July 2015 Issue 337 www.electronicpaymentsinternational.com

APPLE PAY STRIKES THE UK

•ANALYSIS: Apple Pay UK •INTERVIEW: Inge Van Dijk •REPORT: Social media in financial services •MOBILE PAYMENTS: The road ahead

THIS ONE EPI 337.indd 1 24/07/2015 09:10:43 Delivering innovative mobile & online financial services solutions to organisations that need to provide secure access

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IE-Advert-Dec-2014.indd 1 16/12/2014 12:25:21 Electronic Payments International EDITORS LETTER NEWS

CONTENTS Now Apple Pay UK is upon us, it is

NEWS time to dispel a few myths

2: Meet EPI’s new Editorial Advisory Board

4: News comment: Expansion into Nigeria causing ‘a lot of opportunity’ for BitX stopped counting at 100. I’m refer - The Zapp service is a completely open pay- ring to the number of emails received ment method. Customers do not have to use 5: News comment: Barclays continue as a in the past week or so ahead of and any particular smartphone device. It is an ‘trailblazer’ with Zapp partnership following the UK launch of Apple open initiative that any bank or retailer can I join, including Apple. Pay. I’ve rarely known the like. Much of the Myth Number 4 I would suggest is that FEATURE PR activity has been breathless to the point Apple has suddenly shaken up and trans - of hysterical with a fair amount of industry formed the payments industry. 6: APPLE PAY ignorance thrown in. It is not going to do to credit cards what Experts from across the financial industry the iPod did for how we consumed music. examine the launch of Apple Pay in the United Kingdom. Will it be a success? Will it Myths and old wives’ tales Apple does not have anything approaching a fail? Will it do much of anything at all? Anna I will resist the temptation to name and market leading share of the UK smartphone Milne writes shame some of the callers who seemed to be market; it is not going to turn the payments 12: SOCIAL MEDIA under the impression that other firms operat- sector on its head. Banks are still trying to crack to social media ing in this space will be cowed or feel threat- Myth Number 5 is that no other service code. While huge brands, such as Red Bull ened by Apple. provider can compete with Apple’s market- and Apple, have online interaction down to That has to be Myth Number 1: the real- ing buzz. an art form, financial institutions are lagging ity is that Samsung and the telcos will wel- Apple’s entry into the market is a posi - behind. Can the situation change? Franchesa Hashemi writes come Apple’s phenomenal marketing and PR tive for all concerned – see Myth Number buzz and the publicity attracted by the Apple 1. Zapp’s partner banks and retailers are launch. more than capable of promoting Pay by It is fair to say that public awareness of the Bank to their customer base and tapping INTERVIEW benefits of mobile payments technology and into the growing public awareness of NFC NFC-enabled contactless has just been given contactless. 16: ING: FASTER PAYMENTS a huge boost. ING is digitally forward-thinking. Anna Milne speaks to Inge Van Dijk, director of faster Myth Number 2 has to relate to security. The opportunity payments, about the European push towards Nice try, Daily Mail, but anyone and every- What is not in dispute is that the Apple Pay real time payments and when and if banks one that knows a little about the Apple offer- launch is most propitious. The September should make it a priority ing will recognise that the Apple’s solution increase in the payment limit to £30 provides trumps conventional chip and PIN on this a further boost to contactless; the 331% rise front. in contactless in 2014 may well be bettered Myth Number 3 has to be the suggestion this year. that retailers will choose between Apple Pay Customers ultimately will decide if Apple and say, Zapp. It is not an either or situa - (and others) really have nailed it with a great tion – the retailers will offer multiple pay- user experience. < ment methods, as they do today and most will continue to do so. Zapp’s service has an advantage of using the consumers’ existing Douglas Blakey [email protected] bank apps.

Editor: Douglas Blakey Group Publisher: Ameet Phadnis For more information on Timetric, visit Tel: +44 (0)20 7406 6523 Tel: +44 (0)20 7406 6561 our website at www.timetric.com. As a Email: [email protected] Email: [email protected] subscriber, you are automatically entitled to online access to Electronic Payments Financial News Publishing, 2012 Deputy Editor: Anna Milne Sub-editors: Nick Midgley, Kev Walsh International. For more information, call Registered in the UK No 6931627 Tel: +44 (0)20 7406 6701 customer service on: +44 (0)203 096 2636 or Director of Events: Ray Giddings email: [email protected] ISSN 0956-5558 Email: [email protected] Tel: +44 (0)203 096 2585 Unauthorised photocopying is illegal. The Reporter: Patrick Brusnahan Email: [email protected] London Office contents of this publication, either in whole or Tel: +44 (0)20 7406 6526 5th Floor, part, may not be reproduced, stored in a data Email: [email protected] Head of Subscriptions: Sharon Howley Farringdon Place, retrieval system or transmitted by any form or Tel: +44 (0)20 3096 2636 20 Farringdon Road, means, electronic, mechanical, photocopying, Junior Reporter: Franchesca Hashemi Email: [email protected] London, EC1M 3AP recording or otherwise, without the prior Tel: +44 (0)20 7406 6711 Asia Office permission of the publishers Email: [email protected] Sales Executive: Alexander Koidis 1 Finlayson Green, #09-01 Tel: +44 (0) 203 096 2586 Singapore 049246 Asia Editorial: Xiou Ann Lim Email: [email protected] Tel: +65 6383 4688 Tel: +65 6383 4688 Fax: +65 6383 5433 Email: [email protected] Email: [email protected]

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THIS ONE EPI 337.indd 1 24/07/2015 09:10:48 Electronic Payments International NEWS ADVISORY PANEL

Say hello to our new Advisory Board With the relaunch of our magazine and website, Electronic Payments International has gathered a group of payments experts to contribute their insight to our publication. Ranging from payments to technology to regulation, this highly regarded panel will share their respective analyses over coming months

Name: Rich Bialek Name: Robert Courtneidge Title: CEO Global Technology Partners Title: Global head of cards and payment at Locke Lord LLP Rich Bialek is CEO of Global Robert works closely with The Payments Technology Partners (GTP), a Services Regulator, HM Treasury and Tulsa, Oklahoma USA based the Financial Conduct Association and prepaid processor serving the other compliance and industry bodies to African markets. Immediately ensure compliance for his clients. He prior to joining GTP Rich was places special emphasis on working with head of prepaid products for high tech industries and products in the Visa CEMEA, based in Dubai financial services industry, embracing UAE, where he was responsi- new technological and legislative/regula- ble for prepaid market and tory developments. product development. Rich’s He was placed No. 1 in the Payments extensive experience in the 2015 Power 10 rankings and was one of payment industry includes a select few in the industry to be included senior-level positions manag- on the list for four consecutive years. ing payment businesses at Nei- Robert is known for his knowledge and experience in the e-mon- man Marcus, GE Capital and ey area and has advised financial institutions worldwide. Ameritech. Rich also managed consumer credit products for Visa International prior to the for- Name: Chris Davies mation of Visa Inc. and held the post of senior vice president in Title: Managing director at Global Payments charge of strategic research and Intelligence for Visa International. Chris Davies, President Europe, Manag- Rich earned a BA in Economics from Harvard College and ing Director UK, (responsible for all was a Harvard College National Scholar and Boyden Scholar. He Global Payments’ businesses in the UK, earned his MBA from the Harvard Business School and was a Malta, Russia, Central & Eastern Harvard University National Fellow. Europe). He is a board member for Comercia, Name: Francesco Burelli Global Payments Malta, Global Pay - Title: Partner at Innovalue Management Advisors ments Europe and Realex Payments, a Francesco has over 19 years of recent acquisition of Global Payments in experience in the areas of strat- Ireland. He’s also on the board for UK egy, M&A, regulatory impact Card Association and a former board assessments and performance member of Visa UK. He is chairman of improvement. Digital banking, the board for Global Payments’ Russian cards, payments and transac- subsidiary, United Card Service and a board member of Equifax tion banking expert, Francesco Russia, in which Global Payments holds a minority stake. works with financial institu - Prior to his current role Chris spent almost 36 years at HSBC tions, investors, merchant and Bank and its UK forerunner Midland Bank. corporate treasuries, NGOs and government agencies on a Name: Nick Day global basis. Title: CEO Small World Financial Services Previously he held senior Nick Day is the CEO of Small World roles with other advisory firms Financial Services, a technology busi- and before that he was at Mid- ness providing cross-border payment land Bank, later HSBC. services worldwide. Nick founded Small Fellow at the Institute of Financial Services (UK), Francesco was World FS in 2005, with the aim of con - awarded as Industry Consultant of the Year 2014 by the ATM solidating this large and traditional mar- Industry Association (ATMIA). ket, and to bring fast, low cost interna- He is quoted frequently on industry publications and a regular tional payments to a global market. speaker at industry events. Prior to starting Small World, Nick spent five years leading high-growth

