INDEPENDENT PUBLICATION BY RACONTEUR.NET #0618 19/09/2019 FUTURE OF PAYMENTS

HOW SPENDING CAN SOCIAL IMPLICATIONS STANDING OUT IN A 03 BUY YOU HAPPINESS 06 OF CASHLESS SOCIETIES 16 SEAMLESS FUTURE 02 FUTURE OF PAYMENTS RACONTEUR.NET 03

FUTURE OF BEHAVIOUR PAYMENTS How spending money Distributed in can buy happiness

Published in association with Behavioural economics can reveal useful insights into our motivations and feelings when parting with hard-earned money

Marina Gerner payments make parting with money Contributors even easier. magine you’re on your way The latest example of separating Paul Amery Sophie Charara back from work and you purchasing from paying are check- Founding editor of New Associate editor at I Money Review, he is a WIRED UK, she writes pop into a shop. You weren’t out-less Amazon Go shops, where former asset manager about technology looking for anything in particular, people don’t consciously pay at all. and culture. and trader. but an hour later you find yourself Colangelo/Unsplash Tristan Hundreds of cameras around the walking out with a big smile and mul- store are able to detect what custom- Jack Apollo George Edd Gent Writer and media Freelance science and tiple bags in tow. What happened? ers take off the shelves and automat- specialist whose articles technology writer, his Behavioural economists call it the ically charge their Amazon account on technology and culture work has been published effect of “shopping momentum”. when they leave. have been published by in the BBC, New Scientist, We like to think we’re rational con- The second factor is our disposi- Science and MIT the New Statesman and sumers when it comes to our spend- tion. People who are tightwads and CLOT Magazine. Technology Review. ing. After all, our financial decisions who make up about 25 per cent of the Marina Gerner Amy Hawkins have a huge impact on our wellbe- population, according to one study, Award-winning arts, China-based journalist, ing. Think of an unforgettable holi- experience more pain when it comes philosophy and finance she writes about day or a house bought at the wrong to paying than spendthrifts who feature writer, her work technology and culture, time. But in reality, we’re emotional make up 15 per cent. has been published in and has appeared in The The Economist's 1843, The Guardian, The Sunday creatures, susceptible to biases and “Tightwads experience a lot of dis- Times Literary Supplement Times, Foreign Policy external factors. tress when they make purchases, and Standpoint. and others. Luckily, behavioural economics especially the optional kind, and makes our irrationality more predict- that prevents them from spending Emily Hill Duncan Jefferies able. In the words of Nobel prize-win- the money they think they should Freelance journalist and Freelance journalist and author, she is the former copywriter, he covers ning economist Professor Richard spend on certain things, and they commissioning editor at digital culture, technology Thaler, it’s “economics done with sometimes kick themselves after- The Spectator and feature and innovation, and strong injections of good psychology”. wards,” says Scott Rick, associ- writer for The Mail writes for The Guardian When considering paying for ate professor of marketing at the on Sunday. and Independent Voices. goods, researchers have found that University of Michigan. Alexandra Leonards Ouida Taafe buying one thing makes us much On the other side of the spectrum, Freelance journalist, she Editor of LIBF’s Financial more likely to buy subsequent items, spendthrifts hardly experience any writes in-depth features World, she has also worked regardless of our previous delibera- our tendency for “duration neglect” But what kind of a pain is it exactly? pain at all. “They just can’t stop them- on a range of subjects, for the International tions. Browsing things to buy online means we don’t typically think A brain imaging study led by selves,” says Dr Rick. Spendthrifts are including current affairs, Financing Review and or in a store, puts us in a mindset of about how long we’re going to use Professor Nina Mazar, a behavioural largely insensitive to payment meth- culture, to healthcare, tech Telecommunications and logistics. International. “deliberation”. But as soon as we buy it for. But if people are asked to con- scientist at Boston University, found ods, but for tightwads, contactless one item, a cognitive shift to “imple- sider how long an item is meant to that the pain of paying is not like a methods and framing techniques, mentation” occurs. “Our mind- last, they’re likely to pay more. physical pain. It’s more similar to dis- for example if a fee is described as set changes from whether or not I Such framing techniques influ- tress or anxiety on a neural level; it “small”, make a difference. should buy something to how do I ence our pain threshold for pay- can help keep our spending in check. The third factor is whether we buy this?” says Professor Ravi Dhar ing. People are, generally speak- However, not all payments are consider a product virtuous or friv- of the Yale School of Management, ing, loss averse and the idea of a equally painful. Research tends to olous. Buying fat-free yogurt feels Lead publisher Head of production New Haven, Connecticut. “pain of paying” was coined some revolve around three key factors. different from buying ice cream Ellen Shannon Justyna O'Connell “If you want to resist the impulse,” two decades ago by professors The first is payment method. Paying with sprinkles. Only the latter gives Associate editor Design says Professor Dhar, “ask yourself Drazen Prelec of the Massachusetts by card is less visceral and therefore us pangs of guilt. Peter Archer Joanna Bird what else you could do with the Institute of Technology and easier than paying with cash. In one Virtuous items are those we con- Sara Gelfgren money.” His studies show that peo- George Loewenstein of Carnegie study, people were willing to pay sider necessary and they’re more Deputy editor Kellie Jerrard ple typically neglect to think of Mellon University, Pittsburgh, twice as much to bid on tickets for likely to induce shopping momen- Francesca Cassidy Harry Lewis-Irlam opportunity costs, or alternative Pennsylvania. Think of sitting in a basketball game if they could pay tum than vice items, which make Celina Lucey things we could buy with the same a taxi, staring at the meter creep by credit card rather than in cash. us pause because of the momentary Managing editor Colm McDermott Benjamin Chiou Samuele Motta amount of money. Those who do are higher and higher. It’s painful. Contactless payments and phone guilt. So buying milk leads to more Jack Woolrich more likely to choose the cheaper subsequent purchases than buying Digital content executive option or buy nothing at all. ice cream. Taryn Brickner Head of design Conversely, retailers can use CONSUMERS AND THE PAIN OF PAYING But there’s an effective way for Tim Whitlock framing techniques to get peo- companies to counter the guilt we Widely cited survey of 13,000 respondents Although this publication is funded through advertising and ple to spend more. “Paying a lot feel when buying “vice” products. sponsorship, all editorial is without bias and sponsored features for cashmere socks seems gross to It’s an age-old method: coupling vice are clearly labelled. For an upcoming schedule, partnership many people,” says Professor Dhar. products with charitable donations. inquiries or feedback, please call +44 (0)20 3877 3800 or If cashmere socks are presented TIGHTWADS In one study, 48 per cent of people email [email protected] among other types of socks, we’re Those who spend less than were likely to opt into a donation Raconteur is a leading publisher of special-interest content and inclined to see them as socks first they ideally would like when buying theme park tickets, but research. Its publications and articles cover a wide range of topics, % and consider their material second. 25 only 32 per cent did so when buying a including business, finance, sustainability, healthcare, lifestyle and technology. Raconteur special reports are published exclusively in But experiments have shown that if six-month supply of toothpaste. The Times and The Sunday Times as well as online at raconteur.net the same socks are presented along- So if a vice product is coupled The information contained in this publication has been obtained side other cashmere goods, we cate- with a charitable donation, peo- from sources the Proprietors believe to be correct. However, gorise them as “cashmere” first and ple’s guilt is balanced by the warm no legal liability can be accepted for any errors. No part of this “socks” second, and we’re willing to SPENDTHRIFTS glow we experience when we give to publication may be reproduced without the prior consent of the spend more. 15% Those who spend 65% charity and the moral satisfaction Publisher. © Raconteur Media more than they There’s another framing tech- we purchase. Our pain of paying is ideally would like UNCONFLICTED nique to increase spending. When assuaged, while both the company @raconteur /raconteur.net @raconteur_london buying a new backpack, for example, Scott Rick et al, Journal of Consumer Research 2008 and charity benefit.

raconteur.net /future-payments-2019 02 FUTURE OF PAYMENTS RACONTEUR.NET 03

FUTURE OF BEHAVIOUR PAYMENTS How spending money Distributed in can buy happiness

Published in association with Behavioural economics can reveal useful insights into our motivations and feelings when parting with hard-earned money

Marina Gerner payments make parting with money Contributors even easier. magine you’re on your way The latest example of separating Paul Amery Sophie Charara back from work and you purchasing from paying are check- Founding editor of New Associate editor at I Money Review, he is a WIRED UK, she writes pop into a shop. You weren’t out-less Amazon Go shops, where former asset manager about technology looking for anything in particular, people don’t consciously pay at all. and culture. and trader. but an hour later you find yourself Colangelo/Unsplash Tristan Hundreds of cameras around the walking out with a big smile and mul- store are able to detect what custom- Jack Apollo George Edd Gent Writer and media Freelance science and tiple bags in tow. What happened? ers take off the shelves and automat- specialist whose articles technology writer, his Behavioural economists call it the ically charge their Amazon account on technology and culture work has been published effect of “shopping momentum”. when they leave. have been published by in the BBC, New Scientist, We like to think we’re rational con- The second factor is our disposi- Science and MIT the New Statesman and sumers when it comes to our spend- tion. People who are tightwads and CLOT Magazine. Technology Review. ing. After all, our financial decisions who make up about 25 per cent of the Marina Gerner Amy Hawkins have a huge impact on our wellbe- population, according to one study, Award-winning arts, China-based journalist, ing. Think of an unforgettable holi- experience more pain when it comes philosophy and finance she writes about day or a house bought at the wrong to paying than spendthrifts who feature writer, her work technology and culture, time. But in reality, we’re emotional make up 15 per cent. has been published in and has appeared in The The Economist's 1843, The Guardian, The Sunday creatures, susceptible to biases and “Tightwads experience a lot of dis- Times Literary Supplement Times, Foreign Policy external factors. tress when they make purchases, and Standpoint. and others. Luckily, behavioural economics especially the optional kind, and makes our irrationality more predict- that prevents them from spending Emily Hill Duncan Jefferies able. In the words of Nobel prize-win- the money they think they should Freelance journalist and Freelance journalist and author, she is the former copywriter, he covers ning economist Professor Richard spend on certain things, and they commissioning editor at digital culture, technology Thaler, it’s “economics done with sometimes kick themselves after- The Spectator and feature and innovation, and strong injections of good psychology”. wards,” says Scott Rick, associ- writer for The Mail writes for The Guardian When considering paying for ate professor of marketing at the on Sunday. and Independent Voices. goods, researchers have found that University of Michigan. Alexandra Leonards Ouida Taafe buying one thing makes us much On the other side of the spectrum, Freelance journalist, she Editor of LIBF’s Financial more likely to buy subsequent items, spendthrifts hardly experience any writes in-depth features World, she has also worked regardless of our previous delibera- our tendency for “duration neglect” But what kind of a pain is it exactly? pain at all. “They just can’t stop them- on a range of subjects, for the International tions. Browsing things to buy online means we don’t typically think A brain imaging study led by selves,” says Dr Rick. Spendthrifts are including current affairs, Financing Review and or in a store, puts us in a mindset of about how long we’re going to use Professor Nina Mazar, a behavioural largely insensitive to payment meth- culture, to healthcare, tech Telecommunications and logistics. International. “deliberation”. But as soon as we buy it for. But if people are asked to con- scientist at Boston University, found ods, but for tightwads, contactless one item, a cognitive shift to “imple- sider how long an item is meant to that the pain of paying is not like a methods and framing techniques, mentation” occurs. “Our mind- last, they’re likely to pay more. physical pain. It’s more similar to dis- for example if a fee is described as set changes from whether or not I Such framing techniques influ- tress or anxiety on a neural level; it “small”, make a difference. should buy something to how do I ence our pain threshold for pay- can help keep our spending in check. The third factor is whether we buy this?” says Professor Ravi Dhar ing. People are, generally speak- However, not all payments are consider a product virtuous or friv- of the Yale School of Management, ing, loss averse and the idea of a equally painful. Research tends to olous. Buying fat-free yogurt feels Lead publisher Head of production New Haven, Connecticut. “pain of paying” was coined some revolve around three key factors. different from buying ice cream Ellen Shannon Justyna O'Connell “If you want to resist the impulse,” two decades ago by professors The first is payment method. Paying with sprinkles. Only the latter gives Associate editor Design says Professor Dhar, “ask yourself Drazen Prelec of the Massachusetts by card is less visceral and therefore us pangs of guilt. Peter Archer Joanna Bird what else you could do with the Institute of Technology and easier than paying with cash. In one Virtuous items are those we con- Sara Gelfgren money.” His studies show that peo- George Loewenstein of Carnegie study, people were willing to pay sider necessary and they’re more Deputy editor Kellie Jerrard ple typically neglect to think of Mellon University, Pittsburgh, twice as much to bid on tickets for likely to induce shopping momen- Francesca Cassidy Harry Lewis-Irlam opportunity costs, or alternative Pennsylvania. Think of sitting in a basketball game if they could pay tum than vice items, which make Celina Lucey things we could buy with the same a taxi, staring at the meter creep by credit card rather than in cash. us pause because of the momentary Managing editor Colm McDermott Benjamin Chiou Samuele Motta amount of money. Those who do are higher and higher. It’s painful. Contactless payments and phone guilt. So buying milk leads to more Jack Woolrich more likely to choose the cheaper subsequent purchases than buying Digital content executive option or buy nothing at all. ice cream. Taryn Brickner Head of design Conversely, retailers can use CONSUMERS AND THE PAIN OF PAYING But there’s an effective way for Tim Whitlock framing techniques to get peo- companies to counter the guilt we Widely cited survey of 13,000 respondents Although this publication is funded through advertising and ple to spend more. “Paying a lot feel when buying “vice” products. sponsorship, all editorial is without bias and sponsored features for cashmere socks seems gross to It’s an age-old method: coupling vice are clearly labelled. For an upcoming schedule, partnership many people,” says Professor Dhar. products with charitable donations. inquiries or feedback, please call +44 (0)20 3877 3800 or If cashmere socks are presented TIGHTWADS In one study, 48 per cent of people email [email protected] among other types of socks, we’re Those who spend less than were likely to opt into a donation Raconteur is a leading publisher of special-interest content and inclined to see them as socks first they ideally would like when buying theme park tickets, but research. Its publications and articles cover a wide range of topics, % and consider their material second. 25 only 32 per cent did so when buying a including business, finance, sustainability, healthcare, lifestyle and technology. Raconteur special reports are published exclusively in But experiments have shown that if six-month supply of toothpaste. The Times and The Sunday Times as well as online at raconteur.net the same socks are presented along- So if a vice product is coupled The information contained in this publication has been obtained side other cashmere goods, we cate- with a charitable donation, peo- from sources the Proprietors believe to be correct. However, gorise them as “cashmere” first and ple’s guilt is balanced by the warm no legal liability can be accepted for any errors. No part of this “socks” second, and we’re willing to SPENDTHRIFTS glow we experience when we give to publication may be reproduced without the prior consent of the spend more. 15% Those who spend 65% charity and the moral satisfaction Publisher. © Raconteur Media more than they There’s another framing tech- we purchase. Our pain of paying is ideally would like UNCONFLICTED nique to increase spending. When assuaged, while both the company @raconteur /raconteur.net @raconteur_london buying a new backpack, for example, Scott Rick et al, Journal of Consumer Research 2008 and charity benefit.

raconteur.net /future-payments-2019 04 FUTURE OF PAYMENTS RACONTEUR.NET 05 Commercial feature

B2B PAYMENTS Five ways to simplify B2B payments Q&A Streamlining the payments supply chain Public risk court judgments against it, as 01 scores well as anonymised data on its payment patterns gathered Late payments can Fintech Swoop is developing from open banking information. a risk score for potential How to future-proof have a disastrous business partners. The score will give SMEs instant insight, ripple effect on their mobile, into whether on the supply a particular firm has a good your online payments

Matt Porteous/Getty Images Porteous/Getty Matt track record of fair-dealing. chains of small The score will reflect publicly As payments innovation continues, regulations are becoming available data about the client businesses and company, such as any county more complicated. Bradley Riss, chief commercial offi cer of there is big room for Checkout.com, explains how to thrive in this changing world improvement Account-to- network. Users should be able How are online chargeback rates, reducing exposure smartphone was available. As payments 02 account payment to present their clients with an payments changing? to bad actors. Plus, as retailers become increase, so does the strain on these open banking-enabled invoice It’s not uncommon to see an increasingly global and look to grow their systems, leading to interruptions. The Invoices that can be paid from early next year. Alipay or WeChat Pay logo out- customer base through market expan- Financial Conduct Authority has been electronically get paid faster. side Asia as retailers realise they can sion, they must think about unique, vocal about the negative impact of out- Currently, this means paying win more customers by supporting their local payments landscapes. Solutions ages, noting that systems failures in the card fees. Open banking preferred payment method. “Buy now, that allow retailers to accept any type industry are increasing. This instability will make it possible to offer pay later” payments have also shown of local payment from any country can is unacceptable, but avoidable. We built Ouida Taafe account-to-account payments high adoption, helping retailers to max- meaningfully support a company’s long- our platform around a modern archi- that are either free or undercut imise basket size and allow access to term growth, while streamlining internal tecture, leveraging the latest technolog- card payments and can be done premium products by spreading out payments operations. ical standards. There are no fi nite limits usiness-to-business (B2B) more or less instantaneously or deferring the payment. Meanwhile, on what we could process and stabil- B payments matter as small over the faster payments Payment Services Directive 2 imposes How can online retailers and ity is an asset when compared to the companies live or die by a requirement for strong customer services stay up to date? wider industry. their cash flow. Indeed, the impor- authentication, or SCA. There’s con- It’s critical to fi nd a payments tance of getting paid on time is one fusion around exactly what that means partner that can seamlessly and Finally, what is your advice for of the main reasons why small busi- Real-time with real-time data on cash with regulators across Europe differing successfully support hundreds of cur- retailers when it comes nesses are willing to shoulder the 03 cash-flow data flow, with automated nudging to on the enforcement of the regulations, rencies, any payment method and navi- to payments? cost of card payments. chase and make payments, and and both retailers and issuing banks gate nuanced regulations. Checkout.com We’ll see new payment methods, Before cards came along, onerous Large corporates have financial help with optimising payment showing varying degrees of readiness. offers a unifi ed payment platform, so new card processing features. amounts of time and money were professionals to manage methods to avoid charges. When coupled with emerging payment no matter what payment method you This could make life harder for compa- spent on chasing what was owed with However, the problem ripples apart from the owner(s) in 2018. made possible by open banking, payments. SMEs, in contrast, methods, it makes for a complicated want to offer, it is a part of our rep- nies. But if you partner with a provider written invoices. However, though out much further than additional Such firms find it particularly hard the requirement that, if customers are often too small to have landscape to navigate. ertoire. These include Alipay, Klarna, that can help you offer the payment card payments have brought ben- cost to one firm, though these to deal with a lot of admin. ask for it, banks must share account dedicated in-house staff and Union Pay, Visa, Mastercard, Apple Pay, choices your customers want, and with efits, the scourge of late payments, can be very high, including bank- The FSB lays the blame for B2B data with other financial services put a lot of reliance on banks, Can brands keep up? Qiwi, iDeal and many others. In theory, the agility to adapt and capitalise as the which puts 50,000 small UK firms ruptcy. Affected firms can strug- payments woes squarely at the door At the moment, late payments firms. Those firms can then use which can levy steep, and not Online brands want to focus on a retailer could offer these by work- sector evolves, you’ll be at the fore- out of business each year, according gle to pay their own suppliers on of large businesses. It is not alone. are seen as a minor infraction. the data to offer payment services, transparent, charges. Under their core offering and custom- ing directly with each payment service, front of online retail, no matter how the to HM Treasury, has not gone away. time, which hits the economy as The Forum of Private Business, a including B2B payments. open banking, it will be possible ers, not get distracted by new but it’s an absurd amount of work. You market changes. A payment partner can “Our members face an absolute a whole. It’s often forgotten that trade body representing around We want them to be seen as a Swoop, one of the fintechs recently to have a mobile dashboard payment methods or how to comply could be looking at 20 payment meth- help your business cope with the torrent late-payments crisis,” says Craig SMEs employ around 60 per cent 25,000 SMEs, recently put out a public embarrassment awarded a £5-million govern- with new payment regulations. Of ods in a region, each requiring inte- of requirements. Our model is based on Beaumont, director of external of all those in private-sector jobs in to-do list for the incoming prime ment grant under the Banking course, they know that offering the best grations, unique reporting formats and our clients succeeding and the core affairs at the Federation of Small the UK, roughly 16 million people, minister. Top of the 18 requests was Competition Remedies Scheme, checkout experience, including the pay- settlement fl ows. Instead, we provide reason why businesses choose us to help Businesses (FSB). The figures seem and account for 52 per cent of pri- to make 30 days a legal requirement aims to be a one-stop money shop for ment method customers want to use, everything via one integration, with them enhance and expand their pay- to bear this out. At the end of 2018, vate-sector turnover, according to for the payment of invoices once SMEs and sees payments as central Foreign exchange both international payments provides a competitive advantage, so back-offi ce and settlement services ment functions. 43 per cent of UK small and medi- the FSB. That is why any problems work is completed and provide the “There are a number of reasons for to good cash-flow management, says 04 transparency and foreign currencies, and they can’t ignore these changes either. normalised irrespective of the payment um-sized enterprises (SMEs) had to in B2B payments are more than small business commissioner with late payments,” says Sam O’Connor, the chief executive Andrea Reynolds. give them the opportunity to method or market. We service both deal with late payments and, on aver- just a hiccup. the ability to fine consistently poor chief executive of Coconut, which Ms Reynolds is bullish on the When small firms make shop around with a few clicks What are the benefi ts of improv- startups and established global giants, age, they faced a bill of £9,000 for Since the financial crisis, there payers. However, ensuring big firms provides bank account, tax and benefits data capture can bring via B2B payments in foreign on a mobile app. ing the payment process? such as Samsung, Virgin, adidas and To fi nd out more please visit recovering the money owed, accord- has also been a notable increase in play by the B2B payments rules is accounting software to the self-em- open banking, but warns “tech- currencies, they do not have With the right payments solu- TransferWise. checkout.com ing to the UK retail payments author- self-employment. According to the not the only problem that needs ployed. “For self-employed people nology can only go so far”. There access to the spot foreign- tion, retailers can improve con- ity Pay.UK. The cumulative adminis- Office for National Statistics, 75 per solving nor, perhaps, the only way who service small businesses, cli- also has to be political will to make exchange price banks use nor version, reduce costs and curtail risk. What about stability? tration bill was around £4.4 billion. cent of businesses had no employees to help SMEs. ents may have relatively immature firms pay on time. the near-wholesale terms big For example, on risk reduction, some Most payment systems run on finance processes and not be great at However, she says the ability open companies command and payment types have lower reversal and technologies built before the fi rst managing payments well. It can also banking will give SMEs to see what often pay hefty charges on top. LATE-PAYMENTS CRISIS be hard for a sole trader to stay on they are being charged for B2B pay- Open banking can bring SMEs top of late payments, so some might ments, to shop around and find new transparency on the costs of THE OLD WAY of SMEs owed money are being owed money claim that slip through the net. Dealing with solutions to cash-flow problems is forced to wait one month or large companies are accounting and tax admin is low already making large banks much Slow. Ineffi cient. Complicated by third parties. The result? Hidden costs, failed transactions, frustration and poor service more beyond their agreed the worst late paying terms before they are paid offenders down on the list of priorities when more engaged in offering new financ- you're trying to run a business.” ing solutions as part of a wider mar- Scheduling Mr O’Connor says that one of the ketplace. “Swoop has three live pro- 05 payments beyond traditional products, major hurdles in improving pay- jects with banks at the moment. such as invoice financing, to ments processing has already been Banks are now looking at open bank- Small firms facing cash-flow something more customised Merchant Payment Acquirer Payment Issuers taken thanks to the arrival of mobile ing as an opportunity, not just a mat- issues will be able to use open and market gateway processor point-of-sale (PoS) machines. “They ter of compliance,” says Ms Reynolds. banking to help better schedule responsive. 64% 51% 40% 34% have transformed how people get Banks are not the only large firms their own payments and get paid. Before that, it was either via who see opportunities in B2B pay- improved access to short-term THE CHECKOUT.COM WAY invoice or cash, which are harder ments. The FSB’s Mr Beaumont financing. Say, for example, they Fast. Direct. Reliable. You benefi t from better approval rates, faster payment acceptance, and happier customers to manage,” he says. However, PoS points out that they took part in have an invoice due in 30 days, machines still use cards, which a roundtable with the Chancellor they could set up scheduled come with fees. of the Exchequer in July, along- payments or use their own and take large company experiencing late payments say The next step forward, Mr side PayPal and other firms. “At the market data to organise short- payment practices into they have to rely on overdrafts account before trading to help them meet their O’Connor argues, could be direct moment, late payments are seen as term, bridge funding that goes Payment Risk Acquirer Payment with them monthly obligations account-to-account payments that a minor infraction. We want them to Merchant gateway processor Issuers will “either eliminate or drastically be seen as a public embarrassment,” Pay.UK 2018 reduce payment fees”. This will be Mr Beaumont concludes. 04 FUTURE OF PAYMENTS RACONTEUR.NET 05 Commercial feature

