March | April 2016 | paymentscardsandmobile.com in this issue Card Notes The changing global risks landscape in 2016 Real-time payments The need for speed Issuing & acquiring The future of the merchant payment ecosystem Contactless How UK payment habits The future of compare internationally digital payments The payments landscape beyond 2016 Let’s shape your future Enter the customer-centric digital world

Merchant Services & Terminals Leveraging the customer engagement

Mobility & eTransactional Services Enabling strategic digital transformation

Financial Processing & Software Licensing Combining Innovation and Agility with Industrial payment processing

Visit us at Money 2020 Europe 2016 Booth #A14 worldline.com Let’s shape your future Enter the customer-centric digital world

www.paymentscm.com

March | April 2016 Volume 8, Number 2

Editor-in-chief and publisher Alexander Rolfe Merchant Services Tel +44 1263 711 800 & Terminals [email protected] Editor If it ain’t digital and it ain’t fast, don’t bother! Leveraging Joyrene Thomas the customer Tel +44 1263 711 800 engagement [email protected] In this issue of PCM we acknowledge that three years in the Contributors payments industry is a very long time. The first findings of the Digital Joyrene Thomas Payments Report show just how far we have moved as an industry

Head of Business Development and how the once-great have fallen. Wendy Sanders Tel +44 1263 711 801 In particular it is clear from the report that the once-strong and influential mobile Fax +44 1263 456 100 network operators have fallen from prominence in the space and are [email protected] largely seen as being irrelevant in the conversation. Notably the payment networks, Mobility General Manager banks and handset manufacturers are seen as being the strongest in this area. The & eTransactional Gemma Haywood report offers a rich seam of insight into the three main regions in the world and Tel +44 1263 711 800 compares the various trends that are expected to unfold at different times across Services Fax +44 1263 456 100 those regions. Enabling strategic [email protected] Subscriptions and General Meanwhile the real-time payments conversation has moved into top gear. The need digital transformation Kaye Skinner for speed and for systems that are capable of delivering near real-time payments Tel +44 1263 711 800 Fax +44 1263 456 100 has never been greater. There are currently 18 deployments of real-time payments [email protected] systems around the world with a pretty even split by region — and more are in the Address planning stage with a super-system being discussed for the Eurozone. Payments Cards and Mobile The Stable, Hall Yard With so much going on and with speed and momentum building, it’s never been a Kelling, Holt more interesting time to be in payments. Financial Processing NR25 7EW & Software Licensing United Kingdom Cover, Design and Origination Adam Unsworth Combining Innovation Alexander Rolfe, and Agility with Printing Editor-in-chief and publisher, Industrial payment Micropress Printers Payments Cards & Mobile processing

All rights reserved. No part of the publication may be reproduced or transmitted in any form without the publisher’s prior consent. Editorial Advisory Board While every care is taken to provide accurate information, the publisher cannot accept John Berns June Felix Visit us at Money 2020 liability for errors or omissions, no matter how President – Europe, Verifone Europe 2016 caused. Managing Partner, Accourt Payment Cards and Mobile™ Sylvie Boucheron-Saunier Denise Gee Booth #A14 is owned and published by General Manager, Continental Europe, ACI Director, Magna Carta PaymentsCM LLP ISSN 1759-829X Robert Courtneidge Simon Hardie Global Head of Cards and Payments, Director, Magna Carta worldline.com © PaymentsCM LLP 2016 Locke Lord contents

news in brief 25. €1 billion revenue from mobile features wallets in Europe from 2021 6-7. The payments world in 60 days Mobile wallet transaction numbers in the 16. COVER STORY: European Union will experience a CAGR of card notes The future of digital 61.8 percent over 2016-2021, ensuring the payments revenue for the payments industry will pass 8. The changing global risks the €1 billion bar by 2021. landscape in 2016 Advancements in digital The increased likelihood of the top risks technology continued to shape regulation materialising is shaping the global risk the payments industry in 2015 agenda, according to the Global Risks as mobile, online and other 26. EU Commission and US agree Report 2016 from the World Economic digital forms of payments EU-US Privacy Shield Forum. moved into the mainstream. On 02 February 2016 the European Commission and the US announced a 9. EU Commission pushes for faster 20. Real-time political agreement on a new framework adoption of Anti-Money Laundering payments: The need for transatlantic data flows. Directive for speed The fourth EU Anti-Money Laundering (EU AML) Directive came into force in June Consumer-facing technology 2015, meaning member states have two brands have done much to years to transpose the provisions into reset customer expectations national law. around speed, what are the implications for the payments 12. Digital ready, steady, go industry? The journey to digital money is a long one without quick fixes. However the digitisation of money flows has a positive mobile payments impact on financial inclusion, and on governments, businesses and consumers. 13. GSMA announces IOT guidelines 28. Global market The GSMA has published new to reach $620 billion in 2016 12. Apple and FBI face-off guidelines designed to promote the With major brands Apple and It has been billed variously as a battle secure development and deployment Samsung making a big entrance into the of privacy versus security, or security of services for the growing Internet of mobile payment business, the total revenue versus surveillance, Things (IoT) market. of the worldwide mobile payment market as the world’s in 2015 reached $450 billion. biggest brand issuing & acquiring and the FBI face off 24. The future of the merchant against each payment ecosystem another. There is a clear strategic need for acquirers, particularly in Europe, to 13. Cybercrime look beyond payments and payment underground split along national processing for new sources of revenue. 29. UK banks could lose 45 percent lines of their customers to alternative Cybercrime is a large, present and 25. Card payments in Asia Pacific set financial institutions evolving threat to all organisations to double to $19.5 trillion by 2020 A new study by Personetics has revealed operating online. In 2015, global security The value of card payments in Asia that nearly half of traditional UK bank software company, Trend Micro, Pacific grew by 25 percent in 2014 to customers could switch their current published a series of reports examining reach $9.0 trillion, accounting for just account to an alternative financial the cybercrime undergrounds ofvarious under half of the global total card institutions (AltFI) such as a challenger bank, countries. expenditure. retailer, or FinTech companies.

04 payments cards and mobile | March | April 2016 www.paymentscm.com contents

contactless 36. Amazon acquires India’s 39. BIXOLON releases SPP-R200III Emvantage Payments Bluetooth and WiFi printer 30. How UK payment habits Amazon’s investment in the Indian BIXOLON has announced the launch of compare internationally e-commerce market has continued with the SPP-R200III 2-inch, WiFi and Bluetooth Payments UK, the trade association for the the e-tailer announcing it has agreed a Printer with NFC for POS, payments and payments industry, has published a second deal to acquire local online payments firm, auto-ID markets. report in its World Class Payments series, Emvantage. titled: How consumers around the world contracts make payments. 41. MasterCard reportedly bids £1 30. Cash remains king - despite billion for explosive contactless growth MasterCard has reportedly drawn up plans LINK figures reveal that cash withdrawals for a takeover of VocaLink, the bank- from LINK ATMs in 2015 amounted to a 36. Omni-channel payments: myth owned company which handles £6 trillion- record £128 billion. or reality? worth of payments in the UK each year. The top technology challenges 31. Global mobile proximity payment retailers face around omni-channel are 41. TSYS deal for card issuers and users to surpass 1 billion by 2019 incompatible systems, data integration and merchants to combat fraud Mobile proximity payments are the the ability to track customers, according to TSYS announced an agreement with smallest, but fastest growing segment for new research from ACI Worldwide. Ethoca, a provider of collaboration-based mobile payments, according to global technology that enables card issuers and analyst firm Ovum. products e-commerce merchants to help minimise card-not-present fraud, recover lost 31. Android Pay to hit UK in March – 39. Megafon quits mobile payment revenue and eliminate chargebacks. LG Pay delayed platform Android Pay, Google’s Megafon, the Russian mobile operator, has 41. Wirecard acquires Brazilian mobile payments reportedly shut down its mobile payment online payment service provider service, is set to launch platform Megafon Money. Wirecard has acquired all shares of the in the UK in March Brazilian company Moip Pagamentos S.A., 39. Google launches face biometrics a fast-growing internet payment service pos terminals payment app provider founded eight years ago. Google has launched a new app 34. The POS of the future called Hands Free that does not require conferences The point of sale (POS) of the future will be you to take your phone out of your pocket. more intelligent and powerful. It will also be 42. Conference season kicks off more functionally-rich, value-adding and PCM kick-started its 2016 conference cloud-based. season with two great events.

e-commerce 39. sells business 36. Technology companies dominate units under administration best global brands list Failed e-commerce software unicorn Powa For the third year in a row, Apple Technologies has sold two of its divisions and Google claimed the top spots in as it seeks to save jobs after entering www.paymentscm.com Interbrand’s Best Global Brands report. administration in February. www.paymentscm.com payments cards and mobile | March | April 2016 05 news in brief

Where will Clark Kent change into 60 rounds of $50 million or more invested his superhero alter ego now? More in the last 12 months alone, compared to than 7,500 pay phone kiosks across New just 15 between 2011 and 2013. KPMG and York City are to be replaced with new CB Insights say 2015 was the year that structures called Links, providing free, FinTech entered the mainstream. “Almost high-speed WiFi. Each Link will include a every major process within banking and hands-free phone, USB ports for device insurance is being targeted by FinTech charging, a tablet for internet browsing and companies globally, either to disrupt the two screens for displaying advertisements, incumbents or increasingly to enable them which fund the project. Around US $200 to serve their customers better or reduce Microsoft is continuing its push of million is being invested in laying hundreds costs.” However, drilling into the data, it Blockchain-as-a-service within its of miles of fibre optic cable to deliver looks as if we may have passed a peak for Azure cloud computing platform. Its first gigabit speed to Links in what is set to investment in the sector, rather than seeing foray into the area came last year with become one of the fastest and largest it continue to spike in 2016. Deal activity an offering on the decentralised software municipal WiFi networks. fell in the final two quarters of 2015, with platform, Ethereum, which runs smart a particularly steep drop-off in the final contracts. Microsoft is now reportedly quarter of the year. working on an Ethereum Windows Server offering, as well as with cryptographic Deutsche Bank’s efforts to split ledger software provider Ripple. off its Postbank retail banking unit could drag into 2017, according to reports in the Financial Times. Parting company with Postbank was one of the cornerstones of Deutsche Bank’s new strategy to boost profitability and Having bought Brazilian IPSP Moip at strengthen the bank’s capital position. Yet the start of February, the Wirecard plans to sell a major stake in the bank by shopping spree continued. At the end the end of 2016 may not happen without of Feburary, the Munich-based firm major tax implications. A spokesperson announced the acquisition of all shares for Deutsche Bank said the bank still in Romanian payment processor Provus had the “clear aim” of de-consolidating Visa Europe has been announced for €32 million. Provus’ customers include Postbank, which has relatively low as the preferred payments partner major Romanian banks, telcos, retailers profitability in comparison with many of of the Eurovision Song Contest 2016, which and the government, with which it worked the bank’s other businesses. will take place in Stockholm in May. Visa on the digitisation of health and payment Europe will create ‘a contactless payments cards. “This acquisition will allow Wirecard “The payments industry has experience’ for the audience attending to systematically step up its expansion evolved at a steady pace, but now the final and semi-finals of the contest into eastern Europe. The business model is the time to ask whether or not it is as well as visitors to the Eurovision village complements our global payment gateway operating best practice. The evidence at Kungsträdgården in Stockholm. As an as well as our European acquiring and we have gathered shows that common official partner, Visa Europe gains extensive issuing licence,” commented Roland Toch, ownership is hampering competition and pan-European association, event and managing director Wirecard. the speed of innovation in the market.” media rights for the 61st Contest, with an So said Hannah Nixon, managing director expected worldwide television audience FinTech investment around the world of the UK payment systems regulator on of around 200 million. The shows will be smashed 106 percent last year to the publication of the provisional findings co-produced by the Swedish broadcaster $13.8 billion, according to a new report of its review. The regulator is concerned SVT and the EBU. from KPMG and CB Insights. The Pulse of that the nation’s payments systems are FinTech report, published by KPMG and currently controlled by a relatively small venture capital information provider CB number of banks, which also control the Insights, shows a huge surge of investment, single infrastructure provider, VocaLink. topping multi-year highs. The report says The report’s consultation period runs until 2015 was a year of mega rounds, with over 21 April 2016.

06 payments cards and mobile | March | April 2016 www.paymentscm.com news in brief

Amazon has revealed plans to patent Germany's cartel office is the ability to authenticate a payment investigating Facebook for suspected using a selfie. The patent outlines how abuse of market power over breaches of an Amazon shopper would authorise a data protection laws, according to Reuters. purchase using a photo instead of a In the first formal probe of the social password. As Amazon explains in the filing, network for violating competition rules, the facial recognition is more secure than watchdog said it suspected Facebook's entering passwords, which can be stolen. terms of service around use of customer Entering long passwords, the company data may abuse its possibly dominant says, can also be cumbersome on mobile position in the social networking market. devices. It planned to examine whether users were properly informed about how their personal data would be obtained by the company. A Facebook spokeswoman said: “We are confident that we comply with the law and we look forward to working with the Federal Cartel Office to answer their questions.”