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THIS ONE EPI 337.indd 2 24/07/2015 09:10:50 Electronic Payments International ADVISORY PANEL NEWS

businesses within the European financial services industry, using Goldman Sachs, where he was Executive Director, acting as Finan- his vast experience in retail banking and payments from previous cial Advisor for the European corporate market in investments roles within RBS and Lloyds TSB. with a focus on fixed income and money market instruments. Nick is an experienced financial services executive and entrepre- Carlos is a member of the Payment Systems Regulator Panel of neur, with significant international experience of building busi - the UK and a member of the Steering Committee of the World nesses across Europe and North America, and is an expert on Class Payments project of Payments UK (previously the Payments matters of operational strategy, corporate development, venture Council). Carlos holds an MSc in Telematics, a BsC in Engineer- capital, financial services and entrepreneurship. ing and completed his MBA at IMD, Lausanne. Carlos is fluent in Spanish, English, French, Italian and Portuguese. Name: Stuart Lacey Title: CEO Trunomi Name: Rich Wagner: Stuart Lacey is CEO and founder Title: CEO Advanced Payment Solutions of Trunomi, a fintech business Innovative and entre- that is fundamentally changing preneurial senior the way in which customer executive with 30 information is collected, man- years of successful aged and shared. Trunomi's payment experience technology can deliver financial in U.S. and U.K. services providers gains in oper- financial services, ational efficiency and improve- including at ments in customer interaction - Barclaycard and Visa. whilst reducing costs, inefficien- Rich has launched cies duplication and regulatory and managed high risk. growth financial With over 20 years of leader - services businesses ship experience in the C-Suite of internationally with global financial and technology the greatest and most markets, he has a keen eye for recent success so far growing successful teams. being the founder Stuart is a multiple award- and CEO of APS, which in 10 years has become a leading digital winning Member and of the Young Presidents Organization; the banking and payments company in the UK. Young Entrepreneur’s Council and The Institute of Directors; as Rich sits on the advisory board of the Emerging Payments Asso- well as a graduate of McGill University and the inventor of a num- ciation and was selected in 2014 to represent the entire electronic ber of industry defining patents. money industry at the Euro Retail Payments Board under the remit of the European Central Bank to help shape the future European Name: David Parker payment regulations including non-bank access to the payment Title: CEO Polymath Consulting networks. David is the founder and CEO of Poly - math Consulting. Polymath Consulting Name: James Whittle has now delivered over 50 projects for Title: Director of industry policy at Payments UK clients in prepaid cards and emerging Responsible for setting payments. industry policy and strat- The company's current work includes egy and representing the projects in the Middle East, USA, Asia, UK payments in Europe Africa and Europe. and globally. Working David has an in-depth knowledge with a wide range of of payments and payment cards and is stakeholders to share known for his work with prepaid cards, payments knowledge and mobile money/mobile wallets and M-pos. expertise, James also Parker has previously worked for compa- leads the International nies such as The Gaming Bourse, The Pepper Corporation and Organisation for Stand- Saatchi & Saatchi (Saudi Arabia). ardisation (ISO) on ISO 20022. He also works Name: Carlos Sanchez closely with SWIFT and Title: CEO ipagoo other industry standards Carlos is in charge of Financial Services bodies across the world. at Orwell Group, which he co-founded, James has worked and in this capacity created ipagoo, a dis- across a number of func- ruptive new model for the retail banking tions within Payments industry. UK, including senior roles in industry standards, government Carlos has held board and executive engagement and regulation. positions in banking and finance, includ - Previously he worked within the retail sector, developing solu- ing at Dexia Group and more recently tions for cross border trade and supply chain efficiency.

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THIS ONE EPI 337.indd 3 24/07/2015 09:10:57 Electronic Payments International NEWS ROUND UP

COMMENT: DIGITAL range of products will also allow €1.6bn, which is a three-fold million journeys paid for in this P BitX to attract more consumers increase compared to the same way since its inception. than other Bitcoin exchanges. period in 2014. London is currently the Expansion into Nigeria He hopes to attract more than Yet, while the UK sees a £20 only city in the UK to accept causing ‘a lot of just the 'younger, tech-savvy contactless expenditure limit, contactless payment for trans- opportunity’ for BitX early adopters'. Poland and the Czech Republic port. However, there are plans He says: "Our target market do not have the same restriction. to launch similar systems in Bitcoin exchange BitX, is perhaps larger than for most Visa Europe's report shows Manchester and other major headquartered in Singapore, other Bitcoin companies. We that card holders are likely to UK regions. has just entered the Nigerian have the leading bitcoin smart- use contactless technology for market. Werner van Rooyen, wallet application where con- higher value purchases given STRATEGY head of business development sumers can buy, sell, store and the opportunity, however, a PIN Itemize and Fraedom and growth at BitX, explains spend their bitcoins. We have a number is required. team up what opportunities this move modern trading platform where Visa Europe's executive direc- represents. individuals and professional tor of core products, Sandra Itemize, a data extraction man- BitX, currently supporting traders can trade between Nige- Alzetta, said: agement provider, and Fraedom, Malaysia, Indonesia, Kenya, rian naira and bitcoin. Lastly, "Across the continent, 131 mil- a developer in corporate spend- and South Africa, has expanded our powerful API allows local lion Visa contactless cards are ing solutions, have announced its bitcoin wallet, exchange and businesses and developers to carried in the pockets and purses a partnership that offers an API services to Nigeria. integrate bitcoin into their prod- of consumers and used regularly automatic receipt management This allows Nigerian consum- ucts and services." at over 2.6 million contactless system to UK and global enter- ers the ability to buy and sell BitX has no plans of slowing terminals. prises. bitcoin instantly using the BitX down. While it supports only Emphasising the popular- Fraedom's clients can now Android or iOS apps, as well as five countries, transactions can ity, Alzetta went on to add that use their mobile device to pho- using the API to develop their be made all across the globe. "British consumers are by far the tograph their expense's receipt, own Bitcoin products and ser- Van Rooyen concludes: biggest adopters" of contactless which is then scanned by the vices. "There are plans to expand into technology and have more than Itemize app using an almost Speaking to EPI, Van Rooyen other African countries and new double the amount of cards instantaneous extraction tech- said: "Nigeria is Africa's largest regions. The timing and specific issued than France. nology. consumer market with a lot of countries will depend to some Currently there are 49.6 Key data from the receipt, healthy growth and an economi- extent on the local demand for million contactless cards in including merchant name, total cally active middle-class and our products and services, but circulation in the UK, a 37% value, and tax amount, is paired we've had an enormous amount we tend to have pretty good vis- increase compared to the twelve with Fraedom's online account of interest from local business ibility on this given our custom- months leading to March 2015. of the transaction. and consumers to enter the mar- ers can already use our mobile France sees 20.3 million, then The process shows up on the ket. There's a lot of opportunity smartwallet for Bitcoin-only Poland (14.5), and Spain (11.5), client's company account, thus for us to enable people to trans- transactions in any country in according to Visa Europe's eradicating cash payments and act online for the first time, to the world." report. However Spain leads paperwork. do so cheaper and faster than the contactless terminal statis- Global partnerships at Item- with other methods, facilitate RESEARCH tic (593,000), with the UK sec- ize - expense management David small payments and also to help UK trumps top in ond (410,000) and France third Parker, listed the partnership's reduce online fraud." contactless payment (405,000). focus on 'simplicity' as a defin- While Bitcoin is still a fairly Alzetta went on to state the ing feature: new development in the finan- More than a billion contactless uptake of contactless will "only "The difference between our cial world, BitX already has a transactions have been made increase in future as we experi- receipt management system and system in place to measure its across Europe over the last ence the next generation of digi- that of, for example, Examplify, success in Nigeria. year, worth €12.6bn ($13.85), tal payments, where the simplic- is the algorithms which com - Van Rooyen said: "We tend according to a Visa report pub- ity and convenience is extended pletely removed the middle man to measure success in both a lished on Monday 6 July 2015. to mobile and wearable NFC from this process. qualitative and quantitative UK consumers are using technology." "Our software does not rely on way; the former around build- touch-to-pay technology most, There are presently 240 outdated and manual extraction ing communities and increas- with a staggering 52.6 million European banks issuing Visa's techniques. It is a fast and user- ing general awareness, interest, transactions - totalling €330m contactless payment card yet the orientated experience that frees and knowledge of Bitcoin (not -accounted for in March 2015 company has stated its intention up time for busy people to get only for consumers, but other alone. Following closely behind, to make the technology avail- on with their jobs. stakeholders like regulators, however, Visa Europe reported able to all Visa card holders by Itemize and Fraedom's receipt investors and businesses). The that in Poland there were 49.7 2020. payment processes minimises latter will be measured in terms million contactless payments However the UK's adoption manual user data entry, for the of how many people actively and the Czech Republic 13.9 of contactless is tinged with client, software developer and transact using Bitcoin." million. London-centricity. This is due to individual involved in making As well as the sheer size of the Europe's total contactless commuters using the electronic the payment. Nigerian market supporting it, payment expenditure for March service on Transport for London The Itemize app is available Van Rooyen believes that their 2015 hit a record-breaking vehicles, with more than 100 on iPhone and android devices,

