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POSitivitymagazine AGGREGATED NEWS FROM YOUR WORLD OF PAYMENTS • ISSUE 69 / APRIL 2016

Top 10 Payment Trends What Are for 2016 Actually Used For Now in 2016?

The Future of Checkouts: Cash, Credit or Will 2016 Be the Year of your Car? Adoption?

A Tale Is the TreasureHunt of Two blockchain good malware Wallets for security? steals POS... on page 27 on page 35 on page 40 Dear merchant payments acceptance professionals

We are delighted to bring you redesigned POSitivity magazine, focused on topics specific for the European payment acceptance audience. As of this Issue of POSitiv- ity magazine you will find the relevant content generated mostly by payment acceptance professionals.

Our mission is to keep you up-to-date with the latest We have prepared for you also the most up to date Eu- European Payment Industry Announcements, trends ropean map of payments service providers for the most through news, opinion and educational content. complex and comprehensive industry overview.

The “key topic” of this POSitivity magazine is dedi- We believe that inputs we collected for new POSitivity cated to Merchant driven payment initiatives in 2016 . will bring an inspiration back to your business.

As technological disruptions gain momentum, payment Kind regards, world is becoming more challenging than ever. Tradi- Ondrej Dorcik tional payment methods and infrastructures are in a state of transformation due to increasing competition among new start-ups and their disruptive business models. De- spite the disappointment about the market’s acceptance of mobile payments for years, the search for the ‘next big thing’ in payments continues. Editorial mission

Be the premier information resource for executives and sues in the editorial calendar on the following page. influencers in the European merchant payment accep- tance. New sections of the Positivity Magazine includes: • Overview of Key topics as covered in recent news, Positivity magazine delivers information and insights social medias, etc. mostly from the European merchant payments. You can • Expert Insights - section providing independent find the list of key topics to be covered in 2015-2016 is- opinion about recent announcements, industry news • Interviews with industry movers and shakers • Statistics & forecasts relevant for Key topics covered in the Issue • Infographics relevant for Key topics covered in the Issue

We concentrate on helping individuals and businesses to navigate the increasing and ever-changing ecosystem of European merchant payments

You can send us your press releases, news & suggestions to [email protected] Editorial calendar 2016

January 2016 February 2016 March 2016 April 2016

1st issue 1st issue MPE 2016 highlights European Map: Merchant pay- POS: transition from POS and Partnerships (post-conference issue) ment and solution providers mPOS to SmartPOS • What are the models to inter- Influential Start-ups in merchant • • From legacy POS to a platform link, to cooperate and compete payments architecture for banks, monoline acquirers • Investing into merchant pay- Merchant driven payment initia- • POS service in the Cloud and Fintech? ments start-ups, equity flow tives in 2016 • Tablets as mPOS Contactless and NFC projects in • & US Security and Risk in designing Europe Innovative merchant payments innovations • Mobile payment adoption and VAS • Biometrics in detail • HCE • Major players and the issues • POS security challenges with this growing market • Digital identity & authentica- • Carrier billing for goods tion, tokenization and shopping experience

May 2016 June 2016 July 2016 August 2016

Mobile POS Mobile POS mPOS W.I.S.E. highlights BIG payment data • Regulation, • TOP markets (post-conference issue) • Actionable intelligence in mer- • Migration to EMV in the US, • Providers Local and global card schemes in chant payments, • Risk and security, • Merchant segments Europe • Competitive landscape and so- • New HW and devices changing • News and expected regulation lutions mPOS Global Map of mPOS providers • Combining payments & analyt- • Apps, VAS and innovative SW, • M&As in European merchant ics for attractive offerings user experience, OS and hand- payments 2016 set specifics • The most influential people in B2B payments European merchant payments • Solutions for micro merchants & SME merchants, • Loyalty & rewards

September 2016 October 2016 November 2016 December 2016

European Mobile Payment Ac- Blockchains and distributed led- Regulatory challenges Omnichannel & Integrated shop- ceptance in 2017 gers • Next steps in regulation of Ac- ping experience • ACH initiatives across Europe vs • ACH initiatives across Europe vs cess to Account, PSD2 • The changing role of stores in like payments Apple Pay like payments • Interchange fee regulation and meeting customer demands • Faster payment infrastructure • Faster payment infrastructure its impacts on different industry • Enticing mobile shoppers: from players browsers to buyers, from adop- European Acquiring European ecommerce payment tion to loyalty • Focus on local players and challenges Future of merchant checkout APIs, Apps, cloud and payments countries • Cross-border ecommerce and online, mobile and high • In-app payments • Cross border vs. domestic play- • Costs of accepting cards and al- street payments • Open APIs payments, solutions ers ternative payments • Innovating checkout and architecture • Lessons learned from HCE • Effective transaction routing • Simplicity, interoperability & in- • Contactless/NFC POS deploy- • Integration, Omnichannel gate- tegration of payment systems & ments ways technologies • Consolidation of CA in Europe • One-click payments key topic of the issue European Guide: Merchant Pay- ment and Solutions Providers

10 Top 10 Payment Trends for 2016 15 Interview with Michal Smida, CEO & Founder, Twisto Payments 13 Payment Trends. What can be in- ferred?

mobile

18 Will 2016 Be the Year of Digital Wal- 21 This chart shows the seismic shift in let Adoption? how we pay for stuff

19 The importance of in-store mobile 22 Lessons from innovative Chinese technology mobile apps

processing

24 MasterCard forecasts that 38% of EU 27 A Tale of Two Wallets payments by 2020 will be digital

25 Everything You Should Know About 29 Why We Are Still Reaching for Wal- Location-based Marketing Tech- lets, Not Phones, at the Checkout nologies ecommerce

31 What Are Bitcoins Actually Used For Now in 2016?

33 Get Ready for the Blockchain Tsu- 35 Is the blockchain good for security? nami

security

38 Anatomy of Mobile Fraud: What 39 Merchant fraud and acquirer risk: Advertisers Need to Know what you need to know

41 Preparing for the Migration of Fraud 40 TreasureHunt malware steals POS data from retailers

cards

42 Could a Selfie Replace Cash or Credit?

42 Is Apple Pay really any more conve- 43 The future of checkouts: Cash, nient than plastic? credit or your car? key topic of the issue European Guide: Merchant Pay- ment and Solutions Providers

w COMPANY NAME HEADQUARTERS WEBSITE SERVICE OFFICE 2Checkout www.2checkout.com/commu- Payment gateway, Processor nity Accelya w3.accelya.com ACI Worldwide United states www.aciworldwide.com Payment gateway, Payment service provider Aduno www.aduno.ch Payment service provider AIB Merchant Services www.aibms.com/index.php Payment service provider AirPlus International www.airplus.com/world/en Payment service provider China www.alipay.com Alternative payment method Allied Wallet Inc. www.alliedwallet.com Payment service provider, Issuer, Acquirer, Alternative payment method, Processor, Payment gateway arvato Financial Solutions Ireland .arvato.com Other, Payment gateway, Alternative payment method, Processor, Payment service provider Avangate www.avangate.com Payment gateway, Payment service provider B+S Card Service Germany www.bs-card-service.com/en Payment service provider BACS United kingdom www.bacs.co.uk Payment service provider Bambora One www.bambora.com/sv/se/ Payment service provider bambora-one Bardo group Mauritius www.bardo.com/ Payment service provider United states www.bitcoin.org Alternative payment method BNL POSitivity www.bnlpositivity.it/en/prodotti Payment service provider Boku United states www.boku.com Alternative payment method BuyBox www.oonetic.com/technolo- Payment service provider gies/buybox-social-payment/ Card Complete Service Bank www.cardcomplete.com Acquirer CardPay Netherlands www.cardpay.com Payment service provider Cardstream United kingdom cardstream.com Payment service provider Cartasi Italy www.cartasi.it/gtwpages/index. Payment service provider jsp CashSender www.cashsender.com Payment service provider United kingdom www.chasepaymentech.co.uk PSP, acquirer Chess Netherlands www.chess.nl Payment service provider

6 POSitivity Cleverbridge Germany www.cleverbridge.com Payment gateway, Payment service provider CNG Processing www.cngpro.com Payment service provider Coinstar United states www.coinstar.com Payment service provider Commercegate Ireland www.commercegate.com Payment service provider, Payment gateway Computop - the payment Germany www.computop.com Payment service provider people Counting House www.countinghouseltd.com Processor, Payment service provider CreditCall United kingdom www.creditcall.com Payment service provider Ctopay China www.ctopay.hk Payment service provider Cyberplat Russian federation www.cyberplat.com Payment service provider Dalpay Iceland www.dalpay.com/en Payment service provider Datatrans Germany www.datatrans.ch Payment service provider DebitWay Canada www.debitway.ca Payment service provider Dibs Payment Services www.dibspayment.com Payment service provider Digital Garage Japan www.garage.co.jp/en/econtext Payment service provider Digital River World Pay- United states www.digitalriver.com Payment service provider ments Docdata Payments Netherlands www.docdatapayments.com Payment service provider Documetric United kingdom www.documetric.com Payment service provider Dragonfish Gibraltar www.dragonfishtech.com Payment service provider Earthport United kingdom www.earthport.com Payment service provider eBay Enterprise United states www.ebayenterprise.com/ Payment service provider ecardon payments GmbH Germany www.ecardon.com Payment service provider eComCharge www.ecomcharge.com Payment gateway, Payment service provider, Other ECommPay United kingdom www.ecommpay.com/en/ Payment service provider home_en Elavon United states www.elavon.com Payment service provider eNett www.enett.com Payment service provider ePay Worldwide United states www.epayworldwide.com Payment service provider Equens Netherlands www.equens.com/index.jsp Processor, Payment service provider Escalion www.escalion.com Payment service provider eTranzact Nigeria www.etranzact.com Payment service provider Payment Group GmbH Germany www.europaymentgroup.com Payment service provider Evo Payments Germany www.EVOpayments.eu Payment service provider, Acquirer Expercash Germany www.expercash.com Payment service provider FerBuy www.ferbuy.com Alternative payment method Finnish Web Payments Plc www.webpayments.fi Payment service provider (Suomen Verkkomaksut Oyj) First Data United states www.firstdata.com Acquirer, Payment gateway, Processor, Payment service provider FIS GLOBAL United states www.fisglobal.com Payment service provider Gate2Shop United kingdom www.g2s.com Payment service provider

POSitivity 7 GHL Systems Malaysia www.ghl.com Payment gateway HowPeoplePay.com Netherlands www.howpeoplepay.com Payment service provider iDEAL Netherlands www.ideal.nl Alternative payment method ING Netherlands www.ingcb.com Acquirer, Payment service provider France www.ingenico.com Payment service provider Inpay Denmark www.inpay.com KBC/CBC Online www.kbc.com Payment service provider Sweden www.klarna.se Afterpayments Lateral Payment United kingdom www.lateralpayments.com Payment service provider MasterCard Payment Gate- United kingdom www..com/gateway Payment service provider, Payment way Services gateway, Fraud and risk management system Mi-Pay United kingdom www.mi-pay.com Payment service provider ModusLink United states www.moduslink.com Payment service provider Moneta RU Russian federation www.moneta.ru Payment service provider Multisafepay Netherlands www.multisafepay.com Payment service provider MyBank France www.mybankpayments.eu Alternative payment method NOIRE United kingdom www.noirepay.com Payment service provider, Alternative payment method Nordea Sweden www.nordea.com Acquirer, Payment service provider omba Germany www.ombapay.com Payment service provider Omnipay Ireland www.omnipaygroup.com Payment service provider, Processor PagBrasil www.pagbrasil.com Payment service provider Pay360 United kingdom www.pay360.co.uk Payment service provider PAY4 Germany www.pay4.eu Alternative payment method Paybox Services France www1.paybox.com Payment service provider Paydutch Netherlands www.paydutch.nl Payment service provider Paylane paylane.com Payment service provider paymundo China www.paymundo.com Processor, Payment service provider Paynova Sweden www.paynova.com Payment service provider Payone Germany www.payone.de Payment service provider PayPro Global United kingdom www.payproglobal.com Payment service provider group United kingdom www.paysafecard.com Alternative payment method Paythru United kingdom www.paythru.com Payment service provider Paytrail Plc Finland www.paytrail.com Payment service provider PayU Netherlands www..com Payment service provider, Payment gateway PayUnity Austria www.payunity.com Payment service provider PayXpert Netherlands www.payxpert.com Payment service provider PeerTransfer United states www.peertransfer.com Alternative payment method Planet Payment United states www.planetpayment.com Payment service provider Post Finance Switzerland www.postfinance.ch Payment gateway, Payment service provider

