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Going by the number of contractual commitments and annual OCC and other audits that outsourcers submit to, curious to know how this is different from the "back-to-back" conditions that have been in force for a long time?

@AnonFinextraMember:

1. While ewallets do use V/MC, that's not the only rails they can use. Some of them support TELCO rails e.g. Boku, Zong. Others use ACH rails e.g. PayPal, PayTM
2. I regularly use an ewallet because it eliminates the friction associated with the conventional payment process. For the merchant, that means manifold increase in conversion. Real - not perceived - increase. Due to reduced friction, not higher security. HDFC Bank's PayZapp Ends My Bill Payment Woes
3. Gone are the days when middleman automatically meant higher cost. When I pay a bill directly, many biller websites levy a surcharge of 1-2% for accepting credit cards. Whereas, when I pay the same bills via a third party mobile wallet like PayZapp, not only do I escape the surcharge but I actually get a cashback at the end of the month. So, thanks to funding from sugar daddies / VCs, middleman could actually mean LOWER costs! Both for the consumer and merchant. 
4. As long as the funding tap doesn't dry up, ewallets are not dead-on-arrival. Personally, it's never a good idea to invest your nest egg in the private markets but, as long as the party lasts, why shouldn't savvy consumers and merchants partake of the festivities?

PayPal ewallet is often funded via credit card. It's also possible to pay by credit card via PayPal without having a PayPal account, which means PayPal but no ewallet. If WorldPay subtracts the volumes of these two types of transactions, its prediction might go awry. Which makes for a good candidate of the "#3. Exploiting Calculitis" method of How To Lie With Big Data.

Whaat? There are startups who think there's a "tradeoff" between "studying the market" and "spend(ing) time on your solution"?? Okay, now I know why:

1. there are so many fintech solutions seeking problems (e.g. Mobile Wallets: Fix What's Broken - And It Ain't Payments)
2. a fintech startup thinks "overdraft", a decades-old bank feature, is an innovation (https://twitter.com/leimer/status/667342111688273920).
3. Banks Have Nothing To Fear From Neobanks
4. 7 (or 8 or 9, depending upon the source) out of 10 startups die

Midway through the implementation of FPS for a Top 5 UK Bank came another major regulation. If my memory serves right, it was called "Pay No Pay". The bank attempted to integrate the two compliance teams and scheduled a meeting to work out the mechanics. A half hour into the meeting, it became amply clear that a common compliance framework would be impossible for more reasons than one viz. turf protection, ego hassles, varying timelines, different IT orgs., etc. I thought things have changed since then when I noticed the rising prominence given to the Chief Compliance Officer title. Any idea why the CCO hasn't been able to develop your ask of "regulatory compliance framework"?

Just stumbled upon this GigaOm article and learned that the right term for SQUARE's role is "merchant aggregator". The merchant aggregation model is explained in detail in this Digital Transactions article.

When investors lose money invested in blade companies, they file lawsuits. When employees lose their jobs in startups, they call their local politician. When cardholders lose money to fraudsters making unauthorized use of their NFC cards / mobile wallets, they lodge police complaints. If fintech were unregulated, wonder what these people will do - take their losses on the chin and treat it as their contribution to fostering innovation?

If fintech companies were really so innovative, they'd take a leaf out of Uber and AirBnB and operate in the regulatory gray areas. If they were really so popular with the consumer, they'd amass such a huge following at the grassroot level that they'd be able to thumb their nose at the regulator à la Uber and AirBnB. Looks like fintech is neither innovative nor popular. There's nothing new about regulation in fin services. IMHO, fintech is raising it to divert attention from the massive humble pie it's going to eat very soon for having to partner with banks. As Dwolla co-founder Ben Milne says in this WSJ article (http://www.wsj.com/article_email/banks-and-fintech-firms-relationship-status-its-complicated-1447842603-lMyQjAxMTA1MzE5ODYxNzg4Wj), '“Time humbles you,” Working with banks, he says, is the difference between running a sustainable business and “just another venture-funded experiment.”' Regulation is just a smokescreen.

Cash is the cheapest payment option for the merchant. Since I wrote  Cash in Hand Is Worth More Than Card In Bush, UBER has introduced cash as a payment option in India; MERU is phasing out POS terminals from its cabs; customers are complaining that cabbies of other new age cab aggregators (e.g. OLA) are refusing mobile wallet payments and are insisting on cash. Obviously, this is in response to the realization that cash alternatives too have hidden costs, which are conveniently ignored by middlemen with vested interest in cashless options.

Agreed. Unfortunately, there are banking cloud solutions that ail from at least two of the six ills I've listed in my two posts - Low Uptime, Wrong Messaging.

Add to that a new factor: Regulatory ambivalence about SAAS. Just yesterday, I read this in a Finextra article:

'But in new draft guidance, the FCA gives its backing to companies that wish to use "IT services provided in various formats over the internet," as long as "appropriate consideration" is taken "in a manner that complies with our rules".' https://www.finextra.com/news/fullstory.aspx?newsitemid=28132.

Let alone old-school conservative banks, many new age fintech startups will read this paragraph and wonder "can we, can't we" deploy cloud solutions. Not surprisingly, "Regulation biggest threat to fintech growth - survey".