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with receipt recognition process fewer chips, and subtle design tor of cards and unsecured lend- Utilising Pingit makes Zapp's taking a total of 15 and 25 sec- tweaks". ing, Ken Chew. 'Pay by Bank' app the UK's first onds, respectively, to complete. The iPhone 6S is also expected Mobile wallets are fast total market mobile payment Fradeom have more than to have an updated Force Touch becoming a trend in the Asia- service, available to any con- 134,000 clients benefiting from system, a better camera, a differ- Pacific region, with banks deter- sumer with a bank account or its receipt data extraction sys- ent colour range, and includes a mined to remain competitive as smartphone. tem, ranging from large corpo- Qualcomm LTE chip for double they partner with card compa- Peter Keenan, chief executive rates companies in Indonesia speed data updates. nies and mobile network provid- at Zapp, is very enthusiastic and New Zealand to public sec- Force Touch is said to dif- ers to develop their own mobile about this new collaboration tor organisations in the US and ferentiate between a light tap wallets. between the two. UK. and deep press, a feature which "We understand that to move He said: "It goes without say- Kyle Ferguson, CEO of Frae- already exists on new Mac - nimbly, we need to partner ing that Barclays has been one dom, added: "[In terms of] Books and Apple Watches. financial technology companies of the most innovative banks finance it increases receipt com- Sales figures for Apple's first in niche areas," says global head in the payments space. I very pliance and tax reclaim, saving large screen iPhone, the iPhone of retail products Kartik Mani much see them as trailblazers the company time and money. 6, for the first fiscal term ended at Standard Chartered, which in digital and the digital pay - "This agreement takes us one September 2014 hit 135.6 mil- recently ments space, do for Barclays to step closer to our vision of pro- lion, according to the Wall Street collaborated with mobile essentially join our ecosystem is viding our customers with a Journal. This is a 43% increase operator Indosat to launch their a bit vote of confidence in what touch-less transaction experi- from the previous year. Straight2Bank wallet in Indone- we're doing. They very much see ence." The iPhone 6s will be shown sia. See related story. what we're doing as the future to the public for the first time in Similarly, MasterCard is and they like the opportunities COMMENT: APPLE PAY September 2015. targeting a wide reach by part- in will bring their retail and cor- nering with Bank of East Asia, porate customers." PRODUCTS China Construction Bank (Asia), While many have already sup- MasterCard launches Dah Sing Bank and DBS Bank ported Zapp, not only banks, Apple rumour mills global digital payment to launch branded MasterPass but retailers such as Sainsbury's keeps on churnin’ platform Masterpass digital wallets. and Asda, Barclays is one that is in Hong Kong MasterPass is now available pushing Zapp further into the Apple has ordered 85 - 90 mil- to over 40 million consumers market. lion iPhone 6S units from its MasterCard has launched digital across Asia/Pacific. In addition Keenan said: "We've already manufacturers, a record break- payment platform MasterPass to Hong Kong, Taiwan made its announced quite a large consor- ing figure. This is in comparison for the first time in Hong Kong, MasterPass debut last October - tium of banks that have commit- to the 70 million iPhone 6 hand- which allows consumers to while the solution is also availa- ted to getting behind Zapp, but sets from last year. securely store their MasterCard ble in Australia, Canada, China, Barclays coming to that takes The company may not only be and other branded card infor- Italy, New Zealand, Singapore, overall support to just over 50% hedging its sales figures on the mation all in one place - along the United Kingdom, the United of all UK current accounts when success of two new iPhones but with their shipping and billing States and many other countries we launch and the other banks also the adoption of Apple Pay. addresses. around the world. go live. That's a significant mile- The approximate 90 mil - Consumers will no longer stone to get over this early in the lion handsets order is believed have to enter their payment COMMENT: STRATEGY genesis of the company." to accommodate two different and shipping information with While currently Zapp remains iPhone models, one with a 4.7- every purchase. They can con- an online solution only, Keenan inch display and the other a 5.5- veniently access the payment Barclays continue as does not see this as a limitation, inch display. These are the same details in their mobile wallet ‘trailblazers’ with Zapp but a differentiating factor at the screen sizes as the previous mod- during checkout. Apart from moment. els: the iPhone 6 and 6 Plus. that, MasterPass also fosters Developed by VocaLink, Zapp He concluded: "We do online It could be argued that 90 consumer loyalty to merchants has gained the support of many and m-commerce purchases- this million handsets is an oversight. as it allows their loyalty card to banks: HSBC, First Direct, is the one difference between us Yet Apple managed to surpass be automatically passed to mer- Nationwide, and Santander, all and Apple Pay, which doesn't its own prediction for earnings chants when making a purchase. of whom are also supporting have an e-commerce (buying in in the last quarter of 2014, mak- "These days, online shoppers Apple Pay. The latest to join browser or desktop) solution. ing $74.6bn instead of $66.5bn. have become more sophisticated them is Barclays, which was We will be the first ubiquitous The last iPhone was launch and choose carefully. We believe slow to support Apple Pay. mobile-based e-commerce solu- during a holiday, and it is to offering a secure payment solu- Zapp allows users to pay tion out there. Our m-commerce be expected that iPhone 6 and tion through a reputable plat- for purchases direct from their solution is, we believe, by far a 6Plus will be available after form is the key to success. We online bank account via a better solution and we have an Christmas (31 December 2015). are excited to launch our own bank's own mobile application. in-app solution as well. Leaked images of the new branded digital wallet, DBS Corporate and consumer users "In addition, our in-store solu- iPhone were analysed by Apple MasterPass, in Hong Kong - of Barclays Pingit mobile money tion launches at the end of Q1 experts at 9to5mac.com, who giving customers more control transfer service will be the first 2016 and we will have NFC- said: "[The images show] updat- over the way they shop and pay," bank app live with Zapp when based technology on that." < ed NFC, 16 GB base storage, said DBS Bank's executive direc- it launches in October.

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THIS ONE EPI 337.indd 5 24/07/2015 09:10:58 Electronic Payments International FEATURE APPLE PAY

Will Apple Pay-ve the way for mobile? The launch of Apple Pay in the first market outside the states has been hotly anticipated by the payments industry (and the odd Apple aficionado).Anna Milne, EPI’s advisory board and other industry experts examine the potential to evolve the mobile payments industry in the UK market, in comparison to the US

pple Pay has launched in the UK, recently, its acceptance of contactless debit substantially mitigates the risk of fraud such making this market the second inter- and credit cards. Interestingly, US Apple Pay as identity theft and data breach. national region to receive the service users have already been using it on the net- A after its debut in the US in late 2014, work, as TfL’s Shashi Verma confirmed at a Security alongside the roll out of the iPhone 6. MasterCard workshop in June. Moreover, iPhone and iPad transactions are In terms of vendor compatibility, the UK Apple Pay does not disrupt the four-party verified by Touch ID, and Apple Watch trans- is far more prepared at launch than its US scheme model and, at least in the short term, actions are authenticated by skin contact and counterparts. Contactless payments are is expected to be beneficial for card networks, password entry. These biometric protection already becoming more mainstream as the banks, acquirers, POS vendors, and even its features reduce fraud risk resulting from lost vast majority of the UK’s major retailers direct competitors. See table p11. or stolen devices. have NFC terminals installed, and Apple Pay Apple Pay comes at a cost for card issuers- Once the payment has been accepted, the is compatible with any terminal that already 0.15% per credit card and $0.005 per debit device vibrates to acknowledge that the sale accepts contactless payments. card transaction in the US. These figures are has been completed. Apple Pay’s robust Apple Pay acts as a mobile wallet and as yet unclear for the UK market. Yet issuers encryption and data protection allows card comes in after rival wallet services, such as are willing to absorb the extra cost due to issuers to assume fraud liability. Google Wallet, have had limited adoption expections of decreased card fraud and an If a user’s device is stolen, all payments can rates. However, Apple Pay’s UK entrance overall increase in card transaction volume. be suspended via use of the Find My iPhone is likely to spur adoption of competitors as app, which can be accessed remotely from well. According to Ars Technica, Google a PC or Mac. As card details are not stored Wallet registered a 50% increase in transac- How it works on the device, there is no need for a user to tion volume in the two months following the Users store existing credit and debit cards on cancel their cards. announcement of Apple Pay US. The number their Apple devices via the iOS Passbook app. of new Google Wallet users also doubled dur- Card details can be entered manually or by Fraud risk ing the same period. uploading a photo using the device’s camera. The Apple Pay payment mechanism is such Some US retailers have used Apple Pay as Once a card has been authenticated, its that consumers’ details cannot be stolen by an incentive to upgrade their point of sale details are not stored on Apple’s servers. hacking into a payment terminal. However, (POS) terminals to EMV/contactless, away Instead of the user’s actual credit or debit there have been concerns over fraudsters from mag stripe yet uptake remains slow card numbers being stored on the device, a using the Passbook app and an iPhone’s among non-Apple partners and it has been unique 16 digit Device Account Number camera to authenticate stolen cards. Cherian difficult for consumers to rely on Apple Pay (DAN) is assigned, encrypted and securely Abraham, mobile commerce and payments as a wallet replacement solution. stored in the Secure Element (SE), a dedi - expert and industry consultant who works Given the total UK iOS market share of cated chip in iPhone, iPad and Apple Watch. with banks and retailers on mobile payments 36.8%, as of end May 2015, according to The DAN is issued for each card by strategies, said that it is not “an anomaly” Kantar, it is unlikely that Apple Pay will be a a token service provider such as Visa, to see fraud accounting for about 6% of significant disruptor to the payments indus- MasterCard or American Express, to emu- Apple Pay transactions, compared to about try at launch as users will have to own one late the actual card. 0.1% of transactions using a plastic card. See of the latest models of iPhone, iPad or Apple Fraud risk box overleaf. Watch to use the service. Tokenisation Payment is made using tokenisation. These Will high value transactions be accepted? Launch Support tokens can only be recognised by authorised In the UK, contactless card payments are Apple Pay is supported by all major UK banks, parties such as card networks, and conform subject to a £20 transaction limit. However, bar Barclays. The latter has announced it will to EMVCo’s tokenisation guidelines. When depending on the retailer’s POS software, support in due course. Barclays is currently a transaction is initiated, the SE also gen - higher value transactions could be accepted, pushing its bPay contactless payment tech- erates a one-time dynamic security code to providing stronger authentication is submit- nology, which includes a wristband, key fob authenticate the payment, which substitutes ted. The biometric verification in Apple Pay (into which you insert an NFC chip) and a the Card Verification Value (CVV) and satisfies this stipulation. Currently, very few mobile phone NFC sticker. ensures that the transaction is carried out retailers have such sophisticated software; Transport for London (TfL) is a key launch through a genuine device. those that do are using Apple Pay to capi- partner. The London transport network has Aside from restricting skimming, the talise on this facility, such as Pret and Bills been a great vehicle for contactless payments tokenisation feature also prevents card restaurant. through its Oyster prepaid cards and more details being shared with merchants, which A Visa spokesperson said “while there