Barclays will become the first financial institution to have staff working full-time alongside police and other experts in an Interpol centre in Singapore. The announcement in early February is being billed as an important development in the public-private partnership to more Wales should have its own effectively combat cybercrime. Barclays banknotes to give it equal status will join representatives from academia with Scotland and Northern Ireland, and software and security vendors already according to the Welsh national party based in the centre. Plaid Cymru. Speaking to the BBC, Jonathan Edwards, treasury spokesman Peruvian banks and telcos have for Plaid Cymru, said that the notes launched a nationwide mobile could be illustrated with Welsh historical money network to draw five million of and sporting figures. He also called for the country’s unbanked population into the Bank of England to be renamed the formal banking system. Dubbed ‘BiM’, the Sterling Central Bank and to be the service operates on or accountable to all four UK national feature phones, with no need for a pre- parliaments or assemblies. "Sterling Welsh existing bank account, mobile internet banknotes underpinned by the central access or calling credits. Subscribers can bank would put us on an equal footing cash-in/out, check account balances, with the other nations and normalise the top-up mobile airtime, and conduct situation,” he said. person-to-person transfers even if the recipient is not registered with BiM. The project was spearheaded by Peruvian Digital Payments, a new service provider established in July 2015 by the Peruvian government, financial institutions, telcos and other stakeholders. www.paymentscm.com payments cards and mobile | March | April 2016 07 card notes GLOBAL

The changing global risks landscape in 2016

The increased likelihood of the top risks Warming climate is contributing to a “The impact of current macro risks and materialising is shaping the global risk global rise in temperatures of around one trends will continue to put pressure on, agenda, according to the Global Risks degree Celsius above the pre-industrial and potentially change, entire business Report 2016 from the World Economic era. Cybercrime is costing the global sectors,” said José Morago, chairman, Forum. The top risk in terms of likelihood economy an estimated US$445 billion. Institute of Risk Management. “Leaders who in 2016 is large-scale involuntary migration, Against this backdrop, the report calls think critically about the future, anticipate followed by extreme weather events, for action to build resilience. Global or disruption to their sectors, while building failure of climate change mitigation and external risks shape the context in which resilience and agility in their models, will be adaption, interstate conflict with regional all organisations operate. Compared in a better position to tackle a challenging consequences, and major natural to internal risks arising from particular risk environment in 2016 and thrive.” catastrophes. business decisions, external risks are more Almost 750 experts from the World In a departure from past reports, difficult to influence directly and control. Economic Forum’s multi-stakeholder the risks about which the report has Yet while all organisations have to deal communities, including academia, business, been warning over the past decade with the consequences of external risks, civil society and the public sector, assessed are starting to manifest themselves the impact on each each will vary. How 29 global risks for impact and likelihood in new, sometimes unexpected, ways. each organisation identifies its risks — and over a ten-year timeframe. The risks Around 60 million people, equivalent opportunities — and plans to mitigate ranged from societal and technological to the world’s 24th largest country, are and manage them is critical to building risks to economic, environmental and being displaced from their homelands. resilience but also competitive difference. geopolitical risks.

5.5 Faliure of climate-change mitigation and adaption

Biodiversity loss and ecosystem collapse

Spread of Energy price Large-scale 5.0 infectious diseases shock involuntary Interstate migration conflict Profound Critical information social instability infrastructure breakdown

Deflation 4.5

State collapse or crisis

2015 2016

Likelihood 4.0 4.5 5.0 5.5

Source: The Global Risks Report 2016, World Economic Forum

08 payments cards and mobile | March | April 2016 www.paymentscm.com EUROPE card notes EU Commission pushes for faster adoption of Anti-Money Laundering Directive

The fourth EU Anti-Money Laundering (EU virtual currencies and anonymous payment Providers of gambling services must AML) Directive came into force in June 2015, instruments (e.g. prepaid cards). carry out customer due diligence on meaning member states have two years The scope of the fourth EU AML is broader transactions of €2,000 or more, whether in to transpose the provisions into national than the preceding third EU AML. The a single transaction or series of apparently law. However, following the recent terrorist Directive applies to a range of businesses, linked transactions. Member states may attacks in Europe, the European Commission including credit institutions, financial consider applying these checks at both is calling on member states to commit to institutions, auditors, legal professionals, ends of the transaction — wagering a stake transposition six months earlier, namely by trusts, estate agents and providers of and collecting winnings. the end of 2016. gambling services. It also applies to those The Directive specifies simplified The Commission is proposing a number trading in goods where payments are made and enhanced customer due diligence of amendments to the Directive to or received in cash of €10,000 or more, measures, together with requirements to tackle the abuse of the financial system whether in a single payment or several conduct ongoing monitoring and retain for terrorist financing purposes. These payments which appear to be linked. records pertaining to customer due are expected by the end of the second The Directive sets out when, how and diligence. It also defines a category of quarter 2016 at the latest. They include how often customer due diligence must be politically exposed persons (PEPs), who safeguarding financial flows from high- carried out. Broadly, this is when establishing face higher customer due diligence risk third countries, enhancing the powers a customer relationship, when the transaction requirements, for example government, of financial intelligence units, centralising value exceeds a certain threshold or judicial or military persons and family registers, and tackling risks associated with according to a risk-based criteria. members thereof.

Source: The Global Risks Report 2016, World Economic Forum ADVERTORIAL

Tsesnabank invests in the future with WAY4 from OpenWay

After 12 years in the cards business, Tsesnabank, one of the top three financial institutions in Kazakhstan, realized it needed to invest in and modernize its major IT systems to continue innovating and competing effectively. In the record time of four months, the bank migrated to the WAY4 payment processing platform from OpenWay. Balzhan Baisheva, Managing Director, Tsesnabank, talks about the quick migration, the reasons for choosing the new platform and how WAY4 is driving the future for Tsesnabank.

Tsesnabank has been recognized internationally, winning When changes are and software we were using. A complete inevitable overhaul was necessary to deliver a ‘Kazakhstan’s Bank of the better and more differentiated service Year’ from The Banker Tsesnabank entered the cards business to the market, plus financial benefits to magazine, in 2004 when we became an associate the bank. member of Visa. By 2009, we were Based on the requirements of the many ‘Best Commercial Bank in operating our own processing centre, departments involved, we prepared a Kazakhstan’ from British issuing a range of different card products, list of functions crucial for business publication World Finance, and building up our acquiring ATM and development, support, control and POS network as a principal member of accounting. A standard procurement and ‘Best Bank in the Visa payment system. process was launched, and the WAY4 Kazakhstan’ at the 2014 The processing platform we originally processing platform was selected over Euromoney Awards for chose back in 2004 was adequate for other solutions. Excellence. our short-term needs. However ten years later, my colleagues on the senior Migration methodology management team and the board knew that we had to re-invest in our core Together with OpenWay, the vendor, capabilities to support our longer-term we weighed the pros and cons of growth plans. possible migration approaches, from With the increase in digital banking the total reissuance of all our cards to and the popularity of online and self- the migration of the current portfolio service channels, we wanted to foster a overnight. We chose to migrate all our more direct, personalized and proactive credit and debit cards in one go, starting relationship with our customers. It was with the authorization component no longer feasible or cost-effective for immediately followed by the clearing us to continue upgrading the platform component. The ATM and POS network

10 payments cards and mobile | March | April 2016 www.paymentscm.com was handled differently: we switched it has provided well-designed internal international payment system. We are out devices one at a time over a couple processes, convenient interfaces and also working on several other projects of months. overall system reliability in every area to increase our competitive advantage, We completed the majority of of our business: authorization, clearing, such as launching contactless cards, the tasks ourselves in-house; we financial reconciliation, risk management, mobile and online banking, e-commerce had approximately 15 Tsesnabank marketing and customer service. acquiring and P2P transfers. And when employees directly involved in the At the same time, this platform allows something new and exciting appears migration process. The OpenWay team a seamless online integration with in the world of payment services and provided constant assistance at all different external systems. We were able products, Tsesnabank customers will be stages throughout the project. to integrate WAY4 with our core banking the lucky ones who are the first to get it. Summing up, we are satisfied with system and build a unique interface for Investment in technology and processes our experience of migrating to the our branch network. Branch managers is important for securing the future new system. All the work, including can now credit or debit funds from a of a business, but I firmly believe that international payment system customer’s card account in seconds and the investment in people — customers, certification, took only four months — see the balance updated immediately, staff and supplier partners — leaves from August to November 2014. irrespective of the branch where the the longest-lasting legacy. It is crucial After the project, a team of Tsesnabank customer banks. We call this ‘cardholder that teams share the same philosophy, specialists received accelerated training roaming’ — our customers love it and so principles and values. We are very at the OpenWay Academy, and now do our staff. thankful to OpenWay, and in particular implement these learnings in their day-to- With regard to data analytics and to its employees who supported this day work. Additionally, some employees business information (BI), the new project, for their professionalism and had worked with WAY4 products platform allows us to store, systematize caring approach to our customers. previously at other organizations, and also and retrieve customer and transaction pass on their know-how to colleagues. data more easily. We can analyze historic Our bank is quickly developing in-house patterns and forecast trends in a way Due to WAY4, we got rid expertise around the new processing that is critical for day-to-day product of a lot of unnecessary infrastructure. management, new product development duplication, checks and and innovation. business processes, Delivering tangible Right after the migration, Tsesnabank and freed staff up from benefits introduced a range of conceptually new routine procedures. services such as card customer roaming Now we have more time When selecting the new system, we across the branch network. In the autumn and capacity to develop were particularly attracted by the fact of 2015, we began issuing and acquiring the payment business. that the WAY4 architecture unifies the MasterCard cards for the first time, and front- and back-office. Consequently, soon we are going to work with another

Are you transforming your Email OpenWay today to request a payment processing infrastructure? conference call or a workshop:

OpenWay Group is able to share more case studies of [email protected] its clients who migrated from SmartVista, Base24 and Prefer to meet in person? Our team is waiting for you at ElectraCard solutions. We can advise on best practices and the forthcoming payment events! migration tips for: April 4-7, Copenhagen: Money20/20 Europe – OpenWay’s CMS and switch solutions booth #D20 Omni-channel and digital banking platforms Mobile wallet, e-money and other innovative payment May 31-June 1, Dubai: Cards & Payments Middle East – solutions OpenWay’s booth #H18

www.paymentscm.com payments cards and mobile | March | April 2016 11 card notes GLOBAL Digital ready, steady, go

The journey to digital money is a long one 2.0 Incipient Emerging In-transition Materially ready without quick fixes. However the digitisation 1.0 of money flows has a positive impact on 0.0 Deviations from baseline financial inclusion, and on governments, businesses and consumers. -1.0

According to a new report from Citi -2.0 Quartile 1: Incipient Quartile 2: Emerging Quartile 3: In-transition Quartile 4: Materially ready in partnership with Imperial College Egypt Tanzania Romania Morocco Israel Poland Finland Austria Nigeria Venezuela Mexico Mongolia Panama Italy Singapore Canada London, four building blocks determine Zambia Nepal El Salvador Peru Chile Indonesia United States Qatar Tunisia Mali Dominican Republic Greece Portugal Croatia Sweden New Zealand digital money readiness: government and Parkistan Iran Guatemala Namibia Saudi Arabia China Hong Kong Australia Argentina Mozambique Trinidad & Tobago Botswana Spain Brazil Norway UAE market support, financial and telecom Cote D’Ivoire Algeria Kuwait Ghana Czech Republic Kazakhstan United Kingdom Ireland Uganda Burkina Faso Russian Federation Honduras South Africa Philippines Netherlands Malaysia infrastructure, the presence of digital Bangladesh Ethiopia India Vietnam Turkey Thailand Japan Korea Cameroon Angola Sri Lanka Ukraine Costa Rica Hungary Switzerland Belgium money solutions, and consumer/business Gabon Chad Jamaica Senegal Slovenia Columbia Denmark France Kenya Germany propensity to adopt these. Source: Citi Imperial College Digital Money Index 2015 Finland topped the index for the third year running, followed by Singapore and the lowest call charges in the world due to The top two quartiles — ‘in transition’ and the US, which have been first and second fierce competition in the telecom sector. ‘materially ready’ — are characterised by respectively since 2014. In the ‘emerging’ quartile, readiness increasing consumer propensity to adopt The ‘incipient’ quartile of countries saw improvements were as a result of digital money solutions and the continued the biggest improvement in digital readiness. improvements in the ease of doing evolution of industry-specific use cases. This was due mainly to improvements business coupled with local innovation “The themes from previous findings in information and communications and entrepreneurship. Kenya moved up have been clear: the widespread use technology, and regulation that has two places due to local competitive of digital money has real benefits, but encouraged private sector competition intensity and willingness of businesses to adoption will receive a boost from solutions and investment. adopt new technologies. Romania moved that are tailored to specific markets, For example, Tanzania saw a four-fold up ten places as a result of the improved often developed in partnership with other increase in international internet bandwidth regulatory environment and business’ important players,” said Sandeep Dave, per user, and Bangladesh enjoys some of ability to comply. director for global digital strategy, Citi.

Apple and FBI face-off “dangerous precedent” that compliance version of its iOS operating system, and sign with the order would set. it with Apple’s secret key, so the phone will It has been billed variously as a battle of “Up to this point, we have done everything accept it as a legitimate software update. privacy versus security, or security versus that is both within our power Apple is contending that once surveillance, as the world’s biggest brand and within the law to help this intentionally vulnerable version and the FBI face off against each another. them [the FBI]. But now of its operating system exists, it will In mid-February, a judge in California the US government has be requested again. Furthermore approved a court order granting the FBI asked us for something we the key to an encrypted system “is permission to access data stored on the simply do not have, and only as secure as the protections iPhone of the terrorist suspect at the centre something we consider around it,” according to Cook. For of the San Bernadino shootings. The FBI is too dangerous to create. a privacy-focused company such eager to gain information about the dead They have asked us to build a as Apple, the potential ramifications of man’s associates and communications prior backdoor to the iPhone,” wrote Cook. bowing to the request for a backdoor are to the mass shooting last December, in Tellingly, the FBI is not asking Apple for enormous. which 14 people were killed and many customer data. Rather it wants the ability The case also has wide-reaching others injured. to unlock the terror suspect’s iPhone with implications for the technology industry, Apple is resisting the order. In a letter to an unlimited number of guesses without particularly around the use of encryption customers dated 16 February, Tim Cook, activating the auto-erase data feature after that is unbreakable even by its creators, CEO, Apple set out the need for encryption, a certain number of incorrect guesses. The international competitiveness and the threat to data security and the FBI wants Apple to develop a customised data sovereignty.