B2B PAYMENTS Five ways to simplify B2B payments Q&A Streamlining the payments supply chain Public risk court judgments against it, as 01 scores well as anonymised data on its payment patterns gathered Late payments can Fintech Swoop is developing from open banking information. a risk score for potential How to future-proof have a disastrous business partners. The score will give SMEs instant insight, ripple effect on their mobile, into whether on the supply a particular firm has a good your online payments

Matt Porteous/Getty Images Porteous/Getty Matt track record of fair-dealing. chains of small The score will reflect publicly As payments innovation continues, regulations are becoming available data about the client businesses and company, such as any county more complicated. Bradley Riss, chief commercial offi cer of there is big room for Checkout.com, explains how to thrive in this changing world improvement Account-to- network. Users should be able How are online chargeback rates, reducing exposure smartphone was available. As payments 02 account payment to present their clients with an payments changing? to bad actors. Plus, as retailers become increase, so does the strain on these open banking-enabled invoice It’s not uncommon to see an increasingly global and look to grow their systems, leading to interruptions. The Invoices that can be paid from early next year. Alipay or WeChat Pay logo out- customer base through market expan- Financial Conduct Authority has been electronically get paid faster. side Asia as retailers realise they can sion, they must think about unique, vocal about the negative impact of out- Currently, this means paying win more customers by supporting their local payments landscapes. Solutions ages, noting that systems failures in the card fees. Open banking preferred payment method. “Buy now, that allow retailers to accept any type industry are increasing. This instability will make it possible to offer pay later” payments have also shown of local payment from any country can is unacceptable, but avoidable. We built Ouida Taafe account-to-account payments high adoption, helping retailers to max- meaningfully support a company’s long- our platform around a modern archi- that are either free or undercut imise basket size and allow access to term growth, while streamlining internal tecture, leveraging the latest technolog- card payments and can be done premium products by spreading out payments operations. ical standards. There are no fi nite limits usiness-to-business (B2B) more or less instantaneously or deferring the payment. Meanwhile, on what we could process and stabil- B payments matter as small over the faster payments Payment Services Directive 2 imposes How can online retailers and ity is an asset when compared to the companies live or die by a requirement for strong customer services stay up to date? wider industry. their cash flow. Indeed, the impor- authentication, or SCA. There’s con- It’s critical to fi nd a payments tance of getting paid on time is one fusion around exactly what that means partner that can seamlessly and Finally, what is your advice for of the main reasons why small busi- Real-time with real-time data on cash with regulators across Europe differing successfully support hundreds of cur- retailers when it comes nesses are willing to shoulder the 03 cash-flow data flow, with automated nudging to on the enforcement of the regulations, rencies, any payment method and navi- to payments? cost of card payments. chase and make payments, and and both retailers and issuing banks gate nuanced regulations. Checkout.com We’ll see new payment methods, Before cards came along, onerous Large corporates have financial help with optimising payment showing varying degrees of readiness. offers a unifi ed payment platform, so new card processing features. amounts of time and money were professionals to manage methods to avoid charges. When coupled with emerging payment no matter what payment method you This could make life harder for compa- spent on chasing what was owed with However, the problem ripples apart from the owner(s) in 2018. made possible by open banking, payments. SMEs, in contrast, methods, it makes for a complicated want to offer, it is a part of our rep- nies. But if you partner with a provider written invoices. However, though out much further than additional Such firms find it particularly hard the requirement that, if customers are often too small to have landscape to navigate. ertoire. These include Alipay, Klarna, that can help you offer the payment card payments have brought ben- cost to one firm, though these to deal with a lot of admin. ask for it, banks must share account dedicated in-house staff and Union Pay, Visa, Mastercard, Apple Pay, choices your customers want, and with efits, the scourge of late payments, can be very high, including bank- The FSB lays the blame for B2B data with other financial services put a lot of reliance on banks, Can brands keep up? Qiwi, iDeal and many others. In theory, the agility to adapt and capitalise as the which puts 50,000 small UK firms ruptcy. Affected firms can strug- payments woes squarely at the door At the moment, late payments firms. Those firms can then use which can levy steep, and not Online brands want to focus on a retailer could offer these by work- sector evolves, you’ll be at the fore- out of business each year, according gle to pay their own suppliers on of large businesses. It is not alone. are seen as a minor infraction. the data to offer payment services, transparent, charges. Under their core offering and custom- ing directly with each payment service, front of online retail, no matter how the to HM Treasury, has not gone away. time, which hits the economy as The Forum of Private Business, a including B2B payments. open banking, it will be possible ers, not get distracted by new but it’s an absurd amount of work. You market changes. A payment partner can “Our members face an absolute a whole. It’s often forgotten that trade body representing around We want them to be seen as a Swoop, one of the fintechs recently to have a mobile dashboard payment methods or how to comply could be looking at 20 payment meth- help your business cope with the torrent late-payments crisis,” says Craig SMEs employ around 60 per cent 25,000 SMEs, recently put out a public embarrassment awarded a £5-million govern- with new payment regulations. Of ods in a region, each requiring inte- of requirements. Our model is based on Beaumont, director of external of all those in private-sector jobs in to-do list for the incoming prime ment grant under the Banking course, they know that offering the best grations, unique reporting formats and our clients succeeding and the core affairs at the Federation of Small the UK, roughly 16 million people, minister. Top of the 18 requests was Competition Remedies Scheme, checkout experience, including the pay- settlement fl ows. Instead, we provide reason why businesses choose us to help Businesses (FSB). The figures seem and account for 52 per cent of pri- to make 30 days a legal requirement aims to be a one-stop money shop for ment method customers want to use, everything via one integration, with them enhance and expand their pay- to bear this out. At the end of 2018, vate-sector turnover, according to for the payment of invoices once SMEs and sees payments as central Foreign exchange both international payments provides a competitive advantage, so back-offi ce and settlement services ment functions. 43 per cent of UK small and medi- the FSB. That is why any problems work is completed and provide the “There are a number of reasons for to good cash-flow management, says 04 transparency and foreign currencies, and they can’t ignore these changes either. normalised irrespective of the payment um-sized enterprises (SMEs) had to in B2B payments are more than small business commissioner with late payments,” says Sam O’Connor, the chief executive Andrea Reynolds. give them the opportunity to method or market. We service both deal with late payments and, on aver- just a hiccup. the ability to fine consistently poor chief executive of Coconut, which Ms Reynolds is bullish on the When small firms make shop around with a few clicks What are the benefi ts of improv- startups and established global giants, age, they faced a bill of £9,000 for Since the financial crisis, there payers. However, ensuring big firms provides bank account, tax and benefits data capture can bring via B2B payments in foreign on a mobile app. ing the payment process? such as Samsung, Virgin, adidas and To fi nd out more please visit recovering the money owed, accord- has also been a notable increase in play by the B2B payments rules is accounting software to the self-em- open banking, but warns “tech- currencies, they do not have With the right payments solu- TransferWise. checkout.com ing to the UK retail payments author- self-employment. According to the not the only problem that needs ployed. “For self-employed people nology can only go so far”. There access to the spot foreign- tion, retailers can improve con- ity Pay.UK. The cumulative adminis- Office for National Statistics, 75 per solving nor, perhaps, the only way who service small businesses, cli- also has to be political will to make exchange price banks use nor version, reduce costs and curtail risk. What about stability? tration bill was around £4.4 billion. cent of businesses had no employees to help SMEs. ents may have relatively immature firms pay on time. the near-wholesale terms big For example, on risk reduction, some Most payment systems run on finance processes and not be great at However, she says the ability open companies command and payment types have lower reversal and technologies built before the fi rst managing payments well. It can also banking will give SMEs to see what often pay hefty charges on top. LATE-PAYMENTS CRISIS be hard for a sole trader to stay on they are being charged for B2B pay- Open banking can bring SMEs top of late payments, so some might ments, to shop around and find new transparency on the costs of THE OLD WAY of SMEs owed money are being owed money claim that slip through the net. Dealing with solutions to cash-flow problems is forced to wait one month or large companies are accounting and tax admin is low already making large banks much Slow. Ineffi cient. Complicated by third parties. The result? Hidden costs, failed transactions, frustration and poor service more beyond their agreed the worst late paying terms before they are paid offenders down on the list of priorities when more engaged in offering new financ- you're trying to run a business.” ing solutions as part of a wider mar- Scheduling Mr O’Connor says that one of the ketplace. “Swoop has three live pro- 05 payments beyond traditional products, major hurdles in improving pay- jects with banks at the moment. such as invoice financing, to ments processing has already been Banks are now looking at open bank- Small firms facing cash-flow something more customised Merchant Payment Acquirer Payment Issuers taken thanks to the arrival of mobile ing as an opportunity, not just a mat- issues will be able to use open and market gateway processor point-of-sale (PoS) machines. “They ter of compliance,” says Ms Reynolds. banking to help better schedule responsive. 64% 51% 40% 34% have transformed how people get Banks are not the only large firms their own payments and get paid. Before that, it was either via who see opportunities in B2B pay- improved access to short-term THE CHECKOUT.COM WAY invoice or cash, which are harder ments. The FSB’s Mr Beaumont financing. Say, for example, they Fast. Direct. Reliable. You benefi t from better approval rates, faster payment acceptance, and happier customers to manage,” he says. However, PoS points out that they took part in have an invoice due in 30 days, machines still use cards, which a roundtable with the Chancellor they could set up scheduled come with fees. of the Exchequer in July, along- payments or use their own and take large company experiencing late payments say The next step forward, Mr side PayPal and other firms. “At the market data to organise short- payment practices into they have to rely on overdrafts account before trading to help them meet their O’Connor argues, could be direct moment, late payments are seen as term, bridge funding that goes Payment Risk Acquirer Payment with them monthly obligations account-to-account payments that a minor infraction. We want them to Merchant gateway processor Issuers will “either eliminate or drastically be seen as a public embarrassment,” Pay.UK 2018 reduce payment fees”. This will be Mr Beaumont concludes. 06 FUTURE OF PAYMENTS RACONTEUR.NET 07 Commercial feature MmeEmil/Getty Images MmeEmil/Getty CASH Riding high with unicorns

Are we As fintech consolidates, a new crop of billion-dollar unicorns is on the horizon, sleepwalking writes Clay Wilkes, chief executive of Galileo inancial technology (fintech) F is making a significant impact GLOBAL FINTECH FUNDRAISING on our daily lives, from how into a cashless Investment volumes and deal activity by fintech category we pay for public transport to pro- viding alternatives to big banks and NUMBER OF DEALS FUNDING ($M) making international money trans- future? fers cost effective. There are 11,500 818 951 1,207 1,838 2,742 3,251 1,561 4,844 13,358 21,214 23,373 26,653 55,347 22,046 companies across the globe whose 1% 1% 1% primary focus is fintech, with about 3% 3% 3% 2% 3% 3% 2% Back office 6% 5% 4% 3% 3% 3,000 focused on payments fintech, 5% 7% 6% 4% 5% 6% 3% operations Without access to cash or the right support 8% 8% 4% 3% getting money from one person, busi- 5% 8% 3% 3% 22% 7% 6% 3% ness or government to another. 9% 6% 6% 8% 5% 8% Wealth/asset in a transition to digital payment, the older 10% 30% 11% For a decade, fintech has been the 9% 9% management 9% generation will suffer darling of venture capitalists (VCs). In 9% 10% 11% 9% 9% 22% 5% Markets the first half of 2019, investors poured 9% 10% 7% 31% $15.1 billion into fintechs globally, with 15% 3% 25% Current accounts 16% 18% 54 challenger banks alone attract- 12% 17% 27% 5% 15% 45% Alexandra Leonards ing nearly $1.5 billion. Why so? Firstly, 9% 7% Lending because investors recognise the 12% 14% tremendous opportunity inherent in 13% 28% 19% Insurance 14% 15% 14% 9% 14% he plump purses and coin- 2026, according to a report by the cool, if not a little scary, but they introduce and uphold the concept of ing that for many this change will disrupting traditional banking. And, sec- 7% Payments heavy pockets of a once Access to Cash Review. Although contribute to the fact that cash fea- inclusive digital design. be gradual.” ondly, because successful fintechs have T 34% 8% cash-centric society have it’s unlikely that cash will actual- tures in only 15 per cent of purchas- “You should not expect people If the UK is destined for a future of generated stratospheric valuations. Other 23% 8% long been replaced by sleek plas- ly disappear entirely, the report es and this carries consequences for to fit around changes, but design bank closures, contactless cards and Every VC wants in on the next Stripe 30% 25% 51% 13% 27% 31% tic cards and shiny mobile devices. does say that in 15 years’ time cash the elderly in Sweden. technology so the changes work a rejection of cash, then banks, fin- ($22.5 billion) or Adyen ($19.5 billion). 30% 28% 32% 28% The UK is experiencing what feels could account for as little as one in Access to Cash Review warns that for them, then you will start to techs and government bodies must The trajectory of fintech is about to 23% like a natural and inevitable move- ten transactions. Sweden demonstrates the “dangers see greater take up of new tech- take responsibility for the impact change, however, and the result will be 19% ment towards a cashless society. The It’s the rising ATM and bank clo- of sleepwalking into a cashless soci- nology and see more people ben- this will have on the older genera- fewer fintech businesses overall and 20% changeover has been easy for most, sures, a growing rejection of cash ety”. Namely, millions could be left efit from it,” explains Joel Lewis, tion. Cash must survive for the eight more fintech unicorns, privately held 20% 21% 20% 16% 13% 16% but digital payment has only been in shops – often a consequence of without financial inclusion, facing policy manager at Age UK. “Older million adults who would struggle in startups with valuations exceeding $1 11% 10% 10% 12% 10% 12% 6 % 5% designed with financial inclusion those branch closures – and a broad heightened risk of isolation, ex- people can become accustomed to a cashless society and digital tech- billion. Within three to five years, the of the mass market in mind, not for movement towards digital pay- ploitation, debt and rising costs. changes and many embrace it, but nologies should be designed with number of fintech businesses is likely 2013 2014 2015 2016 2017 2018 1 H 2019 2013 2014 2015 2016 2017 2018 1 H 2019 those heavily reliant on cash. ments driving the decline in cash “The problem we have is that as there needs to be an understand- financial inclusion for all in mind. to drop by half, while valuations of the For the older generation, who of- use across the UK. we use less cash and if we don’t re- remaining companies and the number Accenture analysis of CB Insights data, 2019 ten depend on cash, this new-found In Sweden, the most cashless form the infrastructure, those costs of unicorns among them will soar. dominance of digital payment is country on Earth, payments can are borne by the retailers,” says an upward struggle. Regardless, its now be made on messaging apps Natalie Ceeney, chair of Access to Seniors are guided by volunteers Fintech consolidation Fintech consolidation will have the Unicorns rising high-cost international money trans- costs low, they’ll continue to attract growing dominance shows no sign and thousands of its citizens have Cash Review. “They may decide to to download relevant mobile apps While fintech investment will be robust important corollary effect of consoli- Strong, ongoing investment will boost fers. Its founders, both of whom had investment and, potentially, displace of slowing. In fact, a straight-line microchips implanted into their go cashless because they feel they and learn how to log into their for the next decade, VCs will become dating financial data into fewer hands, the number of fintech unicorns. Three been paid in foreign currencies, were traditional banks for everyday con- trajectory of existing trends would hands for speedy purchases. These have no choice; what happens if lo- epayment accounts. Alongside more discriminating about the compa- which is a positive outcome if the data years ago, there were 27 worldwide, tired of giving up 5 per cent of their sumer financial needs. see a complete end to cash use by purchasing methods might sound cal authorities or utility providers this, they learn about different nies they invest in. The “two developers is handled securely and consumers with a combined $16.9 billion valuation. income to currency conversion, so they do the same?” epayment modes, such as in a garage” model of fintech innova- control their information. Companies Today, there are 48, valued at $187.0 created a low-cost, fully mobile alter- Follow the money Cash is a key part of national in- transferring money through mobile tion may not be dead, but those garage with access to the data will have an billion, with seven added during the native. Today, TransferWise has five The key to the future of fintech is MOBILE PAYMENTS WEIGHTED TOWARDS YOUNGER PEOPLE frastructure, not just a commercial apps, paying for food and beverage startups will face increasing difficulty advantage over those that don’t, first half of 2019. And there’s a strong million customers and processes $4 following the money. And the smart issue. This means it’s the duty of a items by scanning QR codes, obtaining funding. Consequently, strengthening the market positions of pipeline of fintechs; in the United billion a month in currency transfers. money is backing fintechs, particu- Distribution of mobile payment users and the total population in the UK by age number of bodies to ensure there is and topping up travel cards with the fintechs that disappear because the “haves”. States alone, 40-plus are on the cusp Not surprisingly, two of these larly companies with a proven track financial inclusion for older people. debit cards. They also learn about they’ve exhausted their funding Galileo, for example, will grow this of unicorn status. unicorns are challenger banks and all record of creating value by unshackling “Ensuring that older people aren’t staying safe online and are given without gaining market traction, and year to process roughly ten million So, what does a payment fintech three are Galileo clients. banking and payments, and offering 30% Percentage of total population left behind should be a joint respon- useful cybersecurity tips. there have been many, aren’t as likely financial transactions daily. Using unicorn look like? Here are three UK- convenient, cost-effective services. Percentage who use mobile payments sibility,” says Gill Moffett, policy "IMDA is continually refining to be replaced by newly minted ones. advanced technologies, combined based examples. Challenger banks Later this year, for example, expect manager at Independent Age. “Al- our Silver Infocomm Initiative Other fintechs will be acquired, some with artificial intelligence, we’ll use Monzo ($2.5 billion), a challenger bank During the first half of 2019, chal- financial products that address banks’ 25% though many older people are hap- to better equip seniors for the scooped up by traditional banks to the immense amount of anonymous launched in 2015, offers an alternative lenger banks attracted $2.5 billion, low, zero or negative interest rates.

py to use cards and mobile banking, NemanjaMiscevic/Shutterstock digital economy and society, strengthen their payments operations. data generated by these transac- to traditional banks with a completely an average of $45.45 million across Look for all types of companies, it is vital that those who do need or and this epayment learning Still others will merge to create larger, tions to reduce card-based fraud mobile banking service that attracts 55 deals, from VC firms. To put this beyond traditional banks and even 20% want to use cash aren’t disadvan- Singapore’s journey for seniors is our latest stronger businesses. And the strongest losses to less than half the industry 55,000 new customers a week. The staggering number into perspective, fintechs, to offer new, incredibly con- taged or forgotten about.” epayment lessons addition,” says Koh Li-Na, senior will continue to receive support from average. Similarly, other large fin- company recently announced it’s it surpasses 2018’s record investment venient payment options. APIs (appli- Earlier this year the government for seniors director, digital readiness investors, who will focus increasingly techs will use their own big data to expanding to America, where it will of $2.3 billion for the entire year. cation programming interfaces) are 15% launched its Joint Authorities Cash cluster, IMDA. “Using technology on proven companies in their later fuel positive innovation. take on not only traditional banks, Investors recognise that challenger enabling this next wave of payments Strategy Group, aimed at safeguard- Singapore’s government body, appropriately allows seniors funding rounds. but native challenger banks, including banks are deconstructing banking, innovation, which will lead to massive ing consumers’ access to cash. It’s a Infocomm Media Development to connect with their family This transition is already under- Chime and Varo. unpacking the services consumers adoption, like the explosion of mobile 10% start, but there’s still much more to Authority (IMDA), is helping members, access eservices way because a maturing fintech Revolut ($1.7 billion), another chal- want and delivering those services apps a decade ago. be done. its senior population learn and enjoy the convenience of environment doesn’t need 11,500 par- lenger bank launched in 2015, ena- in a digital, easy-to-consume format We’re only beginning this fintech The Emerging Payments Associ- how to use epayments etransactions and epayments." ticipants. Although we never want to bles customers to hold cash in mul- at attractive price points. Challenger journey; there’s much more to come. 5% ation says that cash is not a long- and empower them to use IMDA organised 50 sessions lose the entrepreneurial spirit of two Challenger banks are helping tiple currencies. As of late-2018, it banks are helping consumers term fix for financial exclusion, nor technology securely and throughout 2018 at different developers in a garage, consolidation holds a European banking licence and understand that although they need Galileo is fintech’s tech. We power a sound foundation for 21st-centu- confidently. This is part of locations, in collaboration with will increase the efficiency of fintech consumers understand that offers banking services, currency and banking services, they don’t need the world’s leading fintechs, 0% ry economies. If this is true, there Singapore’s wider initiative to various community groups, investments, creating businesses that although they need banking cryptocurrency exchange, and peer-to traditional banks. including many current and soon- 16-24 25-34 35-44 45-54 55-64 65+ needs to be the right support in help its citizens take part in and reached out to 2,000 can scale, achieve profitability and peer payments. Like Monzo, it has US Challenger banks have some of the to-be unicorns. Contact us for more place for elderly people to make the the digital economy. older people. fulfil their mission to improve how services, they don’t need expansion plans. largest audiences among fintechs. If information at galileo-ft.com/contact transition to digital payment. Regu- consumers, businesses and govern- TransferWise ($3.5 billion) launched they continue to expand their bases UK Finance 2018 lators must work with businesses to ments handle their money. traditional banks in 2010 to solve the problem of while keeping customer acquisition 06 FUTURE OF PAYMENTS RACONTEUR.NET 07 Commercial feature MmeEmil/Getty Images MmeEmil/Getty CASH Riding high with unicorns