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may not be many places that accept high value payments when Apple Pay launches, Fraud risk lessons UK banks can learn we expect the expansion of shops, cafés Mary Ann Miller, senior director and fraud executive advisor at NICE Actimize, who and restaurants that accept these transac- previously had directorships and executive roles in fraud strategy at USAA, eBay/PayPal, tions to happen over time.” and Lloyds Banking Group explains the fraud situation in the US around Apple Pay UK Advantages On launch and the fraud risks • Contactless (EMV system) infrastruc- The question is how prepared the banks are for increased levels and new types of fraud – new ture already in place at many retail technology always brings new risks. outlets; Apple has made a huge effort to embed tokenisation into the payments process, but the • Compatibility with transport net - biggest risks lie in the practice of card provisioning. Apple Pay has been made so easy to use works, especially London’s; that now potentially any fraudster can set up new iPhones with stolen personal info and then call the banks to provision the victim’s card to the phone. This has already caused huge losses • Improved security over Chip and Pin. in the US, where many banks were not fully prepared. Although contactless payment in the UK is more advanced, banks here can still learn from the US’s experiences. UK Challenges • Confusion over acceptance only at On the £20 payment limit partner outlets- this is not the case, The key to Apple Pay’s success will be consumer trust – to earn this they must work closely it is accepted everywhere with a with banks to strengthen processes around financial crime. But with a £20 limit to payments, contactless POS; the message is simply that “this is not yet safe to use” - there are many banks that have had • Few consumers with compatible successful mobile wallet launches with much higher limits. Apple device; How can UK banks be prepared against the vulnerability around Apple Pay with regard to • Little incentive to use Apple Pay if fraudsters setting up stolen card info on iPhones? contactless is already widespread; Fraud detection and prevention practices and analytic tools need to be implemented as part of • Lack of merchant incentive due to the card provisioning process and in the subsequent point of sale transactions. These systems non-retention of customer details. should ensure that risk scoring of these events clearly demonstrates that it is either a customer transaction or a fraudulent transaction. It is then critical to have a system that takes actions US Advantages to interdict when the risk is elevated. There is also the need to monitor the activities in the call • Significant security improvements centre if the procedure for provisioning the card to the Apple device involves a process to refer over mag-stripe technology, creating the customer to the call centre. incentive for merchants to upgrade terminals and adopt Apple Pay at the Can you give some examples on US losses of this kind and how many cases there have been? same time; The US losses reached crisis levels, some banks reported ranges of 6-10% losses. Some banks also reported that many of the losses were from the fraudsters purchasing more Apple devices • Significant iOS market share. to keep the fraud cycle going. Banks have now made steps to take corrective action, but not without experiencing customer and risk impact, a rocky start and certainly lessons learned. US Challenges • Vendors reluctant to upgrade termi- nals due to questionable ROI; tion’s list of the top 100 US retailers found an average week; • Competition from CurrentC – a that a quarter accept Apple Pay, nearly two • Only 2.1% of people are “super-users” coalition of US retailers including thirds of the chains said they would not be who use it 10 times or more a week. Wal-Mart, Gap and 7-eleven - offer- accepting Apple Pay in 2015 and only four ing a mobile wallet service, however, companies said that they have plans to join Conversely, a 2014 InfoScout survey of its dependence on QR codes will like- the programme “in the next year”. 170,000 US iPhone 6/6 Plus-owners who ly be a disadvantage in comparison; Adoption by US consumers has also been shopped at retail stores accepting Apple Pay • Lack of merchant incentive due to relatively slow. According to a Trustev sur- during Black Friday weekend 2014, indi- non-retention of customer details. vey of 1000 US-based owners of modern cates 73.5% of respondents found Apple iPhones (models 6 or 6+): Pay easier to use than card payments, illus- UK Reception- Trust • 79% of iPhone 6 or 6+ users have trating Apple Pay’s potential. See table p8. Forrester’s Technographics data from Q1 never used Apple Pay at all; Apple’s iPhone sales reached a record vol- 2015 states that 27% of UK online con - • 21% of users have tried the service ume in the quarter during which the iPhone sumers owning an iPhone would trust once or more. 6 was launched, at the same time as Apple Apple to provide a mobile digital wallet Pay. The following quarter, Q1 2015, Apple but they are still more likely to trust PayPal Among the people who have tried it out, announced the second best iPhone sales (43%), a bank (41%), a credit card network Apple Pay is not used very often. Within ever, with sales of the iPhone 6 and 6 Plus (40%), and Amazon (32%). that 21% who have tried it: amounting to 61.2 million units. However, consumers cannot trust what According to Apple's press release, the they do not yet know. Once Apple Pay per- • 80% still use cards or cash for the vast growth was fuelled by record second quar- meates consumer consciousness, trust is majority of payments, using Apple ter sales of iPhone and Mac, and all-time likely to increase. Pay three times per week or less; the record performance of the App Store. bulk of these (62% out of the 80%) By comparison, during the first quarter US Reception use Apple Pay either not at all or once of iPhone 5s sales, the company shifted 44 The US adoption of Apple Pay has achieved in a typical week; million. The financial quarter of the 6 and only limited amounts of success. A Reuters • 30% of people have stopped using it 6Plus release, as well as Apple Pay, 74.5 mil- survey from the National Retail Federa - altogether: they now use it “never” in lion iPhones were sold.<

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THIS ONE EPI 337.indd 7 24/07/2015 09:11:01 Electronic Payments International FEATURE APPLE PAY

Chris Davies, Global Payments

In some ways it’s more straightforward in the UK than in the US. It is difficult to get a full n APPLE PAY PARTICIPATING UK BANKS/ picture on what the commercial arrangements are going to be between card issuers, who FINANCIAL INSTITUTIONS are in effect going to be providing the issuing side of the process, and what the arrange- At Launch "Coming Soon" ments are with merchants. In the US there is a premium to be paid that Apple puts on Nationwide Bank of Scotland top of the interchange rate that the issuers get. It’s not clear if this will be the case in the UK yet. NatWest Halifax Where Apple really wants to try and improve the consumer experience is with RBS Lloyds in-app purchases. The mobile payments process usually takes a number of screens, Santander M&S Bank with Apple Pay it’s pretty much a single screen, using Touch ID and the approval goes Coutts TSB through. Speed is so important – mobile users typically are on the go and don’t want to go through 3D Secure on their phone. Having that improved shopping experience should Ulster Bank HSBC make Apple Pay successful in the UK. American Express First Direct Face-to-face, it is just an element of substitution, similar to cards, although early adop- Visa ters will use it and tech-savvy people too, but the real benefit comes with the in-app site. MasterCard As retailers become more attuned to mobile and tablet payments and ready their shops to be truly omnichannel, the in-app process will become even more important. mbna Apple has changed the dynamics in other industries already and it has a real chance of Source: Apple taking some market share here but it will be a longer burn and will depend on how each individual consumer integrates their mobile into their lifestyle. It’s unlikely to take the world by storm like iTunes did. It’s likely that Apple will tie in loyalty programmes as it’s a very straightforward process for them to add on rewards. This would be the differentiator over low value contactless card payments. Apple already has a strong loyal following but it also has to find ways of getting people to choose Apple Pay. Rich Wagner, APS Apple Pay strikes me as one of the few operators outside of the card space that has really thought about their payment n APPLE PAY COMPATIBILITY offering. Of course, Apple is renowned for its deep insights into the mind of its Device E-commerce via terminal users but it is clear from the decision to iPhone 6 / 6 Plus   partner with the likes of MasterCard and Apple Watch (paired with iPhone 5, 5c, 5s, 6 or 6 Plus)  Visa that Apple also recognises its own iPad Air 2 / Mini 3  strengths. Apple has acknowledged that it is not best placed – and maybe not Source: Apple trusted by its customers – to store sensi- tive payment data, so has been smart to align itself with the credibility and exper- n CONSUMER SURVEY: APPLE PAY VS. TRADITIONAL CARD PAYMENT METHODS tise of the biggest card schemes. Better Same Worse Love them or hate them, Ease of Use 73.5 23.5 3 Apple’s customer experience , and in my opinion, Speed at Checkout 67.6 29.4 3 is best in class it has got to be the best collection of Security 67.6 29.4 3 minds to crack the seamless, friction - Convinience 67.6 26.5 5.9 less payment experience that consumers Source: InfoScout demand. The UK launch will boost the payments industry as a whole, but how- ever cool the technology, it will take years Rich Bialek, GTP to reach anything near mainstream adop- tion. However, it’s interesting to note that As more and more payment transactions take place without a plastic card, Apple and Apple’s margins will be far lower in the Apple Pay are well positioned to take advantage of the ongoing digitisation of UK than in the US, due to the huge payments. They have the brand, the technology and the business model to be disruptive discrepancy in interchange fee and successful. The Apple brand is powerful, aspirational and recognised globally. The rates between the two continents. This authentication and overall transaction security is sound. Their ability reduces the commercial opportunity for to insert themselves into the payment value chain and earn a few basis points of revenue Apple Pay in this market, so it will be on each transaction insures they have a sustainable business model. Combined with the interesting to see just how much focus it number of iPhones in consumers’ hands today they have the market presence to shape puts on the UK to get this on the ground, and advance this market. compared to Stateside.