12 payments cards and mobile | March | April 2016 www.paymentscm.com EUROPE GSMA announces IOT guidelines Cybercrime underground The GSMA has published new guidelines designed to promote the split along national lines secure development and deployment of services for the growing Internet of Things (IoT) market. Cybercrime is a large, present and evolving found in the Surface Web,” according to Developed in consultation with the threat to all organisations operating online. the appropriately-named report North mobile industry, academics, analysts In 2015, global security software company, American Underground: The Glass Tank. and other industry experts, the Trend Micro, published a series of reports The North American marketplaces guidelines offer IoT service providers examining the cybercrime undergrounds for illicit goods and services are highly and those in the wider ecosystem of various countries. The company found competitive with many vendors offering practical advice on tackling common that whilst cybercrime is global, the various similar wares. This has driven down prices cybersecurity threats and data cybercrime undergrounds displayed and meant that vendors also compete privacy issues. particular national characteristics. on service, such as giving money-back “As billions of devices become “The Russian underground was the first guarantees. “Staying true to its roots, connected in the IoT, offering market of its kind. It offered crimeware to drugs remain the primary North American innovative and interconnected criminals and established itself via forums underground commodity." Indeed Trend new services, the possibility of sometime in 2004,” according to Trend Micro found that around 62 percent of potential vulnerabilities increases,” Micro. The company notes that it still all underground sites tracked sold some said Alex Sinclair, chief technology pioneers services, which then spread to type of drugs. A long-tail of other goods officer, GSMA. other underground marketplaces. and services is also available, notably fake “These can be overcome if the Two notable trends detected in 2015 were identity documents which can be used to end-to-end security of an IoT service increasing automation and an expansion of commit a range of crimes. is carefully considered by the service money laundering schemes. Criminals are Meanwhile in Europe, Trend Micro found provider when designing their service using now using more automated methods that the German underground to be “the and an appropriate mitigating to check the validity of stolen card details, most developed underground within the technology deployed. A proven and and manage escrow or ‘middleman’ European Union." It caters to a regional robust approach to security will guarantee services between anonymous market of German speakers and offers create trusted, reliable services that underground traders. Automation is helping a wide range of services. These include scale as the market grows.” to facilitate more sales by improving both stolen German, Austrian and Swiss credit The guidelines are intended to the transparency around the goods for sale card and financial account credentials, help service providers build secure and transaction processing. and malware developed by German services by outlining technologies New ways to launder money in the coders. However a peculiar quirk of and methods to address potential Russian underground include buying the German underground is the use of threats, as well as advice on how to implement them. airplane tickets, booking hotels or renting ‘Packstation' services. They also establish a risk expensive villas, sometimes using stolen “Most underground markets rely on assessment methodology financial details. people to cash in stolen credit cards for all components of an IoT The Russian underground is now highly and online accounts. In the German service. This helps to ensure that segmented according to different services. underground, users instead rely on the solutions are designed to collect, This has lowered the barriers to entry German postal service ‘Packstation’. This store and exchange data securely, for would-be criminals, who lack the allows sellers to send goods to publicly and can successfully mitigate necessary technical skills to build all the accessible metal boxes [often in railway cybersecurity attacks. component parts of an attack themselves. stations or other high footfall locations] The GSMA represents the interests Off-the-shelf or ‘crime as a service’ kits, for their buyers to pick up using a PIN and of mobile operators worldwide. plus home-study tutorials are readily access card.” The IoT guidelines have been available — a trend common across all Individual organisations may be limited developed through the connected underground marketplaces. in their ability to influence external living programme, designed to help The Darknet or Deep Web are often cybercrime risks. However the impact of operators accelerate the delivery of mentioned in connection with cybercrime. cybercrime on each organisation will vary new connected devices and services However in North America, cybercrime according to their risk response, making in the M2M market. hides in plain sight. “Many underground risk management a source of competitive sites are easy to access as they are often difference and advantage. www.paymentscm.com payments cards and mobile | March | April 2016 13 ADVERTORIAL The future of online payments:

European payment infrastructure provider, SIA recently integrated INFORM’s real-time fraud prevention solution into its platform for the benefit of their financial, corporate and retail clients. We asked Gabriele Boni, Financial Institutions Division Director, SIA and Dr. Andreas Meyer, EVP Risk & Fraud Division, INFORM about the future of online payments and combating fraud in an increasingly digital world. Dr. Andreas Meyer, EVP Risk & Fraud Division, INFORM

Q: As a leading innovator in Europe, SIA large retail clients. These include one-time customer-centric transaction monitoring has invested in several online payment passcode for e-commerce transactions, system. The alternative would be technologies. What does the innovation tokenisation and real-time fraud monitoring introducing security through an IT layer, landscape look like over the near-term? via RiskShield from INFORM. We really want for example giving consumers a device to be a centre of excellence for these types to digitally sign transactions. However, this GB: The future is increasingly instant. We of services. may decrease convenience and increase launched Jiffy, a real-time P2P money cost for banks in having to supply additional transfer service via mobile phone, in Italy Q: Instant payment will increase the speed devices. last year. It’s based on SEPA standards of payments for consumers and small and more than 50 banks, representing businesses, but how do you strike the right One of the main challenges of anti-fraud around 80 percent of bank accounts in balance between speed, convenience and solutions for instant payments is making the Italy, have already adopted the service. security? system fast enough. With a real-time payment Jiffy addresses low-value payments, which system, the fraud — and any losses — are also I think is also critical. Our roadmap includes GB: Well, this is top-of-mind at the moment happening in real-time. You may only have Person-to-Business for retail payments and as we’ve recently signed a letter of intent milliseconds to decide on a transaction. Person-to-Government for tax or public with EBA CLEARING for the development sector payments. of a pan-European infrastructure for real- At INFORM we are able to supply technology time payments. From our experience with to detect fraud patterns within huge volumes Q: What would you say is the biggest Jiffy, we have identified three main areas of data quickly, using self-learning, predictive concern for banks and e-commerce of security. Firstly, there’s the back-end analytics and suggestive intelligence merchants? central monitoring system, which allows us techniques. to provide rules-based alerts to our clients GB: Banks are driving towards digital — they based on our overview of all payments Q: RiskShield is a key part of SIA’s fraud want to engage more with consumers via across the service. Secondly, there are prevention service, what attracted you to innovative channels. On that basis, card- security guidelines for the banks with RiskShield in the first instance? not-present fraud remains the biggest regard to the authentication of end-users risk for everyone: banks, consumers and and so on. Finally, we provide security for GB: RiskShield is a very powerful, robust e-commerce merchants. the SDK with a digital signature to avoid system able to analyse huge transaction man-in-the-middle attacks. volumes within milliseconds. Considering SIA’s ambition is to become Europe’s leading that we manage about 10 billion clearing payment hub for financial markets. So, AM: People often see instant payments transactions and 3.3 billion card payments we’re working with partners to develop a as a trade-off between convenience and annually, we were looking for a strong suite of fraud prevention solutions to support security. But I think it’s more about finding solution and with RiskShield we have our financial institutions, corporate and the right balance using a sophisticated, selected the best technology.

14 payments cards and mobile | March | April 2016 www.paymentscm.com addressing the fraud challenge

To detect such attacks, you really need About INFORM a holistic, omni-channel view, which considers financial transactions as well INFORM is the global leader in advanced as external data sources and log data to fraud prevention solutions that mitigate model what is normal. This helps flag what financial crime risk and optimise operational is abnormal. efficiencies. RiskShield provides a self- learning anti-fraud solution with superb As a security provider, you don’t necessarily detection results that are reliable, fast and know what types of data or sources you responsive for largest payment providers in will have to consider, because you don’t the world, including SIA, First Data, Equens, know what fraud or attack patterns you SIX, ING and Rabobank. INFORM employs Gabriele Boni, Financial Institutions will see in the future. What’s more, with over 550 staff from more than 30 countries. Division Director, SIA online and mobile banking, you don’t have Visit us at www.riskshield.com We also liked INFORM’s approach. In standardised data interfaces unlike in the developing a proof of concept with us card payment area. The best approach About SIA to demonstrate system capability, they is to be flexible by design — to react to worked with us like a partner before any data or any source, but also to allow SIA is European leader in the design, becoming an actual partner. This was one quick deployment within the bank. creation and management of technology of the key points that helped us decide infrastructures and services for Financial on INFORM. Another important reason is Q: As both SIA and INFORM aim to deliver Institutions, Central Banks, Corporates and their expertise and experience in fraud the best possible security and payment Public Administration Bodies, in the areas prevention. INFORM has a long track experience, it seemed a logical decision to of payments, e-money, network services record of implementing anti-fraud solutions partner. What does the future hold for the and capital markets. SIA Group provides at banks and PSPs and they clearly know partnership? its services in over 40 countries, and what they are talking about. also operates through its subsidiaries in GB: The future is already here. We are Hungary and South Africa. The company Q: Cybercrime has become a huge reviewing the current fraud prevention has offices in Milan, Brussels and Utrecht. problem for the financial services industry mechanisms in place with a view to The Group has more than 1,600 employees. and the public. What is INFORM’s view implementing INFORM’s centralised Visit us at www.sia.eu on the measures needed to tackle this solution, not just for cards, but for payments problem? more generally and compliance. We are really looking to extend the INFORM GB: Cybercrime is gaining momentum partnership to other services that SIA within digital and technical areas and provides and manages. We want to work should be taken seriously within any together to attract more customers and company. At SIA, we have a centralised make them feel safe, secure and in control. approach for fraud monitoring and set up a dedicated internal department to focus AM: We are focused on the mission and on this. strategies of SIA, namely extending business for clients at an acceptable risk. We are AM: Cyberattacks are becoming more working together with SIA in new areas, sophisticated. With advanced persistent such as compliance where the rules and threats, for example, deploying malware regulations are becoming more complex into the bank environment is only the first and changing more regularly. Our agile stage to gather information about bank approach will help achieve compliance with systems and employee behaviour. The real less impact on staff and overall costs to the attack is launched as the second stage. direct benefit of SIA’s clients. www.paymentscm.com payments cards and mobile | March | April 2016 15 cover story

The future of digital payments Advancements in digital technology continued to shape the payments industry in 2015 as mobile, online and other digital forms of payments moved into the mainstream. From mass transit to gas stations and supermarkets, businesses of all sizes now accept various types of digital payment, making paying for goods and services quicker and easier. While this seems very encouraging, what does the landscape look like beyond 2016? by Joyrene Thomas

Thinking ahead from the past is always example, no-one upgrades to the latest 40 percent of chip cards shipped in fraught with hazards. When it comes to model of digital television immediately. 2014 included contactless functionality. the future of digital payments, it may Consumers only adopt new technology as Meanwhile on the acceptance side, 9.5 be a case of same-same but different. and when their old device or technology million NFC-capable terminals were Various technologies, propositions and use reaches the end of its natural life or breaks shipped globally in 2014. This represented cases will continue to co-exist in the digital down,” says Berns. a 33 percent increase on 2013, bringing payments future. “The payments industry has invested the worldwide installed base to 21.4 million “We believe the pace of change taking heavily in EMV so I think that this will be units, according to Swedish research firm place in the payments industry is going to the consumer interface for some while Berg Insight. increase as digital technology continues to come in the physical world — and Although consumers can already to advance,” says E-bai Koo, senior vice the survey results particularly around make higher value contactless payments, president, global network business, contactless reaching critical mass bear typically for payments more than €50, American Express. “While the number of this out. In the digital world, however, it’s a by authenticating themselves with their digital payment options is growing, we complete revolution.” fingerprint or PIN on their mobile devices, believe it is too early to determine whether “Consumer adoption of new digital this is currently only available at selected any one platform or form factor will win payment methods will be far more rapid as merchants. However, the acceptance out. Customers adopt new technologies you’ve got the perfect storm as technology, infrastructure for mobile contactless is when they meet their current needs better regulation and social desire to operate via to be extended. By 2017, all contactless than how they are being met today.” a single device are coming together.” terminals already deployed across Europe For John Berns, managing partner, will be upgraded to allow high-value Accourt, co-author of the Digital Payments NFC contactless: the de facto standard contactless functionality. And by 2020, all Report 2016, various factors are coming European POS terminals will allow this. together to drive the perfect storm for Contactless payments are growing Survey respondents were confident digital payments. strongly and NFC technology will be about contactless acceptance reaching “Historically innovation has generally one of the drivers of digital payments critical mass. The majority of respondents been hardware-driven so you have had at point of sale (POS). The Smart believed that this would happen by 2018. to wait and catch the innovation wave. For Payments Association reports that around 52 percent thought that North America

16 payments cards and mobile | March | April 2016 www.paymentscm.com cover story would achieve critical mass by 2018, experience — making them invisible — for payment providers were judged the whereas for Asia and Europe the figures greater speed, convenience and ease-of-use. most likely innovators in the wallet space were higher at 59 percent and 75 percent across all regions, according to the survey respectively. Digital wallets respondents. Mobile operators faired the On the issuing side, 53 percent of worst. Yet when it came to trust, payment survey respondents thought that critical With and live in networks and banks were most trusted mass would be achieved in North America many markets, digital wallets are firmly to deliver wallets, and merchants and by 2018. 62 percent thought that Asia back on the payments agenda. That mobile operators the least trusted across would be ready, whereas 72 percent felt said, there have been various high-profile all regions. that Europe would be at this level by 2018. causalities in the wallet wars, with more Unsurprisingly, acceptance and expected. Google convenience were the factors most likely Contactless/NFC is the de facto standard - Wallet has seen to drive wallet usage, according to survey when do you see critical mass in acceptance? poor take-up and respondents. Ubiquitous coverage, or 75 North America numerous iterations allowing the consumer to use the wallet Europe since it was first wherever they want to use it at the 50 Asia Pacific launched in 2011. Visa very least, preferably via a simple, one-

25 Europe’s digital wallet click checkout are the fundaments of a V.me by Visa has winning proposition. 0 been withdrawn two Technology should be regarded as an 2016 2016 - 2018 2018 - 2020 years after launch enabler to the success of digital wallets, Wearables and connected commerce and the investment of around €300 million. rather than the starting point for a solution. “There are a lot of digital wallets out Due to the investment in EMV, the payments Where are wearables? They are already there — some of the local schemes are industry has favoured NFC for point-of-sale here, for example American Express and looking at this — but we are starting mobile payments, and has perhaps been fitness tracker Jawbone announced a to see some consolidation,” said Berns. somewhat standoffish about QR codes. partnership in April 2015. This marked the “The revised EU Directive on payment Consumers, however, appreciate the speed first time consumers could use a wearable services (PSD2) may well lower the entry and convenience of scanning such codes fitness tracker with an embedded NFC chip barriers even further to new entrants in to make retail or bill payments in-store. for Amex payments. the space, which could interest the internet Tencent’s WeChat wallet and Alibaba’s As second- and third-generation giants. After all, iTunes is a stored value have capitalised on this insight in devices are deployed, the market for mechanism, so it’ll be interesting to see how incorporating choice as well as speed and wearables and connected commerce Apple, Google and Amazon compete in the convenience into their propositions. Their generally will continue to grow. According wallet wars.” respective wallets have been available to the International Data Corporation Handset manufacturers and alternative to users in China for some time and both Worldwide Quarterly Wearable Device Who are the leading innovators in the digital wallet space? Tracker, the wearable market worldwide will reach 111 million units in 2016, an EUROPE increase of 44 percent on 2015 figures. Banks Payments Network ( AmEx, Discover, MasterCard By 2019, total shipments are forecast HIGH IMPORTANCE Visa, China UnionPay, JCB) to reach 214 million units, a five-year Alternative providers ( PayPal, Skrill, Alipay etc.) compound annual growth rate of 28 Mobile Operator ( Vodafone, T-Mobile, Virgin) LOW IMPORTANCE Internet Giants ( Amazon, Facebook, Google, Twitter) percent. Merchants and Retailers ( Walmart, Alibaba, Tesco)

Handset Providers ( Apple, Samsung, HTC, LG) The debate around when wearables 0 10 20 30 FinTech Players ( Square, Stripe, Zapp etc.) will reach critical mass, how much they PERCENTAGE (%) will displace cash and cannibalise existing ASIA PACIFIC NORTH AMERICA card spend almost misses the point.