8 POSitivity PPRO Group United kingdom www.ppro.com Processor, Alternative payment meth- od, Payment gateway, Payment service provider, Acquirer, Issuer Prepay Solutions United kingdom www.prepaysolutions.com Alternative payment method Przelewy24 Poland www.przelewy24.pl/en Alternative payment method Quickpay Denmark www.quickpay.net Payment service provider Rahaxi Finland www.rahaxi.com Processor Realex Payments United kingdom www.realexpayments.com Payment gateway, Payment service provider, Alternative payment method, Fraud and risk management system, Processor Recurly United states www.recurly.com Payment service provider RentPayment United states www.rentpayment.com Payment service provider SafeCharge United kingdom www.safecharge.com Acquirer, Payment service provider, Processor SafetyPay United states www.safetypay.com Alternative payment method Secure Trading United kingdom www.securetrading.com Payment service provider www.skrill.com Payment gateway, Issuer, Alternative payment method, Payment service provider, Processor, Bank Sofort Germany www.sofort.com Alternative payment method SolidTrust Pay www.solidtrustpay.com Payment gateway, Payment service provider, Processor Streamline United kingdom www.streamline.com Payment service provider Swedbank Sweden www.swedbank.com Acquirer, Payment service provider The Logic Group United kingdom www.the-logic-group.com Payment service provider Tinypay.me United states tinypay.me Payment service provider Transaction Network Ser- www.tnsi.com Payment service provider, Payment vices Inc gateway Traxpay United states traxpay.com Payment service provider Trustly Sweden trustly.com Payment service provider TWYP Netherlands www.twyp.nl Payment service provider UATP United states www.uatp.com Processor, Alternative payment meth- od, Payment service provider /Smart Voucher United kingdom www.ukash.com Alternative payment method Upclick Malta www.upclick.com Payment service provider UseMyServices Canada www.usemyservices.com Alternative payment method Valitor Iceland www.valitor.com Payment service provider Verotel Netherlands www.verotel.com Payment service provider Vesta Corporation www.trustvesta.com Payment service provider WEBINC Germany www.webinc.eu Payment service provider WebMoney Russian federation www..ru Payment service provider AG Germany www.wirecard.com Payment service provider, Payment gateway, Processor, Acquirer, Issuer, Bank

POSitivity 9 Articles

Top 10 Payment Trends for 2016

Ralf Ohlhausen Chief Strategy Officer PPRO Financial

With 2016 set to be yet another de- fining year the mobile payments, we have taken time to reflect on 2015 and what we can expect to see in 2016. Last year, we saw the UK wel- come numerous innovative and al- security in 2016, placing tokenisa- see the industry reach new heights. ternative payment methods, such tion and biometric authentication, as Apple Pay and Samsung Pay, and amongst other user-friendly meth- 1. Mobile Payments further expansion is anticipated for ods, high on the list of priorities. 2016. Although mobile payments have Turning to regulations, after a tough been an established trend for the We have already seen the introduc- two-year negotiation period, the EU past five years, they haven’t really tion of mobile payments through has now, finally, agreed on a second come out on top. 2016’s list should smartwatches, but we can expect payment services directive (PSD2) also include smartphone pay- to see mobile payments become which involves strengthening the ments—although the reasons are less smartphone-dependent over security requirements for online more specific. Whereas mobile pay- the next year. Instead, new wear- payments by improving customer ments have always been a fascinat- able technology including bracelets authentication in order to combat ing topic (and one supported by and even rings will enable us to pay fraud. Whilst the European Bank- myriad user benefits), 2016 is set to on the move. As a result, we will see ing Authority (EBA) is set to develop be a defining year for their providers. more European countries cutting more detailed guidelines and regula- The reason is that it looks, at least, down on the use of cash and increas- tory standards for applying the di- as though Apple Pay is planning a ingly adopting alternative payment rective, the payment industry should major European launch in 2016: an methods, in turn encouraging the ensure they prepare themselves now event which could throw the already revolution of the cashless society. for implementation. fragmented mobile payment world into chaos. While setting up a unified 2015 saw the use of the password, One thing is certain, 2016 will be an- overnight would be PIN, and fingerprint authentication other ground breaking year for the impossible, Apple Pay will, however, methods, but these all have one mobile payments industry. With al- almost certainly provide impetus thing in common; they are weak. In ternative payment methods becom- in that respect—with its competi- turn two-factor authentication will ing more secure and streamlined tor Google also jockeying for posi- be increasingly needed to improve within our society, we can expect to tion. Another trend involves mobile

10 POSitivity payments that are no longer wholly technology is still in its infancy. In pean online retailers. As credit card smartphone-dependent. Instead, 2016, however, we anticipate a shift penetration tends to be lower there, smartwatches, bracelets and rings in the market. it will become even more important will also be equipped with payment in 2016 for providers to know their options. When it comes to authenticating way around alternative payment payment processes, there are several types and to market these to specific 2. NFC new inventions in the works for 2016. target audiences. Merchants should The current methods are password, consider which markets are particu- Another familiar face among the PIN, and fingerprint. These methods larly suited to international strate- payment trends of the past few years all have one thing in common: they gies and simulate potential market is Near Field Communication (NFC), a can be expanded upon to allow in- launch models with partners like topic closely related to mobile pay- creasing use of two-factor authenti- payment service providers. ments. NFC, however, goes way be- cation. User-friendly methods—in- yond making payments using smart- cluding, for example, new biometric 5. Real-Time Payments (Instant phones. After all, there are also many processes like voice recognition, key- Payments) credit and debit cards which contain stroke detection, finger vein scan- NFC chips. These speed up POS pay- ners and pulse recognition—are set The European Central Bank (ECB) will ment processing by enabling smaller to become increasingly significant. bring instant payments strongly to amounts to be paid quickly and eas- The trend aims to simultaneously the fore in the near future. Modelling ily without requiring a PIN or signa- increase both security and conve- instant payments on the lowest pos- ture. While there are, of course, other nience. sible infrastructure level, however, POS payment methods, will take a few years. At such as QR codes, for the application level, on example, we anticipate the other hand, solu- that NFC will come tions will be developed out on top. Merchants which are much faster should ensure they to implement, or which have an overview of already exist (e.g. real- the current POS options time guarantees). These and should, if needed, are much more impor- upgrade to the latest tant anyway than actual technology. real-time transfers of money to merchants’ 3. Security account. The real-time guarantee is particu- Security is an essential larly important for digi- element with any pay- tal goods, which are ment option. In 2016, intended to be made in particular, two fields available to customers will strongly influence the payment instantly, as well as for express deliv- industry: tokenization and biomet- 4. International E-Commerce eries, so that goods can be shipped ric authentication. Tokenization is out immediately the payment con- an extremely interesting method of Companies seeking e-commerce firmation is received. Instant or real- securing credit card data. Instead of success will find it increasingly dif- time payments are a trend which will using actual credit card details, com- ficult to manage without an inter- be with us for a long time to come. panies substitute pieces of informa- national strategy. Providers who are tion known as tokens. The original already active in multiple markets 6. Blockchain Technology data is stored securely on a tokenisa- will, in future, probably expand into tion server, and only the tokens are other continents. Expanding e-com- The blockchain technology on which used during the payment process. merce activity involves more than bitcoin is based is set to cause a If they are stolen, there is no harm just translating websites and estab- commotion in 2016. The blockchain done. One current stumbling block lishing efficient logistics. Instead, of- is a database in which every bitcoin involves the lack of widespread to- fering locally relevant payment types transaction is recorded. It comprises kenisation standards. Instead, there is at least as important. Asia, Eastern a long series of data blocks in which are a number of different approach- Europe and Latin America are the one or more transactions are put to- es. Viewed in this light, this security most interesting markets for Euro- gether, encrypted, and then stored

POSitivity 11 in a tamper-proof manner. One ad- revision defines several priorities, issuers have less revenue to pass on vantage is that transactions are both one of which involves strengthening to their marketing partners, such as fast (if not in real time), and cheap. the security requirements for online cobranding companies and program Ideas for alternative uses of the payments by improving customer managers. This means that cashback blockchain technology are currently authentication in order to combat systems and loyalty rewards, like air being developed. Basically, however, fraud. PSD2 will also provide a legal miles or bonuses, will sooner or later, one thing is already clear: wherever framework to stimulate competition. probably be curtailed. transactions must be carried out This framework will facilitate market and where a “trusted third party” entry for new providers and allow 10. Cash on the Retreat has, until now, been required, the the development of innovative mo- blockchain will not be far off. It will bile and Internet payment methods. Could this be the end of cash? You replace the trusted third party cost- It will also force banks to grant such could be forgiven for thinking so, effectively and efficiently. One exam- providers access to accounts. The if you were watching the develop- ple is smart contracts, in which com- European Banking Authority (EBA) is ments in several European countries puters (rather than lawyers) draw up set to develop more detailed guide- or following the current discussions the contracts, verify the conditions in lines and regulatory standards for in the economic media. In Sweden, real time, and automatically execute various industries. Although enshrin- for example, it is now almost impos- certain provisions. ing these in national legislation in all sible to use cash to pay for bus tick- EU countries will take a further two ets. Acceptable payment methods 7. E-Money Accounts years, payment industries should include customer cards, credit cards, begin preparing themselves now for and payments via mobile app. Even The “bank accounts for everyone” implementation. Doing this will al- traditionally cash-based bakeries no requirement coincides with the cur- low them to be ready for the appro- longer exist in Sweden. Instead, many rent reduction in bank retail services. priate steps necessary in 2016/2017. bakeries now display signs request- In 2016, therefore, e-money accounts ing that customers use cashless pay- will come increasingly into focus. 9. Declining Interchange Fees ment methods for even the smallest These have the tremendous advan- amounts. The situation in Denmark tage that they are easily acquired, Multilateral Interchange Fees (MIFs) is similar. There, the government is placing bank-like structures within are paid by acquirers to issuers to currently debating whether or not to reach of population groups (such as compensate them for their involve- release smaller retailers from the ob- refugees) who have, until now, been ment in authorising, releasing and ligation of having to accept cash as a denied access to such services. Addi- processing credit card transactions. payment method. tional benefits of e-money accounts The costs of this type of transaction include their data frugality, their are normally borne by merchants, Doing away with cash, however, is generally state-of-the-art interfaces, who pay these fees to the acquirer. currently more of a theory among and more advanced features. In ad- The acquirer then pays all the other economists. In Germany, for exam- dition, some already offer the instant fees involved, including, for example, ple, around 80 per cent of retail sales payments described above, which the “scheme fee” to the credit card are still transacted in cash. If, how- are not yet available with bank ac- network (Visa, MasterCard, etc), as ever, we look at sales revenue, cash counts. well as the multilateral interbank fee makes up just 53.3 percent, a figure to the credit card provider (usually set to drop further in 2016. Cash is on 8. Regulatory Changes the purchaser’s bank). The regula- the retreat, and alternative payment tions, which will come into force at methods are advancing. Among The first Payment Services Direc- the end of 2015, will therefore reduce the multitude of technologies (like tive (PSD) from 2007 is still currently merchants’ costs, and it is anticipated cards, apps, wearables) available to- implemented domestically. Among that these measures will result in a day, cash is, however, still very high other things, PSD defines the infor- corresponding price reduction by on the list. It’s an essential element mation requirements for payment 2016. in the mix. Fears that cash is dying services within the EU single market. out in Germany are, therefore (as yet) It also stipulates that payments must The lower bank interchange fee is, unfounded be completed no more than one day however, deducted from the earn- after a payment order is processed. ings received by the card-issuing After a tough two-year negotia- banks, which means that these will tion period, the EU has now, finally, probably introduce additional card agreed on a second payment ser- (or even transaction) fees. A reduc- vices directive (PSD2). The proposed tion in MIF revenue means that card

12 POSitivity Payment Trends. What can be inferred?

Phil Kenworthy Founder & Director Payment Systems Consultancy

With all the news stories surround- land’s Real Time Gross Settle- growth of 4% over 2014. In value ing Fintech disruption, emerging ment System (RTGS). terms, these added up to £74.5 tril- regulation, the development of new • Cheque & Credit Clearing lion. The breakdown per system was Payment Systems and ever-glossier (C&CCC): Used for the clearance as follows: consumer interfaces, it is easy to of cheques and and credits over overlook the question of what it is that end-users actually need from their payment systems. To that end, the 2015 UK Payment Statistics pub- lished by Payments UK (download- able here) makes particularly inter- esting reading given the UK already has a well-established Faster Pay- ments platform alongside other pay- ment systems.