8 y July 2015 www.electronicpaymentsinternational.com

THIS ONE EPI 337.indd 8 24/07/2015 09:11:03 Electronic Payments International APPLE PAY FEATURE

Francesco Burelli, Innovalue n IOS SMARTPHONE SALES MARKET SHARE (MAY 2015 FIGURES) The industry has been looking at Apple Pay as a game changer. The launch of Android Pay combined with a reasonable penetration of NFC terminals, in % particular in London and major towns, are promising building blocks to see NFC mobile- 50 UK US enabled payments taking off. Banks have flocked to sign up and announce their support to Apple Pay both in the US and in the UK. 40 Nonetheless take up will be slow. This is due to a number of factors. Apple has just over 18% market share globally, based on IDC research, while Apple’s UK smartphone share is just under 40%, based on Statista research. eMarketer research states 55% of UK consum- 30 ers have a smartphone, leading to the estimate that about 22% of the UK population are iPhone users. iPhone 6 owners have been keen to sign up to Apple Pay but the adoption of it must take into account the fact that the 20 UK handset upgrade cycle is 24 months for the most part in UK contracts. Few consumers are willing to pay full price for the sake of being able to use Apple Pay and would rather wait to get the new phone 10 as a contract upgrade. So, even if we assumed to see a full switch to iPhone 6 by the Christmas season 2015, and we started to see Apple Pay volumes registering on transaction statistics, it is still likely 0 that Apple Pay transaction volumes would be low and will take time to grow. 2013 2014 2015 I would also consider the other UK mobile payment solutions including Barclays’ Pingit Source: Apple and ZAPP. Ultimately the mobile payment space is over-supplied with a significant num- ber of wallets and interfaces competing in a market that I would expect to become pretty fragmented in the medium period. Take off will happen but slowly and will represent a very, very small share of total transactions for the foreseeable future.

Carlos Sanchez, ipagoo

Apple Pay is a useful solution but just one more competitor. It will take off in the UK if they convince enough banks and enough retailers to partner. The Competition: Zapp CEO Peter Keenan There’s just too much choice- people will get confused. The industry I think customers now are getting quite attuned to having many different pay- needs interoperability. You could argue ment options. They will select payment options as to whether they want to collect that everything which is based on card points, have bonuses such as holiday insurance, or want to use debit card because they virtualisation, be it token or otherwise, are tightly budgeting. is interoperable because everybody can Much as I’d love to have 100% of the market share in mobile payments, that’s rare in acquire cards but even in that space, the any market. Our view is that the market is big enough for the likes of Zapp, and Apple way to exchange information between Pay, and others as and when they arrive. the seller and the buyer about the pay- The one great thing Apple has done is to solve the debate around whether it is going to ment is not standardised. I think we need be NFC or not- it has also given the market great confidence that mobile payments as a an international standards body like solution is coming. Now it is just a matter of who the key players are going to be and how ISO looking at the basic things that will quickly it is going to be adopted by consumers. Up to the point of Apple Pay enable interoperability without stepping coming people were still debating whether mobile payments were into the competitive space. If you have ever going to take off. That debate has gone away. It is absolutely here to stay, so to convince everyone to use a specific for us it is a net positive. app or a specific device, it’s much more It goes without saying that Barclays has been one of the most innovative banks in the cumbersome and you need much more payments space. I very much see them as trailblazers in digital and the digital payments investment in marketing- you might not space, so for Barclays to join our ecosystem is a vote of confidence in what we’re doing. even make it, no matter how good you They very much see what we’re doing as the future and they like the opportunities it will are. Standardisation is one of the bring their retail and corporate customers. things that regulators here are pursuing, While currently Zapp remains an online solution only, we do not see this as a limitation, standardisation of messaging, but it’s not rather a differentiating factor at the moment. just at infrastructure level, it should also Zapp is for online purchases and m-commerce purchases and this is the one difference happen for whatever information is pass- between us and Apple Pay, which doesn’t have an e-commerce (buying in browser or desk- ing the NFC connection, for example, so top) solution. We will be the first ubiquitous mobile-based e-commerce solution out there. that we can start thinking along the lines Our m-commerce solution is, we believe, by far a better solution and we have an in-app of “my app works with your solution as well. In addition, our in-store solution launches at the end of the first quarter app”. That’s the way to go. next year and we will be using NFC-based technology on that one.

www.electronicpaymentsinternational.com July 2015 y 9

THIS ONE EPI 337.indd 9 24/07/2015 09:11:05 Electronic Payments International FEATURE APPLE PAY

n APPLE PAY USE DURING FIRST FEW DAYS OF Cash stands to lose LAUNCH- BASED ON TWEET MENTIONS TfL 922 An average smartphone today has more computing power than all of Pret 407 NASA in 1969, when it put two astronauts on the moon. Placing this Tesco 433 at a consumer’s fingertips is driving phenomenal opportunities in Waitrose 233 payments, writes Chris Davies, managing director, Global Payments Boots 174 Costa 147 Starbucks 132 McDonalds 86 t is a truism that technology now But Apple isn’t just using its phones for Subway 58 permeates every part of our daily payments, the smartwatch enables the user lives, with the ubiquitous smart - to make a payment too. The development Co-Op 68 phone being the prime example. of wearable payment technology such as this Nandos 49 I is another feature of the payments industry. The launch of Apple Pay in the UK has Notes: Based on 26,000 tweet mentions between 14 July the potential to push mobile payments For example, prepaid or contactless wrist- 00:01 and 15 July 23.59 2015 into a completely new sphere. bands will be seen 'queue busting' at many Source: Brandwatch The payments industry in Europe is music and sporting events this summer. And mature but that is not to say that it is not the potential for wearable payment tech - ready, willing and able to adopt new tech- nology is only just starting to be seen with nologies and to innovate. In fact the sector applications for clothing, jewellery and even n APPLE PAY USER EXPERIENCE DURING is evolving, perhaps at a pace never before glasses in various stages of development. LAUNCH- BASED ON TWEET MENTIONS seen, as innovation and changing consumer Another area where we are seeing inno- (OUTSTANDING VOLUME COUNTED AS NEUTRAL) habits converge to create unprecedented vation is in the development of peer-to-peer Outlets Negative Tweets Positive Tweets opportunities for payment companies, tech- money transfer, which typically uses smart- TfL 32 47 nologists, retailers and shoppers alike. phones to transfer funds. Pret 18 28 Over the past decade the world of retail Starbucks now operates its own closed- has been revolutionised. Most significantly, loop payments system. This means custom- Tesco 27 12 the rise of online has turned traditional ers can pay Starbucks directly for their cof- Waitrose 27 6 customer shopping habits upside down, fee using a mobile app without the need to Boots 8 10 generating intense competition for bricks introduce another financial intermediary, Costa 3 13 and mortar retailers by lowering costs and such as a card network, into the process. decreasing high street footfall – but simulta- What’s more, some digital wallet services Starbucks 6 6 neously creating huge opportunities for new such as Skrill can link directly and secure- McDonalds 1 10 and existing market participants. ly to bank accounts while other apps, like Subway 1 3 Against this backdrop, the way retailers Barclays Pingit, just need a mobile phone Co-Op 11 11 take payments has also been shifting, both number to transfer money directly to an in line with changing consumer habits and individual, without the need for cards. In Nandos 0 4 emerging payments technologies. Indeed, March Facebook launched a money transfer Notes: Based on 26,000 tweet mentions between 14 July 00:01 and 15 July 23.59 2015 the way customers pay could play a sig - service to compete with existing payments Source: Brandwatch nificant part in the future fortunes of major providers such as PayPal and Square and European retail brands, particularly as they this could prove to be highly disruptive to come to leverage technological innovations. the rest of the market. However, the pace of adoption of new In response to this it is the responsibility ways to pay still differs greatly depending of the traditional providers such as payment n on where you are in Europe. In Germany the card processors and card networks to rise to APPLE PAY TWEET MENTIONS PER BANK use of credit cards remains stubbornly low the challenge and show the real value that NatWest 806 and many people in Italy still instinctively they add to the end consumer. RBS 324 prefer cash. But while we will see different New technology and innovation are Nationwide 259 markets adopting different technologies growing the market for electronic payments at different times, the overall trend is clear. in Europe while at the same time creating Santander 180 The way we pay for things is going to shift opportunities for both new and established Ulster Bank 89 from cash to the use of electronic payments players. But this doesn't necessarily mean Notes: Based on 26,000 tweet mentions between 14 July including smartphones, watches and other pitting one against the other in a winner- 00:01 and 15 July 23.59 2015 'wearable' technology. takes-all battle for supremacy. A bigger Source: Brandwatch A popular handset with a mobile wallet market will be able to accommodate more has the potential for very swift and wide - participants offering new ways to pay. The spread adoption, incentivising retailers and reality is that the real loser in this is likely to consumers to really engage with mobile pay- be cash as it gets pushed ever further to the ments, such as we see with Apple Pay. payment margins. <

10 y July 2015 www.electronicpaymentsinternational.com

THIS ONE EPI 337.indd 10 24/07/2015 09:11:07 Electronic Payments International APPLE PAY FEATURE

n MSC REVENUE SHARE OF A TYPICAL $100 CREDIT CARD TRANSACTION David Abbott, Fiserv THROUGH APPLE PAY

From a business perspective, the UK is rapidly moving to a low Total revenue of all participants in a $100 credit card transaction= $2.49 interchange environment which means that any additional Card Issuer $1.71 costs for payments processing will go against the market trend Merchant Acquirer $0.47 for merchants. This is a consideration that cannot be ignored as Card Scheme $0.16 Apple tries to grow its share of the payments market. Despite these challenges, Apple Pay is a highly innovative pay- Apple $0.15 ment option that will have appeal for both Apple fans and con- Note: Revenue shares in a debit card transaction may vary; card issuers revenue sumers who see Apple Pay as a bonus feature on their smart - includes that of the issuing processor and card acquirer’s that of the acquiring phones. There have been 12 years of hype around Source: Timetric mobile payments, and this announcement represents a real change for the industry. We’re seeing an invigoration in n COMPETITIVE OFFERINGS payments across the sector, with emergent payments methods coming to fruition, an uptake in consumer usage and merchants Zapp, UK ensuring that they have the latest technology to fulfil transac- Key Technology Direct debit in combination with tokens and QRs. Will launch tions. As such this could well be the perfect time for the roll-out NFC in 2016 of this technology. Strengths Low cost for merchants Available via customers' mobile banking app Real-time fund transfers Support from retailers, banks and acquirers Security- does not share sensitive information- digital tokens expire in three minutes Mohamed Horani, HPS Captures consumer data that can be utilised for targeted marketing