Wearables are not for every consumer HIGH IMPORTANCE HIGH IMPORTANCE or every payment situation. However they broaden the scope of digital payments LOW IMPORTANCE LOW IMPORTANCE beyond the plastic card. They are also part of the greater trend of integrating 0 10 20 30 0 10 20 30 and embedding payment into a broader PERCENTAGE (%) PERCENTAGE (%) www.paymentscm.com payments cards and mobile | March | April 2016 17 cover story companies are looking to expand into other are replaced with tokens, eliminating the particularly with the global movement markets and regions. need for merchants to store account towards immediate or real-time There is no single use case or one- numbers in the clear, and limiting the payments. Real-time settlement on size-fits-all for digital wallets. As with so potential damage if their systems are the back-end is key to this because it much in the payments industry, winning compromised. Tokenisation also enables minimises risk for everyone. The merchant propositions must address both acceptance issuers to deploy new digital payment receives faster settlement. The consumer and usage in a compelling way. They build services, such as Apple Pay and Android sees the transaction immediately and is scale quickly by piggy-backing existing Pay, in more secure ways. able to support, approve and challenge it acceptance infrastructure, rather than “Digital technology has also enabled as appropriate. trying to re-invent it. As few consumers go American Express to communicate with “Immediate payments is great fit with out of their way to pay in a different way, and service our card members in more what is happening in the digital space winning propositions offer incremental ways. They can sign up to receive alerts and the perfect storm I mentioned earlier. value to consumers in addressing an about suspicious activity on their accounts So the short answer about the future of un-met or unacknowledged need or pain through e-mail, SMS and push digital payments is: there is going to be point compared with existing alternatives. notifications,” adds Koo. more of it,” according to Berns.

Security and trust The future of digital payments Succeeding in the digital future

When it comes to security and trust in What does the future of digital payments The digital future is about scale, digital payment methods, the present is look like? The future will be more omni- partnerships and speed-to-market. the baseline for the future. “Security is first channel, namely using all sales channels According to Koo at American Express, and foremost for American Express. When interchangeably to serve the customer. advancements in digital technology have we make new technology available to our More ‘click-and-collect’ and ‘endless opened up opportunities for companies of customers, we do so in a way that provides aisles’ propositions are expected as all sizes to get into the payment business, the same level of security they are used to merchants consolidate their back-end and to grow scale almost overnight. receiving from us when using traditional systems. However, just as service will “We believe that scale wins and charge and credit cards,” says Koo. become more channel agnostic, it will partnership is key to achieving success. The American Express Global Network Opportunities and risks exist in the same also become more device agnostic as Given the complexities of the payments future. They are inherent to one another. customers expect to transact from any industry, companies that can find ways to As Koo explains: “While advancements in device, any time, anywhere. The future partner and break into the ecosystem have online and mobile payment options have is increasingly digital, which means a much better chance of succeeding.” widened the scope of fraud, they have also a greater take-up of digital payment “If you look at the amount of funding We power business growth for our partners, by building created new opportunities to fight fraud.” methods. going into FinTech at the moment and the Koo cites the American Express Token These methods include automated rate at which technology and innovation impactful commerce solutions such as contactless Service launched in November 2014. With clearing house (ACH) payments, which are moving, I think that the salvation tokenisation, real card account numbers are expected to rise in prominence, of traditional players is partnerships and EMV chip card payments, backed by our unique and abandoning the build-it-yourself Who do you trust to deliver digital wallet services? experience as an issuer, acquirer, and network. mentality,” says Berns.

NORTH AMERICA Banks “Payment industry incumbents and Payments Network ( AmEx, Discover, MasterCard traditional players definitely have a role HIGH Visa, China UnionPay, JCB) IMPORTANCE Alternative providers ( PayPal, Skrill, Alipay etc.) to play in making good lending decisions Visit www.amexglobalnetwork.com to learn more. Mobile Operator ( Vodafone, T-Mobile, Virgin) and managing deposits. Beyond these LOW Internet Giants ( Amazon, Facebook, Google, Twitter) IMPORTANCE Merchants and Retailers ( Walmart, Alibaba, Tesco) core functions, the technology innovators

Handset Providers ( Apple, Samsung, HTC, LG) 0 10 20 30 40 also have a role to play. Fortunately the FinTech Players ( Square, Stripe, Zapp etc.) PERCENTAGE (%) industry is big enough for everyone to

EUROPE ASIA PACIFIC have a role.”

HIGH HIGH IMPORTANCE IMPORTANCE The Digital Payments Report 2016 provides views and projections on the LOW LOW IMPORTANCE IMPORTANCE state of payments based on research

0 10 20 30 40 0 10 20 30 40 and a survey of industry executives,

PERCENTAGE (%) PERCENTAGE (%) observers and analysts.

18 payments cards and mobile | March | April 2016 www.paymentscm.com

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The need for speed

by Joyrene Thomas

Consumer-facing technology brands have done much to reset customer expectations around speed, but also convenience, value and choice. Consumers can send and receive e-mail across the globe almost instantly. They can stream digital content live, or summon a cab or a meal within minutes. What are the implications of this need for speed for the payments industry? And to what extent are real- time payments the rails on which future innovation will run?

Life in the digital age is resetting our behavioural, some technological and systems live worldwide. But what are real- notions of speed and time. The average others regulatory. Momentum behind real- time payments exactly? attention span in 2015 was 8.25 seconds, time payments is building globally. We Definitions vary and not all systems down from 12 seconds in 2000, according examine the drivers, the implications for worldwide currently conform to the one that to Statistic Brain. This is now less than the end-users and those who serve them, and follows. Generally real-time payments are nine-second attention span of a goldfish. what the future may hold for payments in where funds transferred are available on In a world that seems to be on permanent real-time. the beneficiary’s account instantaneously, fast-forward, waiting five-to-six days for a immediately or in real-time. A real-time cheque to clear, or three days for a bank The real deal payment system must be able to send transfer to reach the beneficiary’s account, and receive payments 24x7x365. Once is like being stuck in reverse. It seems like Real-time payments systems are not new. they are processed, payments cannot be banking from a bygone era. The first domestic real-time payments recalled. There is a finality to payment, The payments industry is at the system was launched in Japan in April but also a certainty as payments sent to a confluence of many trends, some 1973, and there are currently 18 real-time beneficiary’s account are either confirmed

20 payments cards and mobile | March | April 2016 www.paymentscm.com real-time payments to both the payer and payee or rejected. Enterprise technology has also advanced ten percent of the fee in real time when “In most countries, you tend to have a significantly since the first real-time goods were loaded onto a ship. They would couple of payment systems: automated payments systems were launched 40 then pay the next ten percent when the clearing house (ACH) and real-time years ago. “The banking community has ship arrived at its first port and so on until gross settlement (RTGS),” explains Barry ambitions to improve and modernise the the ship arrived at the final destination Kislingbury, director, solution consulting, payments infrastructure,” says George whereupon the payer would settle the immediate payments, ACI Worldwide. Evers, immediate payments services outstanding amount in full. In this way, real- “ACH tends to be for low-value, high- director, VocaLink. “This allows innovation time payments could enable businesses to volume payments, such as paying the and defends against FinTech activity that offer improved invoicing terms to suppliers gas bill. It takes about three days to settle. is starting to bite into every element of a that could help increase working capital. With RTGS, the payment is settled on the bank’s product portfolio." The infrastructure For retailers, real-time payments could same day. This system was intended for investments made now will power the enable just-in-time stock management high-value, low-volume payments, such products and services of the future. with the associated operational and cost as buying a house or for corporate or efficiencies. This obviates the need to carry interbank payments.” A combination of factors is an inventory, and could lead to fulfilment A combination of factors is “Real-time payments sit in the middle. drivingdriving the the change change [towards[towards efficiencies. When a customer ordered They are an ACH-type payment over an real-timereal-time payments] payments] andand these these an item, the retailer would in turn place an RTGS-infrastructure, so they are performed differdiffer from from countrycountry toto country.country. order with their supplier and pay in real in real-time but at the sort of price an ACH GeorgeGeorge Evers, Evers, immediate immediate paymentspayments time. The supplier would then dispatch the services director, VocaLink would charge for a payment — so much services director, VocaLink item either to the retailer or to the customer lower than RTGS.” directly. The retailer would not have to Policy makers and regulators are pre-pay or store stock. They would also The drivers for real-time payments clearly interested in making payments increase fulfilment options to the customer, more efficient, interoperable and cost- and cut the costs of wastage due to unsold The speed, certainty, coverage and cost effective, with a view to driving economic goods. Just-in-time stock management of real-time payments is driving increasing growth, innovation and financial and social also has implications for the retail store of interest in the mechanism. Consumers do inclusion. The lower costs of real-time the future in terms of the purpose, design not necessarily understand bank back- payments versus traditional card-based or and number of stores. office clearing and settlement processes, RTGS payment is also an attractive feature For consumers, a number of possible and nor should they. When they can for regulators, as well as other participants propositions draw on the speed of real- browse, buy and download digital goods in the payments system. time settlement. For example, emergency in real-time, any time of the day or night, funding propositions where the transferred they cannot understand why the digital This time the revolution is for real(-time) funds are available immediately to the movement of money is not instantaneous. beneficiary (e.g. social benefit claimant or They expect to be able to make and ‘Revolutionary’ is a somewhat over- child). With the rise of of part-time work, mini receive payments faster. used and de-valued term in the age of jobs and zero-hours contracts, employers Advancements in technology are also PR and hype. However to what extent could also pay workers quickly and easily making real-time payments possible. There is the term justified in the context of via real-time payments. Gambling operators were around 4.7 billion unique mobile real-time payments? could accept wagers and pay winnings in subscribers worldwide in 2015 (a 63 percent “Real-time payment is revolutionary real time, avoiding customer disgruntlement penetration rate), according to the GSMA, a because it’s game-changing,” says at the traditional two day wait for payment body that represents the interests of mobile Kislingbury. “If you take any bank payment card credits to settle. operators worldwide. When the smartphone process, what would happen if that could For banks, real-time payments will be no is the device of choice for accessing the be done in real time?” less significant. They will be the catalyst — internet — and is the only means a consumer Businesses and corporates have huge and perhaps the imperative — for them to has of getting online in some countries — this scope to use real-time payments to improve devise new business cases and revenue cannot but change the way consumers, their cashflow, supply chain management, streams. “The banks actually have to businesses and governments interact and stock control and reconciliation. This could change their business models. It’s no longer transact. Mobile phone ownership and lead to productivity and efficiency gains about making money from the payment. access to high-speed broadband are also but also to direct bottom- benefits. It’s about making the payment invisible and pre-requisites for mobile-initiated push and For example, a company with a global offering value-added services around it,” pull payments. supply chain could offer to pay suppliers comments Kislingbury. www.paymentscm.com payments cards and mobile | March | April 2016 21 real-time payments

There is an obvious parallel with with a large data dictionary, defining a Keeping it real merchant acquiring, which is becoming wide range of business processes and an increasingly commoditised business at the data required to support them. “It’s Besides interoperability to facilitate cross- the transaction processing level. Acquirers a much bigger message, but technology border payments, what needs to be in are already revising their business models has moved on and can cope with that. place at a domestic level to implement a to secure their futures. They are exploring You can describe the entire transaction: real-time payments system? According how they add more value to customers, remittance information, purchase order to George Evers at VocaLink, alignment and devising innovative, chargeable numbers, invoice numbers. There’s a whole across a broad community within the services for which merchants would be raft of things you can do, if you’ve got that country is critical. willing to pay. “It’s exactly the same data,” explains Kislingbury. “Real-time payments delivers benefits argument across correspondent and retail to banks, consumers, government and banking. Moving money is what banks The banks actually have to businesses of all shapes and sizes,” he The banks actually have to do, but there’s no real value in that these change their business models. says. “To ensure ubiquitous adoption, it is change their business models. days because everyone can do it. It will best to engage widely to agree a common It’sIt’s no no longer longer about about makingmaking be about what value you bring to your moneymoney from from the the payment. payment. It’sIt’s approach to solving problems and ensure customer,” says Kislingbury. aboutabout making making the the paymentpayment the needs of these different communities The revised EU Directive on payment invisibleinvisible and and offering offering value- are met through the solution.” services (PSD2) is intensifying the pressure addedadded services services around around it. As with the implementation of many on European banks. Improving access BarryBarry Kislingbury, Kislingbury, director, director, solutionsolution payment technologies — everything from consulting, immediate payments, ACI to payment accounts and increasing consulting, immediate payments, ACI EMV chip and PIN, to contactless, to Worldwide transparency around payments and Worldwide mobile payments — critical mass on the charges are two of the main themes consumer and merchant side together running throughout the Directive. This is There is huge potential for banks is key. Achieving this is partly a matter of not a peculiarly European phenomenon. in terms of innovative, chargeable ensuring that the system supports end- Banking executives worldwide are services they can overlay on a real-time user requirements from a technical and currently grappling with how they can payments infrastructure based on ISO operational point-of-view. However it is create and maintain value. And how they 20022. Unsurprisingly, many countries also a question of coverage (or reach) and can capitalise on the move to a more open with live real-time payments systems are access. banking environment. actively looking to upgrade to ISO 20022. Faster Payments Scheme Limited This includes China, South Africa and (FPSL), the company behind various UK Faster, richer data Switzerland. Meanwhile, countries such payments systems, is looking to open up the as Australia, the Eurozone countries and infrastructure to a broader base of banks and Value is increasingly bound up with data. the US are building real-time payments PSPs to provide easier and more cost-effective Thanks to the ISO 20022 standard, real- systems on ISO 20022 from the outset. access. Consequently it is having to address time payments come with speed but also However to enable cross-border challenges germane to real-time payment with richer data. Kislingbury explains the payments regionally, if not globally, schemes generally, namely balancing access background and differences between ISO requires interoperability. This came a with security and the integrity of the system, 8583 and ISO 20022. step closer in August 2015 with the particularly around 24x7 operation, payments “ISO 8583 is a small, lightweight publication of the first draft of ISO 20022 delivered in seconds, high availability and message, designed to move the value of messages. The draft was the result of certainty of funds. a payment quickly across systems built on work by the ISO real-time payments FPSL is introducing aggregator the technology of 40 years ago. It’s quite group (RTPG), made up of over 50 models plus a new settlement model a complicated, heavily modified standard international experts. between participants to encourage direct because there is such a small amount of “There are a lot of countries designing access. “This creates a much data. All the schemes use the standard and building real-time payments on easier environment for small banks, who differently to achieve what they need to. ISO 20022. Historically those countries, are currently restricted to being secondary Although it’s a standard, it’s a type of non- which have already built systems on the suppliers through a major bank, as they standard as well.” standard have used it slightly differently. will have direct access,” explains Bob ISO 20022 is not actually a messaging We wanted to put together a best Mackman, director, Mackman Associates, standard. It is a standard to develop practice guide to ensure interoperability,” a vendor participating in the Access to standards. Or a standard that helps define explains Kislingbury, who participated in Payment Systems programme run by FPSL. a business process. ISO 20022 comes the ISO RTPG. “At the moment, the smaller banks are