For those not familiar with the UK a six day clearing and settle- Separately, the UK ATM Scheme Op- Payment Systems, the four princi- ment cycle. erator LINK reported that 2015 repre- pal systems used by consumers and • Faster Payments (FPS): 24×7 sented a record year in terms of the businesses alike are: processing of both timed and amount of money (£128 bn) that had immediate payments up to been withdrawn from its network of • Bacs: Direct Credits and Direct £250K. Normally cleared within ATMs, the total number of withdraw- Debits which operate on a three 2 hours. als made and the number of ATMs in day processing cycle. use. They note that the value with- • CHAPS: Same day High Value Between these systems, a total of 7.8 drawn under-represents the total Payments which settle in real billion payments were made in the value of cash withdrawn via ATMs time across the Bank of Eng- UK during 2015, which represents since it did not include figures for

POSitivity 13 money withdrawn by the customers they just want to know it will defi- Time/ “Immediate” space, is there of Banks using their own ATMs. nitely be paid on the day it is due. sufficient future traction available to Similarly, employees will want com- warrant and support the continued The next table shows the breakdown fort that they will be definitely paid widespread investment being made of volume (millions) by payment on the day their wages are due but in the area of “instant payments” and type in 2015 with and the delta from may be less concerned about the consumer payment interfaces? the previous year. time the money is paid into their ac- As more and more countries look to implement “Instant Payment” solu- tions, the experience of the UK eight years on since its own Faster Pay- ments payment system was launched also highlights that the requirement for timed/future dated payment so- lutions to be able to co-exist along- side real-time “instant payment” mechanisms remains a real world necessity. It would seem that, unless technology can find a way of inno- vatively amalgamating the world of timed and real-time payments (and the differing processing needs these payment types require), there may count on that day. need to be a two track payments en- So, what facts and inferences can be vironment for the foreseeable future. taken from these statistics: It is likely that part of FPS’ growth in “Single Immediate” Payments is from Real time/“immediate” payments the downturn in UK cheque usage. only represent 10% of all payments The remainder is likely to be organic made across the four principal UK growth. A key question is whether Payment Systems. The remaining this growth will continue unabated 90% are timed or forward-dated in and whether it will also take payment one way or another. Even within FPS, volume from the “timed” market. over 40% of its volume is for timed as opposed to immediate payments. The reduction in paper based total of 7.8 bil- cheque/credit volume is mirrored in Of particular note, (and notwith- other countries. However, with over lion payments standing the fall in cheque vol- 430 million items being processed in ume), the total volume growth 2015, its significance (particularly to were made in the of timed and forward dated pay- small businesses, charities and those ments in 2015 (@ 197m) is greater who either do not wish or cannot ac- UK during 2015, than the corresponding growth in cess newer technology) is still very real-time/“immediate” payments (@ relevant. which represents 122m). The growth in ATM volume and value growth of 4% The volume increase in timed pay- also highlights that this payment me- ments highlights that this remains dium still remains of importance to a key payment mechanism for busi- the wider population, notwithstand- over 2014. In val- nesses and consumers alike. Most ing the rise in other consumer-facing business payments just need to be payment mechanisms such as con- ue terms, these paid on a given day and that is pre- tactless cards and Mobile Payments. ordained through their invoice pro- added up cessing and accounting systems. The statistics around timed pay- Most consumers probably do not ments would appear to raise a key to £74.5 mind what time of the day their question. With just 10% of the cur- monthly TV subscriptions are paid; rent UK payment market in the Real- trillion

14 POSitivity Interview

Michal Smida CEO & Founder Twisto Payments

Q: First of all, we want to congratu- The simplicity of our payment meth- late you and Twisto Payments for od is drive by our proprietary risk winning the prestigious pre Start- credit assessment engine Nikita. Ni- up Innovation award at MPE 2016 kita evaluates hundreds of individual in . Please introduce your- factors to deliver a credit decision region in the near future. self and Twisto Payments briefly to within milliseconds. Such speed POSitivity readers. gives our customers a seamless pay- Q: Some would say, that the future ment experience without the need belongs to those who are prepared Twisto is a FinTech startup which is for forms or website redirects. We to take risks, translate great ideas changing the way we shop and pay are also offering Nikita to banks and into tangible solutions and know online. With Twisto, we deliver a true financial institutions to help them how to convince prospective cus- one-click instant credit payment make better credit decisions in the tomers of the benefits. Can you ex- system to our customers by defer- online environment. plain to our readers, what Twisto ring point of sale payments until the Payments does and how it fits this products are delivered. Customers In 2016, we will bring Twisto to the motto? typically pay for their purchase via mobile app market. The Twisto app Twisto 14 days after delivery. For re- will serve as a personal day-to-day At Twisto, we have a saying: “no risk, peat customers, we offer the Twisto financier for customers to help re- no fun” – so this motto fits us very Account service, giving customers define their offline payments experi- well :). We started Twisto with the up to 45 days of interest-free credit ence. ambition to change the way people and aggregating the sum of monthly pay online. We looked at the current shopping into a singe invoice. Pay- Q: Any key figures about Twisto instant credit solutions in the mar- ments with Twisto are free of charge you wish to share? ket, and many of them either require for customers. For each transaction, a social security number (e.g. Klar- Twisto pays the merchant immedi- On average, we process 7-8% of mer- na) or redirect customers to fill out ately and takes on the credit risk of chants turnover and increase mo- forms. We take this a step forward customer payments. Merchants ben- bile conversion by 15%. The average and reduce the complexity of instant efit from an increased conversion transaction approval rate is above credit into a one-click payment expe- rate, especially on mobile phones 80% and our credit default rate is rience based only on the information and greater average order size. We well below the industry average. To- provided by the merchant (name, take a small transaction fee from day, we serve more than 100,000 ac- address, telephone, email and items merchants. tive customers in the purchased). Our drive for simplic- and plan to expand across the CEE ity and reducing friction at checkout

POSitivity 15 created a globally unique payment 1. Trust and build strong relation- payment methods method for both merchants and cus- ships with top management – • Building trust among custom- tomers. We accomplished this with those are the key people who ers and a great marketing tool our risk engine Nikita, which is based will drive the timing between – let them try the product or on hundreds of alternative data handshake to integration of service first, then pay once the points never used before in credit your service. customer is fully satisfied with risk assessment. Today, we are the 2. Deliver a product or service their purchase easiest-to-use instant online credit that brings value to customers, provider. However, our ambition is drives up conversion and aver- Q: Winning this award means, you to take this further and redefine the age order values = more rev- also get international recognition. way people pay offline and finance enue for merchants. Does Twisto want to move forward their everyday purchases. 3. Technical readiness and making and plan to expand internation- integration as easy as possible. ally? And where would you like to Q: And how does the mechanism Merchants have hundreds of move the project in the next year? work? Does it provide an X-factor priorities, make it easy for them What is the vision? for customers to boost its adop- to integrate you! tion? 4. Low transaction fees. With in- Our current energy is focused on the creasing pressure on margins, Czech market, but we are actively With each payment request we merchants are always look for looking for opportunities across the get very limited information from ways to boost their profit mar- CEE region. Regarding new products the merchant (name, address, tele- gins. With the EU wide equal- - we will be launching two innovative phone, email and items purchased). ization of interchange fees and offline payment services during this Based on this, we run a credit check reducing cost of payment gate- year. through Nikita. Nikita enriches the ways, you can’t expect a mer- customer data provided with geo- chant to pay you a 5% fee for a logical data, technical data, device payment service. data and basket analysis. This unique 5. Patience. Large merchants have approach reduces our reliance on a long integration lead time. Nikita enriches typical sources of credit informa- They often have development tion, such as credit bureau data. If cycles and priorities well set the customer data you compare Twisto to other “credit” out in advance, so you need to payment methods provided by local be patient, but as a reward, you provided with geo- banks or consumer finance compa- will get great volume! nies, we are miles ahead. Imagine you want to take out a loan from a Q: What is the value expectation logical data, tech- bank for an online purchase – nu- and how is the ROI proven? merous forms, redirects, scans and nical data, device copies of your social security card For customers: and with a wait time up to 48 hours • Instant credit for their online data and basket for credit approval. Twisto is a one- purchases click payment and takes milliseconds • Interest-free financing for up to analysis. This to approve a transaction – this is the 45 days X-factor benefit for our customers! • One-click payment experience unique approach for web and mobile purchases Q: What is important to keep in • Sense of security – customers reduces our reli- mind when developing services pay after they unpack and try and solutions for retailers and the product (vs. pre-payment merchants? with card or a bank transfer) ance on typical

To sum it all up – it’s tough and re- For merchants sources of credit quires patience, especially when you • Increased conversion rate, es- are bringing a new innovation to the pecially on mobile devices information, market. Here are the 5 key things we • Easy credit for customers, so learned over the past 3 years of B2B they can shop before payday such as credit sales: and typically place larger orders with Twisto than with other bureau data

16 POSitivity 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.comPOSitivity 17 mobile

Will 2016 Be the Year of Digital Wallet Adoption?

for purchases, I might as well carry it in my wallet,” he said.

Plenty of people would agree. A size- able percentage of respondents to the Citi study stated that they have yet to use a digital wallet to make a purchase, for the following reasons:

• Easier to pay with another meth- od, such as cash or credit card (47 percent); • Don’t see any benefit from using a digital wallet (45 percent); • Concerned about the security of payments (45 percent); • Don’t know much about digital Consumer use of mobile devices to wallets gain more widespread accep- wallet tools (44 percent). shop both online and in-store is push- tance.” ing merchants to adopt the use of Of those respondents, 66 percent said digital wallets. The term describes Small Business Digital Wallet Adop- they “could be convinced” to adopt a electronic devices and programs used tion digital wallet if they were educated on to make payments for purchases digi- the benefits. tally, without presenting a physical What must small businesses do to credit card, debit card or cash. Apple meet this growing consumer demand? “Digital wallets must become the de- Pay, Android Pay and Samsung Pay are fault way of paying for things before all examples of digital wallets. For the answers, Small Business Trends they can get to scale and be a genu- spoke with two industry experts, Lau- ine replacement for credit cards, and A recent study by Citi Retail Services rence Cooke, CEO of nanoPay, a digital that’s a long way off,” Cooke said. “I see found that shoppers are embracing payment technology company, and no incentive for merchants to start ac- digital wallet adoption at a growing Sean McQuay, credit card expert with cepting these and, in fact, a lot of mer- pace, due in large part to convenience NerdWallet, a financial education and chants in the U.S. are going out of their and ease of use. resource site for consumers. way to say they won’t accept them.”

“Digital wallets are quickly becoming “Digital wallets are most prevalent in McQuay takes a less pessimistic view. mainstream,” said Leslie McNamara, Asia,” Cooke said. “In Japan, for exam- Rather, he encourages small business- Managing Director of Partner Manage- ple, every phone has a digital wallet. In es to seriously consider implementing ment, Citi Retail Services, in a prepared the U.S., however, adoption is signifi- POS systems that facilitate digital wal- statement from the company. “Tech- cantly lower.” let use. savvy shoppers are increasingly de- manding seamless, omnichannel retail The reason, according to Cooke, is that “With the shift to EMV (i.e., chip card experiences and looking for solutions digital wallets don’t really do anything readers), most point-of-sale terminals that deliver this. There’s no question a physical credit card can’t. He doesn’t come with near field communica- 2016 will be a pivotal year as digital see the incentive. “If I use just one card tion (NFC) capabilities, which enables

18 POSitivity contactless payments,” McQuay said. to date and put a premium on keeping keep, do. “Apple Pay, Android Pay and Samsung their data safe and secure,” McQuay Pay all use NFC.” said. “Also, with Apple Pay and Android Conclusion Pay, you can build in loyalty programs The biggest question small business (i.e., digital punch cards).” Cooke said that for digital wallets owners need to ask, McQuay said, is to fully replace their physical coun- how payments work for their particu- From the standpoint of security, Mc- terparts, they will need to hold ev- lar type of business. Quay said that the new EMV terminals erything a leather wallet does: cash, adhere to a “chip and pin” standard, receipts, membership cards and pay- “In a hardware store, the customer established by the credit card indus- ment cards. Otherwise, they can’t be places the goods on the counter, the try, that produces a unique transaction genuinely classified as digital wallets cashier checks them out, and they pay,” code (called a “token”) for each pur- but only “part of a wallet,” to quote McQuay said. “In a restaurant, howev- chase. As such, EMV credit cards are Cooke. er, it’s customary to pay the waiter at more secure than cards with magnetic the table. stripes, and this new standard enables Despite his advocacy for digital wallet payments to occur via NFC over POS use, McQuay shares a similar opinion. “Adopting digital payments is very dif- systems. ferent between those two scenarios. “Until I can get my entire wallet on the It makes sense to the hardware store How to Get Started Using Digital phone, I see no point in replacing any owner but not for the restaurateur. Wallets part of it,” he said. “I still don’t use mo- No one wants to hand the waiter their bile payments that often. The credit phone to process a payment, particu- Getting started using digital wallet card in my physical wallet works just larly those who use Apple Pay, which technology for purchase transactions fine.” requires personal authentication with is as simple as buying an EMV terminal Touch ID or a passcode.” that supports NFC. Both agree that widespread digital wallet adoption is still far in the future Digital Wallet Benefits to Small Busi- “There are a number of POS devices and that it is not entirely clear what ness that accept NFC payment,” McQuay has to happen to make it a reality. If, said. “Merchants should be seriously as the Citi study attests, consumer de- McQuay suggested there are three looking to shift to EMV, for security mand is driving adoption, then hap- benefits to small businesses regard- reasons. When they do, they might as pen it will. And small businesses need ing the use of digital wallets: surprise well include NFC along with it.” to prepare for when it does, whether and delight, loyalty offers and added that’s in 2016 or beyond. security. There are several POS systems afford- able enough for small businesses. Source: Small Biz Trends “‘Surprise and delight’ is a soft benefit Not all support NFC, but a few, such that lets the customer know you are up as those offered by Square and Shop-

The importance of in-store mobile technology

Over the last decade we’ve seen a work together. even further; all in the aid of deliver- significant increase in mobile tech- ing a personalized approach and im- nology and it is now becoming the Retailers must now decide whether proving the in-store experience for heart of customer experience; forc- to equip their personnel with mobile shoppers. ing retailers to figure out how the devices, introduce more self-service digital and physical relationships can kiosks or expand mobile technology So how has mobility become so im-

POSitivity 19 portant and where it will need to go perience. Seventy-three percent of is not available. This is an interesting to meet the expectations of consum- consumers feel retailers which offer reverse to what most consider as the ers? in-store mobile technology provide normal omnichannel approach of or- superior customer service, with a fur- dering online and collecting in-store. Rise in Mobility ther 64 percent more likely to shop Sixty-three percent of consumers at a retailer which provided in-store have also stated they prefer mobile It is considered that by the end of mobile technology. point of sale (PoS) compared to a 2016 more consumers will be brows- traditional cashier checkout, with a ing on mobile devices than on tra- This highlights how increasing mo- further 72 percent preferring mobile ditional computers for the very first bility in store is having a positive im- PoS as it offers faster checkout times time. This trend has greatly increased pact on customer experience; which or no queues. since smartphones first appeared ten will soon result in increased satisfac- years ago and has encouraged con- tion for shoppers, eventually driving When considering these shopper ex- sumers to expect the same level of sales. pectations it is clear to see mobility engagement from their retailers. has made a strong impact on cus- What the future holds tomer experience and will be at its Some retailers have taken this on heart going forward. Retailers must board, resulting in a rise of in-store As highlighted, one element of the now take these facts on board and mobility, but most haven’t. Leaving future which is guaranteed is that plan a future mobility strategy to customers wanting more; a recent shoppers expect to see more retail- meet the expectations of the next study found 93 percent of consumers ers using in-store mobile technology. generation of customer. would like to see more stores using However retailers must understand in-store mobile technology, high- the type of technology to implement Source: Beta News lighting its lack of uptake so far. and consider what requirements shoppers of the future will have. Impact on Customer Experience Sixty-five percent of consumers are So far the rise of mobility has seen a keen to see in-store mobile technol- significant impact on customer ex- ogy that can order online if a product

20 POSitivity This chart shows the seismic shift in how we pay for stuff

commerce over the next decade than we’ve seen in the last hundred years,” Bill Ready, PayPal’s senior vice president of global prod- uct and engineering, said in a statement on Tuesday.

