Uberiza on of Payments
Smart Card Alliance Payments Summit April 2016
Steve Mo Principal-Be erBuyDesign
1 What it All Means for the Payments Ecosystem
1. The role and form of payments in transac ng is changing forever 2. The search for consumer value in mobile payments con nues 3. Technology choices stymie—rather than enable—the market 4. Transparent, embedded payments wash over a muddled marketplace
2 1. Payments are Changing, Forever
3 Big Players in Exis ng Payments Cut Costs
4 Chase Pushes ‘Pay- ments’ into a New Realm
5 P2P Moves into the Mainstream
6 The Faster Payments Movement Grows
7 Bitcoin Technology (Distributed Ledgers) Takes Hold
8 All Paths Lead to Digital IDs—But Whose?
9 2. The Search for Value in Mobile Payments
10 First-Gen Mobile Wallets Grow Slowly
U.S. banks lower Appeals to other half of MST could enable New payment Paydiant-based, One- Key interchange to play; smartphone market not 80-90% of POS op ons, aggregated Touch re-launch aspects iOS users are 44% of using iOS terminals without merchant spending, aspires to re-boot smartphones, but 65% SmartTap takes over Merchant changes cross-loyalty Offer to ‘take-in’ MCX of total spend where Isis le off No fees (yet) Device agnos c doesn’t fly Control and direct Insinuate itself into Hold line on Apple in Provide consumer Become Switzerland Business ‘walled garden’ of every mobile the U.S., while bea ng choices for merchant- of arbitraged Model prime customers transac on possible, them in the rest of the friendly payments payments/ commerce Use exis ng payments direct ads to be er world Facilitate merchant- enablement for system to China targets directed commerce merchants
Card-loading fraud Only 12% of handsets U.S. isn’t Korea Deployment process Wanted MCX, but Chal- exposes deficiencies in use latest version Many changes being issues (e.g., avail- didn’t get it lenges card payment system Trying to accommodate implemented in great ability of apps, 25 big merchants Merchant acceptance 270+ opera ng systems rush (e.g., full NFC) Gemalto vs. Paydiant) integrated, but li le and recep vity lag Lower-income Slow buy-in so far by and management flux usage Story lines reveal lots of demographic merchants; Ability to afford long- Li le love lost in rest learning s ll to do Issuers on the fence term par cipa on of industry for them Volume building slowly Deal with Visa and HCE Poten al appeal to End-to-end retailing Management changes Prospects as shininess wears off accommoda on could well-heeled transactors customer experience help patch potholes Apple watch and foster more adop on; with fancy handsets choice/integra on Pla orm improve- browser-based in-app 80% global handset Resources and business were supposed to be ments coming; play seem so-so share fuels strategy model big plusses differen ators Venmo a juggernaut Movie to PL, Loyalty, 1st HCE implementa on 500,000 users signed Columbus “test” Omni-channel play Roll-out Discover in 2.0; going live (with top 10 up before 9/28 official moves slowly; offered as paradigm news Slow roll in U.K. bank) launch ChasePay, Walmart for push on Big NFC target: China Many banks signing up Rest of market not sold Pay op ons puzzling merchant outreach
11 Mobile Adop on at POS Adop on Lags
12 But Provider Expecta ons Remain High
13 Meanwhile, Merchant Solu ons Hold Sway
14 Mobile Payment Adop on Rate: A Long Tail
15 Consumers’ Chief Concern: S ll Security
16 Key Ques on Remains: Who Will Consumers Ul mately Trust?
Phoenix Marke ng
71%$ Any$Bank$(Net)$ 72%$
65%$ Primary$Card$Issuer$ 69%$
55%$ PayPal$ 41%$
30%$ MNO$(Net)$ 37%$
33%$ Amazon$ 33%$
29%$ Apple$ 9/14 22%$ 8/13
21%$ Google$ 17%$
17 3. Technology Choices Appear to Stymie— Rather than Enable—the Market
18 NFC Con nues to Get Nudge, but to What End?
19 EMV Rides in to Save the Day!*
Source: Strawhecker 20 What’s Not so Funny About EMV Deployment…
• A flood of charge-backs that have nothing to do with EMV deployment, but represent an opportunity for less-than-competent (or worse…) issuers to take advantage of marketplace disarray • For some merchants, these bogus charge-backs are in 7 figures—triggering at least one law-suit (and perhaps more…) • Some opera onal “accommoda ons” are nothing short of ridiculous (e.g., taking a signature on a terminal twice—taking 60 seconds in total • Consumers are op ng to pay with old mag-stripe cards or cash 21 Tokens, Tokens, Every- where …, But Whose Will Make the Link?
22 Acquirer Solu ons: More com- prehensive; More Effec ve?
Page 23 PayPal And First Data: A Separate Path For Tokens At POS?
Page 24 PAR –Characteris cs and Requirements
§ Needs to be a consistent length across all en es (Not 16 digits like PAN) Characteris cs § Method of genera on does not need o be consistent
§ Can be read at the terminal before transac on ( ideally without any hardware terminal upgrades)
§ Must be unique to the PAN, not the cardholder § Must be unique across and within Network en es Requirements § Must exist outside the TSP environment and not be dependent on it § Cannot be reverse engineered to obtain PAN
§ Fixed 29 characters, uppercase, Roman, alphanumeric value (4+25) Format § 4 character, uppercase, Roman, alphanumeric network iden fier value (assigned by EMVCo), followed by unique 25 character value.
Q 1-3 Z 2 8 R K A 1 E B L 4 7 0 G 9 X Y G 9 0 R 5 D 3 E Unique 25 character value for each PAN Network Iden fier Source: Visa (assigned by EMVCo) 25 Why Banks Are Dragging Their Feet
26 4. Transparent, Embedded Payments Wash Their Way over a Convoluted and Confused Marketplace
27 Uber Pushes the Envelope Again, Tes ng Real- me Payments to Drivers
28 Amazon: Probes Built-in Brand Loyalty Online…
29 …and Anywhere Else Customers Want to Transact Without Being
30 31 Internet of Things (IoT) Pushes Payment ‘Actual- iza on’ Beyond Current Limits
32 How Do We Authen - cate Smart Appli- ances (and Every- thing Else)?
33 U2F (FIDO) & Yubikey: A Portable, Two-Factor Authen ca on Token for Digital Transac ng
34 Steve Mo ’s Contact Info
0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 Steve Mo 0 1 0 1 0 1 0 1 0 1 0 Be erBuyDesign 1 0 1 0 1 0 1 0 1 0 1 1386 Long Ridge Road 0 1 0 1 0 1 0 1 0 1 0 Stamford, CT 06903 1 0 1 0 1 0 1 0 1 0 1 and 1214 Querida Drive Colorado Springs, CO 80909 0 1 0 1 0 1 0 1 0 1 0 (o) 203.968.1967 1 0 1 0 1 0 1 0 1 0 1 (c) 203.536.0588 0 1 0 1 0 1 0 1 0 1 0 email: [email protected] 1 0 1 0 1 0 1 0 1 0 1 website:www.betterbuydesign.com 0 1 0 1 0 1 0 1 0 1 0
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