22 payments cards and mobile | March | April 2016 www.paymentscm.com real-time payments dependent on the facilities of the major Real-time payments is not the panacea to around real-time payment is justified. Real- bank. This way, they’ll get much closer cure all payment ills. Real-time payments time payment has the potential to be game- to 24x7 at a much more realistic price, are fast, but how much speed does the changing for all participants in the payments so they’ll be able to offer these sorts of end-user need, and when? Real-time system. So far, the majority of real-time services," says Mackman. payments based on ISO 20022 can pass payments systems are based on push richer data, but how much more data payments. But pull-based real-time payments does the end-user need, and when? in the retail and government sectors will I believe that real-time have an even greater impact on incumbents’ payments will be the new The future is happening in real-time business models and revenue streams. The normal for payment. And risk of disintermediation, particularly for card that real-time payment Unless there is a compelling reason to schemes, of future innovation based on real- infrastructures will allow change, payers are not usually looking time rails is very real. convergence of batch for a new way to pay. Thus, devising How long will it take for real-time multi-day or same-day compelling use cases and propositions at payments to become a reality in more and systems through to card the right price will be critical to the take-up more countries, and internationally? When clearing infrastructures. of real-time payments. As will getting more will then be now? Soon. While there is no George Evers, immediate participants to use the system, thereby such thing as a simple payments system, the payments services director, generating more value for everyone who future is happening soon. However it may yet VocaLink participates. be happening sooner than soon. It may be However, the momentum and excitement happening in real-time.

Live real-time payments systems Planned real-time payments systems

Brazil - SITRAF Poland - Express ELIXIR Australia Chile - TEF Singapore - FAST Eurozone China - IBPS South Africa - Real-Time Clearing US Denmark - Nets South Korea - HOFINET Iceland - RTGS System Sweden - BIR India - IMPS Switzerland - SIC Key Japan - Zengin Taiwan - CIFS Live real-time payments systems Mexico - SPEI Turkey - TIC-RTGS Planned real-time payments systems Nigeria - NIP UK - Faster Payments

www.paymentscm.com payments cards and mobile | March | April 2016 23 issuing and acquiring The future of the merchant payment ecosystem

With a focus on merchant acquiring, which increased the conversion of the the Merchant Payment Ecosystem (MPE) merchant, and for which they would be event in Berlin in February connects all willing to pay. parts of the payment ecosystem. Indeed, “There are no global acquirers because the evolving and dynamic nature of the it is so difficult and so much investment is ecosystem was one of many key themes necessary,” said Markus Rinderer, founder necessarily remain partners. Co-petition to emerge over the three-day conference. and CEO, PAY.ON. “As long as so much also becomes an issue,” he warned. The industry has seen new entrants, such investment is necessary and providers “You need to have certain competences as mobile point of sale (mPOS) gateway bring value, then there is no reason do in-house, which is why we have started to providers, not in existence at the first this for free,” he continued. Kalifa did not strengthen our competences on the risk MPE event nine years ago. Organisations, advocate free payment acceptance either, management and e-commerce side.” such as PSPs and multi-channel payment suggesting that what acquirers provided Making payments invisible integrators, have risen in prominence and had to be a bundle — a proposition — with power. Meanwhile incumbent organisations payments as part of the bundle. Numerous speakers explained how their have integrated themselves forwards and organisations put genuine focus on the Partnering for business success backwards in the value chain to offer more merchant and end-consumer needs. and different services. They are intent on In moving beyond payments, there is a This is and cannot be mere lip service. capturing more value from their customers necessity to partner. The build-it-yourself Organisations must build propositions and increasing relationship ‘stickiness’. or build-it-from-scratch era has passed. around real customer needs to be Collaborating to improve speed-to-market, successful, now more than ever. Beyond payments coverage and service to merchants However, for a gathering of payments This sentiment was captured by Ron Kalifa, through smart partnerships, alliances, industry professionals, who like nothing deputy chairman, Worldpay during an agreements has become the new order. better than talking about payments and on-stage interview when he was asked There was a sense during the conference how they make payments happen, it was how he would describe his business. “We that partnering for business success across refreshing to hear a new humility. Making are a provider of services to merchants,” the ecosystem would only continue. payments invisible as part of a frictionless he said. “Historically we used to be called “When you look at the forecasts in experience for the end-user has become merchant acquirers, but I think that we are global commerce and the Internet of increasingly top-of-mind. starting to push the boundaries in terms of Things, it is just going to be more complex “If you manage to hide the payment what merchant acquiring is about.” from a scalability, regulatory and security in a great buying experience, it can be There is a clear strategic need for perspective. The complexity will not go a big source of value,” said Marc-Henri acquirers, particularly in Europe, to look away. Will it be possible that one player is Desportes, general manager, Worldline in beyond payments and payment processing capable of doing it all? Or will technology the opening keynote speech. “Payments for new sources of revenue. Whilst not a backbones and providers enable this?” must be seamless, instant, effortless — new thought, with the downward pressure asked Rinderer. which is not easy. You must have strong on interchange and experience from the However, Marcus Mosen, CEO, ConCardis solutions, reliable authentication, a great US where acquirer margins have been sounded a cautionary note: “Partners don’t online gateway, and capacity to adapt to squeezed for some time, looking beyond various geographies. It is and has to be payment processing has become critical. behind the scenes,” he said. “Processing is a commodity service going- This goes to the core of what successful forward. It is the sorts of things that you do acquiring businesses must become. They alongside that drives value,” said Kalifa. must offer compelling, needs-driven Would payment acceptance be free services in addition to payment processing. in the future and subsidised by other They must be open to partnerships and services? Speaking in a roundtable, Gijs focus on real end-customer needs seen op de Weegh, COO, Payvision felt the from the outside in, not projected from objective was to offer additional products inside the organisation out.

24 payments cards and mobile | March | April 2016 www.paymentscm.com €1 billion revenue from mobile wallets in Europe from 2021

Mobile wallet transaction Card payments in Asia Pacific set numbers in the European Union will to double to $19.5 trillion by 2020 experience a CAGR of 61.8 percent over The value of card payments in Asia Pacific MasterCard account for 15 percent and 2016-2021, ensuring grew by 25 percent in 2014 to reach $9.0 nine percent of the value of Asia Pacific the revenue for the trillion, accounting for just under half of the card payments. JCB makes up two percent payments industry will global total card expenditure. overall, but has a 22 percent share in its pass the €1 billion bar by The level of cardholding in Asia Pacific home market of Japan. 2021, according to a newly is comparable to most other regions, but Share of Card Payments by Scheme published market research by Intelling. usage per card remains low. Cash continues in Asia Pacific, 2014 Focusing on the ‘Pay’ mobile wallets, to be used heavily and card acceptance is Apple Pay, Samsung Pay, Android Pay etc. limited in some countries – Asia Pacific’s Other 3.7% Smart Insights analyses the evolution of the JCB 2.0% density of outlets to population is far below Mastercard 9.2% contactless cards and mobile payments the global average. $9 Trillion Visa 15% market in the region. The report finds that, so Between 2014 and 2020, RBR forecasts UnionPay 70% far, financial institutions and mobile network the value of payments with cards issued operators have all plunged into mobile in Asia Pacific to more than double to $19.5 Source: RBR payments by introducing mobile wallets as trillion, stimulated by almost three-fold a payment tool. However, none of them has RuPay fastest growing domestic scheme growth in the number of merchant outlets, actually met a wide consumer adoption. with the bulk of these in China. The growth Domestic schemes are issued in almost all According to key findings in the report, in value will be uneven across the region countries in the region, but are generally following years of largely unsuccessful pilots because countries are at vastly different used for cash withdrawals rather than and commercial launches in Europe, tech stages of maturity: Japan, South Korea and payments and in most cases their share giants have come with their own strategy Taiwan have reached maturity in terms of of payments is static or declining. RBR’s and vision of how mobile payments should be card penetration but India, Indonesia and study shows that, at a regional level, they organised. The ‘Pay’ companies have moved Pakistan are underdeveloped and still have make up less than two percent of value. further, skimming the cream from already substantial scope to grow. The fastest expanding domestic scheme mostly implemented and ready contactless is India’s RuPay, operated by the National payments infrastructure. As they are steadily UnionPay accounts for 70 percent of Payments Corporation of India (NPCI). It following their m-wallet market vision and Asia Pacific card expenditure has seen phenomenal growth since its implementing their m-payments strategy in UnionPay is the largest card scheme in Asia inception in 2012, with issuers attracted the US, tech giants’ m-wallets will likely be Pacific and its share of card expenditure by its lower processing fees and, by the effective in Europe as well. rose from 65 percent to 70 percent in 2014, end of 2014, RuPay’s share of India’s Thierry Spanjaard, CEO of Smart Insights card expenditure had already reached six explains: “Even in a time of increased Value of Card Payments in Asia Pacific percent. competition and more challenging markets, $19.5 Trillion the entrance of the electronics giants Apple UnionPay will face greater competition Samsung and Google on the European in its home market market is bound to demonstrate its efficiency

$9 Trillion UnionPay is expected to maintain its position and profitability.” as the largest scheme in Asia Pacific, in “Although we see a growing adoption the short term at least. The scheme’s of tech giants’ m-wallet initiatives in their 2014 2020 dependence on China makes it more home markets, companies like Apple, Google vulnerable than its competitors to economic and Samsung have to adapt their m-wallet Source: RBR volatility and the end of its monopoly on business models to the specifics of the reflecting the rapid expansion of the bank card clearing in China has opened European market," continues Artur Khakimov, Chinese cards market. UnionPay cards up the Chinese market to foreign players. industry analyst for Smart Insights and author are issued in nine further countries in Going forward, UnionPay will face increased of the report. the region, but less than one percent of competition, with all the international card "Indeed, the report shows these tech scheme spending in the region originates schemes eager to exploit the potential that companies have already set up necessary from cards issued outside China. Visa and a more open Chinese card market presents. modifications ahead of the European launch.” www.paymentscm.com regulation EU Commission and US agree EU-US Privacy Shield

On 02 February 2016 the European Gateley plc, firms transferring personal Commission and the US announced a data from the EEA to the US should be able political agreement on a new framework to rely on an umbrella protection, rather for transatlantic data flows. Dubbed the than on individual agreements negotiated EU-US Privacy Shield, the new agreement with individual US companies. will allow companies to transfer and “Firms can also raise any non- process the data of EU citizens in the US compliance by US companies with their given certain privacy guarantees. local data protection regulator, and The agreement comes after the individual data subjects can do the same. European Court of Justice (ECJ) ruled The Department of Commerce and adequate protection as there may not in October 2015 that the previous Safe Federal Trade Commission will police the be an actual or sufficient change in US Harbour agreement was invalid, as it arrangements and there will also be a new practices.” did not provide adequate protection for ombudsman.” Timings European citizens. Austrian law student, “There will be alternative dispute Max Schrems, had argued that the Irish resolution processes, the burden of which At the end of February, the European data protection regulator had failed to is likely to fall on businesses. So clearly, Commission issued the legal texts that protect him from mass surveillance from there are more avenues for complaint, would put the EU-US Privacy Shield the US National Security Agency. but also increasing layers of bureaucracy into practice. A committee comprising Facebook along with around 4,500 other affecting complaints about transatlantic representatives of the various member companies was making use of the 15-year data transfer.” states will be consulted. The EU data Safe Harbour agreement. This allowed US Annual reviews of the Privacy Shield will protection authorities (the Article 29 companies to transfer data on European take place and with future legal challenges Working Party — WP29) is now also in citizens across the Atlantic, if they agreed likely, it remains to be seen whether the the process of reviewing the detail of the to meet certain conditions, which included agreement remains a long-term solution. Privacy Shield. In a statement prior to notifying customers when their data was the publication of the legal texts, WP29 Future legal challenges possible collected and used. said that it expected the Privacy Shield Speaking at the beginning of February, As well as ruling Safe Harbour to be to contain certain key elements, so the Vera Jourová, European commissioner void in the Schrems case, the ECJ made it text could have a bumpy ride prior to for justice, said: “For the first time ever, the clear that data protection authorities in the implementation. US has given the EU binding assurances EEA could assess whether data transfers The data clock is ticking that the access of public authorities for to territories outside the EEA provided an national security purposes will be subject to adequate level of protection. If any of these “The prudent course of action is to continue clear limitations, safeguards and oversight local data protection authorities rule in this to proceed as if the Privacy Shield were mechanisms.” way or have their decisions appealed, then not in place and enter into individual data “In the context of the negotiations for the ‘adequate level of protection’ issue processing agreements with US companies this agreement, the US has assured that it could find itself in front of the ECJ again. where possible. These continue to be the does not conduct mass or indiscriminate “Therefore, just as with the Schrems most reliable protection for data transfer surveillance of Europeans. We have case on the old Safe Harbour regime, and to third parties, but even these may come established an annual joint review to regardless of the new political agreement under legal challenge in the future on a closely monitor the implementation of on the EU-US Privacy Shield, the risk case by case basis,” said Evans. these commitments.” remains the same,” explained Evans. “The clock is ticking from a data “The comfort given by the US on access protection compliance perspective. Once Far from a done deal to personal data by its security agencies the Privacy Shield has been implemented But what does the agreement mean in appears to come in the form of letters to and a reasonable period of time has practice for firms transferring data from the EU, which are unlikely to have the force passed, EEA data protection regulators will the European Economic Area (EEA) to the of law. Depending upon the content of expect EEA firms to have their affairs in US? According to Andrew Evans, partner, the Privacy Shield, it still may not provide order for personal data transfer to the US.”