The payment industry is in full digital transformation, most Weaknesses No support for payment cards, including prepaid No access to loyalty or reward schemes on credit cards noticeably in the mobile payment space. It is booming world- Requires log-in to banking app wide, and is now the object of a wild race between banks, telephone operators, international payments organisations, tech- BBVA Wallet, Spain nology companies, large retailers and many other entrants seek- Key Technology NFC - HCE ing new opportunities beyond their traditional activities. Strengths Security According to a report published by McKinsey in October 2014, Captures consumer data that can be utilised for targeted growth in the payment industry is built on sound foundations marketing and is expected to be reinforced in the coming years. Convenience Revenues increased by 6% in 2013 reaching $1.6trn, and Works on both Android and Ios accounted for 41% of the revenues of banks in the world. The Works with wide range of smartphones, bank supplies annual growth rate of the payment industry should reach 8% in stickers for phones without NFC function 2018, and should boost payment income to $2.3trn. Popular among BBVA customers The bad news is that according to the same report by McK- Weaknesses Supports only BBVA-issued cards insey, the margins on revenues have been under pressure for the Privacy a concern for some customers last 5 years. The most striking example is the new regulation by Windows phones not supported the European Commission of the interchange rate, which is likely CommBank Tap & Pay, Australia to come into force in 2016. In its current form, it would cause Key Technology NFC PayTag stickers the evaporation of $7.2bn of revenues in Europe. Strengths Security- the bank guarantees 100% refund of unauthorised The key to facing these challenges is technology, as it gives payments companies the tools they need to adapt in an ever changing envi- Works on Android and Ios ronment. The rate of change can only increase, democratising Works with range of smartphones- NFC stickers supplied access to electronic payments and contributing to financial inclu- Does not require app or phone display activation sion. They provide great opportunities for all market players. SEQR Wallet, Europe New entrants are challenging the traditional players, using entirely digital means. For instance Uber, the largest taxi com- Key Technology QR codes and NFC if available pany, has no vehicle and Alibaba, the largest trader in the world, Strengths Access to large set devices, incl. non-NFC has no stock. Supports Android, iOS & Windows 2008 marked the start of a new financial world, even if we No exchange of sensitive information between mobile and were not aware of it at the time. What emerged from the finan- cashier cial crisis was a new economic system based on sharing and col- Low cost for merchants Provides credit option for payments- but not through cards laboration, driven by communication, with the gradual spread Allows P2P fund transfers of the Internet of Things, and secondly energy, with the arrival of new sources of energy. Weaknesses Privacy a concern for some Does not support credit card loyalty or reward schemes Scanning QR codes can be less practical than NFC and cards Source: Timetric

www.electronicpaymentsinternational.com July 2015 y 11

THIS ONE EPI 337.indd 11 24/07/2015 09:11:08 Electronic Payments International FEATURE SOCIAL MEDIA

Bringing financial services out of its shell Financial institution brands have been known to lack social media foresight for a number of reasons such as regulatory concerns and unimaginative marketing. Franchesca Hashemi examines a report delivered by Innovalue on how to engage effectively in the rapidly growing environment of digital consumption

inancial institutions (FIs) and social Photographs and moving images are fun- immediate answers, enabling the customer to media have a challenging relationship: it damental to user engagement on social media. solve a problem with minimal hassle. is not a natural marriage, to say the least. Mobile app Vine, a short-form video service This connects convenience to excellent cus- Research by consultancy firm Innoval- that plays clips of footage which its users pro- tomer service, which are mainstays of mar- F duce on six second loops, garners one billion keting. The task now is to transfer existing ue and Locke Lorde, a strategic management and advisory firm rooted in finance and inter- hits per month. Interlink Vine with Twitter business acumen to an online platform, while national law firm respectively, list key areas and you’ll find that 12 million Vine videos showing a vocational personality that focuses where significant gains can be made: are posted every month, according to a New less on “strategy”, as Innovalue states. “Talent recruitment, employee and consum- York Times blog from 2013. “Possibilities have to be considered within er engagement and empowerment, market Elsewhere, Instagram and Twitter, whose the cultural context each FI operates in, intelligence and product design, credit scoring, respective defining features are breaking accommodating consumer preferences, as analytics, awareness, marketing”. news and alluring pictures, provide financial well as regulation and compliance.” The report entitled ‘Financial Services and services with an unorthodox platform to post Social Media’ includes a wealth of solutions, all sorts of content. Financial Services Brands on Social Media including customer-centricity, brand culture The Financial Brand advises: “Instead of Just over 1% of Facebook’s users ‘Like’ the and social responsibility to help financial pro- boring readers with posts exclusively about card payment brand Visa however nearly viders build a loyal online following. your bank’s hours, rates, or services, try to double this number ‘Like’ Redbull, accord- However, unfortunately for the sec - entertain them. ing to Innovalue’s figures. tor, there are not many fast track solutions. “Post content that people respond positively Similarly, Starbucks’ updates adorn just The organic approach, from the bottom up, to and in varied forms- text, photos, video. under 3% of Facebook user’s timeline, with comes highly recommended. Use a casual, conversational tone.” huge graphic images of colourful Frappuc- In order to do this however, Innovalue rea- cinos and seasonal hot drinks enticing users The Future’s in the Past sons that operational challenges preceding to ‘share’ the post, ‘comment’ on it and ulti- Presently there are more than one billion “real time interaction”, paramount to cred- mately buy the product. active Facebook users around the world, and ibility, come into play: Are FIs able to drive the same amount of this figure is steadily increasing. There is “Communications that are typically routed traffic as an energy drink company? undeniable scope for banks, challengers and through marketing and legal departments for Innnovalue warns the sector risks “lagging fintech developers to integrate themselves time-taking reviews and approval….require behind” its commercial peers. However, it into the online community. banks to rethink their processes and roles…” should be noted that Red Bull boasts a string Facebook is worth $245bn, according to In 2013, Instagram – or “Insta” as its larg- of sponsorship deals which maximises its FB Tech 30, since its launch in the US in 2004. est demographic say – hit 150 million month- online popularity. Innovalue’s research shows almost 2.1 ly users, according to its own figures. Today, The irrefutably “cool” Red Bull Music billion people are now engaged in social in 2015, current statistics stand at 300 million Academy brings together established and networking, with approximately one billion users, with 75 million using it daily. new alternative musicians and has more people registered to a Youtube account. A According to analytics firm Twopchart, than 244,000 Facebook likes. ‘Red Bull’ as further 28% of time spent online is on social there are 974 million Twitter accounts as of the umbrella company draws in 43 million. media, of which more than half is on Face- September 2014. The figure rivals Facebook. Within this arm, Red Bull TV, racing, adven- book, according to wearesocial.net. However, research published by American ture, games, hiking, and sky-diving exist. Yet as social media and banking analysts, radio and TV corporation CBS explain that Collaboration and association work well The Financial Brand, state on its website: only 25% of Twitter’s near billion users have in the world of social media. On Facebook, “As social media marketing continues to an active presence (activity defined as sending Innovalue’s research shows approximately gain steam in retail banking, financial mar- a Tweet every 30 days). Yet this coffee shop 0.03% of the Twitter population follow Red keters need to pause and think about how in the sky – as Times journalist and glorified Bull’s Twitter account, which is more than they use social channels and whether this Tweeter Caitlin Moran calls it – proves popu- Visa, American Express, Bank of America activity is really adding any value.” lar because its users acquire verified informa- and the insurer State Farm. The report advises businesses to think care- tion on global events, or what’s ‘trending’, as It illustrates the importance of commercial fully about the platforms they choose. opposed to communicating. popularity, which is prerequisite of successful For instance, there are 100 hours of video Furthermore, the evolution of social media online campaigns and financial services have uploaded to YouTube every minute, Innoval- has created a powerful relationship between suffered very bad press. ue’s research found -and YouTube has had a business, employee and audience. Custom- Social media users, with the most avid aged profound impact on advertising and culture. ers can ask brands direct questions and get 18-29, follow brands like Red Bull, Starbucks,

