanks to the Canadian Citizens Coalition for Monetary Reform). 🏦
🤡 wildcard: a ceiling for annual subscription increases
Speaking of managing money: Netflix’s subscription is going up - again (well, the last price increase was in November of 2018). Perhaps this was to be expected (SEE: Covid-19 presents Netflix with chance to hike prices). Current users will be notified 30 days before the price increases.
The company’s last price increase in Canada was announced in November 2018. At that time it bumped up the basic monthly plan by a dollar to $9.99, the standard by $3 to $13.99, and the premium by $3 to $16.99.
🃏 My wildcard - as we consider all the levers/pulleys/tools/and other abstractions we have “at our fingertips” to regulate technologies, I wonder if the state should explore capping annual price increases for digital subscriptions.
Of course, price increases can reflect cost increases on the supply side, and they are subject to basic economics i.e. Netflix/the company takes on the risk of losing subscriptions. At it stands, Netflix has ~180M subscribers. So, assuming they are planning on rolling out this price increase everywhere [eventually] and there’s *no* drop off from the increase [big V-assumption], that is an extra $4B/year.
SOURCE: Recode (2019).
You are likely familiar with how the province sets a ceiling for annual rent increases (without regulating the rental market). Typically consumer products with rising prices - not digital - influenced by trading conditions and even things like…the weather. Yet recurring digital subscriptions sort of turn is into hostages.
Quick skim of the prices of some of the most popular digital subscriptions:
Apple Music - $9.99/mo, $14.99/family plan, $4.99/student
Amazon Prime - $7.99/mo
Blockbuster (RIP) - Membership was $50/year or $100 for a lifetime membership, and individual rentals were $10.
ClassPass - pay-as-you-go, minimum $45/mo.
Costco - $60/yr
Spotify - $9.99/mo
Am I bonkers? In California, online subscription retailers face tougher regulation through the Automatic Renewal Law (ARL). Under ARL, retailers that promote auto-renewal subscriptions online need to allow online cancellation. Online dating service eHarmony faced a consumer-protection lawsuit in response to its automatic-charging practices. So - some broad precedent in regulating subscription companies from a consumer protection standpoint
📚 legislative pages: the tangled web we weave - inside the shadow system that shapes the internet
COVID is also affecting the business of outer space, according to a new OECD report.
While many space sector firms seem to be able to cope, a significant number is struggling, particularly small and medium-sized enterprises that constitute the bulk of commercial actors in the space industry. Considering the high costs of entry to the sector, there is a risk that the crisis could lead to more industry concentration, eliminating smaller and younger firms that are key sources of innovation, employment and economic growth. Space agencies and other public administrations therefore need to fully consider vulnerable smaller actors in their overall crisis responses.
Also, researchers are mad that the US is trying to be the “gatekeeper of space.”
What do we think about sponcon from astronauts?
💅 tune: bad girl from “mall girl”
🤓 Vass Bednar is a smart generalist working at the intersection of technology and public policy.