26 payments cards and mobile | March | April 2016 www.paymentscm.com 2015-16 EDITION ORDER NOW Payment Cards Statistical Yearbooks 2015-16

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www.paymentcardyearbooks.com mobile payments IN ASSOCIATION WITH  Global mobile payment market to reach $620 billion in 2016

With major smartphone brands Apple smartphones that come with a fingerprint Yapi Kredi, and National Australia Bank. and Samsung making a big entrance into scanner has risen. HCE is a software-based alternative the mobile payment business, the total In fact, this biometric technology is now to hardware-based secure elements revenue of the worldwide mobile payment a standard feature in most mainstream (SE), which are SIM or microSD cards market in 2015 reached $450 billion, smartphone models. We can expect over modified to hold encrypted electronic according to the global market research 40 percent of the smartphones worldwide identities. firm TrendForce. will be able to read fingerprints by the Previously, making a mobile payment By the end of 2016, the total revenue end of this year.” required a device that had near-field is estimated to arrive at $620 billion, Main battlegrounds for competing communication (NFC) function and representing a massive growth of 37.8 mobile payment service providers will be contained a SE. Under a HCE-based percent year on year. banking and retail sectors. payment mechanism, encrypted banking Apple Pay and Samsung Pay especially Large international banks have information resides in cloud servers or have been scrambling to China, which been energetically building their smartphone apps. Therefore, mobile users makes up a huge slice of the mobile mobile payment networks around the who wish to make payments via NFC will not payment market. The rival service globe. Hsieh said that banks will be need to get another modified SIM card, nor providers both struck a deal with the instrumental in choosing the dominant will they be limited in their carrier options. government-run Chinese bank-card mobile payment method in this market. Besides financial institutions, retailers are payment processor China UnionPay Additionally, the related technologies also looking into developing their own earlier this year. Hence, Chinese iPhone will expand into more applications mobile payment services. Leading US retail and Samsung phone users will be able and sectors if large banks lead the chain Walmart, for example, launched to make mobile payments this year, collaboration between financial service Walmart Pay last year with the hope provided that their models are of the providers and retailers. of building its payment business on its latest generation with upgraded software. One mobile payment technology that customer base of 22 million. Walmart Pay is The rapid diversification of mobile is seeing increasing adoption among expected to be available in all of Walmart’s payment services has accelerated the banks is host card emulation (HCE). US stores this year. Target, the second collaboration among the participants The list of institutions that deploy HCE largest discount retailer in the US, will soon of the industry ecosystem (e.g. financial include Union Bank & Trust in the launch its mobile wallet solution to assert institutions and telecom operators), US, Italy’s Intesa Sanpaolo, Turkey’s control over its mobile transactions. resulting in the formation of industry- wide standards and the maturation of Figure: Total Revenue of Global Mobile Payment related technologies. Market, 2015-2019 “Service charges from banks, telecom 0.4 operators and third-party payment 12,000 10,800 platforms constitute an enormous business 0.35 37.8% 7,800 9,300 opportunity in the mobile payment 10,000 0.3 market,” said Kelly Hsieh, senior manager 8,000 0.25 for mobile communication and end 6,200 25.8% 16.1% 0.2 device research at TrendForce. “However, 6,000 4,500 hardware and software developers also 19.2% 0.15 4,000 have significant roles in the industry.” 0.1 Hsieh added: “For instance, the 2,000 0.05 takeoff of the mobile payment has led 0 to the rapid market growth of fingerprint 0 sensor chips. Since Alibaba’s Alipay and 2015 2016(E) 2017(F) 2018(F) 2019(F) Tencent’s WeChat Payment incorporated Revenue (in US$100 million) YoY Growth fingerprint recognition into their payment verification processes, the number of Source: TrendForce, Feb, 2016

28 payments cards and mobile | March | April 2016 www.paymentscm.com IN ASSOCIATION WITH  mobile payments

UK banks could lose 45 mPOS World becomes percent of their customers to mPOS W.I.S.E. in 2016 The customer shopping experience alternative financial institutions is being re-engineered from beginning to end. Store staff need A new study by Personetics has revealed • 30 percent of respondents have to identify and engage customers that nearly half (45 percent) of traditional relationships with AltFIs for products other when they walk into the store and UK bank customers could switch their than a current account, with savings be empowered through information current account to an alternative financial accounts and credit cards the most and tools to offer curated sales institution (AltFI) such as a challenger bank, popular. advice. With the increasing focus retailer or FinTech company.. Switching on customer engagement and the The study Banking Disintermediation: • More than one-in-four people are convergence of the physical and The Personalisation Imperative surveyed currently tempted to switch bank accounts. digital worlds, mobile point of sale over 1,000 UK consumers, conducted by • Nearly half of non-AltFI users would (mPOS) and supporting technologies Red Bricks research. The survey found consider switching to one. play a critical role in shaping the that a sizeable minority (30 percent) use a Satisfaction customer shopping experience. financial product provided by an AltFI, and • AltFI customers are 20 percent more likely mPOS solutions have become less as many as one-in-twenty already use or very likely to recommend their provider about a terminal type and more AltFIs for their current account. is than customers of traditional institutions. about how to design solutions that Customer satisfaction was cited by • Two thirds of AltFI customers said that fit the needs of the multi-channel consumers as the key driver when choosing their provider helped them better manage merchant, irrespective of their size or their banking provider. AltFI customers felt their finances, opposed to 57 percent of industry vertical. These were the key that their finances were better understood, traditional institutions’ customers. findings from the mPOS World 2015 guided and managed than customers of Relationship conference, the only European event traditional banks. • Close to half (40 percent) of traditional focused on mPOS solutions. When asked ‘what your current provider institutions’ customers felt that they were Based on feedback from the is best at supplying?’ AltFIs outperformed little more than an account number. emerging mPOS ecosystem, the traditional banks on ease of interaction “The battle lines in financial services are mPOS World conference is being (46 vs. 29 percent), convenience (54 vs. being drawn around customer experience rebranded to the mPOS W.I.S.E. 51 percent) and speed (23 vs. 13 percent). and engagement,” said David Sosna, conference in 2016. mPOS W.I.S.E. = AltFI customers are also 20 percent more Personetics Co-Founder and CEO. “What mPOS World of Integrated Shopping likely to recommend their provider than we are seeing from AltFIs today is just the Experience. The new name reflects traditional bank’s customers. tip of the iceberg, but traditional banks can the changing direction of mobile Key Findings fend off disintermediation by leveraging POS industry to smart/wise mPOS Service use the vast amounts of customer data at their solutions integrating the shopping • 94 percent of respondents use traditional disposal to provide relevant guidance and experience. financial institutions for their current account. improve customer satisfaction.” Join mPOS W.I.S.E. 2016 on the 28-29 June 2016 in Frankfurt - For which of these services would you consider an AltFI? www.mposwise.com for two content-

Investment management Total Respondents packed days, 300+ attendees, Mortgage 60+ speakers, 30+ sponsors and Source: Personetics Loan exhibitors from 40+ countries as well Insurance as an mPOS technology showcase. International payments P2P payment services Registration is open now Credit Card Request the conference programme Savings account and registration form/sponsorship Current account brochure at [email protected]. 0% 10% 20% 30% 40% 50%

www.paymentscm.com payments cards and mobile | March | April 2016 29 contactless How UK payment habits compare internationally

Payments UK, the trade association for the with 333 per million inhabitants, while In the World Class Payments report payments industry, has published a second the UK has 1,074 cash machines per published by Payments UK last year, an report in its World Class Payments series, million people. evidence-based approach was taken titled: How consumers around the world • Direct debits are more than twice as to understand what different customers make payments. popular in Germany than the UK, and wanted from payments and what the UK The report provides an overview of how 200 times more popular in the UK than needed in order to stay world-class. In different payment methods are used in in Russia. that report Payments UK set out 13 core various countries in Europe and around • Instantaneous internet and mobile payment capabilities that are needed for a the world. It highlights some of the key payments have been available in the payments environment to be world-class, differences between the way people pay in UK since 2008 thanks to the Faster and identified four priorities that it believes the UK compared to other countries, such as: Payments Service. An equivalent should be the initial focus to help the UK • On 14 February 2016, it was exactly service is soon to be launched in the US. achieve its vision.

ten yars since using an EMV chip card “This report provides insight into thresholds

together with PIN became the norm. how much variation exists in consumer Australia A$100 Some countries, notably the US, are payment behaviour around the world, Singapore S$100 Hong Kong HK$500

still to complete their rollout of EMV level of choice, convenience and United States US$50 technology. protection which UK consumers enjoy, Canada C$50 Brazil BRL100

• The number of debit cards in China compared with many others around the France €25 more than doubled between 2010 and world," comments Maurice Cleaves, CEO Germany €25 Italy €25

2014. 3.28 debit cards are held per of Payments UK. Netherlands €25 person in China, compared with 1.48 in “By using the findings from this report to Spain €25 United Kingdom £30 the UK. focus on the future and what customers South Africa ZAR200 • In 2014, Portugal had the highest need next, Payments UK will ensure that Poland PLN50 China number of cash machines per head customers benefit from the best, and the Limit N/A Japan Limit set by merchant

in Europe, with 1,540 per million industry we represent remains central on Sweden Limit N/A inhabitants. Sweden had the lowest, the global payments stage.” Source: Mastercard, VISA

Cash remains king - despite explosive contactless growth

LINK figures reveal that cash withdrawals “These figures show that the availability place in our wallets and purses for from LINK ATMs in 2015 amounted to a of cash and ATMs remain a very important the foreseeable future," comments John record £128 billion – made over two billion part of our lives here in the UK and is still Howells, CEO, LINK. visits to the UK’s 70,270 LINK-connected the most attractive payment option in lots “With over 70,000 cash machines in ATMs. of situations. With the amount of money the UK, LINK is committed to continuing The total number of cash withdrawals being withdrawn continuing to increase, to make sure everybody has safe, reliable only grew slightly in 2015 with the value it is clear that cash has an important and easy access to their cash.” of those withdrawals increasing by two 2,500 percent. The amount cash machine users Cash withdrawals LINK transaction history (millions) Other transactions withdrew also went up – with the average 2,000 withdrawal value increasing from £61.25 in 1,500

2014 to £61.93 in 2015. 1,000

LINK’s share of all UK ATM cash 500 withdrawals continues to rise with LINK 0 accounting for around 74 percent of all cash withdrawals, with the total value 1986 1990 1994 1998 2002 2006 2010 2014 dispensed through LINK transactions rising These are transactions processed by LINK and do not include transactions made by customers at their own bank’s or by almost 35 percent in the last ten years. building societies’ ATMs. Other transactions include balance enquiries. PIN changes and rejected transactions.

30 payments cards and mobile | March | April 2016 www.paymentscm.com contactless Global mobile proximity payment users to surpass 1 billion by 2019

Mobile proximity payments are the non-NFC) will grow from $4.77 billion in sale (POS) acceptance infrastructure, which smallest, but fastest growing segment for 2014 to $141.21 billion in 2019 (Ovum defines in the US is being helped by the upgrades to mobile payments, according to global mobile proximity payments as purchases EMV. The adoption of host card emulation analyst firm Ovum. made using a connected mobile when (HCE) is also helping, providing a more Ovum’s new m-payments forecast shows the user is physically present at or near flexible way of implementing NFC. At the that the total global user base for mobile the point of sale, using NFC or alternative same time, NFC is being championed payment segments will increase from an enabling technologies such as QR codes). more widely across the ecosystem by estimated 689.99 million users in 2014 to players such as Apple, Google, PayPal, A number of factors are behind the growth 4.77 billion users in 2019. This forecast also and Samsung,” said Eden Zoller, principal includes m-commerce and person-to- “Factors driving growth include wider analyst, consumer services and payments, person (P2P) mobile money transfers. merchant support for NFC across point-of- Ovum.