12 y July 2015 www.electronicpaymentsinternational.com

THIS ONE EPI 337.indd 12 24/07/2015 09:11:09 Electronic Payments International SOCIAL MEDIA FEATURE

n KEY MILESTONES: SOCIAL MEDIA AND FINANCIAL SERVICES n COMPANIES’ VS FINANCIAL INSTITUTIONS’ FACEBOOK & TWITTER INCLUSION Financial services Year Social Media (% OF TOTAL USERS) 2001 Wikipedia launched Company Twitter Facebook 2002 Friendster launched inclusion inclusion 2003 LinkedIn and MySpace launched Red Bull 0.29 3.51 2004 Facebook launched Starbucks 1.11 2.91 Wells Fargo launches Second Life's 'Stagecoach YouTube launched 2005 Nutella 0.02 2.33 Island Community' Nike 0.69 1.74 RBS launched the 'Innovator Blog' YouTube bought by Google for $1.65bn; 2006 Twitter launched H&M 0.74 1.69 2007 Facebook reaches one million UK users GoPro 0.2 0.64 Progresive Corporation launches 'Flo the Progressive Facebook surpasses MySpace Microsoft 0.94 0.49 2008 Girls' on social media Vitamin Water 0.02 0.32 Chase launches 'Chase Community Giving' on Foursquare launched; flickr reaches 2009 Visa 0.04 1.35 Facebook more than 4bn images American Express 0.12 0.44 Chase shuts its 'Chase+1' initiative on Facebook only Pinterest and Instagram launched; three years after launch 2010 Instagram gains 1m users after only one Progressive 0.01 0.41 month Bank of America 0.06 0.16 Top 35 banks on Facebook reach 9m likes between Snapchat and Google+ launched State Farm 0.01 0.14 them; ING launches the 'Orange Ambassador' 2011 initiative BNP Paribas 0.01 0.03 DenizBank launches Facebook banking services Facebook acquites Instagram for $1bn Fidelity 0.02 0.01 2012 in cash and stock; Twitter reaches more Vanguard 0.03 0.01 than 500m active users Source: Innovalue American Express launches 'Pay by Tweet' service 2013 Instagram reaches 100m active users

Snapcash launched 2014 Pinterest: 250m users nine strategic categories FIs already deploy. LinkedIn: 313m users The first two (recruitment and employee Twitter: 645m users engagement) should work cohesively for opti- Facebook: 1.3bn users mum productivity, the report discloses. This works both practically and empirically, as Source: Innovalue advertising job openings through the brand’s social media account is a positive conversa- Nike and H&M because they literally buy ness, marketing and promotion”. tion starter for the online community. into the brand. Slick, feel-good advertising Lloyds gained traction in print and digital It allows vast amounts of skilled and tech- campaigns, with an interactive edge, satisfy a media by focusing the celebration on the cus- nologically savvy people to view the job open- culturally hungry generation. tomer. ing. This increases brand awareness while Innovalue references MasterCard’s “imagi- ‘empowering’ recruiters and existing employ- In Other News native” social media competitions. In 2012, ees, who may choose to share the recruitment Pew Research Centre found that 72% of MasterCard co-sponsored the Brit Awards, link on their personal account online adults use video-based websites, such using the #priceless hashtag to offer fans the The go-to business community is LinkedIn, as YouTube, Vine and Vimeo. This figure chance to duet with their favourite pop-star. which is designed for professionals. Its figures is more than double the number recorded Competitions are alluring. It gives mil- state the site networks more than 264 million between 2006 and 2013. lennials and low-earners reason to click a customers across 200 countries, including 39 Picking up on the cross-functionality of brand’s Facebook page, maybe winning a million students or graduates. video, Lloyds Bank celebrated its 250th anni- month’s supply of Nutella or pair of Nikes. It should be kept in mind however that versary with an advert which found resound- The report states:“The advantages of social “social recruitment” can be applied in any ing praise in the Twittersphere. media over traditional communication chan- capacity the financial brand sees fit. nels include its universal reach, its ‘non-cor- LinkedIn, Facebook and Google Plus allow • “#lloyds what’s the name of the song in porate’ atmosphere and speed of discussion.” employees to discern specific information Lloyds bank ad? Goose bumps every If FIs want to garner more social media about potential recruits, as well as providing time I hear it!” shares and likes, it may be a question of an analytical space to conduct research. investing in trendy social media managers, to Innovalue lists opportunities surrounding • “From the #Lloyds ad! Beautiful tune. I “empower” employee, brand and company. “credit-scoring, fraud prevention and analyt- just used #Shazam to discover Wings As well as this, light subject matters will ics” that help financial services make good Acoustic [soundtrack] by Birdy” rejuvenate a financial brand’s online reputa- choices. According to the report, payday loan tion. Jason DeMers of Forbes Magazine calls provider LendUp checks the Twitter footprint The second Tweet has even incorporated this the “humanisation element”. of potential clients for “economic stability”. another social media app. It is a good exam- There are a number of tools referenced by ple of what Innovalue terms “consumer ser- ‘The Social Media Opportunity’ Innovalue that help the social media checking vice/engagement” as well as “product aware- According to Innovalue’s report, there are process: microfinance, research on behaviour-

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THIS ONE EPI 337.indd 13 24/07/2015 09:11:09 Electronic Payments International FEATURE SOCIAL MEDIA

al consumption and social media data. Regulation, Security and Constraints cant impact on the way financial services con- Kreditch Digital Lending, a Hamburg Data concerns and security are major issues duct business and on people’s perception of based online creditor, ousted traditional for financial services and social media. There FIs, it is unlikely that there will be widespread credit checks. Instead, it developed a unique is a slew of regulation that keeps in check Brit- convergence, beyond nice topical areas or software analysis system, using big data from ish institutions as well as their global arms. beyond single organisations that are manag- Amazon and eBay. This created a matrix to From the Financial Services and Markets ing to set themselves up as a social media best check credit scores, enhancing the lender’s Act 2000 (FMSA), which states a company’s practice, between social media and financial innovation technique. online presence can be held accountable to services in the foreseeable future.” However, this type of analysis is open to the Data Protection Act (DPA) to the FCA In the UK, only 9% of Forrester’s respond- much scrutiny in the mainstream. It brings (Financial Conduct Authority) and ASA ents agreed that communication with banks back the age-old transparency debate, which (Advertising Standards Agency), digital mar- via social media is central. Contrastingly, is a vital core value of any business. keters must ensure that rules which apply on 25% of respondents in Hong Kong consider paper are applied accordingly online. their banks giving personalised advice via Product Awareness and Marketing Pew Research Centre found that 86% of social media a priority. Producing and distributing marketing mes- internet users have at some stage attempted Wells Fargo challenges the undertone of sages on social media can generate user to hide their online footprints: “from clearing this sentiment with its online persona, which engagement while encouraging new audi- cookies and encrypting their email to avoid- includes 733,000 Facebook likes, Twitter and ences to join in. However, customisation and ing using their name to using virtual networks LinkedIn accounts, a YouTube channel with insightful posts, which take into account the that mask their internet protocol (IP) address. 2.6 million views, seven active education- social platform you are posting, are key to Recently, American regulator FFIEC based blogs and a unique online community influencing relationships. released guidelines governing social media developed by the brand Stagecoach Island. Within Innovalue’s report, it describes use by FIs domestically and abroad. Innovalue sums up the survey: “The vast Fidor Bank as “implementing headline-grab- According to Innovalue, the FFIEC pro- majority of people do not consider engaging bing [social media] initiatives by incentivising posed: “financial institutions must have a or sharing information with banks via social its audience to “Like” the bank’s page. The formal written social media strategy that is media channels a priority, mainly suggesting bank also sets its current account interest rate aligned with the global goals and objectives concerns around security.” according to the number of likes its Facebook of the organisation.” However, the report cites the financial cri- page receives in a year.” This approach will Innovalue also stresses that customer “cul- sis and well-publicised scandals as reasons not suit legacy or well-established financial ture” must be taken into account, as this why customers are disinterested in pursuing structures, however, as Innovalue states: helps the brand see through media hype and social media relationships with them: “Increasing connections provide Fidor adhere to legal challenges. “Consumers lost their trust in financial with a stream of prospects as well as engage- institutions; social media can give financial ment that lowers the cost of acquisition to an Data providers new means of engaging with con- average of $20 per customer, compared with Protecting customer data is tantamount to sumers in an appealing manner that can help $1,500 for the average US bank.” the image of financial institutions. Yet the restore lost confidence.” Fidor has successfully investigated the very nature of social media, its openness and Clear objectives, a team of natural Face- potential Facebook brings to an FI. The Ger- instant conversations, means that negative bookers, Tweeters and image distributors are man bank also utilises aspects of Innovalue’s interactions will happen. necessary components of social media success. remaining five ‘strategic applications’: Complaints directed at the institution Competition from luxury, entertainment and “Consumer engagement/ loyalty building, should not be covered up by a social media commercial brands – let alone customer’s real customer service/consumer education/, pub- manager. Leaving negative user comments on social media friends – is tough. FIs must first lic relationship and social responsibility, and a business page, as long as there is a helpful establish their perimeters. payment initative.” reply below, show good will and keen inter- Further advice includes questions that Research by UK-based Kantar Media TGI est in maintaining healthy customer relations. financial services should ask: from the first quarter of 2014 found that It is almost impossible to hide or delete bad social media users are more likely to embrace press on social media. Attempting to do so • To what extent should they involve financial innovation technologies. could do more harm than good. themselves in social media? The same study found that people who log Yet Innovalue reports that “uncontrolled onto a social media platform at least twice and unaddressed complaints” are difficult • What regulator, security and privacy a day are 22% more likely than an average to moderate or control. This is factually true, dangers are involved? consumer to stay abreast of new technologies, however, allowing bad press, as long as it and 22% more likely to use NFC payments. doesn’t infringe anyone’s rights, conveys com- • Do they have prerequisite capabilities? Financial brands such as American Express, mitment to customer satisfaction. If not, are they willing to make the sus- French company S-Money and American- A survey carried out by Forrester showed tained investment to acquire them? based web payment developer Stripe, have that 8% of US social networkers, who inter- teamed up with Twitter, Google and Face- act with financial firms, do so primarily to • What level of autonomy do social media book and introduced E-commerce services. “post reviews, complaints and questions” employees have? It should be stated however that payment while 15% preferred to be “alerted to promo- services must be authorised in the EU, and as tions and special offers”. The contrast proves People will continue to use social media as Innovalue states: “the reporting and capital that it isn’t all doom and gloom for the sector. long as it exists. Therefore if a financial brand requirements accompanying such authorisa- However, Innovalue concedes: wants to remain relevant to consumers, it tion form a very high bar for organisations “While many commentators still claim that must sign up to social media. to enter.” the power of social media will have a signifi- At least for appearance’s sake. <