Are we As fintech consolidates, a new crop of billion-dollar unicorns is on the horizon, sleepwalking writes Clay Wilkes, chief executive of Galileo inancial technology (fintech) F is making a significant impact GLOBAL FINTECH FUNDRAISING on our daily lives, from how into a cashless Investment volumes and deal activity by fintech category we pay for public transport to pro- viding alternatives to big banks and NUMBER OF DEALS FUNDING ($M) making international money trans- future? fers cost effective. There are 11,500 818 951 1,207 1,838 2,742 3,251 1,561 4,844 13,358 21,214 23,373 26,653 55,347 22,046 companies across the globe whose 1% 1% 1% primary focus is fintech, with about 3% 3% 3% 2% 3% 3% 2% Back office 6% 5% 4% 3% 3% 3,000 focused on payments fintech, 5% 7% 6% 4% 5% 6% 3% operations Without access to cash or the right support 8% 8% 4% 3% getting money from one person, busi- 5% 8% 3% 3% 22% 7% 6% 3% ness or government to another. 9% 6% 6% 8% 5% 8% Wealth/asset in a transition to digital payment, the older 10% 30% 11% For a decade, fintech has been the 9% 9% management 9% generation will suffer darling of venture capitalists (VCs). In 9% 10% 11% 9% 9% 22% 5% Markets the first half of 2019, investors poured 9% 10% 7% 31% $15.1 billion into fintechs globally, with 15% 3% 25% Current accounts 16% 18% 54 challenger banks alone attract- 12% 17% 27% 5% 15% 45% Alexandra Leonards ing nearly $1.5 billion. Why so? Firstly, 9% 7% Lending because investors recognise the 12% 14% tremendous opportunity inherent in 13% 28% 19% Insurance 14% 15% 14% 9% 14% he plump purses and coin- 2026, according to a report by the cool, if not a little scary, but they introduce and uphold the concept of ing that for many this change will disrupting traditional banking. And, sec- 7% Payments heavy pockets of a once Access to Cash Review. Although contribute to the fact that cash fea- inclusive digital design. be gradual.” ondly, because successful fintechs have T 34% 8% cash-centric society have it’s unlikely that cash will actual- tures in only 15 per cent of purchas- “You should not expect people If the UK is destined for a future of generated stratospheric valuations. Other 23% 8% long been replaced by sleek plas- ly disappear entirely, the report es and this carries consequences for to fit around changes, but design bank closures, contactless cards and Every VC wants in on the next Stripe 30% 25% 51% 13% 27% 31% tic cards and shiny mobile devices. does say that in 15 years’ time cash the elderly in Sweden. technology so the changes work a rejection of cash, then banks, fin- ($22.5 billion) or Adyen ($19.5 billion). 30% 28% 32% 28% The UK is experiencing what feels could account for as little as one in Access to Cash Review warns that for them, then you will start to techs and government bodies must The trajectory of fintech is about to 23% like a natural and inevitable move- ten transactions. Sweden demonstrates the “dangers see greater take up of new tech- take responsibility for the impact change, however, and the result will be 19% ment towards a cashless society. The It’s the rising ATM and bank clo- of sleepwalking into a cashless soci- nology and see more people ben- this will have on the older genera- fewer fintech businesses overall and 20% changeover has been easy for most, sures, a growing rejection of cash ety”. Namely, millions could be left efit from it,” explains Joel Lewis, tion. Cash must survive for the eight more fintech unicorns, privately held 20% 21% 20% 16% 13% 16% but digital payment has only been in shops – often a consequence of without financial inclusion, facing policy manager at Age UK. “Older million adults who would struggle in startups with valuations exceeding $1 11% 10% 10% 12% 10% 12% 6 % 5% designed with financial inclusion those branch closures – and a broad heightened risk of isolation, ex- people can become accustomed to a cashless society and digital tech- billion. Within three to five years, the of the mass market in mind, not for movement towards digital pay- ploitation, debt and rising costs. changes and many embrace it, but nologies should be designed with number of fintech businesses is likely 2013 2014 2015 2016 2017 2018 1 H 2019 2013 2014 2015 2016 2017 2018 1 H 2019 those heavily reliant on cash. ments driving the decline in cash “The problem we have is that as there needs to be an understand- financial inclusion for all in mind. to drop by half, while valuations of the For the older generation, who of- use across the UK. we use less cash and if we don’t re- remaining companies and the number Accenture analysis of CB Insights data, 2019 ten depend on cash, this new-found In Sweden, the most cashless form the infrastructure, those costs of unicorns among them will soar. dominance of digital payment is country on Earth, payments can are borne by the retailers,” says an upward struggle. Regardless, its now be made on messaging apps Natalie Ceeney, chair of Access to Seniors are guided by volunteers Fintech consolidation Fintech consolidation will have the Unicorns rising high-cost international money trans- costs low, they’ll continue to attract growing dominance shows no sign and thousands of its citizens have Cash Review. “They may decide to to download relevant mobile apps While fintech investment will be robust important corollary effect of consoli- Strong, ongoing investment will boost fers. Its founders, both of whom had investment and, potentially, displace of slowing. In fact, a straight-line microchips implanted into their go cashless because they feel they and learn how to log into their for the next decade, VCs will become dating financial data into fewer hands, the number of fintech unicorns. Three been paid in foreign currencies, were traditional banks for everyday con- trajectory of existing trends would hands for speedy purchases. These have no choice; what happens if lo- epayment accounts. Alongside more discriminating about the compa- which is a positive outcome if the data years ago, there were 27 worldwide, tired of giving up 5 per cent of their sumer financial needs. see a complete end to cash use by purchasing methods might sound cal authorities or utility providers this, they learn about different nies they invest in. The “two developers is handled securely and consumers with a combined $16.9 billion valuation. income to currency conversion, so they do the same?” epayment modes, such as in a garage” model of fintech innova- control their information. Companies Today, there are 48, valued at $187.0 created a low-cost, fully mobile alter- Follow the money Cash is a key part of national in- transferring money through mobile tion may not be dead, but those garage with access to the data will have an billion, with seven added during the native. Today, TransferWise has five The key to the future of fintech is MOBILE PAYMENTS WEIGHTED TOWARDS YOUNGER PEOPLE frastructure, not just a commercial apps, paying for food and beverage startups will face increasing difficulty advantage over those that don’t, first half of 2019. And there’s a strong million customers and processes $4 following the money. And the smart issue. This means it’s the duty of a items by scanning QR codes, obtaining funding. Consequently, strengthening the market positions of pipeline of fintechs; in the United billion a month in currency transfers. money is backing fintechs, particu- Distribution of mobile payment users and the total population in the UK by age number of bodies to ensure there is and topping up travel cards with the fintechs that disappear because the “haves”. States alone, 40-plus are on the cusp Not surprisingly, two of these larly companies with a proven track financial inclusion for older people. debit cards. They also learn about they’ve exhausted their funding Galileo, for example, will grow this of unicorn status. unicorns are challenger banks and all record of creating value by unshackling “Ensuring that older people aren’t staying safe online and are given without gaining market traction, and year to process roughly ten million So, what does a payment fintech three are Galileo clients. banking and payments, and offering 30% Percentage of total population left behind should be a joint respon- useful cybersecurity tips. there have been many, aren’t as likely financial transactions daily. Using unicorn look like? Here are three UK- convenient, cost-effective services. Percentage who use mobile payments sibility,” says Gill Moffett, policy "IMDA is continually refining to be replaced by newly minted ones. advanced technologies, combined based examples. Challenger banks Later this year, for example, expect manager at Independent Age. “Al- our Silver Infocomm Initiative Other fintechs will be acquired, some with artificial intelligence, we’ll use Monzo ($2.5 billion), a challenger bank During the first half of 2019, chal- financial products that address banks’ 25% though many older people are hap- to better equip seniors for the scooped up by traditional banks to the immense amount of anonymous launched in 2015, offers an alternative lenger banks attracted $2.5 billion, low, zero or negative interest rates.

py to use cards and mobile banking, NemanjaMiscevic/Shutterstock digital economy and society, strengthen their payments operations. data generated by these transac- to traditional banks with a completely an average of $45.45 million across Look for all types of companies, it is vital that those who do need or and this epayment learning Still others will merge to create larger, tions to reduce card-based fraud mobile banking service that attracts 55 deals, from VC firms. To put this beyond traditional banks and even 20% want to use cash aren’t disadvan- Singapore’s journey for seniors is our latest stronger businesses. And the strongest losses to less than half the industry 55,000 new customers a week. The staggering number into perspective, fintechs, to offer new, incredibly con- taged or forgotten about.” epayment lessons addition,” says Koh Li-Na, senior will continue to receive support from average. Similarly, other large fin- company recently announced it’s it surpasses 2018’s record investment venient payment options. APIs (appli- Earlier this year the government for seniors director, digital readiness investors, who will focus increasingly techs will use their own big data to expanding to America, where it will of $2.3 billion for the entire year. cation programming interfaces) are 15% launched its Joint Authorities Cash cluster, IMDA. “Using technology on proven companies in their later fuel positive innovation. take on not only traditional banks, Investors recognise that challenger enabling this next wave of payments Strategy Group, aimed at safeguard- Singapore’s government body, appropriately allows seniors funding rounds. but native challenger banks, including banks are deconstructing banking, innovation, which will lead to massive ing consumers’ access to cash. It’s a Infocomm Media Development to connect with their family This transition is already under- Chime and Varo. unpacking the services consumers adoption, like the explosion of mobile 10% start, but there’s still much more to Authority (IMDA), is helping members, access eservices way because a maturing fintech Revolut ($1.7 billion), another chal- want and delivering those services apps a decade ago. be done. its senior population learn and enjoy the convenience of environment doesn’t need 11,500 par- lenger bank launched in 2015, ena- in a digital, easy-to-consume format We’re only beginning this fintech The Emerging Payments Associ- how to use epayments etransactions and epayments." ticipants. Although we never want to bles customers to hold cash in mul- at attractive price points. Challenger journey; there’s much more to come. 5% ation says that cash is not a long- and empower them to use IMDA organised 50 sessions lose the entrepreneurial spirit of two Challenger banks are helping tiple currencies. As of late-2018, it banks are helping consumers term fix for financial exclusion, nor technology securely and throughout 2018 at different developers in a garage, consolidation holds a European banking licence and understand that although they need Galileo is fintech’s tech. We power a sound foundation for 21st-centu- confidently. This is part of locations, in collaboration with will increase the efficiency of fintech consumers understand that offers banking services, currency and banking services, they don’t need the world’s leading fintechs, 0% ry economies. If this is true, there Singapore’s wider initiative to various community groups, investments, creating businesses that although they need banking cryptocurrency exchange, and peer-to traditional banks. including many current and soon- 16-24 25-34 35-44 45-54 55-64 65+ needs to be the right support in help its citizens take part in and reached out to 2,000 can scale, achieve profitability and peer payments. Like Monzo, it has US Challenger banks have some of the to-be unicorns. Contact us for more place for elderly people to make the the digital economy. older people. fulfil their mission to improve how services, they don’t need expansion plans. largest audiences among fintechs. If information at galileo-ft.com/contact transition to digital payment. Regu- consumers, businesses and govern- TransferWise ($3.5 billion) launched they continue to expand their bases UK Finance 2018 lators must work with businesses to ments handle their money. traditional banks in 2010 to solve the problem of while keeping customer acquisition 08 FUTURE OF PAYMENTS RACONTEUR.NET 09 Commercial feature

Amy Hawkins

onvenience at the touch of a fingerprint-based authentication,” C button is the mantra for ser- he says. “This definitively drives CONSUMER APPETITE FOR How better vices you can order through confidence in general public accept- BIOMETRICS IS HIGH your phone. Whether it’s taxis or food ance of biometric technology.” Percentage of Singaporeans who delivery, there’s an app to bring it to Indeed, the Visa study found that have used the following methods of BIOMETRIC PAYMENTS your doorstep. Now the biometric 97 per cent were interested in using biometric payments payments will payments sector is catching up. biometrics and 96 per cent were The world leader is Singapore comfortable using such methods to where 61 per cent of financial com- make payments. The most popular

panies have adopted or are in the reasons for using biometrics were 88% 56% 50% 49% change our lives Singapore: a process of adopting biometrics, perceived convenience and speed. according to a survey by identity A startup making waves in the data intelligence company GBG. biometric payment space is Touché, A study by Visa in Singapore which provides fingerprint scan- SWIFT is working with financial institutions to testbed for found that 88 per cent of those sur- ning devices and a cloud-computing veyed had used fingerprint biom- service that stores customer data. transform the global payments ecosystem, and etrics, while 56 per cent had used As well as streamlining the payment facial recognition, and 50 per cent process, Touché offers businesses it’s making day-to-day life easier for everyone biometric and 49 per cent respectively had personalised, detailed data for mar- used iris scanning and voice rec- keting campaigns and loyalty man- ognition. Mastercard has trialled a agement schemes. vast change is taking place An open cross-border payments “selfie password”, but in Singapore The company has partnered A within the structures that system is inherently complex, as it is payments the most popular type of biometric with OCBC Bank in Singapore and enable payments across the comprised of many players and requires payment is fingerprint. Mashreq Bank in the United Arab world. Faster payments initiatives, adherence with multiple sets of rules Tomasz Kurczyk, digital transfor- Emirates, and has its sights even such as those launched in the UK, and jurisdictions. However, whether mation director at AXA Insurance further afield. Japan is planning to

America and Australia, have been seen it’s businesses transferring large sums A multitude of factors are fuelling in Singapore, says the use of fin- implement biometric payments in Fingerprint Facial recognition Iris scan recognitionVoice at the domestic level, as have local and across borders or retail bank customers particularly as they evolve. For finan- To this end, SWIFT has engaged closely beneficiary in under 30 minutes, many gerprint scans at airports has con- the run up to the 2020 Olympics as regional open banking initiatives from making micro-payments, users expect a cial firms to work effectively with one with financial and non-financial com- of these in just minutes or even seconds, Singapore’s appetite for biometric tributed to its popularity in other it prepares for an influx of up to 40 Visa 2018 Europe to Singapore. fast, convenient and consistent experi- another and fintech partners, and panies to facilitate adoption of the ISO and nearly 100 per cent of them are made sectors. “All residents travelling million visitors. The same is happening on the global ence regardless of their location. to have the capacity to adopt inno- 20022 messaging standard for use in within 24 hours. So we’ve already taken payments, but what does the future hold? in and out of Singapore use auto- Touché’s technology works by level and soon every payments system vative new approaches as they payment schemes, from instant payment huge strides towards delivering instant mated passport control gates with users scanning two fingerprints on countries where fingerprint scan- will be exchanging information on Global unity arise, they must be able to communi- models to the massive real-time systems global payments,” says Mr Newman. “As a device that is provided to mer- ning is not already ubiquitous, international payments in a standard- SWIFT has a long history of engaging cate seamlessly. used by central banks, nearly all of which more and more banks improve their chants free; vendors have to pay there might be challenges in con- ised way, further increasing efficiency with financial institutions to develop an Seamless communication also ena- are now converging on ISO 20022. back offices, we will see this trend con- a monthly subscription fee for vincing people to link their finan- and reliability. open ecosystem and the organisation is bles firms to leverage cloud service “As international trade increases tinue for the world’s payments.” the cloud-computing service that cial and biometric data. However, Some of the pressure for financial leading the way in ensuring it continues providers to manage data in a secure and value chains get longer, you have Industry-wide adoption of ISO 20022 stores the data. The user’s finger- a 2019 study by the UK’s National institutions to deliver more effective to meet the needs of end-customers. way or application programming inter- more players involved with the data,” is set to enable this even further. Richer prints are linked to credit card Cyber Security Centre found that payments stems from the convenience Most of these institutions are already faces (APIs) to support the movement Mr Lindsay notes. “This international and better use of data will open up many information and shopping history. 23.2 million accounts that had provided by digital services in our every- in the process of modernising their of data. “The whole basis of using cloud standard, ISO 20022, ensures the data new efficiencies, including in the area of This is especially useful for the been hacked used the password day lives. Digital tools are enabling faster payment systems and moving towards infrastructure and APIs is that busi- remains consistent no matter what compliance. With about 10 per cent of tourism industry when travellers “123456”, which suggests many Mongkol Chuewong/Getty ImagesMongkol communication, simpler access to infor- real-time transactions. To achieve this, nesses can innovate by partnering with technology is used to make the pay- global payments being stopped due to face possible problems using their people already prize convenience mation and more direct connectivity. the industry has come together around other players, particularly newer tech- ment itself.” sanctions-screening – the vast major- credit cards or making foreign-cur- over security. “We expect a seamless user experi- collaborative initiatives such as SWIFT’s nology companies, and use APIs to link The end-game is to have the major ity of which are false positives, SWIFT rency transactions abroad. Garnering interest in biometric ence in everything we do, whether we global payments innovation (gpi). between systems,” says Mr Newman. traded currencies in the world for both estimates – a more effective reading of Having all your payment infor- technology is one thing, but actually are at work or in our personal lives,” says Many institutions are also develop- “This is how you get innovation quickly.” cross-border and domestic payments payment messages will have a material mation literally at your fingertips making biometric payments a real- Harry Newman, head of banking at inter- ing relationships with fintech firms running on the same rich, common impact on the cost of doing business is convenient and saves having to ity is another. Mr Kurczyk notes: “In bank payments co-operative SWIFT. “We that have the capacity to experiment A common language standard. As firms increase the level of and the speed of payments overall. carry around different cards. But it countries where there is a high pen- all agree payments should be instant and with new technologies and ideas, then Mr Lindsay adds: “Future-proofing automation they employ in processing The result of these tectonic shifts is not without potential pitfalls. etration and adoption of card-based convenient for the people making them. apply their learnings together in the our current designs and technology transactions and trade, the reliabil- is that financial institutions are able “We need to remember that we can payments, there is a limited cus- It’s fair to say that the old world of inter- real world. The challenge is in connect- means we must have a common and ity and depth of data that is included to deliver improved service levels to change our credentials, for example tomer benefit improvement poten- national payments was built some time ing hundreds of individual firms in such consistent way of describing pay- within a payment message will also their clients, with transparency on a passport, but once your biometric tial to justify the investment in ago and that’s why it’s being upgraded to a way that the system hangs together, ments and the additional data that increase the ability to use machine- processes and fees, faster payment data is leaked, we can’t modify it,” biometric technology over simpler deliver a modern experience.” but still allows individual banks to goes along with them.” driven processes. speeds, and certainty when funds have warns Mr Kurczyk. He cites previous solutions, such as QR codes.” This is an enormous task. “Broadly create unique service offerings. been delivered. data breaches from technology com- But for many, fingerprint payment speaking there are two approaches,” “If I move a payment quickly, then Real-world impact “At the end of the day, the winner panies as a reason why consumer is easier than more complex tech- says Mr Newman. “You can create a goods can ship quickly; the supply The end-to-end transparency and in all of this is the end-customer. And trust in biometric authentication nology. Mr Jain says that because closed-loop system where all par- chain shortens and the amount of cap- speed of international payments has financial institutions that embrace might be limited. biometric payments do not mandate ticipants follow one set of rules. This ital involved reduces, which has a very already come a long way in the two the opportunities are able to innovate “Biometric data must be treated as technical literacy, they could be of makes efficiency gains relatively easy to significant impact on trade. But it only years since SWIFT introduced gpi. more to offer new and better client the most sensitive level of personal benefit to people in “digital financial achieve, however you quickly run into a works if you are getting the data to the Whether it’s businesses SWIFT gpi members – more than 3,500 experiences,” Mr Newman concludes. data,” says Shirish Jain, payments isolation”, especially in less devel- dead end as your reach is limited only end-recipient in the right form, in a transferring large sums across financial institutions are sending more director at Strategy&, the strategy oped nations with limited access to to parties within that closed system. standardised way and with sufficient than $300 billion via the service daily – consulting arm of PwC in Singapore. banks or ATMs. “Or you can develop an open ecosys- information in the message for it to be borders or retail bank customers can now provide their customers with For more information please visit Mr Jain says encryption, tokenisa- Brad Jones, chief executive of tem, as we have done together with our processed automatically,” says Stephen making micro-payments, users full transparency on where their pay- www.swift.com/futureofpayments tion, controls and monitoring are Wave Money, a mobile financial network of over 11,000 financial insti- Lindsay, SWIFT’s head of standards. ments are, what has happened to them especially important when it comes services company in Myanmar, tutions, which allows value to be trans- Building systems individually and expect a fast, convenient and and ultimately when they reach the to biometrics. agrees. “We think biometrics can ferred globally from any account to any then connecting them after the fact consistent experience regardless end-beneficiary. Touché points out that all its be a game-changer in a market account, regardless of currency or reg- risks creating gaps in communica- “We know approximately 50 per data is encrypted, but for users in where financial literacy is low,” ulatory jurisdiction.” tion between the different platforms, of their location cent of all payments are reaching the he says. “It can also break barriers and provide financial services to those people who can’t read, write or have disabilities.” A NEW STANDARD Even in Singapore, biometrics have FOR PAYMENTS 2018 2019 2020 2021 2023 2025 yet to become ubiquitous. “I haven’t heard people talk about it much,” SWIFT community First ISO 20022 SWIFT cross- • Start of four-year co-existence USD and other major Adoption complete – all The ISO 20022 standard says Nataniel Tan, a Singaporean supports adoption of cross-border border ISO period for SWIFT customers currencies adopt full cross-border payments Biometrics can break has already been adopted doctor who works in the UK, but vis- ISO 20022 for cross- usage guidelines 20022 testing (November) ISO 20022 and reporting messaging for payments in more than barriers and provide border payments and published goes live • Migration of major European will be ISO 20022-based its Singapore regularly. “I usually pay 70 countries, bringing cash reporting (September) market infrastructures to ISO by contactless, except for the hawker increased speed, reliability financial services to 20022 (November) Aerial view of the stalls, then it’s with cash.” But Dr Tan and service levels to the Fountain of Wealth those people who would be interested in using the tech- payments experience, with at the Suntec City more to come shopping mall in can’t read, write or nology: “As a layman, I would think downtown Singapore it’s safer than having a card and 2018 2020 2022 2024 2026 have disabilities more convenient.” 08 FUTURE OF PAYMENTS RACONTEUR.NET 09 Commercial feature

Amy Hawkins

onvenience at the touch of a fingerprint-based authentication,” C button is the mantra for ser- he says. “This definitively drives CONSUMER APPETITE FOR How better vices you can order through confidence in general public accept- BIOMETRICS IS HIGH your phone. Whether it’s taxis or food ance of biometric technology.” Percentage of Singaporeans who delivery, there’s an app to bring it to Indeed, the Visa study found that have used the following methods of BIOMETRIC PAYMENTS your doorstep. Now the biometric 97 per cent were interested in using biometric payments payments will payments sector is catching up. biometrics and 96 per cent were The world leader is Singapore comfortable using such methods to where 61 per cent of financial com- make payments. The most popular

panies have adopted or are in the reasons for using biometrics were 88% 56% 50% 49% change our lives Singapore: a process of adopting biometrics, perceived convenience and speed. according to a survey by identity A startup making waves in the data intelligence company GBG. biometric payment space is Touché, A study by Visa in Singapore which provides fingerprint scan- SWIFT is working with financial institutions to testbed for found that 88 per cent of those sur- ning devices and a cloud-computing veyed had used fingerprint biom- service that stores customer data. transform the global payments ecosystem, and etrics, while 56 per cent had used As well as streamlining the payment facial recognition, and 50 per cent process, Touché offers businesses it’s making day-to-day life easier for everyone biometric and 49 per cent respectively had personalised, detailed data for mar- used iris scanning and voice rec- keting campaigns and loyalty man- ognition. Mastercard has trialled a agement schemes. vast change is taking place An open cross-border payments “selfie password”, but in Singapore The company has partnered A within the structures that system is inherently complex, as it is payments the most popular type of biometric with OCBC Bank in Singapore and enable payments across the comprised of many players and requires payment is fingerprint. Mashreq Bank in the United Arab world. Faster payments initiatives, adherence with multiple sets of rules Tomasz Kurczyk, digital transfor- Emirates, and has its sights even such as those launched in the UK, and jurisdictions. However, whether mation director at AXA Insurance further afield. Japan is planning to