Total mobile commerce in the U.S. exceeded $100 billion in 2014 and con- tinues to grow at a rapid pace, according to data from Internet Retailer. Last summer, industry tracker IDC predicted that the to- tal value of payments over mobile networks would reach nearly $4 trillion globally by 2020 as people grow more dependent on mobile phones and more comfortable with device security.

“The necessary pieces to spur consumer adoption of mobile payments are finally in place,” said IDC With the advent of smartphone all commerce. research director James payment services from the likes Wester. of Square Inc. SQ, +0.78% , Pay- In January, on a call with analysts, Pal Holdings Inc., , Android PayPal CEO Dan Schulman said the Shares of PayPal fell 0.8% to $38.48 in Pay GOOGL, +0.90% and Apple Pay digitization of cash and mass adop- late-morning trade. They have risen AAPL, +1.30% , mobile payments tion of mobile phones has created 12.2% over the past three months. are forecast to boom over the next “a seismic shift that’s transforming The company was spun off from eBay several years. money and the very nature of com- Inc. EBAY, +1.50% last summer. merce.” Nearly a third of the 4.9 bil- To celebrate 10 years since offering lion payments PayPal processed last Source: Market Watch its first mobile services, PayPal PYPL, year occurred through mobile devic- -0.68% on Tuesday visualized the es, amounting to a transaction value exponential growth of mobile pay- of $66 billion. ments in this chart, though it admits mobile is still just “a tiny fraction” of “Mobile will lead to more change in

POSitivity 21 Lessons from innovative Chinese mobile apps

The combination of and global average. mobile devices has become a way of Rather than focusing on selling more life in China. devices with payment capacity add- The fact that nearly one in five We- ed, as is the norm in , Chat users are setup for mobile pay- A lesser-known ancient Chinese prov- companies like and Alibaba ments speaks for itself. Convenience, erb translates as “Dig the well before in China weave payments seamlessly seamless payments, and security still you’re thirsty.” In many ways, this into services that consumers already remain the top reasons why smart- beautifully illustrates the secret be- use heavily, such as messaging apps, phones are the primary shopping tool. hind the mind-boggling success of thereby powering immediate adop- Long before Chinese consumers felt mobile commerce in China. China is tion. In addition, third-party payment the need to integrate payments into the world’s largest smartphone and providers in China are essentially es- their mobile lives, retailers enabled e-commerce market, it for them and made it and some believe that easy and secure. China is an entire de- cade ahead of the West View shopping as a so- when it comes to mo- cial, not solitary, activ- bile commerce. So what ity are Chinese commerce businesses doing on In the offline world, mobile that the rest of shopping is a social the world simply isn’t, and often entertaining and should start to em- activity that oscillates ulate now? between buying things we need and buying View mobile not as a things that we want. channel or tool, but as Why should our lives on an integrated lifestyle mobile be any different? Chinese retailers tend For starters, many huge- to look further than just ly successful Chinese monthly active users apps are developed and daily active users, by established market but instead around how players like Tencent and regular users engage Alibaba, who demon- with their apps. In China, strate incredible fore- social is not merely me- sight in perceiving mo- dia for advertising or en- bile as a way of life, and gagement, but is a way integrating services to support it. Un- crow services that guarantee that no of life. Rather than aggressively driv- like other parts of the world, mobile money changes hands until both buy- ing consumers to their own apps and payments are actively driven by major er and seller are satisfied, driving up properties, Chinese businesses have third-party Internet and e-commerce the trust factor in mobile payments. leveraged social apps like WeChat to companies in China, who ensure that This has resulted in China having the enable mobile storefronts, seamless the payment experience is integrated highest mobile payment adoption payments, customer support, social and frictionless for end users. in the world of 86 percent, twice the sharing and more, all in one place—

22 POSitivity in the apps where users are already Many Chinese retailers have suc- to them, according to market research spending time. cessfully built their own shopping firm Nielsen. Providing robust offline festivals, rather than waiting for typi- services like prompt delivery fur- As social and buying are increasingly cal holiday seasons as in other mar- ther drives mobile uptake, and that’s integrated, consumers are compelled kets. Singles’ Day, hosted by Alibaba, something Chinese retailers have built to become content creators rather dwarfs all the big American shopping their businesses around. than just consumers, and use social days combined, and goes one step channels just as they would use a further in creating a unified shopping Interestingly, some Chinese com- shopping buddy in real life—for feed- “theme” that excites consumers and merce competitors even merged into back, ideas, and comments. These fea- drives brand value. Prior to the sale, a single entity to align on central func- tures empower nearly 80% of Chinese Alibaba produced an entire TV special tions, while maintaining their laser- consumers to share their purchases with products that consumers could sharp focus on the consumer-facing on social today, compared to between buy from mobile or TV, appealing to proposition. For example, when Mush- 30-40% in other parts of the world. By users on all channels—and ultimately, room Street and Melishuo merged, enabling end-to-end shopping well porting that interest onto mobile. they maintained their separate focus beyond their own app, Chinese busi- on schoolgirls and white-collar work- nesses have enabled word of mouth Before the Chinese New Year, Tencent ers, respectively. Similarly, Dianping and social virality with incremental launched a campaign in which adver- maintains its focus on principal cities, effort, while creating shopping hab- tisers gave away nearly US$80 million while Meituan focuses on smaller cit- its that stick. Nearly 70% of Chinese of cash to WeChat payment users, ies, even after their union. smartphone users shop on social prompting them to gift money and media, and Chinese retailers have ultimately shop and pay on WeChat. Dig the well before you’re thirsty skillfully pivoted their mobile strat- That resulted in more than a billion egy around not just mobile apps, but gifts being sent and brought nearly Long before Chinese consumers were around social apps such as WeChat. 200 million paying users on board. this thirsty for mobile shopping, retail- Chinese retailers don’t just view gue- ers built the infrastructure and inte- View offline and mobile as one rilla marketing as a resort for smaller grations needed to fuel today’s boom- players, they use their competitive ing mobile commerce market. Chinese While Chinese apps have the advan- position and funds creatively. Unlike retailers are fierce when it comes to tage of scale, they have succeeded most advertisers that spend on user changing consumer behavior, and in in bringing offline and mobile worlds acquisition uniformly, we’ve seen Chi- fact, forego consumer trend surveys together by completely immersing nese mobile apps spend heavily on due to the speed at which user behav- users in services. Users can pay on- burst campaigns that generate maxi- ior adapts and changes. line or offline for products using the mum buzz and results. same payment systems, cementing In the midst of this change, the con- payment adoption and loyalty. Re- Focus on the proof in the pudding stant is how mobile businesses in Chi- tailers can therefore integrate offline na have pre-empted consumer hab- and online purchase experiences to Delivery is often the only real of- its to build a truly integrated web of drive a seamless service that provides fline touchpoint for a consumer, and services that has become the de facto unparalleled user convenience. For Chinese retailers truly deliver in this way to communicate, shop, share, and example, users on the Nuomi mobile aspect as well. Retailers in China suc- live today. Retailers all over the world app can view virtual tables in a res- cessfully bridged the last mile with can learn by looking at the Chinese taurant, see how many are occupied, consumers long before other coun- commerce picture, well beyond the understand waiting line times, and tries, with same-day delivery and free silos of their branded shopping apps book a table without being physically pick-up facilities. For example, JD.com and towards the future of ubiquitous present. Users can also buy mobile built up its entire delivery network mobile commerce as a part of every- coupons to redeem when physically comprising more than 50,000 workers day life. visiting the restaurant. In merging of- and 150 warehouses to ensure that fline with mobile, Chinese apps have stellar customer service extended to Source: Internet Retailer ultimately enabled mobile to become the final mile. the gateway portal to everyday life for users. In addition, proactive fulfillment al- ready exists in China. Automatic sub- Own shopping events with integrat- scriptions for necessities like groceries ed guerilla marketing now rule the roost, with nearly 30 per- cent of consumers having subscribed

POSitivity 23 processing

MasterCard forecasts that 38% of EU payments by 2020 will be digital

Consumers continue to adopt digital to pay with a variety of gadgets and de- lution for eCommerce merchants that payments worldwide with MasterCard vices, MDES offers safety and security helps them minimise fraudulent trans- predicting that by 2020, 38 percent of across the entire spectrum, ensuring actions and associated costs, reduce payments made throughout Europe banks, retailers, and consumers have the risks and costs associated with stor- will be digital. access to the safest way to pay across ing card numbers, and has the potential This shift in consumer behaviour will continents,” said David Dechamps, to improve approval rates. be powered safely and securely by the head of Digital Payments Europe at MasterCard Digital Enablement Service MasterCard. (MDES), which enables every commerce Jill Thornton, Senior device to make payments through in- Change Manager at dustry-standard tokenisation. MBNA, added, “We’re one of the first to offer Since 2013, MasterCard has worked payments across the with issuers and merchants to build the wave of new digital foundation of secure digital payments, wallet providers - and ensuring consumers have the highest working with Mas- level of safety and security, no matter terCard on MDES has how they pay. MDES gives cardholders enabled us to extend the choice and peace of mind to make this choice of payment more secure digital payments from a methods. We’re able to variety of connected devices through a offer secure digital pay- tap, touch or click. ments and we continue to invest heavily in giving our custom- The platform is also being used to de- The launch of Apple Pay in the UK last ers greater choice and convenience in liver payments to a wide array of con- summer incorporated MDES to create how they pay.” sumer products across the automotive, and deliver digital MasterCard cards MasterCard is also making it easier for fashion, technology, and wearables cat- into Apple’s digital wallet. This will be issuers and merchants of all sizes to egories, giving consumers the freedom followed by Samsung Pay and Android gain access to tokenisation services to shop using the device that is most Pay when they arrive in the UK, giving with MDES Express and MDES for Mer- convenient to them, with the highest consumers the option to digitise their chants. MDES Express streamlines the level of security available. MasterCard cards across different de- contracting process between finan- vices. cial institutions and digital payment At Mobile World Congress 2016, Mas- services. MasterCard partners - digital terCard and Coin announced a devel- Today card issuers and wallet service wallet providers, device manufacturers, oper program for accelerating the in- providers have MDES projects in prog- card on file merchants and other digital tegration of payments into wearables ress in 18 countries across Europe. payment providers - now have a simple that significantly reduces the barrier MDES already connects banks repre- contractual framework to engage with to entry for device manufacturers. De- senting more than 70% of UK account all participating banks. velopers now have access to MDES and holders to Apple Pay. Coin’s proprietary technology for en- Following MDES Express, MasterCard abling payments in a scalable way. “As the payments ecosystem shifts from announced the MasterCard Digital En- plastic to digital and consumers choose ablement Services for Merchants, a so- Source: Finextra

24 POSitivity Everything You Should Know About Location-based Marketing Technologies

Information is clouding up more than and how they will grow with time to send tailored message to customers ever and customers are increasingly help retailers leverage them better. of a specific geographic area. It is cru- performing shopping-related activi- cial to consider people from different ties on the go. While online retailers Targeting customers Based On Lo- locations to have different interests are definitively capitalizing on this cation & Timing and needs. Online and large offline drift, brick & mortar stores aren’t too retailers with outlets in various loca- far behind. Physical store owners are Advanced location-based mobile tions are already leveraging this tech- also becoming adept in modern tech- marketing technologies allow retail- nology for better customer targeting. nology to win back sales that they ers to reach deeper into their custom- have been losing to the hands of e- ers’ psychology to earn their loyalty Small brick and mortar retailers can Commerce. by hitting that sweet spot. So far the capitalize on this by using it to un- adoption rate among retailers has derstand the local demographics bet- Apart from using traditional mar- been gradual but with the rise of m- ter. For instance, a sportswear store keting tactics online and offline, -of Commerce in recent times, a huge in Manchester can tailor its offers fline retailers are also capitalizing on surge is expected in their acceptance. and online promotions better by first GPS-enabled technologies like bea- knowing where the majority of Unit- con, geo-targeting, and geo-fencing Let’s start by understanding what ed and City fans live. which gives customers what they these technologies are and how they want, when and where they want it. work. 2. Geo-fencing

Through this article, I will shed some 1. Geo-targeting Using this technology, offline retail- light on what these technologies are, ers can set a virtual perimeter around the challenges associated with them, Geo-targeting allows businesses to their stores, so that whenever opt-in customers (those who have installed store’s app) enter that area, this trig- gers a message on their mobile de- vices about the day’s offer and other relevant information.