NFC takes the biggest slice of the 1bn users Global mobile proximity payment users

The global user base for mobile proximity 1,200 1,090,877,800 payments (both NFC and non-NFC) stood at 44.55 million in 2014, as shown 1000 below. Traction for NFC mobile proximity 800 payments is, with a few notable exceptions, 600 particularly low across the vast majority of 461,316,500 mature markets and almost non-existent in 400 emerging markets. But by 2019 there will be 181,975,600 92,213,900 a total of 1.09 billion global mobile proximity 200 44,554,500 60,437,800 payment users, of which 939.10 million 0 will be NFC. The total transaction value of Source: Ovum 2014 2015 2016 2017 2018 2019 mobile proximity payments (both NFC and

Android Pay to hit UK in March – LG Pay delayed

Android Pay, Google’s mobile payments country during the first quarter of 2015 more media service, is set to launch in the UK in March. were Android devices. attention", the LG Android Pay, which was launched in Adoption of payments using smartphones representative said. September, lets consumers pay at store has been noticeably more popular in the The representative checkout counters by waving their Android UK than the US. Last year, British shoppers said this decision smartphones in front of an NFC POS. made nearly one billion contactless was not taken amid The UK launch would be Android Pay’s purchases in stores and elsewhere including lack of support from major credit card second international market and a major in the London underground. issuers in the company's target markets step forward for the fledgling. In December, LG Electronics has announced it will such as the US. Google said the service would be arriving delay plans to launch the LG Pay mobile LG Electronics has also decided to overseas for the first time in Australia in payments system at this year's Mobile use space at MWC that was allocated early 2016. World Congress (MWC), The Korea Times to LG's telecom affiliate, LG Uplus, to More than one million retail stores in the reports, citing an unnamed company promote the G5. "On the LG Uplus front, US already have POS registers that accept representative. LG Electronics' decision not to share space Android Pay, which relies on NFC. "LG Electronics has delayed the is unsatisfactory; however, we have to The UK could be a major market for official launch of LG Pay to the second admit that LG Electronics feels a sense Android Pay. According to reports, 54.2 quarter of this year to help the new LG of urgency to lift its mobile business", the percent of mobile phones sold in the flagship smartphone G5 receive representative added. www.paymentscm.com payments cards and mobile | March | April 2016 31 CONNECTING THE OMNI-COMMERCE EXPERIENCE CONNECT THE OMNI-COMMERCE DOTS... From mobiles and smart A COMPLEX PATH By using a single integrated solution for omni-channel commerce, retailers watches to tablets and laptops, Although shoppers are hungry for new European consumers can now can reduce costs, avoid obsolescence, omni-channel services, retailers can minimise PCI scope and provide connect anywhere. Increasingly, struggle to deliver them within the time- that means even when in-store, consolidated reporting and real- frames and to the scale required to keep time monitoring across channels. they want to access omni- pace with demand. Building a seamless Outsourcing payments also leaves channel services in order to consumer experience takes time, them free to focus their own IT experience more convenient and investment and vision. It’s also a complex resources on customer throughput and frictionless sales journeys. process. Commerce development often revenue generation. has to extend further than just payment Shoppers want to source and compare to include operations, merchandising merchandise from any location, at any and marketing functions. CONNECTED CHECKOUTS time. To order online, but collect or return To support new retail services, the at convenient physical locations. To pay It also requires unified platforms POS has also undergone a major when, where and how they want. To encompassing gateways that manage transformation. NFC enabled, IP- receive offers and promotions designed both ecommerce and bricks and mortar connected multimedia terminals, such just for them. In short, consumers are transactions to multimedia-enabled and as Verifone’s VX, MX and Engage more demanding than ever. connected in-store payment devices solutions are able to drive digital that drive consumer engagement. content and highly personalised, Retailers need to respond with cross- feature-rich services at the POS. While channel capabilities such as click and SIMPLE ROUTES mPOS devices, such as Verifone’s collect, pay-by-app, mobile wallets True omni-channel payment solutions, e355, work directly with smart devices and value-added services to deliver and customer-facing apps to help a great consumer experience. In fact, such as Verifone’s ‘Payment as a Service’ platform cut through this queue bust, up-sell and accept payment 85% of European retailers’ multi- anywhere in the store. channel technology strategy is driven complexity to deliver a holistic view by customer demand. And the rewards of the retailer’s estate, cost benefits are high. Studies show that those omni- and payment acceptance. A managed MAXIMUM RETURN shoppers spend 15-30% more than payment service also enables the Connected channels and terminals offer their traditional counterparts. quick roll-out of additional services incredible new revenue opportunities and technology – such as Apple Pay – for retailers. To help them exploit Verifone offers comprehensive cross-border 85% of European retailers’ when they become available. these, Verifone enables value-added and omni-channel payment solutions to services that can boost retail business omni-channel retail strategy is meet the needs of today’s demanding and “A MANAGED and deliver ROI. Retailers can leverage i the POS for targeted advertising, connected consumer – whether in store, driven by customer demand. PAYMENT SERVICE personalised messaging via beacons, online or mobile. And the rewards are high. ALSO ENABLES THE loyalty, charity giving, dynamic currency conversion and other initiatives that Studies show that omni-channel QUICK ROLL-OUT OF encourage further sales and brand WANT TO LEARN MORE? engagement. consumers spend 15-30% more ADDITIONAL SERVICES Download our Payment Talk: ii AND TECHNOLOGY” Whatever route retailers take to omni- Connecting with the omni-shopper - than their traditional counterparts. channel commerce one thing is clear. verifone.co.uk/omni-commerce To stay relevant they must be on the i - PAC 2015 Omnichannel Retail in Europe report ii - IDC Payment as a Service from Verifone same path as their customers. That bundles payment device, software, means embracing mobile, exploiting professional and gateway services, cloud services, connecting channels encryption, tokenisation, estate and focusing on digital services. With [email protected] Payment services can make a merchant’s life management, value-adds and reporting the right tools, and the right payment simpler and more secure. portal into an easy to deploy, all-in- partner, retailers can deliver customer LET’S CONNECT. one solution - whether in-store, online journeys that build positive brand © 2016. Verifone, Inc. All rights reserved. Verifone and the Verifone logo are www.facebook.com/Verifone or mobile. i experiences and keep shoppers coming either trademarks or registered trademarks of Verifone in the United States and/ PAC 2015 Omni-channel Retail in Europe report or other countries. All other trademarks or brand names are the properties of their ii back for more. IDC respective holders. All features and specifications are subject to change without @Verifone_EMEA notice. Reproduction or posting of this document without prior Verifone approval is prohibited. 03/16

4560 - VF - Omni-Commerce_Advertorial_210x280_AW_v2.indd 1 16/03/2016 09:08 4560 - VF - Omni-Commerce_AD_210x280_AW.indd 1 16/03/2016 10:07 CONNECT THE OMNI-COMMERCE DOTS...

Verifone offers comprehensive cross-border 85% of European retailers’ and omni-channel payment solutions to omni-channel retail strategy is meet the needs of today’s demanding and i connected consumer – whether in store, driven by customer demand. online or mobile. And the rewards are high. Studies show that omni-channel WANT TO LEARN MORE? consumers spend 15-30% more Download our Payment Talk: ii Connecting with the omni-shopper - than their traditional counterparts. verifone.co.uk/omni-commerce i - PAC 2015 Omnichannel Retail in Europe report ii - IDC

LET’S CONNECT. [email protected]

© 2016. Verifone, Inc. All rights reserved. Verifone and the Verifone logo are www.facebook.com/Verifone either trademarks or registered trademarks of Verifone in the United States and/ or other countries. All other trademarks or brand names are the properties of their respective holders. All features and specifications are subject to change without @Verifone_EMEA notice. Reproduction or posting of this document without prior Verifone approval is prohibited. 03/16

4560 - VF - Omni-Commerce_AD_210x280_AW.indd 1 16/03/2016 10:07 pos terminals The POS of the future

The point of sale (POS) of the future will with a smartphone loaded with an be more intelligent and powerful. It will application, which in turn communicates also be more functionally-rich, value- with an intelligent gateway and a payment adding and cloud-based. facilitator and/or acquirer beyond. To some extent the future is already Founded in 2012, Payworks provides here. The traditional POS device has been just such an intelligent, cloud-based limited in providing extra functionality POS gateway. “Companies who want to by memory and processing speed for launch their own payment applications some time. Cloud-based solutions which use us as software-as-a-service port the intelligence to another area (SaaS) so they don’t have to build the and turn the device into a receptacle infrastructure themselves,” says Christian This is one of the the secrets of the mPOS for information for users have helped to Deger, CEO, Payworks. phenomenon, in Fernando Santana’s evolve the POS experience. “We are thinking about this from opinion. The revenue generated by mPOS “If you can do that, the user experience the developer’s perspective. As a transactions does not justify the whole is going to be richer, more useful and developer, you’d like to have the data ecosystem of individual players, each will create more loyalty. Because the with the transaction. You’d like to put contributing their piece of the puzzle. intelligence is based at a server level, this directly into a database to produce “Thought needs to be put into how the scalability also goes well beyond more comprehensive reports for your to reduce the costs of the ecosystem. anything that a traditional POS device can merchants,” continues Deger. Or how to increase the per transaction do,” says Alain Fernando Santana, chief Payworks is working with companies value (revenue pie) so that the different administration officer, Spire Payments. such as Shopkeep and Orderbird. It players are motivated to work together to This is part of the mobile point of also offers a white label mPOS solution, build turn-key solutions, which are more sale (mPOS) or smart POS phenomenon comprising automated merchant boarding, attractive and feature-rich for merchants,” — the fact that the POS becomes a merchant dashboard and marketing says Fernando Santana. bridge between the face-to-face and materials, targeted at micro-merchants. e-commerce worlds. It becomes a The commercial framework bridge between the payment and value- A more complex ecosystem added services worlds, and between The POS of the future (or future of transmitting information and analysing New players have entered the mPOS or POS) involves devising an appropriate and personalising it for the benefit of the smart POS ecosystem, each offering their commercial framework to support consumer and/or merchant. own pieces of the puzzle: application innovation and partnerships across the “As soon as you move into mPOS, you providers, intelligent gateway providers ecosystem, most likely around the creation move into the potential for data analytics and so on. This makes for a more of turnkey or end-to-end solutions. in real time. As you’re in contact with an complex ecosystem, but also a more The original Square proposition, which intelligent gateway while the transaction commercially difficult one. perhaps acted as a catalyst for the mPOS is being approved, you can also send a “At a macro level, you have many or smart POS movement, was aimed at message, ad, coupon, immediate discount players, but at a micro level when you micro-merchants. However the current to the smartphone, which are all things that look at the individual pieces that they trend positions mPOS at tier one or two you cannot do with traditional POS.” provide, there are not that many in merchants as part of a value-added each area. And there are not many that proposition, including in-store customer New players provide the whole turnkey solution,” analytics, Bluetooth and so on. comments Fernando Santana. “We absolutely believe that mPOS is Another part of the mPOS or smart POS “That is where the challenge is today going to be a major wave of the future. phenomenon is the emergence of new because the business model is not set. The It’s just a question of how to do this in an players in the supporting ecosystem. A next challenge is getting all the players economically sound way. How to present traditional POS ecosystem comprised a to work together. How do you get this to it in a user-friendly way. And tweak the counter-top POS device communicating work economically? How does the revenue technology so it is something that really will with an acquirer. In the mPOS ecosystem, generated by each user make sense to work and users will want to use regularly,” the PIN entry device (PED) communicates justify the existence of all these players?” concludes Fernando Santana.

34 payments cards and mobile | March | April 2016 www.paymentscm.com th 4 annual June 28-29 2016, mPOS W.I.S.E. Frankfurt mPOS World of Integrated Shopping Experience

Conference & Exhibition showcasing mPOS technology

300+ 60+ 30+ 40+ Attendees Speakers Sponsors and Countries exhibitors

THE ONLY EUROPEAN CONFERENCE FOCUSED ON MOBILE POS SYSTEMS.

Must attend event for everyone selling & developing next generation POS systems & merchants considering implementation of mobile POS technology.

Smart POS Integrated Shopping Experience

Next-GenPOS/ SmartPOS: Tablets linked Interconnected POS solutions improving to mPOS devices customer interaction; Cloud based POS systems & Loyalty 3.0; “Clienteling” solutions, from Point of Sale Customer tablets vs. Purpose-built mPOS to a Point of Service; hardware, integrated POS systems; mPOS as a part of wider omnichannel Payments: acceptance & processing; approach. mPOS opportunities & for ISVs, VARs, mPOS distributors & HW/SW providers, m-payment providers; +421 233 329 999 Open vs. closed APP market. [email protected] www.mposwise.com e-commerce

Omni-channel Technology companies dominate payments: myth or best global brands list reality? For the third year in a row, This makes them a considerable The top technology challenges Apple and Google claimed the disintermediation threat to retailers face around omni-channel top spots in Interbrand’s Best payments industry incumbents are incompatible systems, data Global Brands report. for the share of consumers’ integration and the ability to track Technology brands represented wallets and minds. customers, according to new more than a third of the table’s $1.7 Consumer-facing technology research from ACI Worldwide. trillion total, making technology brands specialise in understanding Personalised marketing the leading sector by value. consumers as well as technology. promotions and excellent customer Worth an estimated $170 They are expert in understanding service require a single view of billion last year, Apple increased what their customers need and the customer. Yet most retailers its brand value by 43 percent. value and delivering it. And then have two sales applications: one Google came in at #2 up 12 finding new and better ways to for physical stores and the other for percent on 2014 and valued at deliver it. With regard to their foray e-commerce sales, which results $120 billion. Microsoft edged into payments, the technology in silos of separate databases ahead of IBM, Samsung was a brands have understood the and vendors. non-mover at #7, valued at $45 real prize. Apple, Android and “A retailer coming from a pure billion, and Amazon entered the Samsung Pay are not really about card-not-present (CNP) background top ten for the first time with a payment, or compartmentalising and going into card-present will find brand value of $37 billion. all consumer spend on a it easier to do omni-channel. But for a retailer who has a big bricks- “The report examines what it mobile device. They are about and-mortar and big CNP business, takes for brands to succeed in creating deeper, more profitable it’s a much bigger challenge,” today’s hyper-fragmented world. relationships with customers said Andrew Quartermaine, vice Many of the brands in this year’s through their mobile devices. president, merchant retail EMEA, top 100 are so intuitively aligned The mobile is the always close- ACI Worldwide in conversation with people’s priorities, that they at-hand channel to the customer. with PCM. are able to seamlessly integrate This will create new use cases “Being able to consolidate a into their everyday lives,” said Jez and new business models for fragmented infrastructure under Frampton, global CEO, Interbrand. monetising data, cross-selling one platform gives retailers all Indeed it is a combination to customers, serving them sorts of interesting possibilities, of their global reach, culture appropriate advertising and so on. such as dynamic acquiring,” and integration into users’ lives Brand value is a strategic enabler. continued Quartermaine. that has helped the technology The future of consumer marketing However when it came to brands increase their brand belongs to the companies with the innovation around payments, 68 value and claim the top positions. strongest brands. percent of retailers saw themselves as technology followers, with only Amazon acquires India’s Emvantage Payments a third believing that they were innovators or early adopters. Amazon’s investment in the Indian employees will join Amazon’s payments Nevertheless, retailers are actively e-commerce market has continued with team to work on developing solutions piloting a range of payment- the e-tailer announcing it has agreed a tailored to the local market. The deal related capabilities, including loyalty, deal to acquire local online payments is expected to close in the first quarter mobile gateways, mobile point- firm, Emvantage. of 2016. of-sale, alternative payments and Emvantage’s portfolio includes a range Srinivas Rao, director of Amazon multi-currency. of solutions such as a payment gateway, Payments in India, commented: “We are Full results of this research will be mobile payment tools and pre-paid laser-focused on providing customers in available at the end of March 2016. card platforms. India with a convenient and trustworthy As part of the acquisition, Emvantage shopping experience."

36 payments cards and mobile | March | April 2016 www.paymentscm.com TRANSFORM THE PRICKLY PROCESSING OF PAYMENTS INTO A THING OF BEAUTY.