America and Australia, have been seen it’s businesses transferring large sums A multitude of factors are fuelling in Singapore, says the use of fin- implement biometric payments in Fingerprint Facial recognition Iris scan recognitionVoice at the domestic level, as have local and across borders or retail bank customers particularly as they evolve. For finan- To this end, SWIFT has engaged closely beneficiary in under 30 minutes, many gerprint scans at airports has con- the run up to the 2020 Olympics as regional open banking initiatives from making micro-payments, users expect a cial firms to work effectively with one with financial and non-financial com- of these in just minutes or even seconds, Singapore’s appetite for biometric tributed to its popularity in other it prepares for an influx of up to 40 Visa 2018 Europe to Singapore. fast, convenient and consistent experi- another and fintech partners, and panies to facilitate adoption of the ISO and nearly 100 per cent of them are made sectors. “All residents travelling million visitors. The same is happening on the global ence regardless of their location. to have the capacity to adopt inno- 20022 messaging standard for use in within 24 hours. So we’ve already taken payments, but what does the future hold? in and out of Singapore use auto- Touché’s technology works by level and soon every payments system vative new approaches as they payment schemes, from instant payment huge strides towards delivering instant mated passport control gates with users scanning two fingerprints on countries where fingerprint scan- will be exchanging information on Global unity arise, they must be able to communi- models to the massive real-time systems global payments,” says Mr Newman. “As a device that is provided to mer- ning is not already ubiquitous, international payments in a standard- SWIFT has a long history of engaging cate seamlessly. used by central banks, nearly all of which more and more banks improve their chants free; vendors have to pay there might be challenges in con- ised way, further increasing efficiency with financial institutions to develop an Seamless communication also ena- are now converging on ISO 20022. back offices, we will see this trend con- a monthly subscription fee for vincing people to link their finan- and reliability. open ecosystem and the organisation is bles firms to leverage cloud service “As international trade increases tinue for the world’s payments.” the cloud-computing service that cial and biometric data. However, Some of the pressure for financial leading the way in ensuring it continues providers to manage data in a secure and value chains get longer, you have Industry-wide adoption of ISO 20022 stores the data. The user’s finger- a 2019 study by the UK’s National institutions to deliver more effective to meet the needs of end-customers. way or application programming inter- more players involved with the data,” is set to enable this even further. Richer prints are linked to credit card Cyber Security Centre found that payments stems from the convenience Most of these institutions are already faces (APIs) to support the movement Mr Lindsay notes. “This international and better use of data will open up many information and shopping history. 23.2 million accounts that had provided by digital services in our every- in the process of modernising their of data. “The whole basis of using cloud standard, ISO 20022, ensures the data new efficiencies, including in the area of This is especially useful for the been hacked used the password day lives. Digital tools are enabling faster payment systems and moving towards infrastructure and APIs is that busi- remains consistent no matter what compliance. With about 10 per cent of tourism industry when travellers “123456”, which suggests many Mongkol Chuewong/Getty ImagesMongkol communication, simpler access to infor- real-time transactions. To achieve this, nesses can innovate by partnering with technology is used to make the pay- global payments being stopped due to face possible problems using their people already prize convenience mation and more direct connectivity. the industry has come together around other players, particularly newer tech- ment itself.” sanctions-screening – the vast major- credit cards or making foreign-cur- over security. “We expect a seamless user experi- collaborative initiatives such as SWIFT’s nology companies, and use APIs to link The end-game is to have the major ity of which are false positives, SWIFT rency transactions abroad. Garnering interest in biometric ence in everything we do, whether we global payments innovation (gpi). between systems,” says Mr Newman. traded currencies in the world for both estimates – a more effective reading of Having all your payment infor- technology is one thing, but actually are at work or in our personal lives,” says Many institutions are also develop- “This is how you get innovation quickly.” cross-border and domestic payments payment messages will have a material mation literally at your fingertips making biometric payments a real- Harry Newman, head of banking at inter- ing relationships with fintech firms running on the same rich, common impact on the cost of doing business is convenient and saves having to ity is another. Mr Kurczyk notes: “In bank payments co-operative SWIFT. “We that have the capacity to experiment A common language standard. As firms increase the level of and the speed of payments overall. carry around different cards. But it countries where there is a high pen- all agree payments should be instant and with new technologies and ideas, then Mr Lindsay adds: “Future-proofing automation they employ in processing The result of these tectonic shifts is not without potential pitfalls. etration and adoption of card-based convenient for the people making them. apply their learnings together in the our current designs and technology transactions and trade, the reliabil- is that financial institutions are able “We need to remember that we can payments, there is a limited cus- It’s fair to say that the old world of inter- real world. The challenge is in connect- means we must have a common and ity and depth of data that is included to deliver improved service levels to change our credentials, for example tomer benefit improvement poten- national payments was built some time ing hundreds of individual firms in such consistent way of describing pay- within a payment message will also their clients, with transparency on a passport, but once your biometric tial to justify the investment in ago and that’s why it’s being upgraded to a way that the system hangs together, ments and the additional data that increase the ability to use machine- processes and fees, faster payment data is leaked, we can’t modify it,” biometric technology over simpler deliver a modern experience.” but still allows individual banks to goes along with them.” driven processes. speeds, and certainty when funds have warns Mr Kurczyk. He cites previous solutions, such as QR codes.” This is an enormous task. “Broadly create unique service offerings. been delivered. data breaches from technology com- But for many, fingerprint payment speaking there are two approaches,” “If I move a payment quickly, then Real-world impact “At the end of the day, the winner panies as a reason why consumer is easier than more complex tech- says Mr Newman. “You can create a goods can ship quickly; the supply The end-to-end transparency and in all of this is the end-customer. And trust in biometric authentication nology. Mr Jain says that because closed-loop system where all par- chain shortens and the amount of cap- speed of international payments has financial institutions that embrace might be limited. biometric payments do not mandate ticipants follow one set of rules. This ital involved reduces, which has a very already come a long way in the two the opportunities are able to innovate “Biometric data must be treated as technical literacy, they could be of makes efficiency gains relatively easy to significant impact on trade. But it only years since SWIFT introduced gpi. more to offer new and better client the most sensitive level of personal benefit to people in “digital financial achieve, however you quickly run into a works if you are getting the data to the Whether it’s businesses SWIFT gpi members – more than 3,500 experiences,” Mr Newman concludes. data,” says Shirish Jain, payments isolation”, especially in less devel- dead end as your reach is limited only end-recipient in the right form, in a transferring large sums across financial institutions are sending more director at Strategy&, the strategy oped nations with limited access to to parties within that closed system. standardised way and with sufficient than $300 billion via the service daily – consulting arm of PwC in Singapore. banks or ATMs. “Or you can develop an open ecosys- information in the message for it to be borders or retail bank customers can now provide their customers with For more information please visit Mr Jain says encryption, tokenisa- Brad Jones, chief executive of tem, as we have done together with our processed automatically,” says Stephen making micro-payments, users full transparency on where their pay- www.swift.com/futureofpayments tion, controls and monitoring are Wave Money, a mobile financial network of over 11,000 financial insti- Lindsay, SWIFT’s head of standards. ments are, what has happened to them especially important when it comes services company in Myanmar, tutions, which allows value to be trans- Building systems individually and expect a fast, convenient and and ultimately when they reach the to biometrics. agrees. “We think biometrics can ferred globally from any account to any then connecting them after the fact consistent experience regardless end-beneficiary. Touché points out that all its be a game-changer in a market account, regardless of currency or reg- risks creating gaps in communica- “We know approximately 50 per data is encrypted, but for users in where financial literacy is low,” ulatory jurisdiction.” tion between the different platforms, of their location cent of all payments are reaching the he says. “It can also break barriers and provide financial services to those people who can’t read, write or have disabilities.” A NEW STANDARD Even in Singapore, biometrics have FOR PAYMENTS 2018 2019 2020 2021 2023 2025 yet to become ubiquitous. “I haven’t heard people talk about it much,” SWIFT community First ISO 20022 SWIFT cross- • Start of four-year co-existence USD and other major Adoption complete – all The ISO 20022 standard says Nataniel Tan, a Singaporean supports adoption of cross-border border ISO period for SWIFT customers currencies adopt full cross-border payments Biometrics can break has already been adopted doctor who works in the UK, but vis- ISO 20022 for cross- usage guidelines 20022 testing (November) ISO 20022 and reporting messaging for payments in more than barriers and provide border payments and published goes live • Migration of major European will be ISO 20022-based its Singapore regularly. “I usually pay 70 countries, bringing cash reporting (September) market infrastructures to ISO by contactless, except for the hawker increased speed, reliability financial services to 20022 (November) Aerial view of the stalls, then it’s with cash.” But Dr Tan and service levels to the Fountain of Wealth those people who would be interested in using the tech- payments experience, with at the Suntec City more to come shopping mall in can’t read, write or nology: “As a layman, I would think downtown Singapore it’s safer than having a card and 2018 2020 2022 2024 2026 have disabilities more convenient.” 10 FUTURE OF PAYMENTS RACONTEUR.NET 11 Commercial feature

OPINION

In the Nordics, two-factor authentication is already common and it doesn’t impact sales, Makistock/Shutterstock The future of payments as long as the customer experience is smooth ‘Providers explore how they can enable newer should revolve – they should get in touch and Mr van Wezel points out that some refund you. European countries have already technologies and help But apart from the psychologi- adopted more advanced online shop- around you cal shock of finding yourself the ping security systems without too victim of a hack, the costs of poor much fuss. online shopping security filter down “In markets such as the Nordics, their customers address Technology is setting new standards for customer experience that to consumers in the form of higher two-factor authentication is already payment operators often struggle to reach, but in a digital card fees and interest rates. common and it doesn’t impact sales, market needs faster’ To help address card-not-present as long as the customer experience is era this is no longer negotiable fraud, new strong customer authen- smooth, for example using biomet- tication (SCA) rules are due to come rics,” he says. into force this month across the But for the time being, we may all mail, Uber, Spotify, Airbnb, European Union. The idea behind have to get used to a confusing free- team of experts at engaging externally. These strategies G WhatsApp: all are digital dis- SCA is that adding a second identity for-all when it comes to the means by A Money20/20, the financial allowed banks to be involved with rupters that did not exist 15 B2B STATISTICS FROM BOTTOMLINE TECHNOLOGIES’ check, in a process called two-factor which card providers satisfy them- services and fintech indus- many more opportunities than they years ago, but today are essential to 2019 BUSINESS PAYMENTS BAROMETER authentication, can help ensure much selves of our identity. try’s leading event, has identified the could have, had they tried to build our lives. These technologies have set a better online shopping security. “The belated decision to delay major ways our industry is being inno- these within the organisation. new bar for customer experience, driv- The additional check may be a text SCA is a relief,” says Tim Richards, vated and the impact this has across While some institutions saw success, ing higher expectations for payments message sent to your phone asking head of digital payments at Consult sectors. One of which explores how others did not and have pulled back on and commerce. you to confirm a purchase, an email, Hyperion. “Beyond this, the bigger commercial models, value chains, and several of these activities. There were Intuitive, seamless and personalised 92% 70 % a code generated by a hardware issue is the lack of standardisation.” mergers and acquisitions (M&A) are many market tests and proofs of con- end-to-end journeys that place cus- token, or even a biometric check of Regulators have decided not to spec- changing how the industry operates. cept, but fewer than expected achieved tomers at the centre of each trans- the purchaser’s fingerprint or face, ify any minimum technical stand- Recently, they examined the dra- substantial scale. Additionally, from action are the new norm. So winning of financial decision-makers of UK businesses feel conducted by smartphone. ards for SCA, which means those han- matic changes taking place within the the perspective of the startups, they the hearts, minds and wallets of our in the UK admit to paying unprepared for upcoming ONLINE Paul Amery But the introduction of the new SCA dling payments are free to choose business-to-business side of financial often had to jump over massive hur- customers requires a shift from tradi- suppliers late payment initiatives such as rules, which form part of the EU’s their own verification mechanisms, services. For example, point-of-sale dles and expend significant resources tional products that “get the payment PSD2, Open Banking, ISO 20022 ayments are fundamen- Second Payment Services Directive, whether text message, email, use of a (POS) terminals used to be closed sys- to work with the banks, which also job done” to holistic solutions that P tally about trust. And as has generated some worrying com- hardware dongle, mobile phone app tems with limited third-party access resulted in limited volumes. While empower people and businesses to we all conduct more of our ments about the possible knock-on or biometric check. to the hardware. Over the past few there have been many successful take control of their financial lives. Balancing shopping online, there’s a fine line effect on online commerce. “Every issuer, acquirer or merchant years, these systems opened up with partnerships, the initial euphoria has For more than 25 years, Mphasis has between convenience and safety. Payments company Stripe recently has lots of freedom to implement an app-store mentality to enable been tempered. Investment activity partnered with banks and financial £240,092 institutions of all sizes to ignite digi- The more seamless online payments claimed that Europe's online econ- SCA in their own way. This will cre- innovative third-party companies to still continues, but typically in a more is the average loss through fraud for become, the more easily the wheels omy could suffer a €57-billion hit ate confusion in the market,” says Mr design their hardware. measured manner. tal innovation, empower transforma- financial decision-makers in the UK convenience of commerce turn. But get online after the SCA rules take effect, van Wezel. Opening up the POS hardware plat- Finally, there has recently been a tion and unlock disruptive advantages shopping security wrong and the equivalent to a 10 per cent reduction But others see the new SCA rules form has had major implications rapid increase in M&A activity. Over through technology. whole system might seize up as fear- in overall digital shopping volumes. as fertile ground for tech experts to on value chains delivering services. the past year, there have been sev- The company’s global head of pay- ful buyers withdraw from purchases. Other reports are even more improve online shopping security In the past, there was tremendous eral blockbuster mergers across the ments, Andres Ricaurte, affirms that the key through which we open and an easy task, particularly when busi- and trust in In Europe, there have recently been alarmist. A survey, conducted by and gain new business. value in obtaining access to the POS ecosystem, such Fiserv and First customer experience has been a key unlock the network of services that nesses are part of complex supply worrying signs that the system is Germany’s EHI institute, suggested “We see huge opportunities in mobile- hardware, which could be monet- Data, TSYS and Global Payments, and tenet in this journey. makes our lives work. This is something chains with multiple payment terms out of balance and digital fraudsters online merchants are seeing more based authenticators and behavioural ised over a long period. Now, broader SunTrust and BB&T. They are driven “Banks have an inherent advantage Mphasis calls the “Network of You”. and currencies. have been gaining the upper hand. than a third of shoppers abandon biometrics,” says Mr Richards. access pushes value creation towards predominantly by scale and creating that they need to capitalise on,” he “We’ve implemented the Network- “Especially in this uncertain global online shopping According to the European Central shopping carts as a result of SCA, And challenger banks, such other elements, such as functionality, larger players that have greater access says. “Current accounts, mortgages, of-You model with many of our clients environment, it is more important Bank, so-called card-not-present largely due to the complexity of the as Monzo, Revolut and Starling, something that has also been seen in to markets and greater negotiating credit cards, all kinds of policies and by transforming decades-old pay- than ever to help businesses create a scams accounted for 73 per cent of new checkout process. which have invested heavily in back-end payment and account-pro- power. There has also been significant financial products, generated through ments systems and processes into holistic picture of their financial, oper- all fraud in the euro payment area Other European payments spe- user-friendly mobile savings and cessing relationships. Ultimately this acquisitions activity by payment net- relationships that span many years, next-generation, artificial intelligence- ational and commercial networks,” New Europe-wide rules to enforce in 2016, costing €1.3 billion. These cialists are more sanguine, however, spending apps, also seem well posi- has allowed technology providers to works, such as Mastercard and Visa, they all represent terabytes of power- powered platforms that turn every says Mr Ricaurte. online security checks are designed to scams highlight one of the biggest citing a recent decision by the EU to tioned to gain future market share explore how they can enable newer that have been seeking interesting ful data that banks have access to and payment transaction into a moment By extending the Network-of-You problems in the digital economy: avoid an abrupt introduction of the in online payments. technologies and help their custom- fintech companies to build technol- can use to create unique profiles and of meaningful customer value,” says philosophy to the business landscape, make ecommerce safer for customers, the centralised storage of customer new identification rules. ers address market needs faster. ogies, capabilities, and help deliver personalised payments, financing and Mr Ricaurte. Mphasis is partnering closely with identity and card data in online data- “In many countries, SCA will not The way companies are pursuing new services and products to market. commerce solutions for every single “Just because you are not Netflix, it corporates and business-to-business but companies fear it could have a big bases creates a honeypot for hackers. be a ‘big bang’, but phased in grad- new opportunities is changing as This year, Money20/20 USA will one of their customers. doesn’ t mean you cannot deliver Netflix- payments providers to bring together By breaking into such systems ually,” says Ron van Wezel, senior well. Simply put, there are three major have more coverage of these trends “It is a richer value proposition than like customer experiences by leveraging disparate systems, processes and pay- impact on sales and harvesting clients’ personal analyst at consultancy Aite Group. options: build, partner or buy. A dec- to help individuals and companies pure tech operators can provide.” the power of new technologies.” ment solutions into a single, actionable information, debit or credit card “In the UK, the Financial Conduct ade ago, there was a greater focus on understand the current state of the While becoming a digital business control panel that puts businesses at numbers and security codes, fraud- Authority and UK Finance have building within the framework of the industry, take advantage of trends Network of you can be a daunting task for most enter- the centre of their network. BN TM sters can conduct their own illegiti- published a migration plan that €57 company. For example, innovation and stay at the forefront. The fintech Whether buying coffee, riding public prises, Mphasis’s proven Front2Back The Network of You accelerates the mate purchases. extends the deadline to March 2021. estimated loss in economic groups within banks and payment orchard is still filled with low-hanging transport, streaming music or pur- Transformation framework focuses hyper-personalisation of the pay- If your card provider spots a With this handheld approach, the activity in the first year after networks would work with the main- fruit, but with limited ability to take chasing groceries, payments represent on iterative transformation levers that ments industry, which Mphasis sees as SCA takes effect dodgy-looking deal – “Did you buy risks to ecommerce sales are prop- line businesses to help deliver new bites, companies should determine deliver chunks of value quickly, while the future. It goes hand in hand with a a £5,000 sofa in Madrid yesterday?” erly managed in my view.” Stripe/451 Research 2019 offerings to the market. which will have the greatest impact. creating the foundation to shrink and digital transformation that will strike Unfortunately, innovation groups Learn more and register to attend at eliminate legacy applications. banks and enterprises whether they many times lost internal battles for us.money2020.com “It is an ongoing cycle through which keep up or not, and a customer-cen- resources and focus when paired with our customers can start launching new tric business world which will call for massive mainline businesses. This products in a matter of weeks, while even greater seamlessness, efficiency affected how innovators within banks implementing programmes that sys- and context awareness across all pay- saw their place in the institution and Just because you tematically reduce legacy costs and ments and commercial transactions in how corporate leadership structured create savings which can be lever- the years to come. organisations, ultimately leading are not Netflix, it aged to further accelerate their digital to reorganisations and departures doesn’t mean you agenda,” says Mr Ricaurte. which further reduced focus on these For more information please visit internal groups. cannot deliver When business gets personal www.mphasis.com Five years ago, we saw banks heavily Netflix-like customer Payments transcend our daily con- developing relationships with innova- sumer lives. They are also the lifeblood tive startups. Tactics for this strategy experiences by of any business, and enhancing the included being active corporate ven- Sanjib Kalita leveraging the power visibility, predictability and flexibility ture capitalists, supporting accelera- Editor-in-chief of payments is key to ensuring sus- tors, running hackathons and actively Money20/20 of new technologies tainable cash flows. This is not always 10 FUTURE OF PAYMENTS RACONTEUR.NET 11 Commercial feature

OPINION

In the Nordics, two-factor authentication is already common and it doesn’t impact sales, Makistock/Shutterstock The future of payments as long as the customer experience is smooth ‘Providers explore how they can enable newer should revolve – they should get in touch and Mr van Wezel points out that some refund you. European countries have already technologies and help But apart from the psychologi- adopted more advanced online shop- around you cal shock of finding yourself the ping security systems without too victim of a hack, the costs of poor much fuss. online shopping security filter down “In markets such as the Nordics, their customers address Technology is setting new standards for customer experience that to consumers in the form of higher two-factor authentication is already payment operators often struggle to reach, but in a digital card fees and interest rates. common and it doesn’t impact sales, market needs faster’ To help address card-not-present as long as the customer experience is era this is no longer negotiable fraud, new strong customer authen- smooth, for example using biomet- tication (SCA) rules are due to come rics,” he says. into force this month across the But for the time being, we may all mail, Uber, Spotify, Airbnb, European Union. The idea behind have to get used to a confusing free- team of experts at engaging externally. These strategies G WhatsApp: all are digital dis- SCA is that adding a second identity for-all when it comes to the means by A Money20/20, the financial allowed banks to be involved with rupters that did not exist 15 B2B STATISTICS FROM BOTTOMLINE TECHNOLOGIES’ check, in a process called two-factor which card providers satisfy them- services and fintech indus- many more opportunities than they years ago, but today are essential to 2019 BUSINESS PAYMENTS BAROMETER authentication, can help ensure much selves of our identity. try’s leading event, has identified the could have, had they tried to build our lives. These technologies have set a better online shopping security. “The belated decision to delay major ways our industry is being inno- these within the organisation. new bar for customer experience, driv- The additional check may be a text SCA is a relief,” says Tim Richards, vated and the impact this has across While some institutions saw success, ing higher expectations for payments message sent to your phone asking head of digital payments at Consult sectors. One of which explores how others did not and have pulled back on and commerce. you to confirm a purchase, an email, Hyperion. “Beyond this, the bigger commercial models, value chains, and several of these activities. There were Intuitive, seamless and personalised 92% 70 % a code generated by a hardware issue is the lack of standardisation.” mergers and acquisitions (M&A) are many market tests and proofs of con- end-to-end journeys that place cus- token, or even a biometric check of Regulators have decided not to spec- changing how the industry operates. cept, but fewer than expected achieved tomers at the centre of each trans- the purchaser’s fingerprint or face, ify any minimum technical stand- Recently, they examined the dra- substantial scale. Additionally, from action are the new norm. So winning of financial decision-makers of UK businesses feel conducted by smartphone. ards for SCA, which means those han- matic changes taking place within the the perspective of the startups, they the hearts, minds and wallets of our in the UK admit to paying unprepared for upcoming ONLINE Paul Amery But the introduction of the new SCA dling payments are free to choose business-to-business side of financial often had to jump over massive hur- customers requires a shift from tradi- suppliers late payment initiatives such as rules, which form part of the EU’s their own verification mechanisms, services. For example, point-of-sale dles and expend significant resources tional products that “get the payment PSD2, Open Banking, ISO 20022 ayments are fundamen- Second Payment Services Directive, whether text message, email, use of a (POS) terminals used to be closed sys- to work with the banks, which also job done” to holistic solutions that P tally about trust. And as has generated some worrying com- hardware dongle, mobile phone app tems with limited third-party access resulted in limited volumes. While empower people and businesses to we all conduct more of our ments about the possible knock-on or biometric check. to the hardware. Over the past few there have been many successful take control of their financial lives. Balancing shopping online, there’s a fine line effect on online commerce. “Every issuer, acquirer or merchant years, these systems opened up with partnerships, the initial euphoria has For more than 25 years, Mphasis has between convenience and safety. Payments company Stripe recently has lots of freedom to implement an app-store mentality to enable been tempered. Investment activity partnered with banks and financial £240,092 institutions of all sizes to ignite digi- The more seamless online payments claimed that Europe's online econ- SCA in their own way. This will cre- innovative third-party companies to still continues, but typically in a more is the average loss through fraud for become, the more easily the wheels omy could suffer a €57-billion hit ate confusion in the market,” says Mr design their hardware. measured manner. tal innovation, empower transforma- financial decision-makers in the UK convenience of commerce turn. But get online after the SCA rules take effect, van Wezel. Opening up the POS hardware plat- Finally, there has recently been a tion and unlock disruptive advantages shopping security wrong and the equivalent to a 10 per cent reduction But others see the new SCA rules form has had major implications rapid increase in M&A activity. Over through technology. whole system might seize up as fear- in overall digital shopping volumes. as fertile ground for tech experts to on value chains delivering services. the past year, there have been sev- The company’s global head of pay- ful buyers withdraw from purchases. Other reports are even more improve online shopping security In the past, there was tremendous eral blockbuster mergers across the ments, Andres Ricaurte, affirms that the key through which we open and an easy task, particularly when busi- and trust in In Europe, there have recently been alarmist. A survey, conducted by and gain new business. value in obtaining access to the POS ecosystem, such Fiserv and First customer experience has been a key unlock the network of services that nesses are part of complex supply worrying signs that the system is Germany’s EHI institute, suggested “We see huge opportunities in mobile- hardware, which could be monet- Data, TSYS and Global Payments, and tenet in this journey. makes our lives work. This is something chains with multiple payment terms out of balance and digital fraudsters online merchants are seeing more based authenticators and behavioural ised over a long period. Now, broader SunTrust and BB&T. They are driven “Banks have an inherent advantage Mphasis calls the “Network of You”. and currencies. have been gaining the upper hand. than a third of shoppers abandon biometrics,” says Mr Richards. access pushes value creation towards predominantly by scale and creating that they need to capitalise on,” he “We’ve implemented the Network- “Especially in this uncertain global online shopping According to the European Central shopping carts as a result of SCA, And challenger banks, such other elements, such as functionality, larger players that have greater access says. “Current accounts, mortgages, of-You model with many of our clients environment, it is more important Bank, so-called card-not-present largely due to the complexity of the as Monzo, Revolut and Starling, something that has also been seen in to markets and greater negotiating credit cards, all kinds of policies and by transforming decades-old pay- than ever to help businesses create a scams accounted for 73 per cent of new checkout process. which have invested heavily in back-end payment and account-pro- power. There has also been significant financial products, generated through ments systems and processes into holistic picture of their financial, oper- all fraud in the euro payment area Other European payments spe- user-friendly mobile savings and cessing relationships. Ultimately this acquisitions activity by payment net- relationships that span many years, next-generation, artificial intelligence- ational and commercial networks,” New Europe-wide rules to enforce in 2016, costing €1.3 billion. These cialists are more sanguine, however, spending apps, also seem well posi- has allowed technology providers to works, such as Mastercard and Visa, they all represent terabytes of power- powered platforms that turn every says Mr Ricaurte. online security checks are designed to scams highlight one of the biggest citing a recent decision by the EU to tioned to gain future market share explore how they can enable newer that have been seeking interesting ful data that banks have access to and payment transaction into a moment By extending the Network-of-You problems in the digital economy: avoid an abrupt introduction of the in online payments. technologies and help their custom- fintech companies to build technol- can use to create unique profiles and of meaningful customer value,” says philosophy to the business landscape, make ecommerce safer for customers, the centralised storage of customer new identification rules. ers address market needs faster. ogies, capabilities, and help deliver personalised payments, financing and Mr Ricaurte. Mphasis is partnering closely with identity and card data in online data- “In many countries, SCA will not The way companies are pursuing new services and products to market. commerce solutions for every single “Just because you are not Netflix, it corporates and business-to-business but companies fear it could have a big bases creates a honeypot for hackers. be a ‘big bang’, but phased in grad- new opportunities is changing as This year, Money20/20 USA will one of their customers. doesn’ t mean you cannot deliver Netflix- payments providers to bring together By breaking into such systems ually,” says Ron van Wezel, senior well. Simply put, there are three major have more coverage of these trends “It is a richer value proposition than like customer experiences by leveraging disparate systems, processes and pay- impact on sales and harvesting clients’ personal analyst at consultancy Aite Group. options: build, partner or buy. A dec- to help individuals and companies pure tech operators can provide.” the power of new technologies.” ment solutions into a single, actionable information, debit or credit card “In the UK, the Financial Conduct ade ago, there was a greater focus on understand the current state of the While becoming a digital business control panel that puts businesses at numbers and security codes, fraud- Authority and UK Finance have building within the framework of the industry, take advantage of trends Network of you can be a daunting task for most enter- the centre of their network. BN TM sters can conduct their own illegiti- published a migration plan that €57 company. For example, innovation and stay at the forefront. The fintech Whether buying coffee, riding public prises, Mphasis’s proven Front2Back The Network of You accelerates the mate purchases. extends the deadline to March 2021. estimated loss in economic groups within banks and payment orchard is still filled with low-hanging transport, streaming music or pur- Transformation framework focuses hyper-personalisation of the pay- If your card provider spots a With this handheld approach, the activity in the first year after networks would work with the main- fruit, but with limited ability to take chasing groceries, payments represent on iterative transformation levers that ments industry, which Mphasis sees as SCA takes effect dodgy-looking deal – “Did you buy risks to ecommerce sales are prop- line businesses to help deliver new bites, companies should determine deliver chunks of value quickly, while the future. It goes hand in hand with a a £5,000 sofa in Madrid yesterday?” erly managed in my view.” Stripe/451 Research 2019 offerings to the market. which will have the greatest impact. creating the foundation to shrink and digital transformation that will strike Unfortunately, innovation groups Learn more and register to attend at eliminate legacy applications. banks and enterprises whether they many times lost internal battles for us.money2020.com “It is an ongoing cycle through which keep up or not, and a customer-cen- resources and focus when paired with our customers can start launching new tric business world which will call for massive mainline businesses. This products in a matter of weeks, while even greater seamlessness, efficiency affected how innovators within banks implementing programmes that sys- and context awareness across all pay- saw their place in the institution and Just because you tematically reduce legacy costs and ments and commercial transactions in how corporate leadership structured create savings which can be lever- the years to come. organisations, ultimately leading are not Netflix, it aged to further accelerate their digital to reorganisations and departures doesn’t mean you agenda,” says Mr Ricaurte. which further reduced focus on these For more information please visit internal groups. cannot deliver When business gets personal www.mphasis.com Five years ago, we saw banks heavily Netflix-like customer Payments transcend our daily con- developing relationships with innova- sumer lives. They are also the lifeblood tive startups. Tactics for this strategy experiences by of any business, and enhancing the included being active corporate ven- Sanjib Kalita leveraging the power visibility, predictability and flexibility ture capitalists, supporting accelera- Editor-in-chief of payments is key to ensuring sus- tors, running hackathons and actively Money20/20 of new technologies tainable cash flows. This is not always 12 FUTURE OF PAYMENTS RACONTEUR.NET 13