For example, as you are about to walk into your regular coffee shop, you receive a good morning message on your smartphone with special offer on a particular snack on offer that day. As a customer, you might opt for that snack due to being informed about it, even when you had not initially planned to do so.

3. Beacon

The most recent entrant in this list,

POSitivity 25 beacon technology was introduced from 2002. In the movie, this happens something repeatedly only causes by Apple in 2013 with the release of through retinal scan rather than iden- further annoyance. iBeacon. Google also launched Eddys- tification via an app on your smart- tone beacons in mid-2015 for Android phone. Lack of Data and other mobile platforms. Beacons are Bluetooth low energy devices that These technologies have been around retailers can install in their stores to The Downsides for a good while now but they are still target customers with high accuracy, in a somewhat nascent stage. There in specific micro-locations: aisle by Despite the allure of the idea, along are still no well-defined patterns for aisle, store entrance and exit with this opportunity comes a hand- how exactly customers are behaving ful of significant challenges. towards these in-store digital interac- Beacons work with specific apps tions. So to some retailers, investing installed on the customers’ smart- Privacy Concerns on them might seem like a gamble at phone, tablet or smartwatch, and this stage. trigger specific messages or actions These technologies offer seamless in- as they walk by a particular micro-lo- teraction and convenience to custom- Battery Drainage cation in the store. For instance, walk- ers. But it is done at the expense of the ing by a particular product will trigger customer’s privacy. A technology that Beacon is built upon low energy Blue- a push notification about any offer on gets activated based on a customer’s tooth technology. Enhancements it has gone through over the past couple of years have also cut down the battery consumption issue sig- nificantly. But on the ground, since spending a couple of hours in super- markets is normal behavior for cus- tomers, they may need to deal with some battery drainage if they want to keep their Bluetooth on for that pe- riod as well.

Native App Requirement

Another major challenge with these mobile marketing technologies is that they require customers to install specific apps to interact with them. This may be mor feasible for big re- tailers like Walmart, Sears and Target whereas smaller retailers might use them to engage only their most loyal that product, or as a customer walks proximity, and having that informa- of customers. out of the store, payment is automati- tion stored in a retailers’ analytics ap- cally made by a pre-selected payment plication may allow store owners to What does The future channel, and so on. further target them with this data, for unrelated matters. hold? These advanced technologies are cer- tainly taking mobile marketing to a Annoyance Despite these challenges, the future whole new level. By removing friction of these technologies looks hopeful. from customer interaction, they are Taking the example of the coffee shop After all, nothing is more desirable for allowing store owners to provide cus- scenario, if the customer is only walk- customers than knowing about inter- tomers a highly personalized shop- ing past the store in a rush instead esting offers without even having to ping experience. of entering it, receiving a notifica- search for them. tion about the coffee shop’s offer can We have seen an example, although cause annoyance. Of course, it can In fact, a study said that about 70% purely theatrical version of this in be prevented by turning off the app, people find location-based push noti- Steven Spielberg’s Minority Report but then making the customer to do fications to be useful. These technolo-

26 POSitivity gies also increase app usage about alone, 10 times higher than in 2015. oriented countries). But on the other two times, which consequently gives hand, the challenges associated with retailers more time to engage their Apart from these numbers, the grow- them also clearly indicate that they customers. ing trend of the internet of things need further enhancements for easier (IoT) and the idea of gadget speaking implementation, more precise target- Several other studies also suggest to gadgets will also work in favor of ing, and better customer experience. that in coming times, these technolo- these location based marketing tech- gies will be widely accepted. Accord- nologies (since essentially, that’s ex- How long they will take to go main- ing to MediaPost, in 2015, 46% US actly what they do). stream completely depends on how retailers used beacon technology (up quickly these enhancements take from 15% in 2014). And about 71% of place. However, the important thing them were able to understand cus- Conclusion for retailers at this stage is to start tomers’ buying patterns. adopting and using these location So we have established that beacon, based marketing techniques and Business Insider has also estimated geo-targeting and geo-fencing have building upon them as the need aris- that in 2016 beacon based technolo- substantial long-term potential and es in the market. gies will drive about $44 billion worth will gain notable growth in times to of sales for big retailers in the US come (especially in more mobile- Source: Hongkiat

A Tale of Two Wallets

Wallets, or purses, have been around 1: The “American” an account, then the payment I have since bartering was replaced by the committed to is cleared and settled exchange of goods for currency of The first, which I am terming the via the wallet operator using my pre- whatever variety. Therefore they American, model works primarily on determined deposit option. were handy means of carrying that the basis that someone wishes to buy currency in case you needed to ‘buy’ goods online. Should that deposit, or load, option something on your travels. Centuries, be a payment card then it is easy for if not millennia, have passed and we This model, unsurprisingly, is suited the scheme, and its associated issuer are now in the electronic, or digital, to the American payment culture and and acquirers, to identify the benefi- age. The wallet and/or purse are still transactions are, literally, like for like. ciary of the funds and have the trans- with us albeit with that all important This is used for account discretion, action coded in the most appropri- prefix the ‘E.’ security and may also embody a loy- ate way since the funds are ‘passed alty program. There is no element of through’ for an end to end transac- There are a plethora of ‘E’ wallets stored value and transactions are fully tion, in simple terms anyway. these days all offering the provision of card based and so it may be possible various beneficial attributes, depend- for chargebacks to be passed through, There are many organisations operat- ing on the requirements of the user dependent on circumstances. ing wallets of this type, including the but the fundamental reason for being card schemes themselves. All well and remains much the same. So having decided I’m going to buy good so far then. something online and flag that with For the purposes of this article I will, the merchant I will be presented 2: The “European” briefly, examine just two basic mod- with, typically, a number of payment els, comparing and contrasting the options which will usually include a Now we come to the second, which differences and why payment profes- wallet alongside the usual payment I’m terming the European, type of sionals should be aware of them. card options. If I choose to pay by the wallet. Catering for the many different wallet option, assuming I already hold payment cultures in Europe and fea-

POSitivity 27 ture many and varied forms of load of which cards may be one option.

One of the reasons that most of this type of wallet have payment cards attached to them so that a broader range of merchants can be reached and facilities, such as ATM’s, can be accessed.

Again this model is used where finan- cial and account discretion and se- curity is desired but this model also, invariably, incorporates a stored value element, including multi-currency ca- pability. Because the load is used to complete a purchase of ‘electronic’ money any chargeback liability must stop with the wallet operator. It is clear, therefore, that the benefi- Q.”When is a wallet not a wallet?” This type of wallet works in much the ciary of the funds is the ‘wallet’ op- A. “When it’s a digital account!” same way as a bank current account, erator as funds are stored for future the fundamental differences are that transactions or future multiple trans- Source: Finextra E money accounts are not allowed to actions. If the funds are deposited/ offer credit so no overdraft. They are loaded using a payment card then the also not allowed to allow interest to transaction coding should always be accrue on outstanding account bal- of a nature since the ances, although there are ways to customer is, at this point, purchasing The most notice- reward those situations. The most no- ‘electronic money.’ ticeable difference, which is not en- tirely apparent, is that bank accounts The customer now has the where- able difference, are safeguarded under EU deposit withal to conduct transactions, at protection schemes up to a specified their leisure, as if it were a current ac- which is not en- limit (£75k in the UK, for example). count, in fact there is an increasing number of individuals, and SME busi- tirely apparent, Electronic money is not covered un- nesses, that are choosing to use these der these compensation schemes accounts instead of, or in addition to, but are subject to even greater secu- bank current accounts. is that bank ac- rity stringencies in that 100% of funds must be ring-fenced in compliant I have, perhaps, laboured the point counts are safe- safeguarded client accounts which here but the purpose of this is to high- have no financial limits imposed. light the fact that some card schemes guarded under are trying to force the second model, So it is these ‘wallets’ that have funds as described, to fit the first type of deposited in the aforementioned model which just isn’t realistic, or ac- EU deposit pro- safeguarded accounts that must have curate. those funds deposited, or loaded, be- tection schemes fore any further transaction can take My contention, therefore, is that we place. With this type of ‘wallet’ a num- should have a category of ‘digital ac- up to a specified ber of different types of transactions count’ for the second model and defi- can occur, in much the same way as nitions applied accordingly thus giv- a bank current account does as men- ing full transparency and accuracy. limit (£75k tioned previously, usually including the use of a payment card to access So perhaps the question to ask should in the UK the funds contained therein. be: for example)

28 POSitivity Why We Are Still Reaching for Wallets, Not Phones, at the Checkout

Sammy Yuen, a graphic designer who build systems and apps so that people Yet this is happening slowly. lives on the Upper West Side of Man- can pay for items with their phones in hattan, was standing in line at Whole stores, where most retail spending still A tiny percentage of in-store sales Foods Market one morning waiting to takes place. The hope is that phones are made with phones. In the United pay. He used the Starbucks app on his will make payments more efficient States, an estimated $8.7 billion in phone to order coffee in advance and and give banks and retailers new data purchases were made with phones in then bought his Whole Foods items on their customers’ shopping habits. 2015, according to a survey by eMar- with Apple Pay by holding the phone Phone and software makers, including keter, a research firm. That is a mere 0.2 in front of the register. Apple, Google and Samsung, are get- percent of the estimated $4.35 trillion ting involved in mobile payments to of in-store sales last year. Excluding Using his phone in these ways has be- make their products more useful and purchases made with a wildly popular come a routine for Mr. Yuen. “Wherever attractive to their owners. app by Starbucks, the amount of mo- I can use it, I do use it,” he said. bile payments would most likely be Behind all this is the belief that con- well below that $8.7 billion, payment But Mr. Yuen is very much the excep- sumers will discover the benefits of industry experts say. tion. paying with their phones — and then use them more often as a payment Other customers coming out of Whole Banks, technology companies and method. Foods that morning gave several rea- retailers are spending large sums to sons for not paying with their phones. Most were concerned about the security of the transac- tions — or of losing their phones and having other people get access to their fi- nancial data.

They also doubted phones were much faster than credit or debit cards. Even Mr. Yuen said, “I still think that swiping is faster.”

And people who activate a payment method like Apple Pay may not use it much. Only 15 percent of people who had tried it said they used the service more than once a month, according to a survey in January by First Annapolis, an electronic pay-

POSitivity 29 ments consulting and research firm.

Apple said the usage of Apple Pay ac- celerated significantly in the second half of 2015, compared with the first half of that year. The company did not define how it was measuring usage.

Large numbers of consumers don’t ap- pear to be making frequent use of the other payment apps, either. Part of the problem may be that many apps are si- multaneously vying for consumers’ at- tention, keeping one from becoming dominant, at least for now.

Confronted by the low enthusiasm for mobile payments, companies are look- ing for ways to generate some excite- ment. misused until the theft is suspected or ers benefits for using their phones to Samsung has taken a technological reported. pay, like rewards programs. Such a pro- step that substantially increases the gram has been one reason for the run- number of places where its service, Services like Android Pay, Apple Pay away popularity of the Starbucks pay- Samsung Pay, can be used. Many and Samsung Pay use technology that ment app. And once consumers see phone payment methods require the allows the phone to make a credit card real benefits from paying with their technology near-field communication. payment without transmitting the phones, they may finally turn to their But it does not exist on older payment card’s details into the store’s payment phones a lot more at the checkout. terminals that read a card’s magnetic system. This makes such services safer strip. Samsung Pay, however, can be than, say, a card swipe, in which the That is why many payments experts used on both types of terminals. Rival card’s number enters the store’s sys- are waiting to see what happens with mobile payment services from Apple tems and can be vulnerable to hackers. JPMorgan Chase’s digital wallet, called and Android do not work on the older Chase Pay, which the bank aims to of- technology. But because card users generally do fer this year. JPMorgan has payments not have to pay fraudulent charges, relationships with a wide range of As a result, Samsung Pay can be used the more secure nature of phones may merchants, which, the bank hopes, will in more places, according to Thomas not ultimately be the big draw that give Chase Pay critical mass with both Ko, Samsung Pay’s global co-general leads consumers to use them more for retailers and customers. manager. “Truly, you don’t have to car- payments. ry your wallet anymore,” he said. Still, shoppers’ infrequent use of mo- Another way to increase use might bile payments does not bode well. But that advantage may not last, as the be to make paying with a phone far Credit and debit cards have draw- number of near-field communication quicker than using a card. Services like backs, but are easy to carry and gen- terminals grows. Apple Pay are designed to be fast. But erally quick to use. What’s more, they at some stores, the customer still has don’t have batteries that run out dur- Companies might also try to increase to sign when using such services. And ing a shopping trip. “What happens if adoption by underscoring the ways in even when that isn’t the case, taking my phone dies?” said Tyriek Good, a which paying by phone can be more out a phone and making a payment is resident of Harlem, as he came out of secure than using a card. Thumbprint probably not that much faster than us- Whole Foods last month. “I don’t want authentication and passcodes can ing a card. to get used to this.” make it almost impossible for a thief to use a stolen phone to pay for some- Many payments specialists say they Source: New York Times thing. believe that for mobile payments sys- tems to take off, they have to reduce By contrast, a stolen credit card, or in- costs for retailers. Seeing the savings, formation from the card, can be easily retailers may then offer their custom-

30 POSitivity ecommerce

What Are Bitcoins Actually Used For Now in 2016?