14 y July 2015 www.electronicpaymentsinternational.com

THIS ONE EPI 337.indd 14 24/07/2015 09:11:09 Electronic Payments International ANALYSIS FEATURE

Financial Services and Social Media Locke Lorde’s global head of cards and payment Robert Courtneidge highlights some stand out social media campaigns of key financial players and reveals how the sector can implement successful online and social media strategies while appeasing the regulators, despite their inherent disadvantage in the field

espite lagging behind other regu - approach, balancing self-promotion and Furthermore, when it comes to customer lated industries there have been helpful advice. It’s all done by providing service, banking or credit card companies a number of stand-out successful helpful content on investment, planning and cannot ask for account information on social social media campaigns by finan - retirement created by the brand itself. Obvi- media, not even via private or direct informa- D tion therefore customers have to be directed cial services firms. Below are some exam- ously a very competent content marketing ples of firms which have quickly attained team at work here. to a secure email channel. This is of course higher levels of social media engagement. not inherently ‘social’, but it does mean that a State Farm Nation customer can safely provide information that Paypal Insurance service provider State Farm will give an advisor access to their account. In early 2013 PayPal’s social channels were Nation takes a different approach again. It overtaken by complaints about customer has gained 1.5 million Facebook ‘likes’ by How can financial services encourage service and negativity. PayPal’s social pres- sharing ‘hacks’ from other sites about health, social media interaction with a younger ence historically has been fragmented with lifestyle, safety and cookery techniques. generation? low engagement. Though most posts are curated, the content Younger generations have been born into Joining forces with Edelman, it tackled combines to appear like on-brand, helpful a technology age. They think differently these issues in order to transform not only its advice for the community about brands to older generations and they social presence, but also its brand. Customer use customer service departments much less service quickly became a known presence on HSBC frequently. If they want to complain they go social media channels, with the creation of Furthermore, every morning on the @HSBC_ straight to Facebook or Twitter to have their the @AskPayPal handle. PayPal’s competing UK_Help Twitter feed, an HSBC person say. With this in mind, financial institutions brand pages and handles have been consoli- gives their name and says they're there to can therefore use social media to target stu- dated. help with any queries. This method is reas- dents who use the medium extensively for Content has shifted to a cohesive PayPal suring to customers because a name shows talent recruitment, to advertise jobs, answer customer benefits dialogue; including chan- they're reaching out to a real human. questions related to positions and direct nels such as Twitter, Pinterest, Instagram and potential candidates towards online screen- more, and these have been used to engage In terms of regulation, privacy barriers and ing tests. with celebrities and other brands in real- the unfortunate reputation of the financial Furthermore, an increasing number of time. A strategic presence on YouTube and industry within the mainstream community, financial services businesses exploiting LinkedIn has been launched, fuelled heavily is the sector at a fundamental disadvantage social media opportunities are using brand by thought leadership being published on in comparison to Starbucks or Nike? and marketing technology platforms to the new PayPal Forward innovation blog. It is important for financial services to manage the process. An automated process Statistics show that PayPal’s social media recognise the need to exploit social media as with a documented audit trail is created and progress has been a great success: 327% a strategic long-term investment if younger accessed from a single interface, bringing increase in engagement, 207% improve - generations are to be brought on side and together the people, departments and poli- ment to sentiment (positive to negative ratio), retained however, clearly, the financial indus- cies involved in compiling and posting social 329K new fans and expansion into 5 addi- try is at a major disadvantage in comparison media messages. tional social platforms for a total of 8. to the likes of Starbucks or Nike. Financial services companies can control The gap in relation to social media success the creation, approval and posting of social Progressive between companies from other regulated sec- media messages, helping reduce the risk of The insurance service business has gained tors can be attributed to structural barriers to compliance breaches or the wrong messages over 5.4 million fans on Facebook by post- entry, preventing financial institutions from appearing in the wrong context. ing highly on-brand visual content, using fully exploiting social networks and limit- Fidor Bank has implemented several ini- a mix of humour, inspirational quotes and ing the size of their web audience and brand tiatives including a current account interest quirky input from a character called ‘Pro- awareness. rate set according to the number of Facebook gressive Girl’ to project its promotional For a firm to operate a social channel there Likes the bank’s page receives in a given year brand messages. takes a substantial amount of forethought and a crowdsourcing tool allowing custom- and planning as it’s a highly regulated envi- ers to answer other people’s financial ques- Charles Schwab ronment. Far more so than other B2C indus- tions, encouraging word of mouth. This is a Financial investment company Charles tries. You can’t just suddenly announce a prime example of a bank using innovation Schwab has achieved more than 100,000 discount incentive, or a ‘retweet to win’ com- to encourage interaction with millennials and likes on Facebook with a more sedate petition because the regulators don’t allow it. younger generations. <

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THIS ONE EPI 337.indd 15 24/07/2015 09:11:09 Electronic Payments International INTERVIEW ING: INGE VAN DIJK

ING and the faster payments stream ING has already digitised and streamlined account opening, nailed mobile and internet banking and utilised predictive analytics to maximise the customer experience. What next in terms of the drive for global real time payments? Anna Milne speaks to Inge Van Dijk, ING’s director of instant payments

AM: What has ING learned from new with demand. payments, built on the SEPA railway track, entrants? Start simple by all means but make sure it with a single pan-European user experience, is extendable across platforms for the long then you have something that can compete IVD: The main thing is to look at the cus- run. It needn’t happen overnight. It can be a with the MasterCards and the Visas. tomer experience, which we did when we single solution for a single community that First, as a community you have to under- developed iDEAL. We did not do this as people have to sign up to. The community stand each other and make sure you have the much with SEPA because we came from already exists, in the form of the account. same belief. That’s what we’re doing within legacy, so we had to compromise. This never But it needs to fit any type of account so if I EBA. brings out the best in the products- certainly only do P2P, I’ll need to have the ability to if you do that with four, five or six thousand extend into P2B, B2B, B2C and then make AM: Is there a problem within bank banks, it becomes difficult. Whatever the that country specific. departments, vying for budget when there new entrants tell us, one thing is clear, we’ve is not an obvious business case? left something out which they’ve tapped into AM: How much more complex is it to and are succeeding at. Mark Buitenhek said develop P2B than P2P? IVD: Within ING, no. This is something they are really good at cost, speed and most new, inspiring and invigorating so no prob- of all user experience. If you want to be rel- IVD: Complexity in P2B comes not from lem getting people and resources in. Strategy evant you have to listen and tap into that. the volume, but the fact that somebody has discussions take place but it’s more about to sign off, it requires two signatures- this timing. I’ve heard other banks having dif- AM: Could you reiterate your points on makes the authorisation of the payment ficulties putting the strategy together for the the platform at EBA Day about having more difficult. board, especially after SEPA- it is again an a payments infrastructure applicable to The problem for banks is once volume and investment in payments- their colleagues consumers, SMEs and corporates alike? speed are up after you’ve brought in all the might like some investments in savings or segments, the collateral you have to raise to mortgages or other products. ‘Payments’ IVD: If you can do it on the consumer side, have funds available for settlement cycles does tend to eat up quite a lot of the change why can’t you do it on the business side? If is massive- so you have to decide whether within a bank. you can do it for an SME, why not a bigger or not you can go for real time settlement. company? Also, once hours are extended over the AM: What about collaborating with new If a consumer is paying for goods on the weekend you have to cater for increased risk fintech companies? doorstep, on delivery, eg. with iDEAL in NL and liquidity costs, which in turn requires but also in the UK, why can’t a retailer pay settlement cycles to be opened up over the We believe we’re on the brink of a new era his wholesaler (where his goods are stored, weekend. which will change the landscape, we can’t effectively), on departure of the goods and even predict how- it’s going to change it send direct to the consumer. So there is a AM: The faster payments market is mainly drastically. Payments have been so siloed whole different set of services that can be domestic- 90-95%- and is likely to stay with cards on the one hand and payments on opened up by allowing instant payments this way. Why the need for cross-border? the other. All of a sudden these new entrants also in business. Or indeed why can’t the are making it so much more fun. supplier send directly to the consumer? IVD: When it comes to business payments it’s international. When the internet came AM: What’s ING’s take on blockchain AM: What attitude should be adopted? along everyone thought it would spike technology within payments? cross border transaction and it has, but only IVD: You need to think about the product a small spike- one or two percent. This is IVD: It’s really amazing- we’re looking at comprehensively at the beginning, because because the internet became country-specif- it with keen interest- it certainly fits with once you hook the consumer in, it spikes ic- we have country domains. It’s true the our philosophy in terms of opening up interest from the SMEs, and then the cor- consumer market is mostly domestic but I and safeguarding our customer’s input. porates. So consider the broader perspective believe it would be wrong to focus on that We’re concerned about PSD2 and the and build for that. This does mean more and yet I can understand why banks do. The re-use of credentials. But opening up and investment up front but it will pay out in the pan-European volume is just a few percent seeing if fintech companies can lift your long run. It will snowball so quickly that by but the pan-European experience- the reach- infrastructure to find a new business model the time you’ve evaluated your P2P mobile has great potential. Card schemes have is something that’s top of our minds but we pilot, they’ll be banging on your door and global reach- MasterCard and Visa, it is just haven’t pushed it yet. Something will you will be constantly trying to catch up what makes them big. If you deliver instant follow soon. <

16 y July 2015 www.electronicpaymentsinternational.com

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