Worldpay 2018 CARDS AND CASH DOMINATE NORTH AMERICAN PAYMENT METHODS NORTH AMERICA REMAINS BEHIND THE GLOBAL SURVEY WHEN IT COMES TO FINTECH ADOPTION Share of point-of-sale transactions using the following methods in 2018 United States Asia Pacific Percentage of the digitally active population who at least one fintech service

100% China

India 90% 41% 34% 16% 4% 3% 2% UK 80% AMERICA Singapore WHERE CASH AND CARDS ARE STILL KING 70% United States

Canada 60% The payments story in North America is one of contrast. It is home to the global behemoths of Silicon Valley, several cryptocurrency giants and some of the most 50% Global Average 16% 26% 30% 0% 27% 1% disruptive technology startups in every field; yet it remains behind much of the 40% developed world when it comes to mainstream adoption of modern payments 30% technologies, such as biometrics, mobile wallets, contactless and even chip and pin. 20%

Signing for a card payment is still very much commonplace, but why is this? Mature 10%

technology infrastructures have some part to play, sure, but one of the key reasons is 0% EY 2019 consumer attitudes and established preferences for cash and cards Credit card Debit card Cash Charge card E-wallet Pre-paid card 2015 2017 2019

Bain 2018 TOP PAYMENT METHODS IN THE UNITED STATES

Percentage of consumers who used the following methods in 2018

Credit card 80%

Cash 79%

Bank/debit card 59%

Check/cheque 53%

Paypal 44%

Apple Pay 9%

Venmo 7% Zelle 64% 56% 45% 6% Google products 6% of Americans feel nervous are more likely to go to a store would likely stop going to a Square cash when they don’t have cash on that only accepts cash than store or restaurant they like 3% them or in their wallet a store that does not accept if it stopped accepting cash Facebook Messenger cash at all (44 per cent) completely 3% Cardtronics 2018

Cardtronics 2018 NORTH AMERICA REMAINS BEHIND THE GLOBAL SURVEY WHEN IT COMES TO FINTECH ADOPTION CASH TRUMPS OTHER PAYMENT OPTIONS

Percentage of the digitally active population who at least one fintech service EY 2019 Percentage of US adults who agree with the following statements for each payment method Cash Credit Debit Mobile wallet

100%

90% Percentage of adult 80% smartphone users that have 13% 24% 5% 7% used a mobile wallet to pay 70%

60%

50%

Percentage of adult 40%

smartphone users that have 16%3% 6% 1% 1% 30% used a mobile wallet to pay 20% during their last transaction 10%

0% Credit card Debit card Cash Charge card Convenient Easy to use Safe to use Feel secure Private Available to all Accepted everywhere Helps budget 12 FUTURE OF PAYMENTS RACONTEUR.NET 13

Worldpay 2018 CARDS AND CASH DOMINATE NORTH AMERICAN PAYMENT METHODS NORTH AMERICA REMAINS BEHIND THE GLOBAL SURVEY WHEN IT COMES TO FINTECH ADOPTION Share of point-of-sale transactions using the following methods in 2018 United States Asia Pacific Percentage of the digitally active population who at least one fintech service

100% China

India 90% 41% 34% 16% 4% 3% 2% UK 80% AMERICA Singapore WHERE CASH AND CARDS ARE STILL KING 70% United States

Canada 60% The payments story in North America is one of contrast. It is home to the global behemoths of Silicon Valley, several cryptocurrency giants and some of the most 50% Global Average 16% 26% 30% 0% 27% 1% disruptive technology startups in every field; yet it remains behind much of the 40% developed world when it comes to mainstream adoption of modern payments 30% technologies, such as biometrics, mobile wallets, contactless and even chip and pin. 20%

Signing for a card payment is still very much commonplace, but why is this? Mature 10%

technology infrastructures have some part to play, sure, but one of the key reasons is 0% EY 2019 consumer attitudes and established preferences for cash and cards Credit card Debit card Cash Charge card E-wallet Pre-paid card 2015 2017 2019

Bain 2018 TOP PAYMENT METHODS IN THE UNITED STATES

Percentage of consumers who used the following methods in 2018

Credit card 80%

Cash 79%

Bank/debit card 59%

Check/cheque 53%

Paypal 44%

Apple Pay 9%

Venmo 7% Zelle 64% 56% 45% 6% Google products 6% of Americans feel nervous are more likely to go to a store would likely stop going to a Square cash when they don’t have cash on that only accepts cash than store or restaurant they like 3% them or in their wallet a store that does not accept if it stopped accepting cash Facebook Messenger cash at all (44 per cent) completely 3% Cardtronics 2018

Cardtronics 2018 NORTH AMERICA REMAINS BEHIND THE GLOBAL SURVEY WHEN IT COMES TO FINTECH ADOPTION CASH TRUMPS OTHER PAYMENT OPTIONS

Percentage of the digitally active population who at least one fintech service EY 2019 Percentage of US adults who agree with the following statements for each payment method Cash Credit Debit Mobile wallet

100%

90% Percentage of adult 80% smartphone users that have 13% 24% 5% 7% used a mobile wallet to pay 70%

60%

50%

Percentage of adult 40%

smartphone users that have 16%3% 6% 1% 1% 30% used a mobile wallet to pay 20% during their last transaction 10%

0% Credit card Debit card Cash Charge card Convenient Easy to use Safe to use Feel secure Private Available to all Accepted everywhere Helps budget 14 FUTURE OF PAYMENTS RACONTEUR.NET 15 Commercial feature

CREDIT CARDS Apple's big bite into credit cards

Apple’s move into business doesn’t quite cut it. PayPal, a relative veteran in the world of the credit card digital wallets and one of the best known fintech brands, actually industry may not helps businesses to accept Apple Pay in-store. This is despite the fact

put banks out of nikkimeel/Shutterstock that PayPal also has a credit offering business anytime and a physical debit card of its own. In the payments industry, collabora- soon, but its tion is often more useful than com- petition. More choice for custom- customer experience ers means more opportunities for incumbent companies to grow. delivery could set it Indeed, Revolut, one of the lead- apart from the more ing fintech companies in Europe and a normally more disrup- established rivals tive voice, only echoes Apple’s own language when asked about the launch. “We believe that tech Jack Apollo George companies are best positioned to help people lead a more healthy financial life, so we welcome the hen you think about news that Apple are looking to break W disruptive payment tech- into the finance space. At the end nologies, it is artificial of the day, more choice can only be intelligence, machine-learning and a good thing for consumers," says real-time transactions that come Chad West, director of marketing to mind, not physical credit cards. and communications. But in August, Apple – a company The twin horsemen of trust and worth more than the GDP of most iPhone mean that Apple can pitch on the journey and educate merchants growth can create payment complex- Fast and frictionless payments countries in the world – released themselves competitively without on what information is needed to ensure ities that small business owners just have delivered up to the Apple Card. even offering anything particu- transactions can go through. This is the don’t have time to deal with. Unless Undeniably stylish, the Apple lar innovative. By simply taking Evolution of help businesses are looking for.” they have a payments partner that Card is characteristically simple: up more of a prominent position in The other problem that merchants handles the emerging complexities as a weighty and laser etched piece of the payments industry, they will have to deal with is the expecta- they scale, they will soon run into chal- metal to accompany a smorgasbord push the companies around them tion from consumers to be able to lenges and face issues with delivering of financial rewards. Its stated goal to adapt. payments in the buy and return in different channels. the experience customers expect. % is to “help customers lead a health- Nathan Snell, chief innovation For example, they buy something Fortunately, the advent of cloud ier financial life”. But why does a officer at nCino, a major cloud 50time savings for Jump In online, collect it at their local con- computing and other technologies tech company, better known for its banking service that works with venience store, but return it in-store. has lowered the barrier to entry for defence of curved edges than its the likes of Santander and BNP ‘now economy’ Businesses need to be able to handle software solutions that previously derision of collateralised debt, think Paribas, sees the disruptive poten- payments and refunds seamlessly only large organisations could afford. it can serve that role? tial as an opportunity for learning. between these channels. At the same time, numerous software In a capitalist economy, where “If financial institutions want to Enabling a smooth payments experience for customers The payments industry is having to providers are focusing on developing wearable wristbands, as well as access finance depends on the flow of remain competitive, they must respond to these challenges and expec- niche solutions to help merchants the expertise to enable its growth plans. credit, money is mostly imaginary. improve on the things consumer- is crucial to maximise sales and growth potential in an tations by building solutions to address in particular sectors run their busi- “We play a vital role by providing a The wealth we hold, or aspire to focused tech giants continue to the multitude of ways people wish to nesses more efficiently. Sage Pay very supportive service to small and acquire, is not actually there. If we do well: seamless digital experi- omnichannel world. But as payment innovations and spend money. For example, with sub- implements the payments capabilities medium-sized enterprises to help all went to the bank to withdraw our Apple offers both executive Tim Cook steadfastly just tap your phone on any is impossible to read too much into ences, a near-maniacal focus on the scription-based services, which have into the back-end of these solutions. them get up and running with pay- savings, there would not be enough a physical titanium denied the FBI access to the mes- enabled reader and get cashback such things, representatives from customer and personalised, conven- consumer expectations continue to evolve, how can exploded in popularity in recent years, “There are niche software capa- ments,” says Mr Smith. “The larger bank notes. The principle currency card and a digital sages on the perpetrator’s iPhone, into your account. HSBC, Deutsche Bank, Bank of ient service,” he says. Wallet version companies keep up? new capabilities have been developed bilities being developed that service businesses often only give a one-size- in our globalised economy is not the he wrote: “The government is The potential that Apple has to America, Starling Bank, McKinsey The real threat from the and used, such as tokenisation. a much broader range of customers fits-all solution, but when it comes to dollar or sterling, no tangible quan- asking Apple to hack our own leverage its dominance of the smart- and American Express all refused to Apple Card is not that it offers This particular technology has meant or merchants, and the price point of the bespoke, niche integrations that tity of copper and paper, but trust. users and undermine decades of phone market in the payments sec- offer comment for this article. something financially innovative, companies can store an embedded those services is coming right down,” enable much better user experiences If trust is the currency of the pay- security advancements that protect tor seems to be putting other com- But a scare story imagining that but rather it can simply sell he payments landscape has smooth customer experience, which token to represent a user’s account, says Mr Smith. “It’s becoming a lot in particular scenarios, we are on ments industry, then you would be our customers.” For the Cupertino- panies on the defensive. Though it Apple is going to put banks out of similar products better. T transformed significantly of course helps to maximise sales. rather than a card number, minimis- easier to set up and run a business hand to help businesses on that jour- hard pressed to find a more compet- based company, its users’ privacy in recent years, driven by Particularly for online ecommerce ing the risk of fraud as well as auto- because there will be a piece of soft- ney. We put payments at the heart of itive potential entrant than Apple. was non-negotiable. developments in technology and businesses, friction in the checkout matically updating customers’ details ware you can buy that helps you get that conversation.” While other big tech companies face The Apple Card also has clear APPLE’S PRESENCE GROWING fast-changing consumer expectations. process is a common barrier to deliv- when a card is replaced, lost or stolen, everything up and running, provid- As the internet of things and technol- calls for regulation amid fears of perks: up to 3 per cent cashback, no The role payments play has advanced ering a great customer experience. The saving consumers time and preventing ing all the integrations into the ser- ogies such as 5G and artificial intelli- psychological regulation, Apple can late fees whatsoever and easy pay- 2017 2018 rapidly in the last two decades. From the consequences of failing to enable fric- businesses from losing out. vices you need, allowing people to get gence become a reality, the payments confidently claim that “transpar- ment tracking on a neatly designed pioneering introduction of chip and PIN tionless payments can be very damag- Companies typically start out with started with minimal hassle or time.” market has to keep up with these ency, privacy and trust” are “all the app. By tapping into its user base, in the early-2000s to the current rise ing, resulting in cart abandonment. quite simple payment needs, often One such company that Sage Pay trends and be present in every sce- things [it] stands for”. Apple could broaden the appeal of of fingerprint and facial scanning alter- In a study of UK retailers by Klarna and just wanting a means to accept money works with is ROLLER Software, which nario. Sage Pay works consistently to That isn’t pure fluff. In the after- credit cards which are too often seen natives, the growing sophistication of Ovum, more than half said friction at the from their customers. But business develops all-in-one software for ensure it can accept as many different math of the San Bernardino mass as either toys for the super rich or authentication capabilities is making it checkout is the main reason for con- attractions, entertainment and leisure types of payment methods as possible, shooting in 2015, when Apple chief burdens of the perennially indebted. more secure, not to mention seamless, sumers abandoning a sale, while four in venues. A ROLLER Software client, as well as developing the latest inte- Alongside a trusting audi- to purchase goods online and in-store. ten said it’s because certain payment Jump In Trampoline Parks, now enjoys gration capabilities, so its clients can ence, Apple has also created a 383m Number Shoppers’ habits are evolving, par- methods are missing. Separate research fast, frictionless payments across its always keep up as consumer behaviour hardware ecosystem that the of Apple ticularly driven by Generation Z’s from Splitit found 87 per cent of con- nine UK parks thanks to the payment continues to evolve. other digital behemoths can only Pay users desire for instant gratification, fuel- sumers will abandon their shopping if a integrations with Sage Pay. dream of. With such recognisa- ling what is being termed as the “now checkout process is “complicated”. Jump In’s system is set up to accept ble and influencer-friendly prod- 127m 43% economy”. Consumers want to be able “Abandonment is one of the key prob- payments through online bookings, For more information please visit ucts, Apple can use every celebrity Number of iPhone to buy whatever they want through any lems for any online retailer because if Niche integrations enable a customer service representatives, and sagepay.co.uk or call We welcome the news... and hip coffee shop regular as of Apple % users used channel they choose, whenever they you don’t have a smooth payment expe- onsite terminals and kiosks, and has +44 (0) 191 294 1134 billboards. By existing on top of Pay users 20 Apple Pay of iPhone want, and they want it delivered today. rience, with popular payment methods much better user experience. resulted in 40 to 50 per cent time sav- At the end of the day, more the successful Apple Pay technol- users used As a result, payments companies have included, you lose the customer and the We put payments at the heart ings for the business. Meanwhile, it is choice can only be a good thing ogy, the perks of the Apple Card Apple Pay had to work hard to help interweave sale,” says Seamus Smith, chief executive able to keep up with the latest trends, can be enjoyed without even using various functionalities that enable a of Sage Pay. “We have to bring consumers of that conversation such as accepting payments through for consumers the shiny metal card. You can Apple/Loup Ventures 2019 14 FUTURE OF PAYMENTS RACONTEUR.NET 15 Commercial feature

CREDIT CARDS Apple's big bite into credit cards

Apple’s move into business doesn’t quite cut it. PayPal, a relative veteran in the world of the credit card digital wallets and one of the best known fintech brands, actually industry may not helps businesses to accept Apple Pay in-store. This is despite the fact

put banks out of nikkimeel/Shutterstock that PayPal also has a credit offering business anytime and a physical debit card of its own. In the payments industry, collabora- soon, but its tion is often more useful than com- petition. More choice for custom- customer experience ers means more opportunities for incumbent companies to grow. delivery could set it Indeed, Revolut, one of the lead- apart from the more ing fintech companies in Europe and a normally more disrup- established rivals tive voice, only echoes Apple’s own language when asked about the launch. “We believe that tech Jack Apollo George companies are best positioned to help people lead a more healthy financial life, so we welcome the hen you think about news that Apple are looking to break W disruptive payment tech- into the finance space. At the end nologies, it is artificial of the day, more choice can only be intelligence, machine-learning and a good thing for consumers," says real-time transactions that come Chad West, director of marketing to mind, not physical credit cards. and communications. But in August, Apple – a company The twin horsemen of trust and worth more than the GDP of most iPhone mean that Apple can pitch on the journey and educate merchants growth can create payment complex- Fast and frictionless payments countries in the world – released themselves competitively without on what information is needed to ensure ities that small business owners just have delivered up to the Apple Card. even offering anything particu- transactions can go through. This is the don’t have time to deal with. Unless Undeniably stylish, the Apple lar innovative. By simply taking Evolution of help businesses are looking for.” they have a payments partner that Card is characteristically simple: up more of a prominent position in The other problem that merchants handles the emerging complexities as a weighty and laser etched piece of the payments industry, they will have to deal with is the expecta- they scale, they will soon run into chal- metal to accompany a smorgasbord push the companies around them tion from consumers to be able to lenges and face issues with delivering of financial rewards. Its stated goal to adapt. payments in the buy and return in different channels. the experience customers expect. % is to “help customers lead a health- Nathan Snell, chief innovation For example, they buy something Fortunately, the advent of cloud ier financial life”. But why does a officer at nCino, a major cloud 50time savings for Jump In online, collect it at their local con- computing and other technologies tech company, better known for its banking service that works with venience store, but return it in-store. has lowered the barrier to entry for defence of curved edges than its the likes of Santander and BNP ‘now economy’ Businesses need to be able to handle software solutions that previously derision of collateralised debt, think Paribas, sees the disruptive poten- payments and refunds seamlessly only large organisations could afford. it can serve that role? tial as an opportunity for learning. between these channels. At the same time, numerous software In a capitalist economy, where “If financial institutions want to Enabling a smooth payments experience for customers The payments industry is having to providers are focusing on developing wearable wristbands, as well as access finance depends on the flow of remain competitive, they must respond to these challenges and expec- niche solutions to help merchants the expertise to enable its growth plans. credit, money is mostly imaginary. improve on the things consumer- is crucial to maximise sales and growth potential in an tations by building solutions to address in particular sectors run their busi- “We play a vital role by providing a The wealth we hold, or aspire to focused tech giants continue to the multitude of ways people wish to nesses more efficiently. Sage Pay very supportive service to small and acquire, is not actually there. If we do well: seamless digital experi- omnichannel world. But as payment innovations and spend money. For example, with sub- implements the payments capabilities medium-sized enterprises to help all went to the bank to withdraw our Apple offers both executive Tim Cook steadfastly just tap your phone on any is impossible to read too much into ences, a near-maniacal focus on the scription-based services, which have into the back-end of these solutions. them get up and running with pay- savings, there would not be enough a physical titanium denied the FBI access to the mes- enabled reader and get cashback such things, representatives from customer and personalised, conven- consumer expectations continue to evolve, how can exploded in popularity in recent years, “There are niche software capa- ments,” says Mr Smith. “The larger bank notes. The principle currency card and a digital sages on the perpetrator’s iPhone, into your account. HSBC, Deutsche Bank, Bank of ient service,” he says. Wallet version companies keep up? new capabilities have been developed bilities being developed that service businesses often only give a one-size- in our globalised economy is not the he wrote: “The government is The potential that Apple has to America, Starling Bank, McKinsey The real threat from the and used, such as tokenisation. a much broader range of customers fits-all solution, but when it comes to dollar or sterling, no tangible quan- asking Apple to hack our own leverage its dominance of the smart- and American Express all refused to Apple Card is not that it offers This particular technology has meant or merchants, and the price point of the bespoke, niche integrations that tity of copper and paper, but trust. users and undermine decades of phone market in the payments sec- offer comment for this article. something financially innovative, companies can store an embedded those services is coming right down,” enable much better user experiences If trust is the currency of the pay- security advancements that protect tor seems to be putting other com- But a scare story imagining that but rather it can simply sell he payments landscape has smooth customer experience, which token to represent a user’s account, says Mr Smith. “It’s becoming a lot in particular scenarios, we are on ments industry, then you would be our customers.” For the Cupertino- panies on the defensive. Though it Apple is going to put banks out of similar products better. T transformed significantly of course helps to maximise sales. rather than a card number, minimis- easier to set up and run a business hand to help businesses on that jour- hard pressed to find a more compet- based company, its users’ privacy in recent years, driven by Particularly for online ecommerce ing the risk of fraud as well as auto- because there will be a piece of soft- ney. We put payments at the heart of itive potential entrant than Apple. was non-negotiable. developments in technology and businesses, friction in the checkout matically updating customers’ details ware you can buy that helps you get that conversation.” While other big tech companies face The Apple Card also has clear APPLE’S PRESENCE GROWING fast-changing consumer expectations. process is a common barrier to deliv- when a card is replaced, lost or stolen, everything up and running, provid- As the internet of things and technol- calls for regulation amid fears of perks: up to 3 per cent cashback, no The role payments play has advanced ering a great customer experience. The saving consumers time and preventing ing all the integrations into the ser- ogies such as 5G and artificial intelli- psychological regulation, Apple can late fees whatsoever and easy pay- 2017 2018 rapidly in the last two decades. From the consequences of failing to enable fric- businesses from losing out. vices you need, allowing people to get gence become a reality, the payments confidently claim that “transpar- ment tracking on a neatly designed pioneering introduction of chip and PIN tionless payments can be very damag- Companies typically start out with started with minimal hassle or time.” market has to keep up with these ency, privacy and trust” are “all the app. By tapping into its user base, in the early-2000s to the current rise ing, resulting in cart abandonment. quite simple payment needs, often One such company that Sage Pay trends and be present in every sce- things [it] stands for”. Apple could broaden the appeal of of fingerprint and facial scanning alter- In a study of UK retailers by Klarna and just wanting a means to accept money works with is ROLLER Software, which nario. Sage Pay works consistently to That isn’t pure fluff. In the after- credit cards which are too often seen natives, the growing sophistication of Ovum, more than half said friction at the from their customers. But business develops all-in-one software for ensure it can accept as many different math of the San Bernardino mass as either toys for the super rich or authentication capabilities is making it checkout is the main reason for con- attractions, entertainment and leisure types of payment methods as possible, shooting in 2015, when Apple chief burdens of the perennially indebted. more secure, not to mention seamless, sumers abandoning a sale, while four in venues. A ROLLER Software client, as well as developing the latest inte- Alongside a trusting audi- to purchase goods online and in-store. ten said it’s because certain payment Jump In Trampoline Parks, now enjoys gration capabilities, so its clients can ence, Apple has also created a 383m Number Shoppers’ habits are evolving, par- methods are missing. Separate research fast, frictionless payments across its always keep up as consumer behaviour hardware ecosystem that the of Apple ticularly driven by Generation Z’s from Splitit found 87 per cent of con- nine UK parks thanks to the payment continues to evolve. other digital behemoths can only Pay users desire for instant gratification, fuel- sumers will abandon their shopping if a integrations with Sage Pay. dream of. With such recognisa- ling what is being termed as the “now checkout process is “complicated”. Jump In’s system is set up to accept ble and influencer-friendly prod- 127m 43% economy”. Consumers want to be able “Abandonment is one of the key prob- payments through online bookings, For more information please visit ucts, Apple can use every celebrity Number of iPhone to buy whatever they want through any lems for any online retailer because if Niche integrations enable a customer service representatives, and sagepay.co.uk or call We welcome the news... and hip coffee shop regular as of Apple % users used channel they choose, whenever they you don’t have a smooth payment expe- onsite terminals and kiosks, and has +44 (0) 191 294 1134 billboards. By existing on top of Pay users 20 Apple Pay of iPhone want, and they want it delivered today. rience, with popular payment methods much better user experience. resulted in 40 to 50 per cent time sav- At the end of the day, more the successful Apple Pay technol- users used As a result, payments companies have included, you lose the customer and the We put payments at the heart ings for the business. Meanwhile, it is choice can only be a good thing ogy, the perks of the Apple Card Apple Pay had to work hard to help interweave sale,” says Seamus Smith, chief executive able to keep up with the latest trends, can be enjoyed without even using various functionalities that enable a of Sage Pay. “We have to bring consumers of that conversation such as accepting payments through for consumers the shiny metal card. You can Apple/Loup Ventures 2019 16 FUTURE OF PAYMENTS RACONTEUR.NET 17