It’s fair to say that these past few years ally be used for the buying and selling can gamble on buying low and selling have been a baptism of fire for Bitcoin, of everyday things, much like how we high), it’s not as good if you want to the world’s first and most popular use traditional fiat currency. But the use it as a currency. After all, if you sell cryptocurrency. problem is that until very recently, it a $500 laptop for 2 BTC and the next wasn’t that great at being a currency. day BTC loses 40% of its value, you’ve In February 2014, MtGox, which was essentially lost $200. the largest Bitcoin currency exchange, Wait, what? folded after $460 million worth of Bit- Bitcoin nowhere near as stable as the coin was stolen, probably by its found- The thing that makes a currency work U.S. Dollar — over the past month it er Mark Karpeles, who has since been is confidence. If I have ten dollars in reached a low of $386 and a high of arrested for embezzlement. cash, I’m confident that what I can buy $445 — but it’s still a marked improve- with it today, I can also buy with it to- ment over its previously volatile state. Later that year, it was reported that morrow. As a spender, I want to have Its definitely more stable now than it Bitcoin had performed worse than confidence that its value and power was before.

So, what does this mean for users of Bitcoin? Essentially, it has matured to the point where it’s now practi- cal to use it as a currency. Merchants now have confidence in it, and many are happy to accept it in exchange for physical goods like laptops.

Bitcoin’s Strength: No Capital Con- trols

The global financial crisis introduced the Russian ruble, which itself had lost won’t radically change from day to day. a whole bunch of new words and 50% of its value that year as a result of phrases into our collective lexicon, international sanctions. Its value weak- It’s for this reason why stable curren- like derivatives, subprime, credit de- ened further as governments clamped cies — like the U.S. Dollar, Japanese fault swaps. They are big, scary words down on “dark web” marketplaces. Yen, British Pound, Euro, and Swiss with meanings nobody can quite un- Franc — are used by governments derstand. But for ordinary people, one But since then, things have stabilized, as their foreign exchange reserves: phrase is scarier than the others: capi- and 2016 is looking to be a good year because the value of a currency is in- tal controls. for Bitcoin as it goes from being niche trinsically linked to how much people and sinister to something you might trust it. A capital control is when a government actually want to use. places limits on the amount of money Bitcoin, by this definition, was not a that can be taken out of the country or Bitcoin Is Now a Usable Currency good currency. From day to day, its val- withdrawn from a bank in hard cash. ue would fluctuate significantly, soar- Many in the Bitcoin community hope ing and dipping. While this is great if We saw it in Iceland in 2008 after their that the cryptocurrency will eventu- you’re using Bitcoin as an asset (so you financial system imploded spectacu-

POSitivity 31 larly in a blaze of smoke and lost life money you can take out of the country coin to pay for services, such as travel. savings. To stem the flow of money at $50,000 per year. While that’s fine for AirBaltic, who is the flag carrier of Lat- leaving the country, Iceland intro- most in the working and middle class- via, has accepted it since 2014 with a duced capital controls that prevented es, it’s a real problem for the growing couple of caveats. First, you can only people from converting assets held in number of Chinese ultra-rich. use it to pay for the most basic of tick- Icelandic Krona to foreign currencies. ets. (Forget about booking a business These controls were only – and barely A popular way of circumventing this it class ticket with Bitcoin.) Second, you – lifted late last year. is to just convert Renminbi to Bitcoin have to pay a small fee in for the and to take it out of the country on an privilege of spending Bitcoin. A more recent example happened in encrypted USB stick, where you can in 2013 when the government then just sell it and store it in a foreign Another small Baltic-based airline, Air had to bail out their banking institu- bank account far from the reaches of Lituanica, briefly accepted Bitcoin. tions from the edge of utter collapse. the Chinese government. This airline operated a single Embraer To prevent a bank run, the govern- aircraft on just a handful of routes de- ment limited ATM withdrawals to 260 What Can You Actually Buy? parting from Vilinus. Unfortunately, it Euro per day (later 100 Euro). Other wasn’t financially successful and the limitations were put in place which af- We talked earlier about how Bitcoin company declared bankruptcy in May fected people’s ability to transfer their is now a semi-functional currency. (It 2015. money abroad. may not be as stable as the Japanese Yen, but it’s no Zimbabwean Dollar ei- Hotel Rooms This was very similar to what happened ther.) As a result, more and more ven- in in 2015 when the specter dors are flocking to Bitcoin in order to In the same vein, it’s also possible to of their leaving the Euro loomed. The reduce the costs of payment process- book hotel rooms with Bitcoin. Cheap- Greek government harshly limited how ing and to engage with a tech-savvy Air (a flight and hotel search engine) much cash could be withdrawn from audience. has accepted the ATMs and blocked all international since the end of 2013 when it was still card transactions. While this arguably Computers trapped in its cycle of boom-and-bust. saved these institutions, it essentially A risky proposition if there ever was left Greeks traveling abroad destitute Take Dell for instance, who is perhaps one. In recent years, they’ve even add- and unable to access their funds. the largest retailer that currently ac- ed Dogecoin and Litecoin to the list of cepts the currency. Its entire catalog is cryptocurrencies they accept. Almost immediately after Greece and available for purchase with it, and pro- Cyprus introduced capital controls, cessing is done through the third-par- There’s also a more mainstream hotel there was a surge in the price of Bit- ty CoinBase. While Bitcoin undoubted- booking site that accepts Bitcoin: Ex- coin. Why? Because Bitcoin was, and is, ly represents a tiny part of their sales, if pedia. They’ve allowed people to make an unstoppable way to evade capital it takes off, it could ultimately save Dell reservations with it since June 2014. controls. Bitcoin essentially allowed or- a lot of money. dinary Greeks and Cypriots (but mostly Coffee Greeks) to move their assets abroad Payment processors often take as rather than keep them in at-risk banks. much as 2.75% per transaction as their Surprisingly, an increasing number cut, which we saw when we surveyed of coffee shops are accepting Bitcoin. It could be argued that Bitcoin’s effec- the market of Android payment pro- Some, like the Prague espresso bar, Bit- tiveness in evading capital controls is cessors. While that what’s driven it firmly into the main- doesn’t sound like a lot, stream in Greece. While Bitcoin ATMs it is when you’re selling are very much a novelty in most of large-ticket items and the world, in Greece they’re about to shifting billions of dol- become mainstream, as according to lars of stock. Dell’s rev- CNBC, one company has plans to roll enue for 2015 was $59 out 1,000 of them. billion, so 2.75% of that is an unthinkable sum This goes a long way to explaining the of money. enduring popularity of Bitcoin in Chi- na, where they’ve had restrictive capi- Airline Tickets tal controls for a long time. The gov- ernment there limits the amount of You can also use Bit-

32 POSitivity vices which allow you to orCoins, allows people to order from spend your digital cur- Dominos, Pizza Hut, and Papa John’s, rency there. One of the which some might unkindly call “the biggest is Fold Coffee, trifecta of terrible pizza”. which also works at Tar- get and Whole Foods. Other Stuff

Pizza If you’re not in the mood for any of the things above, you can still spend your One of the earliest Bit- Bitcoins on other products at retailers coin transactions was like OverStock, TigerDirect, and New- in 2010, when Florida Egg. programmer Laszlo Hanyecz exchanged the Bitcoin isn’t for everyone though. 10,000 Bitcoins he had While admittedly it’s cheaper to pro- coin Coffee, exclusively accept Bitcoin mined for two piping-hot pizzas. If he cess, and faster than paying through as payment for coffee, but the vast ma- had held onto them, his coins would traditional mediums, it lacks some es- jority of them accept it in addition to have been easily worth over $4 million sential consumer protections. For in- standard fiat currency. today. stance, you can’t issue a chargeback for a fraudulent transaction, like you While Bitcoin isn’t accepted at the Six years later, people are still swap- can with a credit card. larger coffee chains, like Starbucks ping Bitcoin for stuffed crusts and and Tim Hortons, there are some ser- deep dishes. One service, PizzaF- Source: Make Us Of

Get Ready for the Blockchain Tsunami

Lately I’ve been hearing about block- ground is The Age of Cryptocurrency: blockchain technology has these ad- chain-related solutions to copyright How Bitcoin and the Blockchain Are vantages over older technologies: problems on practically a weekly ba- Challenging the Global Economic Or- sis. Perhaps this was inevitable, given der. Here are some relevant aspects • It’s truly distributed. It eschews the massive amounts of activity and for our purposes. Blockchain is the intermediaries (like banks and hype surrounding blockchain tech- technology that underlies Bitcoin; clearinghouses) that run serv- nology, and the realization that it has it’s an open source technology that ers, manage transactions, and applications well beyond cryptocur- enables highly secure transactions maintain information about rency (and I’m sure others have been over a network, such as the Internet. buyers and sellers for their own observing this same phenomenon A blockchain is a type of distributed purposes. in different industries at different database: a “chain” of “blocks” of data • It ensures that everyone who times). But the crescendo of activity denoting transactions, in which each participates in a blockchain al- in the content industries right now is block contains a link to the previous ways has a ledger, i.e., an up-to- unmistakable — and I say “crescendo” block in the chain. Bitcoin uses one date history of transactions that on purpose, because almost all of the particular blockchain; there are oth- have taken place on the block- activity is in music. ers. chain. This has the side ben- efit of making transactions very There’s a lot to know about blockchain Although secure e-commerce has hard to tamper with, refute, or technology; a good read for back- been around for a long time now, roll back.

POSitivity 33 • Its security is state-of-the-art power of smaller entities (small labels people use it to cook once it comes and considered to be uncrack- and publishers, and even some indi- out of the tap. Yet making a fast, reli- able. vidual musicians and songwriters) to able plumbing system available (on • The software required for build- get paid quickly, easily, and fairly. an open source basis) should help ing and running blockchains is motivate progress on these other all open source. Blockchain technology does have its fronts. • Most importantly of all: rivers limitations. It’s not suitable for very of money, talent, and hype are small entities or individuals (at least Here’s a more relevant analogy: XML. flowing into this technology. not yet) because of the infrastructure XML is a metalanguage — a standard that each participant must have to scheme for creating machine-read- The last point ensures that systems, house the distributed ledger and be able, text-based languages that ex- services, and standards will be built around blockchain technology for some time to come. In fact, the situ- ation with blockchain technology is a mirror image of the situation with other new technologies and stan- dards that the media industry con- siders: the question is not whether a critical mass of interest will lead to meaningful investment in solutions in a reasonable timeframe; the ques- tion is which any of the dozens or hundreds of proposed — and funded — solutions will prevail.

What music industry problems can blockchain technology solve? Most of the discussion is not about con- sumers paying for music with Bitcoin. updated on all transactions. Small press structured data. It was created Instead, it’s about rights and royalties entities will still need to rely on ser- in the late 1990s during the rise of applications that involve smart con- vice providers, which will compete the commercial Internet, which gave tracts — transactions that the tech- by adding value to a fundamentally rise to a huge need for online entities nology ensures will execute accord- open system rather than by hoard- to communicate structured data in ing to terms that are encoded in data ing information and building walled standard and straightforward ways. stored in the blockchain. gardens. XML didn’t solve the problem of what By bringing efficiency, transparency, The technology also can’t (by itself) the structure of the data should be and accountability to rights trans- solve the problems of identifying for specific applications, let alone actions, blockchain technology can copyrighted works and describing how to create such data consistently benefit just about every type of en- rights and royalty terms in unambig- and accurately. But it led to thou- tity in the digital music value chain uous, machine-readable ways. It can’t sands of XML-based standards that that actually wants to play by the solve “last mile” problems such as cre- are used in just about every industry rules. It has the potential to eliminate ating identifiers and metadata in the on Earth and motivated better meta- ambiguity, nonperformance, and first place, or integrating them into data creation practices. For example, outright fraud that would otherwise legacy systems at record companies, XML has pervaded every aspect of require investigations and lawsuits to music publishers, or distributors. And the book publishing industry, from resolve. The technology can make it while it won’t turn bad actors into editorial content creation to e-book much easier for digital music services good actors, it might help expose formatting and physical product to track rights holder information them through their lack of participa- distribution and sales and inventory and pay the royalties that they owe. tion. reporting. In fact, nowadays it’s virtu- It can reduce the roles that collecting ally unthinkable to create a standard societies play, so that they can focus In other words, blockchain technolo- for data to be communicated across on rate-setting and collections rather gy can help build a plumbing system, the Internet that isn’t XML-based. than on the mechanics of transac- but it can’t control the quality of the tion processing, while increasing the water from sources or the ways that There have been many attempts to

34 POSitivity create identifier and rights metadata someday; and those that are open to it had money and talent behind it. standards for music. While a few stan- as many participants as possible, not Google was to pay US $34 million to dard identifiers are well-established, walled gardens accessible only to es- build it, and the parties had tapped they aren’t implemented consistently tablished industry entities. an eminently qualified person (Mi- and completely throughout the in- chael Healy, then head of the Book dustry. And rights metadata stan- By way of example, the best hope for Industry Study Group) to run it. dards are far behind. an industry-wide rights transaction system that I have seen was (once While the 2nd Circuit appeals court Blockchain technologies can help again) in book publishing. It was ultimately rejected the settlement motivate more complete adoption of the Book Rights Registry (BRR) that on antitrust grounds, the BRR would standard identifiers, development of book publishers and authors nego- have been the type of solution that practical standards for rights meta- tiated with Google during litigation had a decent chance of success, and data — with emphasis on the word over Google’s huge book-scanning of being the foundation for solutions “practical” — and best practices for effort back in the mid to late 2000s. to more complex rights problems in rights metadata creation. The solu- The BRR was to handle simple rights the future. And of course interactions tions that succeed are the ones that transactions on book content (not with the BRR would have been based solve practical problems for a rea- every type of transaction that anyone on XML. sonable subset of industry players could think of) and be open to all ser- today, not the ones that try to create vice providers, not just Google. Source: Copyright and Technology Grand Unified Metadata Models and solve every problem for everybody The BRR wasn’t just an idea on paper;

Is the blockchain good for security?