Payments is what we do at ACI — and more than 5,000 financial institutions, intermediaries, merchants and billers around the world rely on us for payment solutions that help them grow, reduce risk and cut costs. We’re delivering the future of real-time, any-to-any payments — and it’s exciting, liberating and beautiful. Let us show you how.

Visit us at Transact 16 (ETA), Las Vegas, Booth #764, Money20/20 Europe, Copenhagen, at the Café, and Cards & Payments Middle East, Dubai, Booth #L40.

aciworldwide.com 17830 PayExpo Advert resize_Layout 1 08/03/2016 16:43 Page 1

2000+ delegates 150+ speakers 60+ exhibitors

7 & 8 June 2016 // ExCeL London EUROPE 2016

AYMENTS ECOSYSTEM OLVE THE BRINGING THE ENTIRE EUROPEAATNUS P QUO AND EV TOGETHER TO DISRUPT THE ST ACE PAYMENTS MARKETSP 20% discount for Payments Cards & Mobile subscribers. PayExpo Europe – your gateway to the European payments Use the code technology market, returns to London in June. ‘PCM20’ to claim Bringing together over 2000 senior payments professionals from across Europe, PayExpo Europe is the essential event for anyone interested in making payments faster, easier and more secure.

Retailers, banks, transport and gaming operators, MNOs and NGOs attend FREE!

WHO WILL YOU MEET?

Retailers Transport Gaming Mobile network Government Banks and financial Technology and operators operators operators authorities institutions service providers

SPONSORS GOLD SPONSORS SILVER SPONSORS

BRONZE SPONSORS PAYMENTS LANYARD SPONSOR INNOVATION SPONSOR & EXHIBITOR

EXHIBITORS

The World’s Leading Card Manufacturer

SUPPORTERS GLOBAL INSIGHT PARTNERS BRAND SPONSOR OFFICIAL CHARITY PARTNER

Register now at www.payexpo.com/europe using the code 'PCM20' to claim you 20% discount For sponsorship opportunities, contact Andy Falconer on [email protected] 17830 PayExpo Advert resize_Layout 1 08/03/2016 16:43 Page 1

2000+ delegates 150+ speakers 60+ exhibitors products Megafon quits mobile payment platform

7 & 8 June 2016 // Megafon, the Russian mobile operator, has mobile account with the wallet, (VimpelCom) and MTS were developing reportedly shut down its mobile payment thus making the Megafon Money their own payment platforms Ruru and ExCeL London platform Megafon Money. service redundant. Additionally, the Legkiy Platezh. According to ewdn.com, this service will payment platform attracted only In June 2015, VimpelCom also launched EUROPE 2016 be replaced by Visa Qiwi Wallet which is 100,000 subscribers. a mobile payment wallet in partnership the Visa electronic wallet. To put things into perspective, the with Visa Qiwi Wallet, but does not In early 2015, Megafon subscribers Megaton Money service was launched in consider it to be redundant in comparison AYMENTS ECOSYSTEM were given the ability to connect their 2012, when Megafon’s competitors Beeline with ‘Ruru.’ OLVE THE BRINGING THE ENTIRE EUROPEAATNUS P QUO AND EV O DISRUPT THE ST Google launches face cashier that they wanted to pay with TOGETHER T ACE biometrics payment app Google and provide their initials. PAYMENTS MARKETSP 20% discount Hands Free system has a list of all Hands Google has launched a new app Free-using phones within range of the for Payments Cards called Hands Free that does not require McDonald’s Hands Free terminal, so when & Mobile subscribers. you to take your phone out of your the cashier enters the user's initials, they PayExpo Europe – your gateway to the European payments Use the code pocket. The new system is available could see a list of customers close by with ‘PCM20’ to claim technology market, returns to London in June. on Android and iOS devices and is those initials. Bringing together over 2000 senior payments professionals from across Europe, PayExpo currently being tested in San Francisco. The cashier would find the user's face in Europe is the essential event for anyone interested in making payments faster, easier and more secure. Hands Free uses face biometrics the system, match it to a real-life likeness, Retailers, banks, transport and gaming operators, MNOs and NGOs attend FREE! and the phone’s location as two identifying and then ring through the payment. Google factors to authenticate the user making is also testing an automated version where the payment. a built-in camera matches a face against WHO WILL YOU MEET? For example, if the user wanted to the photo on file. The company says any pick up a Happy Meal at a participating photos taken by Hands Free cameras in McDonald’s location, they would tell the stores are deleted immediately. Retailers Transport Gaming Mobile network Government Banks and financial Technology and operators operators operators authorities institutions service providers Powa Technologies sells business units under administration

SPONSORS Failed e-commerce software buyout team led by Andy Muldoon and “We are delighted to have secured GOLD SPONSORS SILVER SPONSORS unicorn Powa Technologies has sold two backed by Warren Cowan and digital a sale for the business, preserving a of its divisions as it seeks to save jobs business group Greenlight Digital. significant number of jobs and wish Ben after entering administration in February. “Given the precarious financial position White, Greenlight Digital and the respective Deloitte, which was appointed as of the business, we have had to run an management teams every success in BRONZE SPONSORS PAYMENTS LANYARD SPONSOR administrator last month, confirmed Powa accelerated and focused M&A process, taking the businesses forward.” INNOVATION SPONSOR & EXHIBITOR sold its PowaTag business to a consortium quickly zeroing in on the key likely The sale will preserve 69 jobs, after Powa led by Ben White, and the PowaWeb purchasers after our recent appointment,” announced 72 of its 144 UK-based employees business has been sold to a management said joint administrator Rob Harding. were made redundant on 23 February.

EXHIBITORS

The World’s Leading Card Manufacturer BIXOLON releases SPP- Android, iOS & Windows devices, alongside with 203dpi print quality and 58mm media R200III Bluetooth and additional Apple MFi certification, the new width (50mm option). WiFi printer auto-switch function provides automatic The printer features an IP43 dust- switching between iOS mode and standard protected, splash-proof design and 2.1m SUPPORTERS GLOBAL INSIGHT PARTNERS BRAND SPONSOR OFFICIAL CHARITY BIXOLON has announced the launch of Bluetooth modes. drop test reliability. Alongside a battery PARTNER the SPP-R200III 2-inch, WiFi and Bluetooth The SPP-R200III is designed for dual life that provides continuous printing of printer with NFC for POS, payments and purpose 58-50mm receipt and labelling 145 metres and a 24 hour standby once auto-ID markets. Supporting NFC tagging with a linerless label option. It is capable fully charged, the SPP-R200III is the ideal technology for auto-Bluetooth pairing with of producing print speeds of 100mm/sec, solution for printing on the move.

Register now at www.payexpo.com/europe using the code 'PCM20' to claim you 20% discount www.paymentscm.com payments cards and mobile | March | April 2016 39 For sponsorship opportunities, contact Andy Falconer on [email protected] 2016 BAI- INFOSYS FINACLE GLOBAL BANKING INNOVATION AWARDS

Nominations Are Open Join us as we recognize and celebrate leaders in innovation, through the world’s premier financial services innovation awards program. Because together, as global innovators, we will move the industry forward.

The 2016 Award Categories:

• Product and Service Innovation • Innovation in Societal • Channel Innovation and Community Impact • Innovation in Internal • Most Innovative Non-Bank Process Improvement Financial Services Organization • Innovation in Payments

Nominees are also eligible for these awards: • Disruptive Innovation in Banking • Most Innovative Community-Based Banking Organization • Most Innovative Bank of the Year

Submit your nomination at: BAIGlobalInnovations.com contracts MasterCard reportedly bids £1 billion for VocaLink MasterCard has reportedly drawn up More than 90 percent of all salary plans for a takeover of VocaLink, the bank- payments, and virtually all state benefits owned company which handles £6 trillion- are processed using VocaLink, which worth of payments in the UK each year. delivers the Faster Payments Service Sky News has learnt that MasterCard, and the Bacs service which collectively which is one of the world’s biggest credit underpin billions of payments. card issuers, has approached the board of The company is owned by 17 of VocaLink about a deal that could be worth UK's biggest high street lenders, with more than £1 billion. the biggest stakes held by Barclays, News of the approach from MasterCard HSBC, Lloyds Banking Group and came just days after the new payments Royal Bank of Scotland. industry regulator said that the current MasterCard’s interest in ownership structure of VocaLink was acquiring VocaLink is understood to have “hampering competition and the speed of been expressed prior to the payment innovation in the market.” systems regulator’s remarks.

TSYS deal for card empowers issuers and online merchants said Andrew Mathieson, group executive issuers and merchants to quickly recover lost revenue and at TSYS. to combat fraud eliminate the need for expensive and time- “The TSYS Transaction Recovery consuming chargeback processes. Network enables a collaborative efficiency TSYS announced an agreement with “With the continued growth of that reduces online fraud and operational Ethoca, a provider of collaboration-based e-commerce payments and the expenses associated with chargebacks.” technology that enables card issuers and anticipated rise in card- e-commerce merchants to help minimise not-present fraud, card-not-present fraud, recover lost efficient collaboration revenue and eliminate chargebacks. between issuing banks Launched through this agreement, the and merchants is TSYS Transaction Recovery Network, crucial to help mitigate powered by Ethoca, provides near real- risk and improve the Independent. time notification of confirmed fraud that cardholder experience,” IndIspensable.

We have delivered unbiased reporting Wirecard acquires “Through its focus on on the payment industry for 45 years. Brazilian online payment innovation, Moip has No ads. No sponsored content. Ever. service provider become the independent payment solution of What you get is expertly curated, Wirecard has acquired all shares choice in the Brazilian original news stories, along with proprietary industry data you can rely of the Brazilian company Moip market for marketplaces on to make key business decisions. Pagamentos S.A. With more than and companies. During 150 employees at its location in Sao the fourth quarter of Paulo, Moip is a fast-growing internet 2015 the company payment service provider and was surpassed the threshold Subscribe today. founded eight years ago. of BRL 1 billion in annual www.nilsonreport.com Moip has developed a leading payment total payment volume platform for small and medium sized serving close to 100,000 retailers over the last few years and customers in Brazil,” focuses, in particular, on marketplaces comments Igor Senra, and companies with direct sales with its CEO and founder innovative end-to-end solutions. of Moip. www.paymentscm.com payments cards and mobile | March | April 2016 41 conferences Conference season kicks off PCM kick-started its 2016 conference season with two great events. Conference diary

Money2020 Europe Merchant Payments Ecosystem in Berlin Retail Business Technology Expo 4-7 April, Copenhagen can always be relied on to produce good at London Olympia brings together www.money2020europe.com quality, informative sessions, and 2016 attendees and exhibitors covering all was no exception with an even greater aspects of retail. This includes payment number of attendees. Day one has all solution providers which service a whole 11th Middle East Retail Banking participants together to hear the latest range of merchants from large multi- Forum & Expo industry thoughts and news, while days national companies to SMEs. The retailer 6-7 April, Dubai two and three are split into topic streams bootcamps and conference theatres www.retailbanking-expo.com covering specific areas of attendee interest. were often full with standing room only. The conference organisers, Empiria, give Exhibitors were invited to submit IFINTEC Finance Technologies networking a high priority with long coffee entries to the innovation trail and awards. Conference and Exhibition and lunch breaks allowing companies Short-listed entries highlighted on the 12-13 April, Istanbul and individuals plenty of time to meet and ‘winners wall’ included , Bixolon, www.ifintec.com talk. Evening events include the popular Paysafecard and Xhockware. The overall awards dinner where the category winners winner was the Datalogic Magellan 9800i NACHA Payments 2016 are announced and presented with their scanner. 17-20 April, Phoenix specially-commissioned award trophies. payments.nacha.org Merchants Payments Ecosystem 2017, 14-16 Retail Business Technology Expo 2017, 19-20 February in Berlin. April at London Olympia. Transact 16 19-21 April, Las Vegas Electran.org/events/transact16/

Apps World Germany 20-21 April, Berlin http://germany.apps-world.net/

Cards & Payments Asia 20-21 April, Singapore www.terrapinn.com/exhibition/ cards-asia/

Ad Index March/April 2016 Cards & Payments Middle East

P37 ACI Worldwide P10-11 OpenWay Group 31 May- 1 June, Dubai www.aciworldwide.com www.openwaygroup.com http://www.terrapinn.com/

P19 American Express P38 PayExpo exhibition/cards-and-payments- www.amexglobalnetwork.com www.payexpo.com middle-east/index.stm P40 BAI Global Banking Innovations Awards P7 Payment Business School www.BAIGlobalinnovations.com www.paymentbusinessschool.com PayExpo P21 Bixolon P27 Payment Cards Yearbooks www.bixoloneu.com www.paymentcardyearbooks.com 7- 8 June, London www.payexpo-london.com/ P9 Entrust Datacard Group Cover P4 Star Micronics www.datacard.com/pcm www.star-emea.com

P14-15 Inform/SIA P32-33 VeriFone mPOS W.I.S.E. www.inform-software.com www.verifone.com 28-29 June, Frankfurt P41 Nilson Report Cover P2 Worldline www.mposwise.com www.nilsonreport.com www.worldline.com

42 payments cards and mobile | March | April 2016 www.paymentscm.com

Star-mPOS-PC&M 19/03/2015 4:56pm Page 1

Star mPOS solutions. As the world of retail goes mobile, Star sets new standards for multi-channel retailing. World’s 1st Combined Printer Star has, once again, raised the bar with the latest software and hardware to & Cash Drawer strategically integrate the advantages of tablet based POS in-store. The value of mPOS is undeniable but more than just a Bluetooth or Cloud receipt printer is needed as this retail revolution explodes. mPOS users want the full range of printing solutions for their business – receipting is only part of the IT required. Star has understood this from the beginning and offers software partners and retailers the largest range of mPOS ULTRA white & black peripherals available encompassing: a Bluetooth & Cloud receipt & label printers (mobile and counter top) a Unique Bluetooth & Cloud 80mm & 112mm wide ticket printers able to use lightweight or 0.15mm thick professional ticket paper a Bluetooth & Cloud matrix and thermal kitchen printers a mPOP – the world’s 1st combined Bluetooth printer & cash drawer a NEW AllReceipts Digital Receipt Service with App included free-of-charge with Star printer driver For more information on Star’s mPOS revolution, call our sales team on +44 (0) 1494 471111 or visit www.Star-EMEA.com

AllReceipts

3G 4G

www.Star-EMEA.com