OPINION

CUSTOMER EXPERIENCE Frictionless ‘There is every reason payments will mean fewer opportunities to expect the UK will Standing out for companies to interact visibly remain the world’s in a seamless with customers leading fintech future startup hub’ could mean, for example, automati- cally paying bills in the order which If truly seamless payments promise best suits the customer’s finances,” ver the last few years, we providers to create services that go says Mr Dobbie. What’s more, AI O have been warned of the even further towards meeting cus- to be barely noticeable in our day-to- and the increased data available in possible negative effects tomers’ evolving needs. a world of seamless payments could of Brexit on the UK fintech and pay- And the work doesn’t stop there. day lives, customer experience may speed the shift from mass mailing ments landscape, with the poten- Plenty is being done by the govern- or email loyalty campaigns to gen- tial for loss of access to the European ment to nurture these seeds to create be the only way financial services can uinely personalised offers. “The Union through the bloc’s passporting future sector growth. differentiate themselves challenge is how you give the most arrangements, as well as loss of talent. The UK’s Department for relevant offer while also respecting A recent study by the Digital International Trade (DIT) is work- people’s data privacy, undoubtedly Finance Forum revealed that ing to promote UK fintech by estab- a hot topic at the moment,” he adds. although 63 per cent of fintech com- lishing its Five Fintech Bridges, As more vehicles are connected pany founders say the UK is the which are agreements with other to the internet, in-vehicle payment Duncan Jefferies global leader in the sector, only 33 fintech hubs across the globe, from systems and frictionless forms of per cent are optimistic that this will Singapore and South Korea, to toll-charging, parking and fuelling still be the case in five years. China, Hong Kong and Australia. mazon Go, the check- barely even aware that a payment is could become the norm. So-called However, despite these concerns, These deals will go a long way A out-less grocery store being processed? And what role will Payment “programmatic commerce”, whereby the UK payments and fintech sectors towards helping UK payments launched by the tech giant customer experience play? consumers allow purchase deci- are still going strong. Investment in and fintech firms overcome barri- in January 2018, could be about to Digital wallets and mobile pay- sions to be made on their behalf UK fintech rose by 120 per cent to ers to these international markets go mainstream. After a much-hyped ment platforms, such as Google by connected devices, could also $3.5 billion from 2017 to 2018, accord- through collaboration with local US trial in Seattle, the company has Pay and Apple Pay, have shaken up have an impact on customer expe- ing to Innovate Finance. regulators, sowing the seeds for rolled out the concept in Chicago, the payments landscape over the rience expectations, though Mr And this is showing no sign of slow- impressive international expansion. New York and San Francisco, tak- past few years and many consum- Dobbie says stories of your fridge ing down. In fact, there is every rea- The DIT is also supporting growth ing the total number of trading and ers now reach for their phone rather buying milk for you are “possibly a son to expect the UK will remain the closer to home by partnering with planned stores to 18. than their card when they want to little oversold”. world’s leading fintech startup hub us for this year's PayExpo, providing None of them have queues, pay. Meanwhile, the likes of Uber Although they might not be ready for many years to come. Investment startups with access to the broader because none of them have check- and Amazon have pushed invisible to embrace appliances that do the figures for the first six months of 2019 payments and fintech community. outs. You simply use the Amazon and one-click payment experiences shopping, consumers seem more were certainly representative of this, We are working with the DIT to invite Go app to enter, take the products firmly into the mainstream. different expectations for larger-value that I like on Instagram, I should willing to try new financing options reaching a record level for a half-year early-stage payments and fintech you want and go. Amazon can auto- “The average consumer now items, where they expect slightly be able to click a buy button and at the point of sale. “Instalment pay- of $2.9 billion and on track to exceed startups to attend, speak and show- matically detect when products are expects a slick and seamless pay- more friction to ensure their details checkout in one click without leav- ment options present a clear ben- the 2018 total. case their solutions for free to a wide taken from the shelves and keep ments transaction on everyday low- and financial data are handled safely ing Instagram,” says Mr Dawson. efit to consumers who want to take The UK has become a true hub for international audience of their peers, track of them in a virtual shop- value items,” says Simon and securely.” “Having the payments infrastruc- advantage of the offer of credit, but technology-driven innovation in as well as prospective investors, part- ping cart. When a customer leaves Kent, global head of Wearables like smartwatches and ture in place is a crucial part of mak- are not convinced by the poten- finance in recent years. The combi- ners and customers. the store, the company sends them financial services wrist bands are also increasingly ing that possible.” tially high cost and less structured nation of forward-thinking regula- Whatever happens in the coming a receipt and charges the items to at A.T. Kearney. defining customer experiences A world of frictionless payments, repayment plans of credit cards,” tors, tech talent and a well-developed months regarding the UK’s future their Amazon account. Nevertheless, at the checkout, and voice pay- while appealing to consumers, says Claire Gates, chief executive network of support for tech startups relationship with the EU, entrepre- But if the frictionless payment e x p e c t a t i o n s ments are on the rise too. “There’s could also be appealing to criminals. of Paysafe Pay Later. “This is not have all helped lay the foundations neurs in the fintech and paytech sec- technology behind Amazon Go around friction- a real move to make payments “Real-time or automated payments, only useful for those that need to for this success. tor can rest assured that the support becomes the norm rather than a less payments more instant,” says Mr Kent. “It’s and zero friction, are a tempting spread the cost of a purchase, but The UK’s Financial Conduct and infrastructure is there to help novelty, it will mean fewer oppor- still exist on a already the norm in the UK, but is target for fraudsters, so it’s vital the also addresses the growing demo- Authority (FCA), for example, is their budding startup businesses to tunities for payments companies to s p e c t r u m . likely to be adopted globally in the industry stays a step ahead,” says graphic of millennials who either do helping the most forward-think- grow and thrive into the future. interact visibly with customers. So “Surprisingly, near future.” Gregor Dobbie, chief executive of not have a credit card or value the ing startups test their products, ser- By taking advantage of platforms how will they differentiate them- consumers Myles Dawson, UK managing Vocalink, a Mastercard company. utility of instalment payment for vices and business models in a live such as PayExpo, startups can be selves in a world where people are h a v e director of Adyen, a global pay- “Alongside this, as consumers rely certain purchases.” market environment through their confident they have the guidance ments company, believes expecta- more and more on always-on elec- A range of options, such as 0 per regulatory sandbox. This means and tools they need to navigate polit- tions will rise when it comes to inter- tronic payments, maintaining our cent interest, means customers can startups and innovative companies pay for items in a way that suits ical uncertainty and access invest- BANKS INTERESTED IN REAL-TIME PAYMENTS national payments and experiences. existing high levels of resilience and have the support and freedom they ment and customers, so they can “Tourism is increasingly important, service is incredibly important.” them, says Michael Bevan, chief need to develop the next generation carve their own niche in the global Retail banks were asked about their attitudes towards real-time payments especially as the number of global Every breach of a customer’s data executive of consumer finance spe- of business-to-consumer and busi- payments and fintech market. We are developing/interested in new services for consumers based on immediate payments travellers grows. With this comes or takeover of their ewallet account cialist Duologi. “Applications can ness-to-business solutions, from Learn more and register to attend the expectation that the payment will put a dent in their trust of new also be processed in the same time % regtech to new ways to pay and new at www.payexpo.com 88 methods used at home should be payment services. “We will likely that it takes to authorise a debit card Payments via immediate payments will improve our customer service financial services tools, without wor- supported abroad,” he says. see the rise in the use of biomet- payment, in around four seconds,” rying about falling foul of penalties. 86% “Merchants across the globe will ric security technology spurred on he says. This approach has been so success- Immediate payments will drive revenue growth for our organisation be expected to accept a growing by regulatory upheavals like strong That’s a big change from the long, ful that now other regulators are fol- 85% number of international payment customer authentication, which will drawn-out experiences associ- lowing suit. Singapore has begun a We are developing/interested in new services for small businesses based on immediate payments methods, for example Chinese pay- require consumers to double-au- ated with old-style in-store credit, similar initiative, as have authorities 79% ment methods like UnionPay, Alipay thenticate payments over £30,” says though it remains to be seen how in Phoenix, Arizona, who are work- Immediate payments will save our organisation money and WeChat Pay or iDEAL and SEPA Iain McDougall, UK and Ireland these new financing options will ing with the FCA to develop a sand- 78% for the Benelux regions.” country manager at Stripe, which tie in with the kind of frictionless box of their own. The business case for investing in immediate payments is weak It’s still too early to tell whether offers online payment processing for payment experiences promised by In addition, the UK Competition 49% financial products such as Apple’s internet businesses. Amazon Go. However, it’s already and Markets Authority is driving I see no benefit in immediate payments Card or Facebook’s Libra cryptocur- The new era of open banking will clear that to succeed in future, pay- innovation and competition through rency will be a success, but social also unleash more innovative pay- ment providers will need to ensure % its own open banking initiatives. By 16 media is likely to transition from ment services. For instance, we they offer customers something I have never heard of immediate payments harnessing the power of open bank- Andrew Earle a marketing channel for brands to could see more payment systems that’s fast becoming the norm: the ing, it is pioneering the creation of Event manager 10% a sales channel in the future. “For that use artificial intelligence (AI) freedom to pay anywhere, with any- opportunities for new third-party PayExpo Ovum 2018 example, if I see a post of something to make choices on our behalf. “This thing, anytime you like. 16 FUTURE OF PAYMENTS RACONTEUR.NET 17

OPINION

CUSTOMER EXPERIENCE Frictionless ‘There is every reason payments will mean fewer opportunities to expect the UK will Standing out for companies to interact visibly remain the world’s in a seamless with customers leading fintech future startup hub’ could mean, for example, automati- cally paying bills in the order which If truly seamless payments promise best suits the customer’s finances,” ver the last few years, we providers to create services that go says Mr Dobbie. What’s more, AI O have been warned of the even further towards meeting cus- to be barely noticeable in our day-to- and the increased data available in possible negative effects tomers’ evolving needs. a world of seamless payments could of Brexit on the UK fintech and pay- And the work doesn’t stop there. day lives, customer experience may speed the shift from mass mailing ments landscape, with the poten- Plenty is being done by the govern- or email loyalty campaigns to gen- tial for loss of access to the European ment to nurture these seeds to create be the only way financial services can uinely personalised offers. “The Union through the bloc’s passporting future sector growth. differentiate themselves challenge is how you give the most arrangements, as well as loss of talent. The UK’s Department for relevant offer while also respecting A recent study by the Digital International Trade (DIT) is work- people’s data privacy, undoubtedly Finance Forum revealed that ing to promote UK fintech by estab- a hot topic at the moment,” he adds. although 63 per cent of fintech com- lishing its Five Fintech Bridges, As more vehicles are connected pany founders say the UK is the which are agreements with other to the internet, in-vehicle payment Duncan Jefferies global leader in the sector, only 33 fintech hubs across the globe, from systems and frictionless forms of per cent are optimistic that this will Singapore and South Korea, to toll-charging, parking and fuelling still be the case in five years. China, Hong Kong and Australia. mazon Go, the check- barely even aware that a payment is could become the norm. So-called However, despite these concerns, These deals will go a long way A out-less grocery store being processed? And what role will Payment “programmatic commerce”, whereby the UK payments and fintech sectors towards helping UK payments launched by the tech giant customer experience play? consumers allow purchase deci- are still going strong. Investment in and fintech firms overcome barri- in January 2018, could be about to Digital wallets and mobile pay- sions to be made on their behalf UK fintech rose by 120 per cent to ers to these international markets go mainstream. After a much-hyped ment platforms, such as Google by connected devices, could also $3.5 billion from 2017 to 2018, accord- through collaboration with local US trial in Seattle, the company has Pay and Apple Pay, have shaken up have an impact on customer expe- ing to Innovate Finance. regulators, sowing the seeds for rolled out the concept in Chicago, the payments landscape over the rience expectations, though Mr And this is showing no sign of slow- impressive international expansion. New York and San Francisco, tak- past few years and many consum- Dobbie says stories of your fridge ing down. In fact, there is every rea- The DIT is also supporting growth ing the total number of trading and ers now reach for their phone rather buying milk for you are “possibly a son to expect the UK will remain the closer to home by partnering with planned stores to 18. than their card when they want to little oversold”. world’s leading fintech startup hub us for this year's PayExpo, providing None of them have queues, pay. Meanwhile, the likes of Uber Although they might not be ready for many years to come. Investment startups with access to the broader because none of them have check- and Amazon have pushed invisible to embrace appliances that do the figures for the first six months of 2019 payments and fintech community. outs. You simply use the Amazon and one-click payment experiences shopping, consumers seem more were certainly representative of this, We are working with the DIT to invite Go app to enter, take the products firmly into the mainstream. different expectations for larger-value that I like on Instagram, I should willing to try new financing options reaching a record level for a half-year early-stage payments and fintech you want and go. Amazon can auto- “The average consumer now items, where they expect slightly be able to click a buy button and at the point of sale. “Instalment pay- of $2.9 billion and on track to exceed startups to attend, speak and show- matically detect when products are expects a slick and seamless pay- more friction to ensure their details checkout in one click without leav- ment options present a clear ben- the 2018 total. case their solutions for free to a wide taken from the shelves and keep ments transaction on everyday low- and financial data are handled safely ing Instagram,” says Mr Dawson. efit to consumers who want to take The UK has become a true hub for international audience of their peers, track of them in a virtual shop- value items,” says Simon and securely.” “Having the payments infrastruc- advantage of the offer of credit, but technology-driven innovation in as well as prospective investors, part- ping cart. When a customer leaves Kent, global head of Wearables like smartwatches and ture in place is a crucial part of mak- are not convinced by the poten- finance in recent years. The combi- ners and customers. the store, the company sends them financial services wrist bands are also increasingly ing that possible.” tially high cost and less structured nation of forward-thinking regula- Whatever happens in the coming a receipt and charges the items to at A.T. Kearney. defining customer experiences A world of frictionless payments, repayment plans of credit cards,” tors, tech talent and a well-developed months regarding the UK’s future their Amazon account. Nevertheless, at the checkout, and voice pay- while appealing to consumers, says Claire Gates, chief executive network of support for tech startups relationship with the EU, entrepre- But if the frictionless payment e x p e c t a t i o n s ments are on the rise too. “There’s could also be appealing to criminals. of Paysafe Pay Later. “This is not have all helped lay the foundations neurs in the fintech and paytech sec- technology behind Amazon Go around friction- a real move to make payments “Real-time or automated payments, only useful for those that need to for this success. tor can rest assured that the support becomes the norm rather than a less payments more instant,” says Mr Kent. “It’s and zero friction, are a tempting spread the cost of a purchase, but The UK’s Financial Conduct and infrastructure is there to help novelty, it will mean fewer oppor- still exist on a already the norm in the UK, but is target for fraudsters, so it’s vital the also addresses the growing demo- Authority (FCA), for example, is their budding startup businesses to tunities for payments companies to s p e c t r u m . likely to be adopted globally in the industry stays a step ahead,” says graphic of millennials who either do helping the most forward-think- grow and thrive into the future. interact visibly with customers. So “Surprisingly, near future.” Gregor Dobbie, chief executive of not have a credit card or value the ing startups test their products, ser- By taking advantage of platforms how will they differentiate them- consumers Myles Dawson, UK managing Vocalink, a Mastercard company. utility of instalment payment for vices and business models in a live such as PayExpo, startups can be selves in a world where people are h a v e director of Adyen, a global pay- “Alongside this, as consumers rely certain purchases.” market environment through their confident they have the guidance ments company, believes expecta- more and more on always-on elec- A range of options, such as 0 per regulatory sandbox. This means and tools they need to navigate polit- tions will rise when it comes to inter- tronic payments, maintaining our cent interest, means customers can startups and innovative companies pay for items in a way that suits ical uncertainty and access invest- BANKS INTERESTED IN REAL-TIME PAYMENTS national payments and experiences. existing high levels of resilience and have the support and freedom they ment and customers, so they can “Tourism is increasingly important, service is incredibly important.” them, says Michael Bevan, chief need to develop the next generation carve their own niche in the global Retail banks were asked about their attitudes towards real-time payments especially as the number of global Every breach of a customer’s data executive of consumer finance spe- of business-to-consumer and busi- payments and fintech market. We are developing/interested in new services for consumers based on immediate payments travellers grows. With this comes or takeover of their ewallet account cialist Duologi. “Applications can ness-to-business solutions, from Learn more and register to attend the expectation that the payment will put a dent in their trust of new also be processed in the same time % regtech to new ways to pay and new at www.payexpo.com 88 methods used at home should be payment services. “We will likely that it takes to authorise a debit card Payments via immediate payments will improve our customer service financial services tools, without wor- supported abroad,” he says. see the rise in the use of biomet- payment, in around four seconds,” rying about falling foul of penalties. 86% “Merchants across the globe will ric security technology spurred on he says. This approach has been so success- Immediate payments will drive revenue growth for our organisation be expected to accept a growing by regulatory upheavals like strong That’s a big change from the long, ful that now other regulators are fol- 85% number of international payment customer authentication, which will drawn-out experiences associ- lowing suit. Singapore has begun a We are developing/interested in new services for small businesses based on immediate payments methods, for example Chinese pay- require consumers to double-au- ated with old-style in-store credit, similar initiative, as have authorities 79% ment methods like UnionPay, Alipay thenticate payments over £30,” says though it remains to be seen how in Phoenix, Arizona, who are work- Immediate payments will save our organisation money and WeChat Pay or iDEAL and SEPA Iain McDougall, UK and Ireland these new financing options will ing with the FCA to develop a sand- 78% for the Benelux regions.” country manager at Stripe, which tie in with the kind of frictionless box of their own. The business case for investing in immediate payments is weak It’s still too early to tell whether offers online payment processing for payment experiences promised by In addition, the UK Competition 49% financial products such as Apple’s internet businesses. Amazon Go. However, it’s already and Markets Authority is driving I see no benefit in immediate payments Card or Facebook’s Libra cryptocur- The new era of open banking will clear that to succeed in future, pay- innovation and competition through rency will be a success, but social also unleash more innovative pay- ment providers will need to ensure % its own open banking initiatives. By 16 media is likely to transition from ment services. For instance, we they offer customers something I have never heard of immediate payments harnessing the power of open bank- Andrew Earle a marketing channel for brands to could see more payment systems that’s fast becoming the norm: the ing, it is pioneering the creation of Event manager 10% a sales channel in the future. “For that use artificial intelligence (AI) freedom to pay anywhere, with any- opportunities for new third-party PayExpo Ovum 2018 example, if I see a post of something to make choices on our behalf. “This thing, anytime you like. 18 FUTURE OF PAYMENTS RACONTEUR.NET 19 Commercial feature Fidesmo Home Credit reinvents

WEARABLES credit card for Russia

The consumer lending business has been ripe for disruption, but even established players Why the can become disruptors if they are tech-savvy and leverage what they already do well