The blockchain is now being hyped the network that verifies the integrity 80 percent, and counterparty risk is as the solution to all inefficient infor- of the transactions and associated ac- eliminated because the cash and as- mation processing systems. count balances makes a successful at- sets are accounted for ahead of time tack mathematically impossible.” and instantly swapped. Overstock was one of the first online retailers to adopt Bitcoin in a big way. Overstock used the t0.com stock Finally, the blockchain is completely Now it’s become the first major com- trading platform, which it owns. Up transparent, he said, and cannot be pany to issue stock on a trading plat- to a million common shares will be is- changed. form powered by the blockchain. sued on t0.com, and up to a million preferred shares will be issued on the “Put transparency and immutabil- The blockchain is a distributed file traditional exchanges. ity together and you have a dream system where participants keep cop- scenario for regulators, auditors and ies of the file and agree on changes “There may be no software that has compliance officers,” he said. by consensus. The file is composed of been better proven, from a secu- blocks, where each block includes a rity standpoint, than Bitcoin,” Bagley And it’s not just stock trading. The cryptographic signature of the pre- said. “Building a stock trading plat- blockchain is now being hyped as the vious block, creating an immutable form atop such well proven software solution to all inefficient information record. should leave all parties feeling very processing systems, such as record- confident, from a security point of ing of property transfers, escrow ser- “Blockchain trading is much more view.” vices, and even legal contracts. secure than the current system,” said Judd Bagley, director of communica- In addition, he said, settlement times But Bitcoin isn’t without problems. tions at Salt Lake City-based Over- are reduced from three days to 10 The cryptocurrency has proven to stock.com. “The distributed nature of minutes, settlement costs are cut by be extremely volatile and popular

POSitivity 35 with criminals. Regular users have costs roughly $6 in hardware and en- a -based startup, Safe lost millions to theft, the FBI is sitting ergy, and consensus approval of each Cash, announced last month that it on stockpiles of confiscated Bitcoins, transaction takes about 10 minutes. can process a transaction in under and some of the members of the Bit- five seconds -- and can handle up to coin Foundation, created to legiti- That kind of performance doesn’t 25,000 transactions per second. mate the currency, are now in jail or necessarily compare well to compet- on the lam. In addition, the Bitcoin ing technologies. According to Autonomous Research, system is slow to process transac- blockchain technology could save tions and is facing significant scal- But some of this is due to the way the financial system $16 billion by ability issues. that Bitcoin uses the blockchain. 2021, or one-third of annual clearing and settlement costs globally. Are any of these problems endemic “Bitcoin throughput is limited,” said to the blockchain itself? And if you’re Mance Harmon, senior director of But getting to that point could be looking to eliminate an old, ineffi- labs at Ping Identity. “To increase extremely difficult, said Larry Tabb, cient manual or batch-based process, throughput means that you need a founder and CEO at Tabb Group, in a the blockchain may be better -- but is business relationship in place, and report released in February. it better than other modern types of more trust between peers.” data structures? “Many massive and in some cases That is very much possible when a what seem to be insurmountable For example, the blockchain lends it- blockchain is used by, say, a limited challenges need to be overcome,” he self well to peer-to-peer systems but group of business partners. said. “This will take not only years but isn’t necessarily a good tool for indi- hundreds of millions if not billions of vidual enterprises. For example, banks would send mon- investment dollars across banks, in- ey directly to one another instead of vestors, custodians, and industry in- “If you’re the only participant, you going through a centralized clearing- frastructure.” don’t need a block chain -- you just house like SWIFT or ACH. need a database,” said Prakash San- Larger attack surface thana, director for payments risk and In February, 40 of the world’s largest integrity at Deloitte Advisory at De- banks conducted a trial of five block- As any company with a big database loitte & Touche LLP. chain technologies, including Ethere- knows, hackers love going after sen- um, a public block chain platform, as sitive information. If a blockchain is More Bitcoin, more problems well as blockchains from Chain, Eris used to store confidential contract Industries, IBM, and Intel. information or payment data, then Peter Williams, chief edge officer at replicating the file could potentially Deloitte’s Centre for the Edge, cal- Ethereum claims to take only 17 sec- offer hackers more places to get their culates that each Bitcoin transaction onds to process a transaction, while hands on it.

This isn’t a problem for blockchain data that is meant to be visible to the public. But many investors, for ex- ample, would not like others to know that they are taking a position in a particular security, said Tabb.

If the information is meant to be vis- ible, then having multiple copies means that the data is less likely to be lost, said Ping Identity’s Harmon, since there are multiple copies of the records.

And if the blockchain contains en- crypted information, then it doesn’t much matter whether the peers ac- cess the data in a single location or in multiple locations, since the number

36 POSitivity Even if blockchain technology does prove to have advantages over other modern systems, there are still is- sues of compliance, regulations and enforcement that will need to be ad- dressed.

For example, centralized utilities of- ten have to comply with rules about what kinds of public access they pro- vide to their systems. Do groups of companies setting up private block- chains have to comply with the same rules? of access points remains the same. This is possible, agreed Smart, if the Other regulatory issues include clari- money for the widgets was to be ty over jurisdictions and how to com- “If a key is compromised, then it can locked away inside the blockchain in ply with know-your-customer and be used to access the database in a Bitcoin or some digital equivalent. anti money laundering laws. hub-and-spoke model, as well as in a distributed database,” said Harmon. Someone else still has to validate that There’s also a large network effect “There is no difference.” the contract has been fulfilled, but associated with some platforms. For then once it does, the money could example, according to Autonomous Enterprises do have a lot of flexibility leave the blockchain automatically. Research, card networks currently in how they deploy the blockchain, process around 2,000 transactions said Nigel Smart, co-founder and ad- “The Bitcoin wallet itself is acting as per second and do so very cheaply, viser at Dyadic Security. an escrow system,” Smart said. “But if meaning that merchants have little you’re transferring a large amount of incentive to switch. “If you wanted to deploy a block money, if you put it into a traditional chain in a system like a commercial escrow account it earns interest, and Finally, one unintended consequence banking system, you wouldn’t use it if you put it in a Bitcoin account it of full automation is the lack of circuit the way Bitcoin uses the blockchain,” doesn’t earn interest.” breakers. The current settlement pro- he said. “The general idea is you can cess provides more opportunity to hit put anything you want on the block- Plus, Bitcoin’s volatlity means that the brakes if something goes wrong. chain. If you want anonymity, you you don’t know whether you’ll end could put that on. If you want public up with the same amount of money According to the DTCC, the block- accessibility, you can put that in.” as you started with. chain not only has fundamental technology challenges related to But not all the proposed applications A more likely application would in- scalability, latency, performance, and make common sense, he added. volve the sale of virtual goods, Smart security but many operational prob- said. lems as well. For example, logging For example, some blockchain pro- and monitoring are essential for en- ponents suggest that the technology For example, the blockchain could terprise environments, but have not could eliminate escrow accounts. contain a song file, and the smart yet been addressed. contract to release it once the pay- According to Dan Wellers, digital fu- ment for it has cleared. Source: CSO Online tures lead in SAP’s marketing divi- sion, a company looking to buy, say, “Anything digital can go on the block a million widgets could put the order chain,” Smart said. into the blockchain, the widget facto- ry would invest in the new plans and Compliance and enforcement machinery needed to make the wid- gets, and when the order was com- Central clearinghouses do more than plete, the contracts would execute just move information around, how- automatically. ever.

POSitivity 37 security

Anatomy of Mobile Fraud: What Advertisers Need to Know

Mobile fraud is ubiquitous, but every player in the digital rally. advertising ecosystem could be doing more to combat it. Although some degree of fraud is unavoidable, not taking To reduce fraud is to get more from every ad dollar we spend measures to reduce it may be costing advertisers more than and to ensure the continued growth of mobile advertising. they realise. In this piece, Maor Sadra (pictured below), man- The good news is that programmatic makes it easier to spot aging director, AppLift, discusses the ways in which pro- and stop fraudulent patterns. grammatic makes it easier to spot fraud – and three action points to stop it. Types of mobile ad fraud

Thirty-four percent of programmatic mobile traffic is at risk On the impression level, there is technical compliance fraud; where an advertiser pays for impres- sions that haven’t been served in accor- dance with the agreement and/or advertis- ing standards. For example, the impression may run below the fold or be deemed not viewable by IAB standards. Even if this is un- intentional, it still qualifies as fraud. A more malicious type of mobile fraud occurs when ‘bad guys’ generate false impressions, usu- ally by hacking a server’s API.

Geo fraud is when an advertiser pays a pre- mium CPM for inventory to be served in a particular country or region, but the traffic actually serves elsewhere. There is usually a nefarious media trader pulling the strings and pocketing the difference between the locations’ CPMs, which can be quite sub- for fraud, according to a recent report from Applift and Fo- stantial. rensiq. Just last month, The Financial Times reported that a Russian developer of mobile phone apps allegedly gener- Click fraud occurs on platforms that sell or monetise on a ated USD$250k (£176k) per day in fraudulent advertising CPC basis. continues to make headlines for clos- revenue on the MoPub marketplace, costing advertisers ing millions of fake profiles and booting off bots. One of the millions of dollars. It’s no surprise that fraud is so wide- most sophisticated types of mobile fraud is on the conver- spread. Global mobile ad spend is estimated at more than sation level, i.e., app download fraud. Fraudsters can ma- USD$100bn (£70.3bn). We’re swimming in a sea of data, nipulate downloads by creating fake installs or by pinging and it is challenging to effectively monitor every single im- a DSP or advertiser with a code that indicates an app was pression. Our industry also has a high tolerance for wasting installed when it wasn’t. money — or at least that’s the message we send by tolerat- ing dismal conversion rates. Because our industry-average As mobile commerce continues to grow, we’ll see an uptick click-through rate is in the single digits – and advertisers are in credit card fraud. In these schemes, people make pur- accustomed to accepting that 99% of the impressions they chases with fraudulent payment info. In the desktop space, purchase may not generate action – accepting that up to we’ve learned to fight this quite adeptly. (Check out PayPal’s 34% of mobile traffic is at risk for fraud comes all too natu- approach to fraud detection and protection.) As this type of

38 POSitivity fraud increases in the mobile space, we’ll get better at fight- 2. Combine human and machine intervention ing it — and with good reason. Mobile e-commerce plat- forms can be penalised for voiding transactions. Charge- To best fight fraud, use a combination of technology (in- backs can affect credit scores or, worse, prompt a billing cluding third-party solutions) and people – a traffic-quality provider to terminate its partnership. person or team that scours data for patterns. Advertisers must be proactive. Should you identify a worrisome traffic Just as an ineffective advertising campaign wastes mar- pattern before your supplier, share as much data as possible keters’ money, so does fraud. Advertisers should ask their so that your partners can learn from the incident. partners about their approach to fraud and choose to work with businesses that have robust prevention and protection 3. Share best practices measures. Look for some of the following tactics; and don’t be afraid to take matters into your own hands. No reputable company wants to serve fraudulent traffic. Keep in mind that we are on the same side, and that to best 1. Watch for simple patterns fight the ‘bad guys’, we have to collaborate. If a fraud protec- tion method is working for you, share it with the industry. Publishers and DSPs should monitor traffic and campaign- (But do so clandestinely. We don’t want fraudsters knowing related KPIs for suspicious patterns. For example, if you ob- all of our tactics.) serve an unusually high app-install rate, that the time be- tween click and app install is uniform for every user from Let’s work together to identify fraud, and to find effective the same traffic source, or that the time between click and measures for stopping it before it starts. Remember, lower- install is inexplicably short, that should raise a red flag. You ing the rate of fraud can do as much for your next campaign can set up a system in which certain patterns trigger alerts as increasing your conversation rate. It’s an opportunity no or actions programmatically. Advertisers should also moni- advertiser should be passing up. tor traffic and KPIs themselves and speak up immediately if they see something suspicious. Source: ExchangeWire

Merchant fraud and acquirer risk: what you need to know

Payment fraud prevention efforts are usually geared up to chants and, because of chargeback liabilities, make acquir- focus on the consumer. Normally, card fraud is carried out ers bear the costs of their activities. using stolen consumer details at bona fide merchants. For example, a merchant (the criminal) opens an online But what if the fraud is the other way around? When the store and generates lots of transactions from unsuspecting criminal is not the person using the card but the merchant customers before busting out with the cash in their account. accepting payment, there are important considerations from a prevention perspective. With the merchant vanished, the acquiring bank has to deal with the chargebacks and all the other mess that a fraudu- It’s a big risk for the acquirer as they may be liable to com- lent merchant leaves behind. pensate issuers and cardholders, when merchants do not fulfil their chargeback obligation. Particularly lucrative examples include fake ticketing web- sites, where duped customers don’t realise it’s a scam until Bust-out merchants their event ticket doesn’t come in the mail, which could only become apparent months after the purchase. This gives the Bust-out merchant fraud is really a version of first party website plenty of time to rack up profits at the acquirer’s fraud and one that makes detection hard. Through false ap- expense. plications, criminals disguise themselves as legitimate mer-

POSitivity 39 POS device to covertly take small amounts from unsuspect- ing cardholders. For example, it can be done on packed trains or in other busy locations where the criminal can get close enough to a card to force the transaction without anyone realising. It’s a kind of modern day pickpocket scam that relies on the misuse of a merchant terminal.