onsumer credit has come using their existing credit or debit Scandis are C a long way since the 1950s’ cards. The buy now, pay later start- launch of Diners Club, the ups collect fees from vendors, who world’s first payment card widely can increase sales by attracting accepted by merchants. shoppers cautious of accumulating bucking the One of many followers in the foot- debt. Buyers, however, face fines for steps of Diners Club is Home Credit, a late payment. In Russia, the Svoboda consumer lender established in 1997, zero-interest credit card is also an which is active across eastern Europe answer to escalating concerns of trend with and southeast Asia. Home Credit rising consumer debt. Swedbank and Nordea have became a credit card issuer by grad- According to the country’s central partnered with Fidesmo ually tracking the growing financial Bank, Russians have doubled their to allow customers with needs and rising financial literacy of its personal debt in the last five years. Mastercard debit cards wearables to tap-and-pay for small clients in countries where consumer Governor of the central bank Elvira purchases via wearables borrowing was a novelty. Nabiullina has downplayed the prob- “Since the mid-2000s, interest-free lem while setting stricter regulations instalments have become popular in to slow consumer lending. The rules Wearable devices along with a joint-venture in Sweden So are there any downsides to pay- Russia. People could buy a TV, smart- include interest rate caps, notably a 1 and Norway with leading partner- APPETITE IS STILL NOT UNIVERSAL ment wearables compared with more phone or household appliances with- per cent daily limit on payday loans. ship bank SEB. futuristic face and fingerprint-sens- out down payment or overpayment “It is wrong though to think we are were seemingly Percentage of global consumers willing to make a payment using a wearable device by age “Additional banks and markets ing authentication options? Wear- and pay for their goods in equal instal- facing risks to financial stability,” Ms bypassed by will be launched later this year,” ables are an extra cost, for one, and ments,” says deputy chairman of Home Nabiullina told an economic confer- biometrics in the says Mr Eld. “If you want to have a 58% 57% 48% 37% 20% aside from long-lasting devices with Credit’s Russian unit Artem Aleshkin. ence in St Petersburg earlier this year, solution based on fingerprints or 16-24 25-34 35-44 45-54 55-64 swappable batteries, require daily “Then the boom of traditional credit as she highlighted the central bank’s payments evolution, biometrics, by design you will have a charging. There’s also the possible cards began, which makes it possible measures to prevent personal loans more complex and advanced device issue of social etiquette when using to pay arrears without interest in the from spiralling out of control. so why are big banks or wearable. We fill the space of con- smartwatches and wearables to pay; grace period. The next stage of market Svoboda cardholders can use the card necting any device to the banks, the Apple Watch is a regular sight on development was the appearance of an to pay both online and in-store for goods investing now? some may include fingerprints and the London Underground, but that is instalment card, which combines the or services at Home Credit’s partnered some may not.” not indicative of the UK as a whole. advantages of both products: instal- shops. Home Credit pays the partners Sophie Charara Simple near-field communica- Arguably, apart from Apple, Fitbit ment plan and credit card.” fully in exchange for commissions and tion or NFC-enabled wearables that and Samsung, wearables and asso- Writing its own chapter in Russia’s lets its card clients spread payments up allow these contactless card-like ciated services can be unreliable. credit card history, Home Credit to 12 months. More than 60,000 ven- “We want our clients to be able to use t’s now unusual to go a week payments hold a number of advan- Barclaycard merged its bPay and launched its new credit card called dors all over Russia are co-operating the card to pay regardless. For example, Transaction Network Services 2019 I without a new data breach, tages over smartphones with biom- Pingit payment apps earlier this Svoboda, which means freedom, in with Home Credit and its buy now, pay it could be for lunch at a restaurant that but this summer there was etric sensors and cameras. For one, year and Swedish smartwatch Kro- 2017. The card is Home Credit’s take on later Svoboda shopping card. hasn’t partnered with us yet,” says Mr a security story with a twist. A mil- they’re easy to set up and use with Beyond Scandinavia, there’s a stark Then there’s the security angle. naby, which partnered with bPay, the growing popularity of “buy now, pay Interestingly, the card has a dual Aleshkin. In this way, Home Credit aims Home Credit holds key positions, with a large lion biometric fingerprint scans, a fairly seamless user experience. contrast between the UK and China’s “While biometric payments are filed for bankruptcy in February. later” solutions that fintech companies spending limit. Most of the line of to reach the milestone of a million issued customer base and long-term partnerships mostly unencrypted, were leaked As CCS Insight senior analyst, spe- approach to biometrics, which may designed to increase security “Outside these major players, the such as Sezzle, Splitit or Afterpay offer credit is for zero-interest purchases Svoboda credit cards by the end of 2019. from the unsecured internet data- cialising in wearables and virtual affect trends in wearable payments. around transactions, this doesn’t wearables space is very unpredict- online retailers in the United States, at partner shops. The rest, which Over the years, Home Credit has built with retailers and manufacturers base of a South Korean company. reality, Leo Gebbie puts it: "Biomet- “The UK has seen some trials of biom- mean data is entirely immune to able,” says Mr Gebbie. “It is very Australia and other developed markets. has a standard interest rate and 51- up its partnerships with stores and ser- The usual advice in similar data ric payments are simply a less devel- etric payment cards, but these have being compromised,” says Michael difficult for these smaller players to They let buyers split their bills into day payment grace period, can be vice sellers, including online retailers. breaches is to switch passwords and oped offering right now.” been restricted to small-scale trials, Sawh, editor of wearable tech site break through and generate mean- interest-free monthly instalments used elsewhere. Startups such as Sezzle have a long way update software, but how can vic- Apple has seen success with Apple whereas paying with a smartphone or Wareable. He points out that with ingful sales.” to catch up on this scale of business. tims change their fingerprints? Pay on the hugely popular Apple smartwatch is increasingly common- payment wearables, users aren’t With the world’s biggest tech com- Home Credit benefits from having “When their loan application is to bypass traditional banks. It has also Concerns like these go some way Watch series, though with the launch place,” says Mr Gebbie. “However, required to hand over any sensitive panies seemingly committed to both started as a short-term consumer approved, clients can link the virtual allowed consumer goods manufactur- to explain why payment wearables of the Apple Card with Goldman in markets such as China, biometric data, but the two methods could biometric and NFC-based proximity Comparing the market loan provider at bricks-and-mortar version of the Svoboda card to their ers to skirt retailers and reach their shouldn’t be counted out just yet, Sachs, it’s clearly exploring all ave- technologies like face recognition are also “work in tandem to offer a payments, it seems safe to predict stores for people needing to bridge digital wallets, such as Apple Pay or customers directly. despite on the surface seeming less nues. Elsewhere, Fitbit just added its being implemented more widely.” robust and secure payment setup”. that it’s not an either-or scenario. How do credit cards, instalment The Svoboda instalment card has the gap between their available cash Google Pay, in our mobile app,” says Conventional banks have stepped up advanced than biometrics. rival Fitbit Pay to the main model of payment cards and “buy now, pay two spending limits for partner and and the cost of desired goods, mainly Mr Aleshkin. “They get the physical their efforts to retain existing clients In fact, there are signs that fintech the new Versa 2 smartwatch, not a later” payment solutions stack up non-partner shops. The card can be electronics, mobile phones and fur- plastic card later either through a cou- and attract new credit card custom- startups and banks in a number of special edition as previously. against each other? used at non-affiliated vendors as long niture. As these shops went online, rier or they can pick it up at one of ers, expanding rewards for big spend- regions, including Scandinavia, are However, Mr Eld believes it’s Credit cardholders have a set number as they accept Visa cards. Clients can Home Credit followed. It also part- our branches.” ers and offering new clients extended concentrating their efforts on rel- “important to offer an ecosystem of Smartrings are coming Motiv has an ambitious plan to of days before they start incurring use the Svoboda card in the same way nered with ecommerce companies With the basic revolving loan concept periods with zero or low-interest rates atively simple tap-to-pay watches, services that are independent of the use the wearer’s ECG to verify their interest liabilities. They have to settle as any other traditional credit card. such as Ozon.ru. Just like the US giant unchanged, credit card companies when they transfer their outstanding straps, trackers and jewellery for device manufacturer” as this could Most of the big players in wearable identity whereas the zirconia the debt in full within the grace period Buy now, pay later services such Amazon.com, Ozon.ru started as an and banks have looked for new ways to balances from other banks. payments. In August, two of Swe- help open up wearable payments to payments focus on smartwatches and ceramic K Ring acts as a prepaid to avoid paying interest. Traditional as Sezzle allow clients to make online bookshop for Russian speak- stand out and attract customers. They As the competition heats up and den’s leading banks, Swedbank and new kinds of manufacturers which smartwatch bands for tap-to-pay tech. Mastercard wearable. The £90 McLear cards issued by Home Credit offer a purchases only at affiliate online shops ers and grew into the country’s larg- have added tweaks or extra services, more “buy now, pay later” platforms Nordea, announced they would are more fashion oriented. But a number of smartrings with discreet smartring, meanwhile, works with 51-day grace period. and service providers. est online everything store. such as different grace periods for appear, tech-savvy consumer lenders start allowing customers with Mas- According to CCS Insight’s data, designs and contactless payment Visa and Mastercard. Home Credit’s Svoboda card spreads Banks issue instalment cards. Their From its headquarters in Prague, outstanding debt repayments, insur- such as Home Credit can shine. In this tercard debit cards to tap-and-pay only 26 per cent of smartwatch capabilities are breaking through. A word of caution from CCS Insight’s the balance payment into interest- use gets recorded in the credit history Czech Republic, Home Credit currently ance or free airline miles rewards. race, Home Credit holds key positions, for small purchases via wearables, owners currently use their weara- “Smartrings are no longer a wearable Leo Gebbie: “Smartrings allow people free instalments over three to twelve of their holders. Buy now, serves almost 120 million borrow- The 1990s saw the internet and a with a large customer base and long- with no new account needed. ble device to make payments, but novelty, with startups like Motiv and to make payments with a tap of the months. Clients make monthly pay later solutions such as Sezzle ers in ten countries, including Russia, boom in the use of credit cards for term partnerships with retailers and Both banks signed up to Fidesmo Mr Gebbie expects this to continue McLear building the technology into its finger. However, it’s early days for these payments in equal parts in exchange are not reflected in their users’ China, India, Vietnam, Indonesia and online payments. The digital revolution the manufacturers of consumer goods. Pay, a similar system to Apple Pay, to rise “as more smartwatches add connected jewellery,” says Wareable’s devices and currently they are far less for not incurring interest on their credit history. the Philippines. sweeping the financial services sector to facilitate this and Fidesmo’s chief features such as NFC” and overall editor Michael Sawh. common than smartwatches.” card balances. It has continually improved its credit has, however, not spared the consumer executive and co-founder Mattias smartwatch shipments grow to 80 approval technology using vast troves credit industry and has opened the For more information please visit Motiv Eld says these schemes are now live, million units in 2019. of proprietary and third-party data. door to peer-to-peer lenders seeking www.homecredit.net 18 FUTURE OF PAYMENTS RACONTEUR.NET 19 Commercial feature Fidesmo Home Credit reinvents

WEARABLES credit card for Russia

The consumer lending business has been ripe for disruption, but even established players Why the can become disruptors if they are tech-savvy and leverage what they already do well

onsumer credit has come using their existing credit or debit Scandis are C a long way since the 1950s’ cards. The buy now, pay later start- launch of Diners Club, the ups collect fees from vendors, who world’s first payment card widely can increase sales by attracting accepted by merchants. shoppers cautious of accumulating bucking the One of many followers in the foot- debt. Buyers, however, face fines for steps of Diners Club is Home Credit, a late payment. In Russia, the Svoboda consumer lender established in 1997, zero-interest credit card is also an which is active across eastern Europe answer to escalating concerns of trend with and southeast Asia. Home Credit rising consumer debt. Swedbank and Nordea have became a credit card issuer by grad- According to the country’s central partnered with Fidesmo ually tracking the growing financial Bank, Russians have doubled their to allow customers with needs and rising financial literacy of its personal debt in the last five years. Mastercard debit cards wearables to tap-and-pay for small clients in countries where consumer Governor of the central bank Elvira purchases via wearables borrowing was a novelty. Nabiullina has downplayed the prob- “Since the mid-2000s, interest-free lem while setting stricter regulations instalments have become popular in to slow consumer lending. The rules Wearable devices along with a joint-venture in Sweden So are there any downsides to pay- Russia. People could buy a TV, smart- include interest rate caps, notably a 1 and Norway with leading partner- APPETITE IS STILL NOT UNIVERSAL ment wearables compared with more phone or household appliances with- per cent daily limit on payday loans. ship bank SEB. futuristic face and fingerprint-sens- out down payment or overpayment “It is wrong though to think we are were seemingly Percentage of global consumers willing to make a payment using a wearable device by age “Additional banks and markets ing authentication options? Wear- and pay for their goods in equal instal- facing risks to financial stability,” Ms bypassed by will be launched later this year,” ables are an extra cost, for one, and ments,” says deputy chairman of Home Nabiullina told an economic confer- biometrics in the says Mr Eld. “If you want to have a 58% 57% 48% 37% 20% aside from long-lasting devices with Credit’s Russian unit Artem Aleshkin. ence in St Petersburg earlier this year, solution based on fingerprints or 16-24 25-34 35-44 45-54 55-64 swappable batteries, require daily “Then the boom of traditional credit as she highlighted the central bank’s payments evolution, biometrics, by design you will have a charging. There’s also the possible cards began, which makes it possible measures to prevent personal loans more complex and advanced device issue of social etiquette when using to pay arrears without interest in the from spiralling out of control. so why are big banks or wearable. We fill the space of con- smartwatches and wearables to pay; grace period. The next stage of market Svoboda cardholders can use the card necting any device to the banks, the Apple Watch is a regular sight on development was the appearance of an to pay both online and in-store for goods investing now? some may include fingerprints and the London Underground, but that is instalment card, which combines the or services at Home Credit’s partnered some may not.” not indicative of the UK as a whole. advantages of both products: instal- shops. Home Credit pays the partners Sophie Charara Simple near-field communica- Arguably, apart from Apple, Fitbit ment plan and credit card.” fully in exchange for commissions and tion or NFC-enabled wearables that and Samsung, wearables and asso- Writing its own chapter in Russia’s lets its card clients spread payments up allow these contactless card-like ciated services can be unreliable. credit card history, Home Credit to 12 months. More than 60,000 ven- “We want our clients to be able to use t’s now unusual to go a week payments hold a number of advan- Barclaycard merged its bPay and launched its new credit card called dors all over Russia are co-operating the card to pay regardless. For example, Transaction Network Services 2019 I without a new data breach, tages over smartphones with biom- Pingit payment apps earlier this Svoboda, which means freedom, in with Home Credit and its buy now, pay it could be for lunch at a restaurant that but this summer there was etric sensors and cameras. For one, year and Swedish smartwatch Kro- 2017. The card is Home Credit’s take on later Svoboda shopping card. hasn’t partnered with us yet,” says Mr a security story with a twist. A mil- they’re easy to set up and use with Beyond Scandinavia, there’s a stark Then there’s the security angle. naby, which partnered with bPay, the growing popularity of “buy now, pay Interestingly, the card has a dual Aleshkin. In this way, Home Credit aims Home Credit holds key positions, with a large lion biometric fingerprint scans, a fairly seamless user experience. contrast between the UK and China’s “While biometric payments are filed for bankruptcy in February. later” solutions that fintech companies spending limit. Most of the line of to reach the milestone of a million issued customer base and long-term partnerships mostly unencrypted, were leaked As CCS Insight senior analyst, spe- approach to biometrics, which may designed to increase security “Outside these major players, the such as Sezzle, Splitit or Afterpay offer credit is for zero-interest purchases Svoboda credit cards by the end of 2019. from the unsecured internet data- cialising in wearables and virtual affect trends in wearable payments. around transactions, this doesn’t wearables space is very unpredict- online retailers in the United States, at partner shops. The rest, which Over the years, Home Credit has built with retailers and manufacturers base of a South Korean company. reality, Leo Gebbie puts it: "Biomet- “The UK has seen some trials of biom- mean data is entirely immune to able,” says Mr Gebbie. “It is very Australia and other developed markets. has a standard interest rate and 51- up its partnerships with stores and ser- The usual advice in similar data ric payments are simply a less devel- etric payment cards, but these have being compromised,” says Michael difficult for these smaller players to They let buyers split their bills into day payment grace period, can be vice sellers, including online retailers. breaches is to switch passwords and oped offering right now.” been restricted to small-scale trials, Sawh, editor of wearable tech site break through and generate mean- interest-free monthly instalments used elsewhere. Startups such as Sezzle have a long way update software, but how can vic- Apple has seen success with Apple whereas paying with a smartphone or Wareable. He points out that with ingful sales.” to catch up on this scale of business. tims change their fingerprints? Pay on the hugely popular Apple smartwatch is increasingly common- payment wearables, users aren’t With the world’s biggest tech com- Home Credit benefits from having “When their loan application is to bypass traditional banks. It has also Concerns like these go some way Watch series, though with the launch place,” says Mr Gebbie. “However, required to hand over any sensitive panies seemingly committed to both started as a short-term consumer approved, clients can link the virtual allowed consumer goods manufactur- to explain why payment wearables of the Apple Card with Goldman in markets such as China, biometric data, but the two methods could biometric and NFC-based proximity Comparing the market loan provider at bricks-and-mortar version of the Svoboda card to their ers to skirt retailers and reach their shouldn’t be counted out just yet, Sachs, it’s clearly exploring all ave- technologies like face recognition are also “work in tandem to offer a payments, it seems safe to predict stores for people needing to bridge digital wallets, such as Apple Pay or customers directly. despite on the surface seeming less nues. Elsewhere, Fitbit just added its being implemented more widely.” robust and secure payment setup”. that it’s not an either-or scenario. How do credit cards, instalment The Svoboda instalment card has the gap between their available cash Google Pay, in our mobile app,” says Conventional banks have stepped up advanced than biometrics. rival Fitbit Pay to the main model of payment cards and “buy now, pay two spending limits for partner and and the cost of desired goods, mainly Mr Aleshkin. “They get the physical their efforts to retain existing clients In fact, there are signs that fintech the new Versa 2 smartwatch, not a later” payment solutions stack up non-partner shops. The card can be electronics, mobile phones and fur- plastic card later either through a cou- and attract new credit card custom- startups and banks in a number of special edition as previously. against each other? used at non-affiliated vendors as long niture. As these shops went online, rier or they can pick it up at one of ers, expanding rewards for big spend- regions, including Scandinavia, are However, Mr Eld believes it’s Credit cardholders have a set number as they accept Visa cards. Clients can Home Credit followed. It also part- our branches.” ers and offering new clients extended concentrating their efforts on rel- “important to offer an ecosystem of Smartrings are coming Motiv has an ambitious plan to of days before they start incurring use the Svoboda card in the same way nered with ecommerce companies With the basic revolving loan concept periods with zero or low-interest rates atively simple tap-to-pay watches, services that are independent of the use the wearer’s ECG to verify their interest liabilities. They have to settle as any other traditional credit card. such as Ozon.ru. Just like the US giant unchanged, credit card companies when they transfer their outstanding straps, trackers and jewellery for device manufacturer” as this could Most of the big players in wearable identity whereas the zirconia the debt in full within the grace period Buy now, pay later services such Amazon.com, Ozon.ru started as an and banks have looked for new ways to balances from other banks. payments. In August, two of Swe- help open up wearable payments to payments focus on smartwatches and ceramic K Ring acts as a prepaid to avoid paying interest. Traditional as Sezzle allow clients to make online bookshop for Russian speak- stand out and attract customers. They As the competition heats up and den’s leading banks, Swedbank and new kinds of manufacturers which smartwatch bands for tap-to-pay tech. Mastercard wearable. The £90 McLear cards issued by Home Credit offer a purchases only at affiliate online shops ers and grew into the country’s larg- have added tweaks or extra services, more “buy now, pay later” platforms Nordea, announced they would are more fashion oriented. But a number of smartrings with discreet smartring, meanwhile, works with 51-day grace period. and service providers. est online everything store. such as different grace periods for appear, tech-savvy consumer lenders start allowing customers with Mas- According to CCS Insight’s data, designs and contactless payment Visa and Mastercard. Home Credit’s Svoboda card spreads Banks issue instalment cards. Their From its headquarters in Prague, outstanding debt repayments, insur- such as Home Credit can shine. In this tercard debit cards to tap-and-pay only 26 per cent of smartwatch capabilities are breaking through. A word of caution from CCS Insight’s the balance payment into interest- use gets recorded in the credit history Czech Republic, Home Credit currently ance or free airline miles rewards. race, Home Credit holds key positions, for small purchases via wearables, owners currently use their weara- “Smartrings are no longer a wearable Leo Gebbie: “Smartrings allow people free instalments over three to twelve of their holders. Buy now, serves almost 120 million borrow- The 1990s saw the internet and a with a large customer base and long- with no new account needed. ble device to make payments, but novelty, with startups like Motiv and to make payments with a tap of the months. Clients make monthly pay later solutions such as Sezzle ers in ten countries, including Russia, boom in the use of credit cards for term partnerships with retailers and Both banks signed up to Fidesmo Mr Gebbie expects this to continue McLear building the technology into its finger. However, it’s early days for these payments in equal parts in exchange are not reflected in their users’ China, India, Vietnam, Indonesia and online payments. The digital revolution the manufacturers of consumer goods. Pay, a similar system to Apple Pay, to rise “as more smartwatches add connected jewellery,” says Wareable’s devices and currently they are far less for not incurring interest on their credit history. the Philippines. sweeping the financial services sector to facilitate this and Fidesmo’s chief features such as NFC” and overall editor Michael Sawh. common than smartwatches.” card balances. It has continually improved its credit has, however, not spared the consumer executive and co-founder Mattias smartwatch shipments grow to 80 approval technology using vast troves credit industry and has opened the For more information please visit Motiv Eld says these schemes are now live, million units in 2019. of proprietary and third-party data. door to peer-to-peer lenders seeking www.homecredit.net 20 FUTURE OF PAYMENTS RACONTEUR.NET 21 Commercial feature

POPULATION OF MOBILE PAYMENT USERS IN INDIA

Based on point-of-sale transactions, not ecommerce payments International payment pitfalls 2019 (estimated) Dhiraj Singh/Bloomberg via Getty Images 93.3m businesses want to leave behind

2018 73.9m For many UK-based companies, whether using suppliers abroad or growing their international workforces, making and 2017 52.9m receiving international payments has become a regular activity. But a range of eMarketer 2018 payment pain points and knowledge gaps can create serious challenges But while that expansion sounds shopkeeper, in rural areas with a impressive, industry consensus mobile device that lets them func- is that digital payments still only tion as a mini-branch and carry out account for 10 to 15 per cent of all digital transactions on customers’ retail merchant transactions, says behalf. ustaining a global footprint of at Equiniti’s business payments divi- Vijay Mani, partner at Deloitte But the World Bank report also S any scale requires businesses sion. “With departmental heads acting India, with mobile predicted to play found nearly half of accounts were and public sector bodies to on strategy, it can introduce new pay- second fiddle to cards, at least in inactive and only about a third of take a smart and long-term approach ment needs.” terms of value. account owners reported making or to their global payments, to avoid Currently, companies tend to utilise What’s more, only a quarter of receiving a digital payment in the some serious and potentially costly multiple partners and in-country pro- Indians own a smartphone with the previous year, suggesting simply pain points. viders when making international pay- capabilities to use banking apps and providing access to banking won’t Traditionally, foreign payments have ments. This can require the fi nance popular payment services such as spur adoption of digital payments. been left to well-known providers but teams to use a host of systems to PayTM, Google Pay and PhonePe, Nonetheless, Mr Abse thinks now, with the help of new technol- manually build payments directly with INDIA though with 40 per cent of Indians booming smartphone adoption in ogy, rival providers are entering the each provider, taking into account under the age of 18, the percentage smaller cities could see this change market, tackling the common pitfalls varying formats and requirements. of adults using them is likely to be rapidly. Expansion is driven largely and enabling organisations to pay the Additionally, their banking partners considerably higher. by content delivery, he says, while right person the right amount, at the or brokers may not offer full currency The National Payments Corporation there’s also corresponding growth right time, anywhere in the world. coverage to small or medium-sized Have mobile payments of India (NPCI), which built UPI, has in UPI use. “In three years max, There are myriad reasons why an organisations, or support contractors’ also created the *99# service that I would not be surprised if every organisation might need to make pay- newly preferred payment methods allows feature phones without inter- Indian has a smartphone,” he says. ments in local currencies around the such as delivery into digital wallets or net connectivity to make mobile pay- The challenge for mobile payment world. These can include interna- card accounts. hit a wall in India? ments and store money in digital wal- systems isn’t just getting services tional expansion, setting up a technol- “Not having access to a single plat- A London council recently worked served by traditional banks or foreign lets. But while similar technology has into customers’ hands though; a sus- ogy or other specialist team abroad, form that will serve international and with Equiniti to streamline its previ- exchange providers. Businesses are taken off in African countries, such as tainable business has to be devel- working with new suppliers else- domestic payment needs is a major ously paper-based overseas payment looking for a way to transact on one, Kenya and Tanzania, it has failed to oped. In India, mobile money transfer where and needing to pay pensions pain point organisations face in this There is a strong demand in processes. It introduced a tailored easy-to-use platform, without incur- Cashless transactions are surging across India, but mobile catch India’s imagination. between accounts makes up the bulk to ex-employees who have retired in area and is starting to cause fric- digital solution to deliver payments ring unexpected costs, yet with the payments could stumble over a series of obstacles Part of the reason is that transac- of UPI transactions, says Deloitte’s other countries. tion for businesses as they manage the market for a single platform to foster carers, who are often adult reliability, transparency and security of tion charges from telecoms provid- Mr Mani, with only about 20 per cent “Foreign payments are frequently multiple partners,” says Ms Cowan. on which all international and relatives or family friends of children traditional fi nancial institutions.” ers are too high. Renita d’Souza, who going directly to merchants and earn- needed by organisations and the “On top of this, businesses want the it retains responsibility for, but who Equiniti has focused on making its researches mobile payment systems ing providers commission. importance of minimising pitfalls transparency and security of a bank, domestic payment needs can live abroad. business payments platform easy to in India for New Delhi-based think “I think there's no compelling is not solely the responsibility of but with the ability to make payments be served Meanwhile, a pharmaceutical fi rm integrate with organisations’ existing Edd Gent A sign for PayTM tank Observer Research Foundation, reason for the ordinary man in the fi nance departments,” explains Lisa quickly to a wide range of locations in brought in the provider to establish a systems and authorisation workfl ows, digital payments says there was a missed opportunity street to fish out his or her mobile Cowan, director of growth strategy local currencies. single, end-to-end payment process and ensuring it is adaptable and fl ex- displayed on post-demonetisation to promote the phone to buy a loaf of bread,” he “Given that not all banks or fi nan- that reaches more than 1,800 employ- ible, with extensive reach and backed the windscreen ash is still king in India. says Manish Jain, partner at KPMG payments at that point in time,” says system’s use by subsidising these says. That’s leading fintech firms cial institutions offer the truly wide ees in 15 different countries. by proper customer support. It also of a rickshaw in C But rapid adoption of tech- India’s digital and fintech arm. Mr Jain. “It was a very big learning Bengaluru, India charges and raising awareness. flush with venture capital and eager range of currencies that businesses serving multiple countries and cur- Elsewhere, a leading university provides data validation within the nology and a concerted 2016 was a watershed year for experience for the entire country.” “Mobile payments using non- to capture market share to offer large can require, a number of these rencies, in a simpler format and with- enlisted the help of Equiniti to create system to ensure payments are pro- push from the government are start- mobile payment systems in India. UPI usage leaped from 103,000 smartphones must go hand in hand discounts and cashback to keep peo- organisations now use our services out unexpected costs. A company a single payroll and payments solution, cessed successfully. ing to change things. Mobile pay- August saw the rollout of the Unified transactions to 1.97 million in just with smartphone payments,” she ple engaged, says Mr Mani, but the bn+ so they too can support clients of all leading the way with its single business enabling it to easily and cost-effec- As the need for international pay- ment systems are booming, though Payments Interface (UPI), which three months at the end of 2016; says. “Only then will the scale of low margins on payments make 300 sizes to execute payments in multi- payments platform is Equiniti. The tively pay its employees in Dubai, some ments becomes more prominent to transactions are how big their reach can be in India lets mobile apps complete instant last month it crossed the 900-mil- cashless transactions increase in recovering that investment tricky. ple additional currencies.” payment provider works with numer- of whom are UK citizens and others support business growth and supplier processed each year remains uncertain. transfers between bank accounts. lion mark. Mobile payments are the near future.” The long game for most mobile There are two additional challenges ous organisations, including large nationals of the United Arab Emirates. strategies, many companies will con- Accenture Reddy, 27, who goes by a single The service suddenly made a frag- now ubiquitous in major cities with But there are also fundamen- payment systems is to create “super for businesses making payments banks, providing access to an exten- As international payments pres- tinue to face a range of pain points. name, has first-hand experience mented market of siloed mobile wal- even the smallest stores displaying tal differences between India and apps”, says KPMG’s Mr Jain. These abroad. First are the potentially unex- sive network of 180 countries and ent increasing demands on busi- The business payments team at of the pace of change after starting lets interoperable, says Mr Jain. a host of QR code stickers for differ- places like Kenya, says NPCI chief act as a gateway to services such as pected fees applied to their transac- 133 currencies. nesses, the issue of how to make Equiniti is making sure they can avoid to accept digital payments at his Already rapid smartphone growth ent providers. executive Dilip Abse. While much ride-hailing or food delivery and tions, as well as foreign exchange risk, Equiniti’s business payments divi- overseas payments without unnec- these problems and enable compa- Bangalore grocery store six months received a boost a month later when of Africa suffers from a lack of most crucially financial services. By 45% which is especially critical for pay- sion, which is regulated by the essary complexity is growing in sig- nies to successfully pay people and ago. Initially less than a tenth of Reliance Jio entered the telecoms banking infrastructure, making collecting fine-grained transaction of companies are fully satisfi ed ments being agreed now, but drawn Financial Conduct Authority and is nifi cance. In addition to fi nance organisations, no matter where they transactions were made digitally, he market with ultra-low 4G tariffs, mobile banking a much-needed data on customers, companies hope with their fi rm’s business software down at a future date. Then there is compliant with Electronic Money and teams, everyone is taking note, from are in the world. says, but today almost all are. “It’s forcing the entire industry to slash alternative, more than 80 per cent to sell financial products, including for payments and banking compliance with local regulations. Payment Services Regulations, offers technology staff, sales force per- gone full reverse in six months,” prices. Then in November 2016 the of Indians had a bank account in insurance and micro-credit, to cus- “In-country nuances need to be comparable security and transparency sonnel and product developers, to To fi nd out how organisations are Accenture Reddy says. “Almost 99 per cent of government caused a cash crunch 2017, according to the World Bank’s tomers who previously had limited considered, particularly when they’re to an established bank, while provid- supply chain leaders, payroll manag- avoiding the common pain points customers are using cashless.” by taking India’s high-denomina- latest Global Findex. access to such services. relevant to taxation and accurate ing easy access to account managers ers, human resources directors and of international payments please Non-cash transactions are pre- tion notes out of circulation over- Everybody, from the street A government programme run- “There is a clear incentive for peo- salary payments. Many businesses do with extensive in-country expertise. chief executives. email [email protected] or dicted to grow by 20 per cent by 2023, night to curb “black money”, cash ning since 2014 to open a bank ple to use super apps and there is a not have the time, resources or exper- Its single, online business payments “There is a strong demand in the visit equinitiglobal.com according to a recent report from from illicit sources or hidden from vendor to the beggar, used account for every Indian, has relied clear incentive for the ecosystem to 55% tise to address these effi ciently,” says platform enables clients to make busi- market for a single platform on which KPMG, faster than in digital pay- the taxman. mobile payments at that on a “business correspondent” adapt to them,” says Mr Jain. “So of corporates work with more Ms Cowan. ness payments confi dently to the right all international and domestic payment ments poster child China. Much of “Everybody, from the street ven- model, says Mr Abse, where banks the value creation is already there. I than fi ve banks for payments As a result, the industry is looking person, at the right time and for the needs can be served,” says Ms Cowan. this growth will be driven by mobile, dor to the beggar, used mobile point in time provide an agent, often a local think it's all about adoption.” Nordea to tackle these problems, compliantly right amount, anywhere in the world. “That is currently a gap not readily 20 FUTURE OF PAYMENTS RACONTEUR.NET 21 Commercial feature

POPULATION OF MOBILE PAYMENT USERS IN INDIA

Based on point-of-sale transactions, not ecommerce payments International payment pitfalls 2019 (estimated) Dhiraj Singh/Bloomberg via Getty Images 93.3m businesses want to leave behind

2018 73.9m For many UK-based companies, whether using suppliers abroad or growing their international workforces, making and 2017 52.9m receiving international payments has become a regular activity. But a range of eMarketer 2018 payment pain points and knowledge gaps can create serious challenges But while that expansion sounds shopkeeper, in rural areas with a impressive, industry consensus mobile device that lets them func- is that digital payments still only tion as a mini-branch and carry out account for 10 to 15 per cent of all digital transactions on customers’ retail merchant transactions, says behalf. ustaining a global footprint of at Equiniti’s business payments divi- Vijay Mani, partner at Deloitte But the World Bank report also S any scale requires businesses sion. “With departmental heads acting India, with mobile predicted to play found nearly half of accounts were and public sector bodies to on strategy, it can introduce new pay- second fiddle to cards, at least in inactive and only about a third of take a smart and long-term approach ment needs.” terms of value. account owners reported making or to their global payments, to avoid Currently, companies tend to utilise What’s more, only a quarter of receiving a digital payment in the some serious and potentially costly multiple partners and in-country pro- Indians own a smartphone with the previous year, suggesting simply pain points. viders when making international pay- capabilities to use banking apps and providing access to banking won’t Traditionally, foreign payments have ments. This can require the fi nance popular payment services such as spur adoption of digital payments. been left to well-known providers but teams to use a host of systems to PayTM, Google Pay and PhonePe, Nonetheless, Mr Abse thinks now, with the help of new technol- manually build payments directly with INDIA though with 40 per cent of Indians booming smartphone adoption in ogy, rival providers are entering the each provider, taking into account under the age of 18, the percentage smaller cities could see this change market, tackling the common pitfalls varying formats and requirements. of adults using them is likely to be rapidly. Expansion is driven largely and enabling organisations to pay the Additionally, their banking partners considerably higher. by content delivery, he says, while right person the right amount, at the or brokers may not offer full currency The National Payments Corporation there’s also corresponding growth right time, anywhere in the world. coverage to small or medium-sized Have mobile payments of India (NPCI), which built UPI, has in UPI use. “In three years max, There are myriad reasons why an organisations, or support contractors’ also created the *99# service that I would not be surprised if every organisation might need to make pay- newly preferred payment methods allows feature phones without inter- Indian has a smartphone,” he says. ments in local currencies around the such as delivery into digital wallets or net connectivity to make mobile pay- The challenge for mobile payment world. These can include interna- card accounts. hit a wall in India? ments and store money in digital wal- systems isn’t just getting services tional expansion, setting up a technol- “Not having access to a single plat- A London council recently worked served by traditional banks or foreign lets. But while similar technology has into customers’ hands though; a sus- ogy or other specialist team abroad, form that will serve international and with Equiniti to streamline its previ- exchange providers. Businesses are taken off in African countries, such as tainable business has to be devel- working with new suppliers else- domestic payment needs is a major ously paper-based overseas payment looking for a way to transact on one, Kenya and Tanzania, it has failed to oped. In India, mobile money transfer where and needing to pay pensions pain point organisations face in this There is a strong demand in processes. It introduced a tailored easy-to-use platform, without incur- Cashless transactions are surging across India, but mobile catch India’s imagination. between accounts makes up the bulk to ex-employees who have retired in area and is starting to cause fric- digital solution to deliver payments ring unexpected costs, yet with the payments could stumble over a series of obstacles Part of the reason is that transac- of UPI transactions, says Deloitte’s other countries. tion for businesses as they manage the market for a single platform to foster carers, who are often adult reliability, transparency and security of tion charges from telecoms provid- Mr Mani, with only about 20 per cent “Foreign payments are frequently multiple partners,” says Ms Cowan. on which all international and relatives or family friends of children traditional fi nancial institutions.” ers are too high. Renita d’Souza, who going directly to merchants and earn- needed by organisations and the “On top of this, businesses want the it retains responsibility for, but who Equiniti has focused on making its researches mobile payment systems ing providers commission. importance of minimising pitfalls transparency and security of a bank, domestic payment needs can live abroad. business payments platform easy to in India for New Delhi-based think “I think there's no compelling is not solely the responsibility of but with the ability to make payments be served Meanwhile, a pharmaceutical fi rm integrate with organisations’ existing Edd Gent A sign for PayTM tank Observer Research Foundation, reason for the ordinary man in the fi nance departments,” explains Lisa quickly to a wide range of locations in brought in the provider to establish a systems and authorisation workfl ows, digital payments says there was a missed opportunity street to fish out his or her mobile Cowan, director of growth strategy local currencies. single, end-to-end payment process and ensuring it is adaptable and fl ex- displayed on post-demonetisation to promote the phone to buy a loaf of bread,” he “Given that not all banks or fi nan- that reaches more than 1,800 employ- ible, with extensive reach and backed the windscreen ash is still king in India. says Manish Jain, partner at KPMG payments at that point in time,” says system’s use by subsidising these says. That’s leading fintech firms cial institutions offer the truly wide ees in 15 different countries. by proper customer support. It also of a rickshaw in C But rapid adoption of tech- India’s digital and fintech arm. Mr Jain. “It was a very big learning Bengaluru, India charges and raising awareness. flush with venture capital and eager range of currencies that businesses serving multiple countries and cur- Elsewhere, a leading university provides data validation within the nology and a concerted 2016 was a watershed year for experience for the entire country.” “Mobile payments using non- to capture market share to offer large can require, a number of these rencies, in a simpler format and with- enlisted the help of Equiniti to create system to ensure payments are pro- push from the government are start- mobile payment systems in India. UPI usage leaped from 103,000 smartphones must go hand in hand discounts and cashback to keep peo- organisations now use our services out unexpected costs. A company a single payroll and payments solution, cessed successfully. ing to change things. Mobile pay- August saw the rollout of the Unified transactions to 1.97 million in just with smartphone payments,” she ple engaged, says Mr Mani, but the bn+ so they too can support clients of all leading the way with its single business enabling it to easily and cost-effec- As the need for international pay- ment systems are booming, though Payments Interface (UPI), which three months at the end of 2016; says. “Only then will the scale of low margins on payments make 300 sizes to execute payments in multi- payments platform is Equiniti. The tively pay its employees in Dubai, some ments becomes more prominent to transactions are how big their reach can be in India lets mobile apps complete instant last month it crossed the 900-mil- cashless transactions increase in recovering that investment tricky. ple additional currencies.” payment provider works with numer- of whom are UK citizens and others support business growth and supplier processed each year remains uncertain. transfers between bank accounts. lion mark. Mobile payments are the near future.” The long game for most mobile There are two additional challenges ous organisations, including large nationals of the United Arab Emirates. strategies, many companies will con- Accenture Reddy, 27, who goes by a single The service suddenly made a frag- now ubiquitous in major cities with But there are also fundamen- payment systems is to create “super for businesses making payments banks, providing access to an exten- As international payments pres- tinue to face a range of pain points. name, has first-hand experience mented market of siloed mobile wal- even the smallest stores displaying tal differences between India and apps”, says KPMG’s Mr Jain. These abroad. First are the potentially unex- sive network of 180 countries and ent increasing demands on busi- The business payments team at of the pace of change after starting lets interoperable, says Mr Jain. a host of QR code stickers for differ- places like Kenya, says NPCI chief act as a gateway to services such as pected fees applied to their transac- 133 currencies. nesses, the issue of how to make Equiniti is making sure they can avoid to accept digital payments at his Already rapid smartphone growth ent providers. executive Dilip Abse. While much ride-hailing or food delivery and tions, as well as foreign exchange risk, Equiniti’s business payments divi- overseas payments without unnec- these problems and enable compa- Bangalore grocery store six months received a boost a month later when of Africa suffers from a lack of most crucially financial services. By 45% which is especially critical for pay- sion, which is regulated by the essary complexity is growing in sig- nies to successfully pay people and ago. Initially less than a tenth of Reliance Jio entered the telecoms banking infrastructure, making collecting fine-grained transaction of companies are fully satisfi ed ments being agreed now, but drawn Financial Conduct Authority and is nifi cance. In addition to fi nance organisations, no matter where they transactions were made digitally, he market with ultra-low 4G tariffs, mobile banking a much-needed data on customers, companies hope with their fi rm’s business software down at a future date. Then there is compliant with Electronic Money and teams, everyone is taking note, from are in the world. says, but today almost all are. “It’s forcing the entire industry to slash alternative, more than 80 per cent to sell financial products, including for payments and banking compliance with local regulations. Payment Services Regulations, offers technology staff, sales force per- gone full reverse in six months,” prices. Then in November 2016 the of Indians had a bank account in insurance and micro-credit, to cus- “In-country nuances need to be comparable security and transparency sonnel and product developers, to To fi nd out how organisations are Accenture Reddy says. “Almost 99 per cent of government caused a cash crunch 2017, according to the World Bank’s tomers who previously had limited considered, particularly when they’re to an established bank, while provid- supply chain leaders, payroll manag- avoiding the common pain points customers are using cashless.” by taking India’s high-denomina- latest Global Findex. access to such services. relevant to taxation and accurate ing easy access to account managers ers, human resources directors and of international payments please Non-cash transactions are pre- tion notes out of circulation over- Everybody, from the street A government programme run- “There is a clear incentive for peo- salary payments. Many businesses do with extensive in-country expertise. chief executives. email [email protected] or dicted to grow by 20 per cent by 2023, night to curb “black money”, cash ning since 2014 to open a bank ple to use super apps and there is a not have the time, resources or exper- Its single, online business payments “There is a strong demand in the visit equinitiglobal.com according to a recent report from from illicit sources or hidden from vendor to the beggar, used account for every Indian, has relied clear incentive for the ecosystem to 55% tise to address these effi ciently,” says platform enables clients to make busi- market for a single platform on which KPMG, faster than in digital pay- the taxman. mobile payments at that on a “business correspondent” adapt to them,” says Mr Jain. “So of corporates work with more Ms Cowan. ness payments confi dently to the right all international and domestic payment ments poster child China. Much of “Everybody, from the street ven- model, says Mr Abse, where banks the value creation is already there. I than fi ve banks for payments As a result, the industry is looking person, at the right time and for the needs can be served,” says Ms Cowan. this growth will be driven by mobile, dor to the beggar, used mobile point in time provide an agent, often a local think it's all about adoption.” Nordea to tackle these problems, compliantly right amount, anywhere in the world. “That is currently a gap not readily 22 FUTURE OF PAYMENTS RACONTEUR.NET 23 Cons

here is obviously a lot of T excitement around facial recognition technology and its implications for the future of payments, and rightly so. But it’s We’re at the early important to temper enthusiasm stages of biometrics, with caution. It is vital, therefore, so what we do now the industry concentrates on the Money for privacy concerns that are most per- will set the agenda tinent, so the risks to the consumer don’t exceed potential gains. for its future use “While the benefits are endless, businesses must also consider the risks that arise from deploying face the future recognition systems as they need to take appropriate steps to comply with the law,” says Tamara Quinn, recognition collected by London’s partner at international law firm Metropolitan Police. FACIAL RECOGNITION Osborne Clarke. “Facial recogni- “Combined with the personal Servicing clients in over 70 countries tion and video surveillance are details, usernames and passwords, covered by a complex web of reg- the potential for criminal activity and multiple currencies, Paysend ulations, which isn’t easy to navi- and fraud is massive,” according to gate, plus there is reputational risk one of the researchers who brought enables instant cross border as well as Facial recognition if companies aren’t seen to be tak- the situation to light. So biometrics ing privacy seriously.” is not immune from the difficulties local payments in a way which is It’s also important to understand faced when it comes to fraud. the potential for fraud. Customers “Biometrics is not fool-proof and, simple and smart. continues to might think that because their just like your credit card, details face is unique, they don’t have can be stolen and cloned,” says Mr to worry as they would if relying Anderson. "A picture of your face can on a password or PIN number to enable anyone to steal your identity. Paysend’s unique card to card and divide opinion authorise payments. Until the reliability and security of Last month, it was revealed biometrics can be proven, it should proxy card technologies already serve that the biometrics data of more only be an opt-in choice for users. than a million people had been What absolutely must not happen is over a million customers worldwide. “Currently, convenience still beats population is 1.3 billion) and facial exposed from a database owned a rush to implement biometrics as FACIAL RECOGNITION IS NOT Data is the most valuable commodity of other concerns,” says John Erik recognition privacy concerns are by the biometric security company the de facto means of authentication; THE FAVOURED OPTION the modern era. Global tech giants thrive Setsaas, vice president of innova- very serious. Suprema. This included facial let’s not run before we can walk.” Discover more – www.paysendgroup.com tion and identity, at digital identity “Upon its creation, Aadhaar was Adults in the UK, United States and on collecting it and making a profit from fintech Signicat. “People use Google largely viewed as a well-intentioned Australia willing to use the following for mail, maps, documents and initiative that could stem government when making a biometric payment it. So the march towards facial recognition searching, even though we know waste and protect citizens’ identities,” Google collects information and cre- Mr Tomlinson explains. “Today, many payments may seem unstoppable. ates a profile.” view it as a mass-surveillance tool that % % % % 51 56 42 However, the idea that our faces are being But when it comes to facial rec- infringes privacy rights.” 50 ognition payment we’re in unreg- Currently, the European Union’s harvested and stored digitally is raising ulated territory as legislation lags General Data Protection Regulation behind the latest technology. is meant to prevent abuse of our pri- far more than a few eyebrows. Here are The industry should, perhaps, be vacy. Geoff Anderson, chief exec- looking to France where the first utive of UK cybersecurity startup the pros and cons standard regulation applicable to PixelPin, urges companies using biometric systems at work was intro- biometric payment technology to duced. It prescribes specific require- get ahead of potential future prob- ments for processing biometric data lems. “The appeal of biometrics to control information systems in is obvious: it’s easy to use, almost the context of business tasks. impossible to lose your facial char- This is in stark contrast to the sit- acteristics and also quite sci-fi,” he uation in India where the world’s says. “We’re at the relatively early largest biometric identification pro- stages of the biometrics life cycle, gramme comprehends roughly a so what we do now will really set the Fingerprint Iris Facial recognition Veins in hand billion registered users (the entire agenda for its future use.”

Emily Hill An invasion of privacy?

Anyone interested in payments technology should "It is just like taking people's DNA or fingerprints, Pros take note of a court case launched in Cardiff without their knowledge or their consent,” says concerning automated facial recognition used Megan Goulding, a lawyer working on the case. f course, there are many says Gus Tomlinson, head of strat- by the state. This is the first major legal challenge Understandably, this has prompted negative O pros when it comes to facial egy at GBG, a global leader in iden- in the UK regarding facial recognition privacy headlines and it seems a balance must be struck recognition payment, espe- tity data intelligence. “Most promi- concerns and was brought by office worker Ed between the use of biometrics by the state and its cially from the industry’s point nently, we have seen Apple enabling Bridges, who believes he had his image captured potential benefits in the payments sector. of view. After all, devotees of the facial recognition to unlock phones, by police while he was shopping last Christmas. “The technology will, as technology does, iPhone are already using it if they the first step in extending strong "By the time I was close enough to see the words continue to be developed," says Andrew Hartshorn, have the latest model, making it authentication to access apps.” 'automatic facial recognition' on the van, I had information law specialist at law firm Shakespeare already the new or latest normal. When it comes to giving out your already had my data captured by it,” he told the Martineau. “I think its use is likely to be curtailed “It appears consumers are becom- facial characteristics, why would you BBC. “That struck me as quite a fundamental going forwards, or rather used in limited ing more accepting when they are worry if you’ve already given away invasion of my privacy.” Mr Bridges is supported by circumstances, where use is more focused, with trading biometrics for convenience your thumbprints to your phone, the civil rights group Liberty. less scope for widespread invasion of privacy.” in the private sector in terms of photograph album to Instagram, faster and more secure payments,” contacts book to Facebook and so on? 22 FUTURE OF PAYMENTS RACONTEUR.NET 23 Cons

here is obviously a lot of T excitement around facial recognition technology and its implications for the future of payments, and rightly so. But it’s We’re at the early important to temper enthusiasm stages of biometrics, with caution. It is vital, therefore, so what we do now the industry concentrates on the Money for privacy concerns that are most per- will set the agenda tinent, so the risks to the consumer don’t exceed potential gains. for its future use “While the benefits are endless, businesses must also consider the risks that arise from deploying face the future recognition systems as they need to take appropriate steps to comply with the law,” says Tamara Quinn, recognition collected by London’s partner at international law firm Metropolitan Police. FACIAL RECOGNITION Osborne Clarke. “Facial recogni- “Combined with the personal Servicing clients in over 70 countries tion and video surveillance are details, usernames and passwords, covered by a complex web of reg- the potential for criminal activity and multiple currencies, Paysend ulations, which isn’t easy to navi- and fraud is massive,” according to gate, plus there is reputational risk one of the researchers who brought enables instant cross border as well as Facial recognition if companies aren’t seen to be tak- the situation to light. So biometrics ing privacy seriously.” is not immune from the difficulties local payments in a way which is It’s also important to understand faced when it comes to fraud. the potential for fraud. Customers “Biometrics is not fool-proof and, simple and smart. continues to might think that because their just like your credit card, details face is unique, they don’t have can be stolen and cloned,” says Mr to worry as they would if relying Anderson. "A picture of your face can on a password or PIN number to enable anyone to steal your identity. Paysend’s unique card to card and divide opinion authorise payments. Until the reliability and security of Last month, it was revealed biometrics can be proven, it should proxy card technologies already serve that the biometrics data of more only be an opt-in choice for users. than a million people had been What absolutely must not happen is over a million customers worldwide. “Currently, convenience still beats population is 1.3 billion) and facial exposed from a database owned a rush to implement biometrics as FACIAL RECOGNITION IS NOT Data is the most valuable commodity of other concerns,” says John Erik recognition privacy concerns are by the biometric security company the de facto means of authentication; THE FAVOURED OPTION the modern era. Global tech giants thrive Setsaas, vice president of innova- very serious. Suprema. This included facial let’s not run before we can walk.” Discover more – www.paysendgroup.com tion and identity, at digital identity “Upon its creation, Aadhaar was Adults in the UK, United States and on collecting it and making a profit from fintech Signicat. “People use Google largely viewed as a well-intentioned Australia willing to use the following for mail, maps, documents and initiative that could stem government when making a biometric payment it. So the march towards facial recognition searching, even though we know waste and protect citizens’ identities,” Google collects information and cre- Mr Tomlinson explains. “Today, many payments may seem unstoppable. ates a profile.” view it as a mass-surveillance tool that % % % % 51 56 42 However, the idea that our faces are being But when it comes to facial rec- infringes privacy rights.” 50 ognition payment we’re in unreg- Currently, the European Union’s harvested and stored digitally is raising ulated territory as legislation lags General Data Protection Regulation behind the latest technology. is meant to prevent abuse of our pri- far more than a few eyebrows. Here are The industry should, perhaps, be vacy. Geoff Anderson, chief exec- looking to France where the first utive of UK cybersecurity startup the pros and cons standard regulation applicable to PixelPin, urges companies using biometric systems at work was intro- biometric payment technology to duced. It prescribes specific require- get ahead of potential future prob- ments for processing biometric data lems. “The appeal of biometrics to control information systems in is obvious: it’s easy to use, almost the context of business tasks. impossible to lose your facial char- This is in stark contrast to the sit- acteristics and also quite sci-fi,” he uation in India where the world’s says. “We’re at the relatively early largest biometric identification pro- stages of the biometrics life cycle, gramme comprehends roughly a so what we do now will really set the Fingerprint Iris Facial recognition Veins in hand billion registered users (the entire agenda for its future use.”

Emily Hill An invasion of privacy?

Anyone interested in payments technology should "It is just like taking people's DNA or fingerprints, Pros take note of a court case launched in Cardiff without their knowledge or their consent,” says concerning automated facial recognition used Megan Goulding, a lawyer working on the case. f course, there are many says Gus Tomlinson, head of strat- by the state. This is the first major legal challenge Understandably, this has prompted negative O pros when it comes to facial egy at GBG, a global leader in iden- in the UK regarding facial recognition privacy headlines and it seems a balance must be struck recognition payment, espe- tity data intelligence. “Most promi- concerns and was brought by office worker Ed between the use of biometrics by the state and its cially from the industry’s point nently, we have seen Apple enabling Bridges, who believes he had his image captured potential benefits in the payments sector. of view. After all, devotees of the facial recognition to unlock phones, by police while he was shopping last Christmas. “The technology will, as technology does, iPhone are already using it if they the first step in extending strong "By the time I was close enough to see the words continue to be developed," says Andrew Hartshorn, have the latest model, making it authentication to access apps.” 'automatic facial recognition' on the van, I had information law specialist at law firm Shakespeare already the new or latest normal. When it comes to giving out your already had my data captured by it,” he told the Martineau. “I think its use is likely to be curtailed “It appears consumers are becom- facial characteristics, why would you BBC. “That struck me as quite a fundamental going forwards, or rather used in limited ing more accepting when they are worry if you’ve already given away invasion of my privacy.” Mr Bridges is supported by circumstances, where use is more focused, with trading biometrics for convenience your thumbprints to your phone, the civil rights group Liberty. less scope for widespread invasion of privacy.” in the private sector in terms of photograph album to Instagram, faster and more secure payments,” contacts book to Facebook and so on? 24 FUTURE OF PAYMENTS

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