What acquirers can do

Acquiring banks should be very diligent when onboarding new merchants. Checks on any previous links to frauds is a start, but like all first party fraud, it’s not an easy thing to achieve as criminals can easily use a fake ID to set up an ac- count. However, there are various appropriate due diligence Another version sees the merchant establish a fake online checks that ought to be completed as a first step. store and then use fraudulent payment methods such as cloned cards to ‘buy’ goods – effectively filling their account Once a merchant is onboarded, it’s vital the bank pays on- with other people’s cash. going attention to the merchant’s activities and monitor transactional patterns for any signs of potential wrongdo- In a world where card-not-present fraud is our biggest ing. worry, this becomes a way in which the criminal can har- ness stolen card details to directly generate cash rather than Detection of merchant fraud relies on proactive and real- buying goods and then selling them on the black market. time monitoring. This includes transactions, but also things like extra-large discounts or unusual sales campaigns. Some merchants may commit fraud by declaring bankrupt- cy after collecting a large number of orders. This can be a An intelligent fraud detection system is a key weapon in the harder fraud to spot as in many cases it could be a legitimate battle against merchant fraud. case of the business going under. Source: Banking.com Another new form of merchant fraud is to use a contactless

TreasureHunt malware steals POS credit card data from retailers

Custom-built malware is stealing credit card details direct- tion from memory, and transmit this information to a com- ly from retail point-of-sale (POS) systems, cybersecurity re- mand and control server, wrote Nart Villeneuve, a threat searchers have warned. researcher at FireEye in a blog post about the malware.

The malware, dubbed TreasureHunt, has been observed Examination of the TreasureHunt code points to the source by FireEye, which has warned the POS-targeting software of the malware as BearsInc, who FireEye describes as “an is being used to steal information from specific organisa- actor on an underground cybercrime forum dedicated to tions. credit card fraud”. Such forums typically allow users to buy and sell stolen payment information. TreasureHunt appears to target US retailers using older, less secure POS systems, which rely on ‘swipe’, rather than The developer of TreasureHunt posts under the handle of chip and PIN, cards to authorise payments. ‘Jolly Roger’, with the pirate theme continued via the skull and crossbones icon used by the web interface for control- Once a POS machine is infected, the software will enumer- ling compromised systems. ate the running processes, extract payment card informa-

40 POSitivity It is thought this strain of POS-targeting malware was first deployed in 2014 and it’s appeared more frequently in 2015 and 2016 as criminals look to infect outdated systems before US retailers complete the transition to chip-based, rather than swipe-based payment systems.

“In the world of POS threats, there has been a rise in both underground offerings as well as new malware found in active use. The demand is likely due to the ongoing transi- tion to EMV chip and PIN technology in the United States, which will eventually render these techniques largely use- less,” said Villeneuve.

“Many cybercriminals are looking to take advantage of memory scraping POS malware while it still works,” he continued, adding that SMBs are the main target for POS malware. retailers and banks that may not be as prepared for the transition,” Villeneuve concluded. “With an increasing number of major firms transitioning to the more secure chip-enabled cards, we expect to see Source: ZD Net cybercriminals increasingly turn their attention to smaller

Preparing for the Migration of Fraud

To fight the growth of payment card fraud, retailers need ceptance, it also invested in tokenization and end-to-end to address fraud prevention from a multichannel perspec- encryption to help shore up security for its online, e-com- tive. merce transactions, Vanderhoof says.

EMV, while critical for reducing card-present fraud at the “It’s really a suite of security measures that are needed physical point-of-sale, does not address card-not-present in order to protect payments systems today,” Vanderhoof fraud online, says Randy Vanderhoof, executive director of says. “And so the smart retailers, when they realized that the EMV Migration Forum, a cross-industry body focused they were going to have to do some major structural on supporting EMV chip implementation technology and changes to their payments systems, decided, ‘Let’s look at processes in the U.S. this from a broader perspective, and not just do the mini- mum to support card-present fraud with EMV.” Thus, Vanderhoof says EMV, on its own, is not enough. “You really have to look at fraud mitigation as a full system,” Van- The goal for larger retailers has been to address data secu- derhoof says during this video interview at Information Se- rity from a “systemwide approach,” he adds. curity Media Group’s recent Fraud and Data Breach Sum- mit in San Francisco. “So it’s not just about the card-present “We need to protect the data that’s going to stay in the fraud, using the physical cards at the retail point-of-sale; system before all of the EMV chip cards have migrated into it’s also about protecting the other channels where fraud the market ... to make sure that all of the data is protected,” is likely to migrate.” Vanderhoof says. “Retailers need to] look at it from a sys- temwide approach of card-present, card-not-present, and Vanderhoof points to Target, which suffered a massive managing the data that’s at rest and in motion in their en- data breach in late 2013, as an example of a retailer that’s vironment.” now taking a multichannel approach to fraud prevention. Source: ZD Net As Target upgraded its POS terminals for EMV chip card ac-

POSitivity 41 cards

Could a Selfie Replace Cash or Credit?

The payments space is moving further “As we move away from the plastic Oxman said that’s an incredibly fast and further away from cold hard cash. card with the magnetic , which adoption rate, given how Apple Pay, is a 40 year old technology -- the same Samsung Pay and Alphabet’s Android Major companies like MasterCard technology used in cassette tapes Pay have only been on the market for have apps that allow users to pay for -- we’re moving towards mobile pay- a year or so. Apple and Alphabet are things by taking a selfie. ments,” he said. “That’s the most se- holdings in Jim Cramer’s Action Alerts cure implementation of payments PLUS Charitable Trust Portfolio. “Your phone has not only your pay- technology out there today.” ment credentials securely stored, but “Apple Pay, Samsung Pay and Android it also has a camera built in,” said Jason Oxman said it’s secure because it uses Pay take advantage of the fact that Oxman, CEO of the Electronic Trans- the connected technology of the almost every American has a mobile actions Association, based in Wash- phone plus the biometrics of the fin- device in their pocket today,” Oxman ington. “Rather than authenticating ger in order to authenticate the trans- said. “You can very easily load your yourself using something that’s 50 or action. credit and debit cards onto those mo- 60 years old like a PIN, you can take a bile devices.” picture of yourself.” Some 24% of those who use mobile phones actually made a transaction Oxman predicted the mobile plat- As technology evolves, consumers on the device over the last year, end- forms from these technology giants have become increasingly concerned ing in November 2015, according to a will work alongside the selfie pay- about the security of mobile payment Federal Reserve survey released last ments technology. transactions. month. Source: The Street

Is Apple Pay really any more convenient than plastic?

THERE’S no doubt about it: electronic mission is to make transacting money when even the Metropolitan Police payment facilities are an open goal for quicker and easier than ever before? If commissioner, Sir Bernard Hogan- fraudsters and other denizens of the it’s easier for you, it will be even more Howe, is asking banks to remove what internet’s darker places. so for the crooks. he calls the “safety blanket of compen- sation” in order to make us think twice So where does this leave the new apps Certainly, you should not expect sym- before making bad decisions online. from Apple, Google and others, whose pathy if you fall victim to crime - not

42 POSitivity Both systems embraced contactless payments us- use a technology ing our existing debit cards, and the known as near keying-in of a PIN number for larger field commu- purchases has never seemed a limit- nication (NFC), ing factor. Any convenience advan- which is built tages of the NFC systems are marginal into the iPhone at best. 6, Apple Watch and newer An- Online payments, on the other hand, droid models. If could be where Android and Apple your handset is Pay come into their own, and their more than a cou- likely take-up this year by all manner ple of years old, of website merchants could finally do it’s unlikely to be away with the need to fill in address compatible. forms and card numbers, especially on But with the giants of technology fiddly phone screens. competing with high street banks to You need to enter your passcode to do away with not only cash payments confirm your purchase, and some re- That’s also where the rival PayPal ser- but also plastic cards, it’s not an area tailers will use fingerprint scanners as vice comes in. The long-established we can easily opt out of. a secondary security measure - though transactor of choice on Ebay is seeing any benefit is likely to be outweighed its existence threatened by the emer- Apple Pay is already up and running in by the health hazard. But the real risk gence of Apple and Android’s systems, thousands of UK outlets, including the occurs when you lose your phone. and is fighting back with an app of its entire London Underground, and its Once you’ve realised it has gone, you own. Though it is available in far fewer Android equivalent - formerly called can freeze your account - but that may shops, PayPal does have the advan- Google Wallet and now rebadged be too late to prevent initial misuse. tage of being able to send money Android Pay - is arriving from the US At least your bank details aren’t stored both ways, and to individuals as well any time now. In both cases, you reg- on the phone, so no crook is going to as companies. It’s a convenient way of ister your existing debit cards with the get the keys to your account this way. splitting a cab fare or restaurant bill, phone and complete your transaction for instance. by waving the handset in front of a For all the sophistication, it’s hard to scanner. Your actual card stays in your escape the conclusion that NFC pay- Source: Yorkshire Post pocket, or at home. ments are a solution looking for a problem. We in the UK have already

The future of checkouts: Cash, credit or your car?

In the front seat of a Honda Civic, the ton to stop the clock and pay, then turning a vehicle into a mobile pay- clock is ticking. drives off without handing cash to a ment device is still an elusive goal. cashier or slipping a card into a slot. Having paid for a parking spot with a “We’re making sure we understand credit card linked to his car, a driver For automakers such as Honda, which the [user experience] and how our returns to the vehicle and finds a dig- are determined to give owners a partners could implement it,” John ital readout on the navigation screen smartphone-style experience in their Moon, developer relations lead at counting toward a two-hour time cars, this is a big part of the promise Honda’s r&d center in Silicon Valley, limit. He taps the Visa Checkout but- of the modern connected car. But said in an interview after demonstrat-

POSitivity 43 ing a software interface that Honda designed with Visa. It was not linked Consumers are likely to make $1 tril- Luxoft, which has a team in Stuttgart to a real parking lot. That comes next. lion in mobile payments in 2017, up designing software interfaces for lux- from about $500 billion in 2015, the ury cars, is working on this challenge. “The developer community is start- consultancy International Data Corp. Suvorov said he expects early use of ing to understand that the connected said in an August report. in-car payments in about three years car is here, and it’s real,” Moon said. and wider use in about five years. Those services rely on near-field com- Over the past two months, Honda munication, which requires a phone One area in which in-car payments and Visa brought the Civic to two of to be just a couple of inches from a are widespread is tolls. the world’s largest gatherings of soft- sensor. ware developers: the Mobile World Toll collection agencies have a strong Congress in Barcelona, Spain, and the No such standard has emerged for financial interest in reducing the South by Southwest arts festival here, cars. number of workers manning booths. which features a technology confer- Parking lots, drive-through restau- ence. Without a standard, few parking rants and fueling stations would lot owners or fuel station operators need to see a similar potential payoff They were hunting for partners. Now would be willing to add the infra- before committing to build the need- they’re working with companies such structure needed to process pay- ed infrastructure. as Chicago’s ParkWhiz, which lets cus- ments. tomers reserve a parking space from If the auto industry moves too slowly, a smartphone. “It will take some time,” said Vasiliy it risks ceding that payoff to smart- Suvorov, vice president of technol- phone companies. While working Outside the auto industry, interest in ogy strategy at the Swiss company with Honda, Visa also is working with mobile payments has exploded with Luxoft, which specializes in software Chevron to add Samsung Pay sensors the introduction of Apple Pay, An- for the financial industry. “There’s a to pumps at six fueling stations in droid Pay and Samsung Pay, which challenge in infrastructure, there’s a California. let customers make payments by challenge in common standards and tapping a sensor with a smartphone there’s a challenge integrating it into Source: Automotive News linked to a credit card. the car.”

44 POSitivity Global Map of mPOS Providers

The most comprehensive industry overview of mPOS providers. The interactive map monitors the increasing complexity of mPOS ecosystem listing players coming in from different sectors around the Globe. www.mposwise.com